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LLC v. United States Small Business Administration

United States District Court, District Circuit

November 11, 2013

CS-360, LLC, Plaintiff,



Plaintiff CS-360, LLC ("CS-360" or "Plaintiff) brings this action against Defendant United States Small Business Administration ("Defendant" or "SBA") seeking a declaratory judgment setting aside or vacating the November 15, 2012 Order by the Office of Hearing Appeals of the United States Small Business Administration ("OHA") dismissing as untimely Plaintiffs appeal of the size determination conducted by the Small Business Administration. Presently before the Court are Defendant's [14] Motion for Summary Judgment and Plaintiffs [15] Cross-Motion for Judgment on the Record. Upon consideration of the parties' submissions, [1] the relevant legal authorities, and the record as a whole, the Court GRANTS Defendant's [14] Motion for Summary Judgment, and DENIES Plaintiffs [15] Cross-Motion for Judgment on the Record.


In November 2009, CS-360, LLC applied to the Department of Veterans Affairs ("VA") for certification as a Service Disabled Veteran Owned Small Business ("SDVOSB"). See CS-360, LLC v. U.S. Dep't of Veteran Affairs, 846 F.Supp.2d 171, 175 (D.D.C. 2012). The VA denied Plaintiffs application, and in January 2011, Plaintiff filed a lawsuit in this Court challenging the VA's denials as arbitrary and capricious. Id. at 183-84. On March 6, 2012, this Court remanded the issue to the VA for further consideration and explanation. Id. at 197. The Court's remand Order stated that "[w]here, as here, the district court cannot evaluate the challenged action on the basis of the record presented, and the agency may be able to cure any defects through further action, the proper course is to remand to the agency for additional investigation or explanation." Id. at 192. The Court further made clear that "[o]n remand, the VA shall have the discretion to reopen the administrative record, to engage in additional factfinding, to supplement its explanation, and to reach the same or a different ultimate conclusion." Id. In a subsequent Order, this Court clarified the extensive scope of this remand to the VA, explaining that although it "did not remand the case to Defendant so that the agency could require Plaintiff to re-apply per 38 CFR Part 74'" the Court's remand Order "unambiguously provided" Defendant the freedom "to request updated information relevant to Plaintiffs eligibility for inclusion in the VetBiz VIP database. In other words, Defendant may re-open the administrative record to collect evidence that speaks to current circumstances." AR SB A 0102. "Nothing in the Court's remand Order precludes Defendant from seeking such information." Id.

On July 19, 2012, pursuant to these Orders, the VA formally requested a small business size determination of CS-360 from the U.S. Small Business Administration (SBA). AR SBA 0105-0108. On September 25, 2012, SBA's Office of Government Contracting Area II issued its size determination finding Plaintiff to be other than small for any size standard below $16 million. AR SBA 0065-0078. Plaintiff received SBA's size determination on September 26, 2012. AR SBA 0035.

On October 26, 2012, Plaintiff filed an appeal of this size determination before SBA's Office of Hearings and Appeals ("OHA"). AR SBA 0032-0044. On November 1, 2012, OHA issued an Order to Show Cause as to why Plaintiffs appeal should not be dismissed as untimely under 13 C.F.R. § 134.304(a) because it was not filed within fifteen days after the date CS-360 received the size determination. AR SBA 0014. Appeals from SBA size determinations are governed by 13 C.F.R. § 134.304(a), which states that "[s]ize appeals must be filed within 15 calendar days after receipt of the formal size determination." Pursuant to 13 C.F.R. § 134.304(c), "[a]n untimely appeal will be dismissed." This regulation became effective on March 4, 2011 after opportunity for notice and comment. 76 Fed. Reg. 5680, 5685 (Feb. 2, 2011). Prior to March 4, 2011, SBA's regulations provided that "[i]f the appeal is from a size determination other than one in a pending procurement or pending Government property sale, then the appeal petition must be filed and served within 30 days after appellant receives the size determination." 13 C.F.R. § 134.304(a)(2) (2009) (amended 2011).

On November 8, 2012, Plaintiff filed a response to the OHA's Order to Show Cause, arguing that its appeal was timely because OHA should have applied the regulation in existence during the time period when Plaintiff submitted its application to the VA, which allowed thirty days to file an appeal. AR SBA 0007-0012. Plaintiff contended that applying the current regulation to its appeal would represent a retroactive application of this rule because Plaintiff submitted its application to the VA in 2009, before the regulation took effect. AR SBA 0007. Under Plaintiffs view, the request for the size determination, although made in 2012, was effectively a retroactive request to 2009-2010, because such a determination should have properly been made as part of Plaintiffs initial (and only) application to the VA. Id. Accordingly, Plaintiff contended, it should receive the benefit of the thirty day time limit for appeals in effect prior to 2011. Id.

On November 15, 2012, OHA issued an Order dismissing Plaintiffs Appeal Petition as untimely. AR SBA 0002-0005. The OHA decision concluded that despite Plaintiffs claims, application of the fifteen day time limit for appeals contained in 13 C.F.R. § 134.304(a)(2) would not represent the retroactive application of a regulation. Id. On this point, the Administrative Law Judge concluded:

While Appellant argues that VA should have referred this matter for a size determination in 2009 or 2010, the fact remains that the VA did not do so. The VA formally requested the size determination on July 19, 2012. The Area Office issued the size determination on September 25, 2012, and Appellant received it on September 26th. Therefore, in no way can the instant size determination be said to be a transaction that was completed or pending on March 4, 2011. All the actions concerning the size determination, from the VA's request for it to the Area Office's investigation to the issuance of the determination, took place in 2012, long after the March 4, 2011 effective date of the new OHA regulation on the commencement of size appeals. None of these actions took place prior to March 4, 2011, nor were any of them pending on March 4, 2011. Therefore the procedural regulations which became effective on March 4, 2011 apply to the instant appeal. Under those regulations, Appellant had fifteen days to file this appeal, a deadline it failed to meet.

AR SBA 0004. Subsequently, Plaintiff filed this suit, arguing that the OHA's decision to dismiss its appeal of the size determination as untimely was arbitrary, capricious, and contrary to law because it applied the current regulation to the size appeal instead of the regulation in effect during the 2009 time period. The parties have now filed cross-motions for summary judgment.


Under Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." However, "when a party seeks review of agency action under the APA [before a district court], the district judge sits as an appellate tribunal. The 'entire case' on review is a question of law." Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001). Accordingly, "the standard set forth in Rule 56[] does not apply because of the limited role of a court in reviewing the administrative record. . . . Summary judgment is [] the mechanism for deciding whether as a matter of law the agency action is supported by the administrative record and is otherwise consistent with the APA standard of review." Southeast Conference v. Vilsack, 684 F.Supp.2d 135, 142 (D.D.C. 2010).

A reviewing court can set aside agency action if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" or "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right, " or "without observance of procedure required by law." 5 U.S.C. §§ 706(2)(A), (C), (D). An agency's decision may be arbitrary or capricious if any of the following apply: (i) its explanation runs counter to the evidence before the agency or is so implausible that it could not be ascribed to a difference of view or the product of agency expertise; (ii) the agency entirely failed to consider an important aspect of the problem or issue; (iii) the agency relied on factors which Congress did not intend the agency to consider; or (iv) the decision otherwise constitutes a clear error of judgment. Motor Vehicle Mfrs. Ass 'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983); accord Jicarilla Apache Nation v. U.S. Dep't of Interior, 613 F.3d 1112, 1118 (D.C. Cir. 2010). This standard of review is highly deferential to the agency; a court need not find that the agency's decision is "the only reasonable one, or even that it is the result [the court] would have reached had the question arisen in the first instance in judicial proceedings." Am. Paper Inst, Inc. v. Am. Elec. Power Serv. Corp., 461 U.S. 402, 422, 103 S.Ct. 1921, 76 L.Ed.2d 22 (1983).

Plaintiff, as the party challenging the agency action, bears the burden of proof. Abington Crest Nursing & Rehab. Ctr. v. Sebelius, 575 F.3d 717, 722 (D.C. Cir. 2009) (citing City of Olmsted Falls v. Fed. Aviation Admin., 292 F.3d 261, 271 (D.C. Cir. 2002)). In assessing the merits of Plaintiffs challenge, the Court begins with the presumption that the Commission's actions were valid. Grid Radio v. Fed. Commc'ns Comm'n, 278 F.3d 1314, 1322 (D.C. Cir. 2002). So long as the agency decision has some rational basis, the Court is bound to uphold it. Hosp. of Univ. of Penn. v. Sebelius, 63 ...

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