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Gerber Products Co. v. Vilsack

United States District Court, District of Columbia

September 9, 2016

Gerber Products Company, d/b/a Nestlé Infant Nutrition, Plaintiff,
v.
Tom Vilsack, in his official capacity as Secretary, United States Department of Agriculture, et al., Defendants.

          MEMORANDUM OPINION

          Amit P. Mehta United States District Judge

         I. INTRODUCTION

         This matter is before the court on Plaintiff Gerber Products Company's Amended Motion for a Temporary Restraining Order. Plaintiff asks the court to enjoin officials of the Commonwealth of Virginia from issuing a notice that would announce Virginia's intent to award a new contract under the Women, Infants, and Children infant formula rebate procurement program. This “notice of intent” to award a contract is presently scheduled on September 12, 2016, at 8:00 a.m. Plaintiff also seeks an order placing the parties back to what it contends is the status quo ante-i.e., the time before Virginia rescinded a March 2016 notice announcing the state's original intent to award the contract to Plaintiff.

         Upon consideration of Plaintiff's Amended Motion, the pleadings, the oral representations of counsel, and the evidence submitted, the court denies Plaintiff's Motion for a Temporary Restraining Order. Plaintiff has failed to demonstrate a substantial likelihood of success on the merits. Specifically, Plaintiff has not established that the court has personal jurisdiction with respect to the Virginia state officials they have sued; nor has it shown that the court has subject matter jurisdiction under Ex parte Young, 209 U.S. 123 (1908), to hear their claims against those state defendants. Furthermore, because an order directed against only the federal defendants could not provide Plaintiff with its desired relief, the court concludes that Plaintiff at this juncture lacks standing to pursue its claims against the federal defendants.

         II. BACKGROUND

         A. Factual Background

         The Child Nutrition Act of 1966 requires states to provide low-cost infant formula to women, infants, and young children from low-income families. See 42 U.S.C. § 1786; see also Fed. Defs.' Opp'n to Pl.'s Mot. for TRO [hereinafter Fed. Defs.' Opp'n], Ex. 1, Decl. of Sarah Widor, ECF No. 15-1 [hereinafter Widor Decl.], ¶ 7. Accordingly, the U.S. Department of Agriculture (“USDA”), through the Food and Nutrition Service, runs the Women, Infants, and Children (“WIC”) program. Pl.'s Am. Mot. for TRO, ECF No. 7, Am. Mem. of P. & A. in Support of Pl.'s Am. Mot. for TRO, ECF No. 7-1 [hereinafter Pl.'s Am. Mot.], at 8. WIC provides grants to state and local agencies, which then administer the program on the local level. Id. State agencies that receive federal WIC grants are required to, in a way that “maximizes full and open competition, ” solicit bids from infant formula manufacturers for a contract to supply and provide a rebate on formulas. 7 C.F.R. § 246.16a(b)(1) (2011). The state agency is required to award the contract to the bidder that offers “the lowest total monthly net price for infant formula or the highest monthly rebate” for a standardized number of units of formula. 7 C.F.R. § 246.16a(c)(5). The company that wins the contract provides infant formula to the state agency and that formula is distributed to low-income families.

         On February 8, 2016, the Virginia Department of Health (“VDH”) requested bids for a contract to provide, and supply a rebate on, infant formula to be distributed to families through the Virginia WIC program. Pl.'s Am. Mot. at 9. About six weeks later, on March 24, 2016, VDH issued a “Notice of Intent to Award” the contract to Plaintiff. Compl., ECF No. 1, Ex. 2, Notice of Intent to Award, ECF No. 1-10. A few days later, on April 1, 2016, the Notice of Intent to Award to Plaintiff was posted publicly on a state-run website. Id. ¶ 50. On April 4, 2016, Abbott- a competitor of Plaintiff-filed a protest with VDH challenging the decision to award the contract to Plaintiff, arguing that VDH had used an incomplete and incorrect calculation to determine which company's price was lower. Widor Decl. ¶ 14.

         In the following days, Virginia officials communicated with USDA officials about Abbott's challenge (the “USDA-VDH emails”). See generally Compl., Ex. 1, Email Correspondence between USDA and VDH, ECF No. 1-9 [hereinafter USDA-VDH Emails]. The USDA officials “provided technical assistance, ” “shared regulatory language, ” and participated in a phone call to discuss the relevant regulatory requirements. Widor Decl. ¶ 15. One USDA official emailed the Virginia officials links of relevant regulations as well as the language of the preamble to those regulations, describing them as “the background for [the Food and Nutrition Services'] interpretation” of how to calculate the cost of a prospective infant formula contract. See USDA-VDH Emails, at 7-9. Following these communications, on April 11, 2016, VDH reopened the bidding for the infant formula contract “due to missing data” and informed Plaintiff of its decision. Id. at 12-14; see also Compl., Ex. 3, Notice of Cancellation of Intent to Award, ECF No. 1-11. Plaintiff challenged VDH's decision soon thereafter. Compl., Ex. 4, Notice of Protest and Cease and Desist, ECF No. 1-12; see also Compl., Ex. 5, Gerber Protest to VDH (Apr. 20, 2016), ECF No. 1-13.

         B. Procedural Background

         On May 2, 2016, VDH rejected Plaintiff's protest on the grounds that Plaintiff had not challenged an “award” but rather a decision not to award a contract. See generally Compl., Ex. 8, Contracting Officer Final Decision (May 2, 2016), ECF No. 1-16. VDH also asserted that it had cancelled the procurement to fix errors in the method of calculation, rather than to avoid providing the contract to Plaintiff. Id. at 3. A week later, Plaintiff filed a supplemental protest with VDH, id., Ex. 10, Gerber Supplemental Protest, ECF No. 1-18, which was denied on June 10, 2016, id., Ex. 11, Contracting Officer Final Decision (June 10, 2016), ECF No. 1-19.

         Contemporaneously, Plaintiff filed suit in the state Circuit Court in Richmond, Virginia, challenging VDH's denial of Plaintiff's protest. Pl.'s Am. Mot. at 20. On July 7, 2016, the Circuit Court ruled in favor of Virginia, finding that, under Virginia law, Plaintiff could not challenge the decision to rescind the contract award (as opposed to challenging the award of a contract itself, which would be a cognizable claim). See Fed. Defs.' Opp'n, Ex. 2, Circuit Court of the City of Richmond Decision, ECF No. 15-2.

         On August 1, 2016, VDH re-solicited bids for the contract, asking that all bids be submitted by August 31, 2016. Compl. ¶ 104. Plaintiff requested that VDH delay the due date pending judicial review, and VDH agreed not to issue a notice of intent to award until September 12, 2016. Plaintiff brought an action in this court on August 19, 2016, against both USDA officials (“Federal Defendants”)[1] and Virginia state officials (“Virginia Defendants”).[2] See generally Compl.; see also generally Mot. for TRO, ECF No. 3. Plaintiff requested a Temporary Restraining Order that, among other things, enjoins the issuance of a new intent to award and reinstates the notice of contract award to Plaintiff. See generally Compl.; see also generally Mot. for TRO. One week later, on August 26, 2016, Plaintiff amended its request for a TRO. See generally Pl.'s Am. Mot. As the basis for its request for a TRO, Plaintiff argues that the USDA-VDH emails show that USDA unlawfully compelled VDH to reopen the bidding. Pl.'s Am. Mot. at 25.

         III. ...


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