SIKORSKY AIRCRAFT CORPORATION, Plaintiff, v. UNITED STATES, Defendant.
No. 12-898C
United States Court of Federal Claims.
Filed: August 20, 2015
711, See also 110 Fed. Cl. 210, 773 F.3d 1315.
LETTOW, Judge.
James W. Poirier, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C., for defendant. With him on the briefs were Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Civil Division, Robert E. Kirschman, Jr., Director, and Steven J. Gillingham, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, D.C.
Second litigation over a contractor‘s compliance with Cost Accounting Standards pertinent to indirect materiel overhead costs; government‘s “alternative” claim to that litigated to final judgment in the prior action; applicability of the doctrine of claim preclusion
OPINION AND ORDER
LETTOW, Judge.
This action concerns the accounting practices of plaintiff, Sikorsky Aircraft Corporation (“Sikorsky“), a government contractor, and is a reprise of a prior dispute between Sikorsky and the United States (“the government“) over those practices. At this juncture, the question before the court is whether the doctrine of claim preclusion bars the government from presenting an “alternative” claim to that litigated to final judgment in the first action.
At issue in the first case was whether Sikorsky‘s accounting practices were in compliance with the Cost Accounting Standards (“CAS“) set out at
During the course of that litigation, on December 21, 2011, a contracting officer issued a further “alternative” final decision asserting a second claim related to Sikorsky‘s indirect-cost-allocation methods. Specifically, the contracting officer claimed that even if Sikorsky‘s accounting practices from 1999
The case is now before the court on Sikorsky‘s motion for judgment on the pleadings pursuant to Rule 12(c) of the Rules of the Court of Federal Claims (“RCFC“). See Sikorsky‘s Mem. Supporting Its Mot. for Judgment on the Pleadings (“Pl.‘s Mot.“), ECF No. 21.3 Sikorsky avers that the government‘s claim is precluded because common transactional facts appertain to the government‘s 2008 claim for noncompliance and its alternative 2011 claim now at issue. See Sikorsky‘s Reply Supporting Its Mot. for Judgment on the Pleadings (“Pl.‘s Reply“), ECF No. 29. The government resists Sikorsky‘s motion, arguing that the timing of its alternative 2011 claim renders claim preclusion inapplicable. See Def.‘s Response to Pl.‘s Mot. for Judgment on the Pleadings (“Def.‘s Opp‘n“), ECF No. 25.
BACKGROUND4
Sikorsky holds a number of contracts with the government and commercial customers to furnish aircraft and spare parts. Compl. ¶ 11; see also Sikorsky Aircraft Corp. v. United States, 102 Fed.Cl. 38, 40 (2011) (”Sikorsky I“). The dispute between the parties stems from Sikorsky‘s method for allocating its materiel overhead costs. Compl. ¶ 12; see also
A. Cost Accounting Standards
The CAS are a set of nineteen cost-accounting criteria promulgated by the Cost Accounting Standards Board (“CASB“). Sikorsky I, 102 Fed.Cl. at 41; see also Compl. ¶¶ 34-38. Since its inception, the CASB has had “exclusive authority to prescribe, amend, and rescind cost accounting standards, and interpretations of the standards, . . . [which govern] measurement, assignment, and allocation of costs to contracts with the [f]ederal [g]overnment.”
B. Sikorsky‘s Accounting Practices, Audits, and Reviews
Materiel overhead costs are types of indirect costs; they consist of the costs to purchase materiel used by Sikorsky to manufacture and assemble aircraft and spare parts, store the materiel in warehouses, and supply the materiel to the manufacturing labor. See Sikorsky IV, 110 Fed.Cl. at 215-16. Sikorsky allocates materiel overhead costs to both government and commercial contracts. See Compl. ¶ 12. Prior to 1999, Sikorsky allocated materiel overhead costs using a hybrid allocation base of direct materiel costs less the costs of commercial aircraft engines and used helicopters. Compl. ¶ 16. The commercial costs were removed from the calculus “to compensate for the exclusion of [government furnished materiel (‘GFM‘)] from the direct materiel cost base.” Sikorsky VI, 773 F.3d at 1319.7 In 1998, Sikorsky concluded that its allocation method only partially mitigated the GFM distortion. See Compl. ¶ 19. “Sikorsky officials felt that the pre-1999 compromise was not entirely effective because the company used substantial amounts of GFM beyond engines, and the removal of the cost of commercial engines from the base did not deal with the remaining GF[M] that [Sikorsky] still [had] in [its] factory that [was] still being handled and moved around and not receiving any allocations.” Sikorsky IV, 110 Fed.Cl. at 216 (alteration in original) (citations and quotations omitted). To avoid the perceived distortions caused by the substantial volume of GFM, starting in January 1, 1999, Sikorsky began allocating indirect materiel costs by using a direct labor cost base. Compl. ¶ 19. Sikorsky alerted the government to “these accounting changes before they took effect, submitting a revised cost-accounting Disclosure Statement to Ms. [Joan] Sherwood, then its C[orporate Administrative Contracting Officer (‘CACO‘)], on August 12, 1998.” Sikorsky IV, 110 Fed.Cl. at 216.8 Ms. Sherwood approved the use of the direct labor cost base but provided the caveat that this method for allocating materiel overhead costs would be continually monitored for compliance with CAS 418. Compl. ¶ 20.
On October 29, 2004, the Defense Contract Audit Agency (“DCAA“) issued its final report for an audit that began in August 2002. Compl. ¶¶ 21-22. The report, principally authored by Robert Boyer, determined “that Sikorsky‘s use of a direct labor cost base to allocate materiel overhead was ‘in potential noncompliance’ with CAS 418 . . . and that Sikorsky was in fact ‘in noncompliance with
C. Government‘s 2008 Claim for Noncompliance
In 2007, Frank Colandro, who succeeded Mr. Weisman as Sikorsky‘s CACO, became aware of Sikorsky‘s audit from 2004 that found the accounting practices from 1999 to 2005 to be potentially noncompliant with CAS 418. See Compl. ¶¶ 28-29. Mr. Colandro subsequently submitted a notice of potential noncompliance to Sikorsky in March 2007 and issued a final decision against Sikorsky on December 11, 2008. Compl. ¶¶ 28-29; see also Pl.‘s Reply Ex. A, at 1-3 (Letter from Colandro to Joseph Chancio, Sikorsky‘s former Assistant Controller, Government Accounting (Dec. 11, 2008)). The 2008 final decision claimed that “the manner in which [Sikorsky] allocated [m]ateri[e]l [o]perations expenses to final cost objectives using a base of direct labor [from 1999 through 2005] did not comply with CAS 418,” and stated that Sikorsky‘s alleged noncompliance practice “ceased” by the change in 2006. Pl.‘s Reply Ex. A, at 1-2; see also Def.‘s Reply to Pl.‘s Response to Def.‘s Mot. for Leave to Serve Interroggs. at 7, ECF No. 74 in No. 09-844C, the first Sikorsky action (“[T]he amended allocation base for materi[e]l overhead costs set forth in . . . 2006 ‘corrects the noncompliance‘“). Based on Sikorsky‘s alleged noncompliance, the contracting officer asserted a claim against the company for about $80 million ($65 million in principal plus $15 million in interest). Compl. ¶¶ 28-29.10
On December 8, 2009, Sikorsky filed suit challenging the CACO‘s determination. Compl. ¶ 30. The complaint contended that the 2008 final decision was null and of no effect, and that Sikorsky‘s challenged allocation method was in compliance with CAS 418. See Sikorsky I, 102 Fed.Cl. at 40. Sikorsky also pleaded various defenses, viz., accord and satisfaction, waiver, laches, and statute of limitations. See id.11 The government filed its answer and counterclaim on May 4, 2010, alleging that Sikorsky had violated CAS 418 through its materiel overhead accounting method from 1999 through 2005 and seeking the same $80 million that Sikorsky was said to owe. See Compl. ¶ 30. Seven months after Sikorsky filed its complaint, the Federal Circuit issued a decision in M. Mar-
The government never answered Sikorsky‘s second complaint. Instead, on December 27, 2010, the government filed a motion to dismiss the second complaint on the ground that the juridical prerequisite of a contracting officer‘s final decision had not been met for Case No. 10741C, the second action. See Sikorsky I, 102 Fed.Cl. at 47. The government‘s motion was denied on November 30, 2011. See id. at 47-48 & n.14. In February 2012, the government filed motions for summary judgment on Sikorsky‘s affirmative defenses based upon statute of limitations and accord and satisfaction. See Sikorsky II, 105 Fed.Cl. at 660. On July 18, 2012, the court found that genuine issues of material fact precluded summary judgment on those two affirmative defenses. See id. at 674, 678 (holding that genuine factual issues existed relating to the accrual of the government‘s claim and respecting the parties’ accord and satisfaction entered by and between Sikorsky and the contracting officer attendant to the 2006 accounting change). The court thereafter held a five-day trial on the merits of the government‘s CAS-noncompliance claim and Sikorsky‘s statute-of-limitations defense. See Sikorsky IV, 110 Fed.Cl. at 213.12 In March 2013, this court held that the government‘s claim was timely but that the government had failed to establish by a preponderance of the evidence that Sikorsky had violated CAS 418. See id. at 210. The Federal Circuit affirmed on the merits in December 2014. See Sikorsky VI, 773 F.3d 1315.
D. Government‘s Alternative 2011 Claim
During the pendency of the litigation over the government‘s 2008 claim, a new CACO, DCMA contracting officer Mark Sadlon, who had replaced Frank Colandro, issued a further final decision on December 21, 2011, asserting a claim related to Sikorsky‘s materiel overhead costs during 2006 and thereafter. Pl.‘s Mot. Ex. A (Letter from Mark Sadlon to Chancio (Dec. 21, 2011)). In his 2011 final decision, Mr. Sadlon “explicitly acknowledg[ed] that this second claim constitute[d] an ‘alternative’ to the government‘s CAS 418 claim as to Sikorsky‘s 1999-2005 materiel overhead accounting method.” Pl.‘s Mot. at 5 (emphasis added) (citing Compl. ¶ 47; Pl.‘s Mot. Ex. A). In Mr. Sadlon‘s view, “Sikorsky made a change from one compliant [materiel overhead] accounting practice to another compliant [materiel overhead] accounting practice, which is the definition of a unilateral accounting practice change [as set forth in] CAS 2016(b)(2).” Pl.‘s Mot. Ex. A, at 5.13 He therefore claimed that if “Sikorsky‘s 1999-2005 [materiel over-
Sikorsky challenged the 2011 final decision on the alternative claim by filing a complaint in this court on December 20, 2012. Sikorsky‘s complaint sets out eight counts against the government. See Compl.16 The government subsequently counterclaimed on March 4, 2013, seeking to recover the amount of the CACO‘s 2011 final decision. See Def.‘s Answer and Counterclaim (“Counterclaim“) ¶ 142, ECF No. 13 (“Plaintiff is liable to the United States for an immediate payment of $26,554,660.00, plus interest, or such other amount as may be demonstrated at trial.“).
On April 24, 2015, Sikorsky filed a motion for judgment on the pleadings pursuant to RCFC 12(c). See Pl.‘s Mot. This motion draws upon Count IV of Sikorsky‘s complaint, i.e., the preclusive effect of the final judgment in the previous litigation. See id. at 10-12; Pl.‘s Reply at 2-11; Compl. ¶¶ 67-70.17 Sikorsky‘s motion has been fully
STANDARDS FOR DECISION
A. Judgment on the Pleadings
RCFC 12(c) is identical to
Sikorsky‘s complaint in this case sets out defenses to the government‘s claim, which is the reverse of the posture of a typical complaint that initiates litigation. Consequently, the court looks to Sikorsky‘s defenses as it would those raised by a defendant‘s motion in a standard case. In that respect, when considering a motion under RCFC 12(c), the court applies substantially the same test as it does for a motion to dismiss for failure to state a claim under RCFC 12(b)(6). See Xianli Zhang v. United States, 640 F.3d 1358, 1364 (Fed.Cir.2011) (“When reviewing a decision of the Court of Federal Claims to grant judgment on the pleadings under RCFC 12(c), ‘we apply the same standard of review as a case dismissed pursuant to Rule 12(b)(6). . . .‘“) (quoting Cary v. United States, 552 F.3d 1373, 1376 (Fed.Cir.2009)); see also Peterson v. United States, 68 Fed.Cl. 773, 776 (2005) (“The legal standard applied to evaluate a motion for judgment on the pleadings is the same as that for a motion to dismiss.“).
As a starting point, factual allegations set forth in the complaint regarding the claimed defenses must be enough to raise a right to relief above the speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007). The court must inquire whether the complaint “plausibly suggest[s] (not merely [is] consistent with)” a showing of entitlement to relief. Cary, 552 F.3d at 1376 (citing Twombly, 550 U.S. at 557). Further, the court must not “accept as true a legal conclusion couched as a factual allegation[, which is entitled to a favorable inference.]” Papasan v. Allain, 478 U.S. 265, 286 (1986) (citations omitted). While a plaintiff is not required to set out in detail the facts upon which the claim or defense is based, “[t]o survive a motion [of this nature], a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief [here, a claimed defense] that is plausible on its face.‘” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (alteration in original) (emphasis added) (quoting Twombly, 550 U.S. at 570); see also Henry Hous. Ltd. P‘ship v. United States, 95 Fed.Cl. 250, 254 (2010). Plausibility is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
B. Claim Preclusion19
Under the doctrine of claim preclusion, “a judgment on the merits in a prior
The rule [of claim preclusion] provides that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. The judgment puts an end to the cause of action, which cannot again be brought into litigation between the parties upon any ground whatever, absent fraud or some other factor invalidating the judgment.
Id. (emphasis added) (citations and quotations omitted); see also Brain Life, LLC v. Elekta Inc., 746 F.3d 1045, 1053 (Fed.Cir.2014) (claim preclusion bars relitigating “a claim, or cause of action, or any possible defense to the cause of action which is ended by a judgment of the court“) (quoting Nystrom v. Trex Co., 580 F.3d 1281, 1284-85 (Fed.Cir.2009)). The doctrine therefore serves to “foreclose[] matters that, although never litigated or even raised, could have been advanced in an earlier suit.” Carson v. Department of Energy, 398 F.3d 1369, 1375 n.8 (Fed.Cir.2005); see also Chapman Law Firm Co. v. United States, 72 Fed.Cl. 14, 16 (2006) (“Claim preclusion refers to the effect of a judgment in foreclosing litigation of a matter that has not been litigated, because of a determination that it should have been advanced in an earlier suit.“) (citing Sharp Kabushiki Kaisha v. Thinksharp, Inc., 448 F.3d 1368 (Fed.Cir.2006) (in turn citing Migra, 465 U.S. at 77 n.1)). In that respect, it prevents a party from “split[ting] a cause of action into separate grounds of recovery and [then] rais[ing] the separate grounds in successive lawsuits.” Mars Inc. v. Nippon Conlux Kabushiki–Kaisha, 58 F.3d 616, 619-20 (Fed.Cir.1995) (citations omitted); see, e.g., Restatement (Second) of Judgments § 24 cmt. d (“When a defendant is accused of successive but nearly simultaneous acts, or acts which though occurring over a period of time were substantially of the same sort and similarly motivated, fairness to the defendant as well as the public convenience may require that they be dealt with in the same action.“).
For purposes of evaluating alleged claim preclusion, the court applies the following tripartite test: whether “(1) there is identity of parties (or their privies); (2) there has been an earlier final judgment on the merits of a claim; and (3) the second claim is based on the same set of transactional facts as the first.” Nasalok Coating Corp. v. Nylok Corp., 522 F.3d 1320, 1324 (Fed.Cir.2008) (quoting Jet, Inc. v. Sewage Aeration Sys., 223 F.3d 1360, 1362 (Fed.Cir.2000)); see also Phillips/May Corp. v. United States, 524 F.3d 1264, 1268 (Fed.Cir.2008). Regarding the third prong, a claim cannot be split from another claim that arises from the same series of transactional facts. See Hyperion, Inc. v. United States, 120 Fed.Cl. 504, 510 (2015); Restatement (Second) of Judgments § 24(2). The Federal Circuit in Bowers explained:
Courts decide whether two claims involve the same transactional facts “pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.” In contract disputes, the rule has been refined to create a presumption that all claims arising from the same contract should be brought together.
Acumed, 525 F.3d at 1323 n.2 (citing Restatement (Second) of Judgments, Introductory Note before ch. 3 (1982) (discussing the terminology of res judicata); 18 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4402 (2d ed.2002) (same)).
ANALYSIS
A. Claim Preclusion
The first two requirements for claim preclusion are not in dispute. See Pl.‘s Mot. at 10. Respecting prong one, the parties in this action are the same as those in the prior action. Compare Compl. in No. 09-844C, ¶¶ 12-13, and Compl. in No. 10-741C, ¶¶ 14-15, with Compl. in No. 12-898C, ¶¶ 1-2. For prong two, these same parties litigated to final judgment the government‘s claim that Sikorsky‘s materiel overhead accounting method was noncompliant with CAS 418. See Sikorsky IV, 110 Fed.Cl. 210, aff‘d, Sikorsky VI, 773 F.3d 1315. As a result, the salient question concerns the third requirement, i.e., whether the government‘s alternative claim is based on the same set of transactional facts as its first claim concerning CAS 418.
In the prior action, the government argued that Sikorsky‘s allocation method used from 1995 to 2005 violated CAS 418 and indicated that the accounting change in 2006 corrected the noncompliance. See supra, at 715-17. In the present action, the government again addresses these accounting methods, but characterizes them differently. See Counterclaim ¶¶ 98-141; see also Def.‘s Opp‘n at 4-5. The government now argues that the allocation method Sikorsky used during 1999 through 2005 was compliant with CAS 418 and that the change in 2006 was a “unilateral” change from one compliant practice to another. See Pl.‘s Mot. Ex. A, at 5; see also Counterclaim ¶ 140. Sikorsky avers that “the transactional facts underlying the alternative claim are the 1999-2005 method and the 2006 change, including the appropriate characterization of the change.” Pl.‘s Reply at 4. It argues that the facts supporting both claims “are not merely ‘related in time, space, origin, or motivation,’ . . . they are essentially the same.” Id. at 4-5 (quoting Bowers, 695 F.3d at 1384). In Sikorsky‘s view, the government‘s claims “would have formed ‘a convenient trial unit,’ and they satisfy the transactional test for claim preclusion set forth in Bowers.” Id. at 2-4 (quoting Bowers, 695 F.3d at 1384); see also Pl.‘s Mot. at 11-12. The government responds that the claim it raised in 2008 relating to noncompliance with CAS 418 and the alternative claim it raised in 2011 are based on different transactional facts because the claims involve different regulations, and the calculation for compensation due for the alleged unilateral change in 2006 is calculated differently from the calculation for compensation due for a change from a noncompliant practice. See Def.‘s Opp‘n at 6, 12-13; Def.‘s Surreply at 5.
The government‘s argument is unavailing because “[a]ltering the theory of recovery does not create a new claim under the transactional approach.” Tindle v. United States, 56 Fed.Cl. 337, 347 (2003); see also Lyons v. United States, 45 Fed.Cl. 399, 404 (1999). This rule, as stated in the Restatement, applies to situations where a party, “[h]aving been defeated on the merits on one action . . . attempts another action seeking the same or approximately the same relief[,] but adducing a different substantive law premise or ground.” Restatement (Second) of Judgments § 25 cmt. d; see also id. § 25 illus. 8-9. For example, in Lyons, a military retiree brought separate actions against the government under different theories of recovery, but based on an “identical factual scenario.” 45 Fed.Cl. at 403. The plaintiff had originally alleged that an alteration in his retirement status was invalid, but after being denied recovery on that ground, he filed a second lawsuit claiming that his discharge was inval-
While the government‘s theory of recovery in this action is distinct from its earlier, litigated claim for noncompliance, the factual overlap between the two claims readily satisfies the transactional test explicated in Bowers. See 695 F.3d at 1384. The contracting officer himself emphasized the virtual identicality of the factual premises for both claims in stating that the claim made in December 2011 was an “alternative” to the claim raised in December 2008. See Pl.‘s Mot. Ex. A, at 5; see also Pl.‘s Mot. at 8-9. By “focus[ing] extensively on Sikorsky‘s 1999-2005 accounting method that was at issue in the CAS 418 case,” Pl.‘s Mot. at 8, as well as analyzing the reasons why Sikorsky changed its accounting method in 2006, id. at 9, the contracting officer acknowledged and acted upon the fact that the alternative claim came from the same series of transactional facts as the previous claim brought in 2008, see id. Ex. A, at 5; see also Pl.‘s Reply at 4 (“The alternative-claim final decision devotes most of its factual discussion to statements about the CAS 418 claim [from 2008].“) (emphasis in original). The contracting officer also identified the same representative contract, i.e., the Multi-Year Contract, for both claims. Compare Compl. ¶ 77 in No. 09-844C, with Pl.‘s Mot. Ex. A, at 1, and Compl. ¶ 53 in No. 12-898C. Because both claims emerged from the same contract, they are presumed to “constitute the same claim,” Phillips/May,
In sum, the three-part test for claim preclusion has been satisfied, and the government‘s alternative claim based on the 2011 final decision should be precluded, absent any temporal or jurisdictional limitations.
B. Exceptions
1. Temporal limitation.
Even accepting that the factual scenarios underlying both claims are the same, the government avers that claim preclusion is inapplicable to the present action because the government could not have asserted the second claim “at the time the pleading was filed in the first case.” Def.‘s Opp‘n at 9. Notably, even before the first litigation was initiated, the government could have raised the alternative claim because it had all the pertinent facts then before it. See Pl.‘s Reply at 7 (“The government does not dispute that the alleged facts supporting the alternative claim occurred before the 2008 CAS 418 final decision.“). Moreover, it also had the option to inject its alternative claim into the first action after Sikorsky filed its complaint in the first action. As the government observes, “concurrent consideration of an adjustment for a voluntary change and an adjustment for a change from a non-compliant practice is neither prohibited nor required by the regu-
lations or contract provisions.” Def.‘s Surreply at 5 (emphasis in original). Nonetheless, the government relies on Federal Circuit precedent for the proposition that it “[was] not required to do” either of those things, i.e., (1) raise the alternative claim concurrently with the first claim or otherwise assert it before that claim was litigated, or (2) inject the alternative claim into the litigation over the first claim. It argues that claim preclusion cannot “penalize a party for exercising the discretion granted by the rules of civil procedure.” Def.‘s Opp‘n at 10 (citing Gillig, 602 F.3d at 1363; Florida Power & Light Co. v. United States, 198 F.3d 1358, 1360 (Fed.Cir.1999)). Sikorsky counters that the government has misapplied these precedents and that “[c]laim preclusion turns on when a claim arises, not when a party chooses to assert it.” Pl.‘s Reply at 10; see also Pl.‘s Mot. 10-11.
The Federal Circuit in Gillig acknowledged that “[t]he doctrine of [claim preclusion] does not punish a plaintiff for exercising the option not to supplement the pleadings with an after-acquired claim.” 602 F.3d at 1363 (emphasis added) (citing Florida Power & Light, 198 F.3d at 1360). In Gillig, the claim in the second action arose from the “same nucleus of operative fact” as a previously litigated claim, but the later-
The instant case is distinguishable from Gillig, in that here the facts pertinent to the government‘s alternative claim were at hand when the government‘s contracting officer propounded the first claim. See Pl.‘s Reply at 9.23 By December 2008 when the first claim was asserted, the change in accounting methods from 2006 had already occurred and the government was well aware of that
change. It was therefore “within the government‘s control to assert the alternative claim as part of, or contemporaneously with, the [claim for noncompliance].” Id. at 10. The government‘s claim based on the accounting changes from 2006 does not form “an after-acquired claim,” see Gillig, 602 F.3d at 1363, and its decision to split the claims is fatal to its alternative claim, see PCL Const. Servs., 84 Fed.Cl. at 415 (“‘[I]f the claimant, before filing its first suit, is in possession of all the facts on which its second suit is based, the splitting of the claims into multiple suits is fatal to maintenance of the later-filed action.‘“) (quoting Alyeska Pipeline Serv. Co. v. United States, 231 Ct.Cl. 540, 546, 688 F.2d 765 (1982) (in turn quoting Everett Plywood Corp. v. United States, 206 Ct.Cl. 244, 252, 512 F.2d 1082 (1975))).24
2. Jurisdictional limitation.
The government nevertheless argues that it was permitted to split its claims in this case because this court was without jurisdiction to adjudicate the merits of the alternative claim at the time of Sikorsky‘s original suit. See Def.‘s Opp‘n at 10-11; see also Def.‘s Surreply at 2, 12-13. The Restatement (Second) of Judgments § 26(1)(c) provides that the usual rules of claim preclusion are inapplicable when a party is “unable to rely on a certain theory of the case . . . because of the limitations on the subject matter jurisdiction of the court[ ] . . . .“) (em-
The CACO‘s final decision concerning the alternative claim had not yet been made when the government asserted the original claim alleging noncompliance with CAS 418. See Def.‘s Opp‘n at 10. This timing is irrelevant for claim preclusion purposes, however, because it was within the government‘s control to make all of its claims ripe for review by asserting them beforé Sikorsky brought suit challenging the first governmental claim. See Phillips/May, 524 F.3d at 1271. The government could have relied upon its alternative theory when it originally filed a claim against Sikorsky and could have brought the alternative claim at that time since the salient facts regarding the allocation change in 2006 were already available. To the extent the government is arguing that its hands were tied while it waited for the contracting officer to issue the 2011 final decision, see Def.‘s Opp‘n at 2-3, this argument fails because “the contracting officer is a government employee with the responsibility of administering a contract for the contracting agency,” McDonnell Douglas Corp. v. United States, 76 Fed.Cl. 385, 412 (2007), aff‘d, 567 F.3d 1340 (Fed.Cir.2009), vacated and remanded sub nom. on other grounds, Gen. Dynamics Corp. v. United States, 563 U.S. 478, 131 S.Ct. 1900, 179 L.Ed.2d 957 (2011) (emphasis added); see also
ficer to decide [f]ederal [g]overnment‘s claims.“) (title). “The government cannot use its own contracting officer‘s delay in asserting a claim to avoid claim preclusion,” Pl.‘s Reply at 8, because that would allow the government to “re-litigate the same transactional facts by issuing separate, sequenced final decisions on claims arising from those same facts,” id. at 6.
Any such circumvention of claim preclusion principles “through strategic delay” was rejected by the Federal Circuit in Phillips/May, 524 F.3d at 1271. There, a contractor submitted to a contracting officer ten claims against the government that related to its contract for construction at a naval air station. Id. at 1266. The contractor appealed the denial of nine of those claims to the Armed Services Board of Contract Appeals. Id. After the parties had entered into a settlement agreement with respect to the nine claims, and the Armed Services Board had issued a judgment in accordance with that agreement, the contractor challenged the tenth claim in this court in a second action. Id. at 1267. The government moved for summary judgment, contending that the contractor was barred from litigating the tenth claim by the doctrine of claim preclusion. Id. This court granted the government‘s motion, and on appeal, the contractor argued-as the government does here-that claim preclusion did not apply “because the claims could not have been appealed together.” Id. at 1270. The court of appeals found this argument untenable:
“Even if [the contractor] were correct that the [tenth claim] could not have been appealed at the same time as the others, it was within [the contractor‘s] control to make all ten claims ripe for review at once. . . . [The contractor] was obligated to prosecute its claims in the same proceeding; it could not avoid the application of [claim preclusion] through strategic delay.”
Id. at 1271 (emphasis added).25
Coupled with Bowers, Phillips/May is precedentially dispositive. Un-
CONCLUSION
For the reasons stated, the three elements of claim preclusion have been met, and the government‘s alternative claim, challenged by Sikorsky in this action, is barred. The government faced no temporal or jurisdictional limitations on bringing its alternative claim with its original claim. Because the government asserted the alternative claim in a later-filed contracting officer‘s decision, but “could have . . . raised” that claim in its earlier contracting officer‘s decision, the alternative claim is now precluded. Bowers, 695 F.3d at 1384; see also Phillips/May, 524 F.3d at 1271.
The court GRANTS Sikorsky‘s motion for judgment on the pleadings, and Sikorsky prevails in its suit to overturn the government‘s alternative claim. The clerk shall enter judgment for Sikorsky and against the government both on the complaint and on the counterclaim.
Sikorsky is awarded its costs of suit.
It is so ORDERED.
LETTOW
JUDGE
CYIOS CORPORATION, Plaintiff, v. The UNITED STATES, Defendant.
No. 15-148C
United States Court of Federal Claims.
E-Filed Under Seal: July 31, 2015
Reissued: August 21, 20151
Notes
[t]he Court of Federal Claims shall have jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41, including a dispute concerning termination of a contract, rights in tangible or intangible property, compliance with cost accounting standards, and any other nonmonetary disputes on which a decision of the contracting officer has been issued under section 6 of that Act [sic, now
41 U.S.C. § 7103 ].
[n]egotiate with the [c]ontracting [o]fficer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of subparagraph (a) (4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the United States.
Nevada, 463 U.S. at 130 n.12.Under the first Restatement of Judgments § 61 (1942), causes of action were to be deemed the same “if the evidence needed to sustain the second action would have sustained the first action.” In the Restatement (Second) of Judgments (1982), a more pragmatic approach, one “not capable of a mathematically precise definition,” was adopted. Id. § 24, comment b. Under this approach causes of actions are the same if they arise from the same “transaction;” whether they are products of the same “transaction” is to be determined by “giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as unit conforms to the parties’ expectations or business understanding or usage.” Id. § 24.
See also, Hr‘g Tr. 43:13 to 94:7 (Aug. 18, 2015) (reciting an example of multiple claims under an indefinite delivery/indefinite quantity contract where a party had appealed most of the claims to the Armed Services Board of Contract Appeals, but the jurisdiction of this court had been properly invoked over one complex claim which happened to have 519 elements) (referring to Mansoor Int‘l Development Servs. v. United States, 121 Fed.Cl. 1 (2015)).(d) Consolidation. If 2 or more actions arising from one contract are filed in the United States Court of Federal Claims and one or more agency boards, for the convenience of the parties or witnesses or in the interest of justice, the United States Court of Federal Claims may order the consolidation of the actions in that court or transfer any actions to or among the agency boards involved.
41 U.S.C. § 7107(d) .