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Novell, Inc. v. United States

July 26, 2000

NOVELL, INC., ET AL. PLAINTIFFS,
v.
UNITED STATES OF AMERICA, ET AL. DEFENDANTS.



The opinion of the court was delivered by: Emmet G. Sullivan United States District Judge

[13-1]

MEMORANDUM OPINION

I. Introduction

This action arises out of a solicitation by the Administrative Office of the United States Courts ("AOUSC") for a new electronic mail system for the federal judiciary. Plaintiffs Novell Inc. and Software Spectrum, Inc. ("plaintiffs") bring this action for a permanent injunction and declaratory judgment against the United States of America, the United States Attorney for the District of Columbia and the Director and Contracting Officer of the AOUSC ("defendants"), alleging that defendants improperly evaluated competing bids by plaintiffs and a competitor, Lotus Development Corporation and ASAP Software Express, Inc. ("Lotus"). Lotus, which was eventually awarded the contract, has joined this lawsuit as an intervenor-defendant. Defendants have filed a motion to dismiss, alleging that this Court has no subject matter jurisdiction to review a procurement decision of the AOUSC. Upon consideration of the motion to dismiss, the responses thereto, the arguments in open court at the July 7, 2000 hearing, and for the following reasons, defendants' motion to dismiss [13-1] is GRANTED.

II. Procedural Background

On May 24, 1999, the AOUSC issued a solicitation for proposals for a new e-mail software system and related training and technical support. See Complaint ¶20. Plaintiffs submitted a bid, as did intervenor-defendant Lotus. On December 22, 1999, defendants notified plaintiffs that the contract had been awarded to Lotus. See Defendant's Motion to Dismiss at 2. On February 8, 2000, plaintiffs filed suit in the Court of Federal Claims ("COFC"), alleging improprieties in the evaluation and subsequent award of the e-mail contract. The COFC dismissed the suit without prejudice on April 28, 2000, finding that it had no subject matter jurisdiction to hear the complaint under 28 U.S.C. §1491(b), the statute that extended jurisdiction for post-award bid protests to the Court of Federal Claims. Novell Inc. v. United States, 46 Fed. Cl. 601; 2000 U.S. Claims LEXIS 86. On June 13, 2000, plaintiffs filed this complaint in U.S. District Court for the District of Columbia, challenging the same procurement action under the Administrative Procedure Act, 5 U.S.C. §701 et seq. ("APA"). Defendants filed a motion to dismiss, which is joined by intervenor-defendant Lotus.

III. Government Motion To Dismiss

Defendants have filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), and they make a two-pronged argument for dismissal. First, defendants argue that the district courts' APA jurisdiction to review government bid protests was subsumed by the provisions of the 1996 Administrative Dispute Resolution Act ("ADRA"), codified at 28 U.S.C. §1491(b) ("Section 1491(b)"). Since the COFC has already ruled that the AOUSC is not an "agency" for purposes of Section 1491(b), defendants contend that the issue is settled in this case under the doctrine of res judicata. Alternately, if some independent APA jurisdiction for government bid protests survived the passage of ADRA, defendants argue that the AOUSC is exempt from such review under that statute's exclusion for the "courts."

Res Judicata

In 1996, Congress passed the Administrative Dispute Resolution Act ("ADRA"), Pub. L. No. 104-320, §12, 110 Stat. 3874-75 (1996). Prior to enactment of this statute, the COFC could hear challenges to ongoing procurements, however, any protest regarding an actual contract award had to be brought in district court under the APA. ADRA changed that by allowing the COFC to hear post-award as well as pre-award bid disputes pursuant to the new language of Section 1491(b). Section 1491(b) gave the two courts concurrent jurisdiction over such governmental bid protests, but provided that the district courts' authority to hear such cases would expire on January 1, 2001 unless Congress acted to extend it. At that time, the COFC would have exclusive jurisdiction over these bid protest cases. See Fed. Def.'s Mot. to Dismiss at 9.

Plaintiffs invoked Section 1491(b) when they brought their original challenge to the Lotus bid award in the Court of Federal Claims (COFC). However, the COFC dismissed that suit without prejudice on the grounds that there was no subject matter jurisdiction under 28 U.S.C. §1491(b). Specifically, the court held that the AOUSC was not an "agency" under this statute. See Novell, 46 Fed. Cl. 601, 614. Defendants contend that this holding is res judicata in this case because the jurisdictional parameters of the district court and COFC are identical under Section 1491(b).

The doctrine of res judicata "provides that when a final judgment has been entered on the merits of a case, '[i]t is a finality as to the claim or demand in controversy....'" Nevada v. United States, 463 U.S. 110, 129 (1983)(citing Cromwell v. County of Sac, 94 U.S. 351, 352 (1877)). This Circuit has held that res judicata applies to dismissal for lack of jurisdiction as well as other grounds. See Dozier v. Ford Motor Company, 702 F.2d 1189, 1191 (D.C. Cir. 1983). Although the earlier dismissal was in the COFC rather than another district court, this distinction should not matter if, as defendants contend, jurisdiction is coextensive under Section 1491(b).

Plaintiffs appear not to dispute that res judicata would apply if, as defendants contend, the district courts and the COFC exercise identical jurisdiction over government bid protests. However, plaintiffs contend that jurisdiction is not identical in both courts. Rather, plaintiffs argue that district courts have distinct, pre-existing jurisdiction under the so-called Scanwell doctrine. This term is a reference to Scanwell Laboratories Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970), in which the D.C. Circuit upheld judicial review of procurement awards under the APA. Plaintiffs argue that Section 1491(b) did not displace this pre-existing jurisdictional authority, although ADRA does mean that the Scanwell jurisdiction will expire in 2001 unless there is further Congressional action to retain it. *fn1 Plaintiffs have alleged APA jurisdiction for this action, while Section 1491(b) was the basis for jurisdiction pled in the earlier lawsuit before the COFC.

Unfortunately for plaintiffs, however, this Court agrees with defendants that there no longer is such an independent, APA-based jurisdiction for the district courts in government bid protest cases; rather, Congress effectively subsumed APA jurisdiction of the district courts into the more specific jurisdictional language of ADRA. See Fed. Def.'s Mot. to Dismiss at 6-7. The statute authorizes jurisdiction for both courts without making any distinction between the two courts. *fn2 See 28 U.S.C. §1491(b). The law also specifies that both courts shall review agency actions under the "arbitrary and capricious" standard of the APA. See 28 U.S.C. §1491(b)(4) (stating that courts shall review actions under the law pursuant to "the standards set forth in section 706 of title 5.") The selection of the APA standard of review adds credence to the argument that lawmakers believed they were codifying the Scanwell jurisdiction with the enactment of Section 1491(b). *fn3 More importantly, and as plaintiffs concede, the 1996 statute includes a sunset provision that will terminate district court jurisdiction over bid protest actions as of 2001. See Pub. L. No. 104-320, ยง12(d), 110 Stat. at 3875. Since the sunset provision terminates actions under Section 1491(b)(1) and makes no mention of terminating Scanwell jurisdiction, it would defeat the purpose of the sunset ...


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