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ALASKA AIRLINES v. AUSTIN

August 11, 1992

ALASKA AIRLINES, et al, Plaintiffs,
v.
RICHARD AUSTIN, et al, Defendants.



The opinion of the court was delivered by: STANLEY SPORKIN

MEMORANDUM OPINION

 INTRODUCTION

 Plaintiffs in this case are airlines that provide domestic air transportation services to United States government personnel. The defendants are the General Services Administration (GSA), which audits the government's air transportation bills and the United States of America. The case arises out of a dispute over the legality of the post-payment audits of airline transportation bills that the General Services Administration conducts. The plaintiffs contend that as a result of these audits, the government is recouping alleged overcharges from them in violation of the law. The General Services Administration maintains that the audits are conducted in accordance with applicable legal standards and that the claims for overcharges are justified. Plaintiffs are seeking an injunction as well as return of the funds they claim have been illegally taken from them.

 Plaintiffs originally raised their dispute before the Comptroller General as they are legally entitled to do. See 31 U.S.C. § 3726(g)(1); 41 C.F.R. § 101-41.701. The Comptroller General issued an opinion on September 10, 1990 in which he stated that

 if GSA seeks to apply a fare other than that shown on the ticket, it must first establish that the other fare was requested by the government or that the government was contractually entitled to that fare.

 Decision of the Comptroller General, In re Alaska Airlines, Inc. et al, 4 (September 1, 190). GAO found that GSA had the legal authority to offset overcharges against current transportation bills. However, GSA could not issue a notice of overcharge unless it could show the traveler had asked for another price or was entitled to another price under a contract. At the request of the General Services Administration, the Comptroller General reviewed his earlier decision and issued another opinion on September 23, 1991, confirming his original position. In between the first and the second opinions from the Comptroller General plaintiffs filed suit in this court seeking injunctive relief from GSA's current post-payment audit procedures and a return of the funds they claim have been assessed against them unlawfully.

 Plaintiffs have included fourteen counts in their complaint, ten of which are requests for return of alleged overcharges taken from each of the plaintiff airlines. The other four seek

 (1) an injunction requiring GSA to abide by the Comptroller General's decisions;

 (2) an injunction prohibiting GSA from continuing to violate the Administrative Procedure Act with its current audit practices which allegedly have resulted in duplicative assessments for overcharges, assessments against the wrong airline and assessments for tickets bought by government employees for personal use;

 (3) an injunction requiring GSA to implement procedures for providing an explanation and an opportunity for protest when it does deduct overcharges from its current transportation bills; and

 (4) a preliminary injunction prohibiting offsets for overcharges during the pendency of the case.

 The parties entered into a stipulation that the Court ordered into effect on May 15, 1991. The parties agreed to dismiss count three, the claim regarding procedures for explaining deductions of overcharges. The defendants also agreed to conduct pre- and post-payment audits in accordance with the Comptroller General's decision until the Court resolved the case. This stipulation gave the plaintiffs comfort during the pendency of the case, therefore, they were willing to defer a motion for a preliminary injunction. The Court is now left to resolve counts one and two, both of which request a permanent injunction, and the ten counts for monies plaintiffs claim have been improperly withheld.

 II. JURISDICTION

 The Court construes this case as raising a question about the propriety of the government's post-payment transportation audit procedures for airlines. The plaintiffs seek an injunction to stop what they claim are the unauthorized practices now in use and an order returning funds that have been taken from them as a result of these practices. As such, this case presents a straightforward federal question: is the government auditing its airline transportation bills in accordance with applicable laws and regulations? Nevertheless, this Court's jurisdiction to hear this matter has been a subject of dispute between the parties. The government filed a motion to transfer the case to the Claims Court or, in the alternative, to dismiss the case for lack of jurisdiction. The government argues three points. First, the government claims that because the claims for return of funds made in counts five through fourteen of the complaint total well in excess of ten thousand dollars, jurisdiction lies in the Claims Court under the Tucker Act, 28 U.S.C. § 1491(a)(1), and not in the District Court under the Little Tucker Act, 28 U.S.C. § 1346(a)(2). Second, the government argues that because all of the claims plaintiffs raise are founded upon contracts, exclusive jurisdiction lies in the Claims Court under the Tucker Act. Specifically, the government argues that the source of the rights that are at issue in this case are the city-pair contracts and Scheduled Airlines Ticket Office (SATO) contracts that the plaintiffs have with the government. Third, the government argues that to the extent the plaintiffs' claims are grounded in the Administrative Procedure Act (APA), there is no subject matter jurisdiction because the APA cannot be an independent basis for jurisdiction. Contrary to what the government argues, this Court does have jurisdiction over this action under the federal question statute, 28 U.S.C. § 1331, and the Little Tucker Act.

 The main thrust of the government's jurisdictional challenge is aimed at the contractual nature of plaintiffs' claims. The Tucker Act grants jurisdiction to the United States Claims Court over "any claim against the United States . . . for liquidated or unliquidated damages in cases not sounding in tort." 28 U.S.C. § 1491(a)(1). The Little Tucker Act grants concurrent jurisdiction to the United States District Courts over "any . . . civil action or claim against the United States, not exceeding $ 10,000 in amount. . . ." 28 U.S.C. § 1346(a)(2). In counts five through fourteen the plaintiffs are seeking the return of approximately $ 100 million, clearly an amount in excess of $ 10,000, for overcharges they claim were illegally taken from them. However, that amount represents the accumulation of disputes over alleged overcharges on thousands of individual tickets. The plaintiffs' claims are based on their contracts with the defendants to provide air travel for individual government travelers, i.e. the tickets they sold. Each contested overcharge is based on a single ticket and is for less than $ 10,000. Therefore, under the Little Tucker Act, jurisdiction properly lies with this Court and not the United States Claims Court. The same conclusion has already been reached in another case concerning claims for wrongful offsets for unused tickets. See American Airlines, Inc., et al v. Austin, 778 F. Supp. 72 (D.D.C. 1991). For purposes of analyzing jurisdiction this case is no different. See also United States v. Louisville & Nashville R. Co., 221 F.2d 698, 701-702 (6th Cir. 1955); Jones Motor Co., Inc. v. Teledyne, Inc., 690 F. Supp. 310 (D.Del. 1988). As the court noted in Jones, different evidence will be needed to decide each claim for each individual ticket. Hence, each claim is considered separately for purposes of determining jurisdiction, and the Little Tucker Act, granting jurisdiction to this Court, applies.

 Second, the claims raised in counts one and two are not primarily contractual in nature and therefore fall outside the ambit of the Tucker Act. See Ingersoll-Rand Co. v. United States, 250 U.S. App. D.C. 412, 780 F.2d 74 (D.C. Cir. 1985); Megapulse, Inc. v. Lewis, 217 U.S. App. D.C. 397, 672 F.2d 959 (D.C.Cir. 1982). The dispute is over the government's methodology for determining overcharges -- primarily on controlled capacity fares -- not the awarding of specific contracts or payment under them. Unlike Ingersoll-Rand, the plaintiffs are not frustrated bidders. Their complaint cannot be resolved by reference to the terms of any contract or any law about contract bidding. Like Megapulse, which concerned the Trade Secrets Act, plaintiffs are pointing to a statute that creates legal obligations regardless of whether the plaintiffs have bid on a contract, formed a contract, or been terminated from a contract. The airlines are subject to audit because they have billed the government for services. They are audited whether or not those services were provided under a contract. Counts one and two address the proper standards and methodology to be used in the audits when determining whether the airlines have overcharged the government. This Court must look primarily to the governing statutes and cases to resolve this dispute. Although the government has pointed to the city-pairs contracts it has made with the airlines to substantiate its position as to what the standards should be, the Court determines jurisdiction based on the allegations of the complaint, not the defenses raised.

 As our court of appeals has said, "A court will not find that a particular claim is one contractually based merely because resolution of that claim requires some reference to a contract." Spectrum Leasing Corp. v. United States, 246 U.S. App. D.C. 258, 764 F.2d 891, 893 (D.C. Cir. 1985). To the extent that the plaintiffs' claims are related to the individual contracts that each of the tickets represents, contract issues are still not at the heart of the dispute. This suit is not one for specific performance of ticket contracts as defendants characterize it. Therefore, this Court does have jurisdiction over the claims raised in counts one and two of the complaint because they are not fundamentally contract claims.

 Also telling is the contrast with the facts in Eagle-Picher Industries v. U.S., 901 F.2d 1530 (10th Cir. 1990). At its core, Eagle-Picher was about competition between private companies to get a contract for government business. In this case all the private companies have the same interest in the outcome. The plaintiffs are not scrambling to get business or even advantageous contract terms from the government nor are they parties to a single contract with the government. They are complaining about procedures currently in use that affect all of them similarly because they all bill the government for transportation services, and they all make services available in the same way. They are seeking changes in those procedures to bring them in accordance with the law. Accordingly, the plaintiffs' claims are not essentially contract claims, and they are properly the subject of this Court's jurisdiction.

 III. SUMMARY JUDGMENT

 Plaintiffs have filed two motions, one for summary judgment on count one, seeking an injunction enforcing the decisions of the Comptroller General, and one for summary judgment on count two, seeking an injunction preventing further violations of the Administrative Procedure Act. The defendants have filed a cross-motion for summary judgment on count one. As noted above, the parties have agreed to dismiss count three. Count four, the request for a preliminary injunction, is now moot because the Court is prepared to give a final ruling on the claims for a permanent injunction. In order to understand the transactions that are at issue and the positions of the parties, the Court held three days of hearings. Based on the testimony presented and the declarations submitted by the parties, the Court believes that it now has the requisite understanding to decide the motion for summary judgment on count one. ...


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