171 F.3d 460 (7th Cir. 1999), 98-1504, American Federation of Government Employees, Local 2119 v. Cohen

Docket Nº:98-1504.
Citation:171 F.3d 460
Party Name:AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL 2119, et al., Plaintiffs-Appellants, v. William S. COHEN, et al., Defendants-Appellees.
Case Date:March 18, 1999
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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171 F.3d 460 (7th Cir. 1999)


al., Plaintiffs-Appellants,


William S. COHEN, et al., Defendants-Appellees.

No. 98-1504.

United States Court of Appeals, Seventh Circuit

March 18, 1999

Argued Nov. 30, 1998.

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Mark D. Roth (Michael J. Schrier, Staff Counsel, on the briefs), American Federation of Government Employees, Washington, DC, David Cunningham, Winstein, Kavensky & Wallace, Rock Island, IL, Kevin M. Grile (argued), American Federation of Government Employees, Chicago, IL, for Plaintiffs-Appellants.

Anthony J. Steinmeyer (argued), William Kanter, Department of Justice, Civil Division, Appellate Section, Washington, DC, for Defendants-Appellees.

Before FLAUM, KANNE, and EVANS, Circuit Judges.

FLAUM, Circuit Judge.

Federal employees at a government owned arsenal and their union sued the Department of the Army ("Army") over its decisions to award two defense projects to private contractors. The employees claimed that the Army failed to comply with certain procurement and contracting statutes as well as the Arsenal Act, codified at 10 U.S.C. § 4532. Had the Army complied with these statutes, the plaintiffs maintained, the projects would have been performed at their government facility, thereby preserving federal job opportunities. The district court held that because employment interests were not within the "zone-of-interests" protected by the statutes at issue, the plaintiffs had failed to establish standing. The employees and their union now appeal that decision. While we agree with the district court that the plaintiffs do not have standing to challenge violations of the procurement and contracting statutes (10 U.S.C. § 2462 and 10 U.S.C. § 2304), we believe they have met the standing requirements with respect to the Arsenal Act, and may pursue their claim that it has been violated. We therefore reverse in part and remand.


Local 2119 of the American Federation of Government Employees ("AFGE") represents the civilian employees of the Rock Island Arsenal ("Rock Island"), one of the only remaining arsenals owned and operated by the U.S. Government. Rock Island produces half of the gun mounts for the Army's M1A2 Abrams Tank program ("M1A2"). Until recently, the other half was supplied by the Detroit Arsenal Tank Plant ("Detroit Arsenal"), a government owned facility operated by General Dynamics Land Systems ("General Dynamics"), a private defense contractor.

In 1995, pursuant to the Defense Base Realignment and Closure Act of 1990, 10 U.S.C. § 1687 ("BRAC"), Congress closed the Detroit Arsenal. Instead of transferring the excess tank mount work to Rock Island, the Army allowed General Dynamics to continue producing the mounts at a private facility. In 1996, the Army sought bids for the production for a new ultra-light howitzer, known as the VIPER. After canvassing its own facilities and finding no interest in producing the new weapon, 1 the Army decided to bid the project only to private contractors. Rock Island, which had developed a prototype VIPER, attempted to bid on the project through Lewis Machine & Tool Company ("Lewis"), a private contractor. Because the competition was open only to the private sector, the Army rejected Lewis' bid when

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Rock Island's participation in it was discovered.

Following these events, the Army ordered Rock Island to undertake certain layoffs. Before this reduction in force ("RIF") took effect on September 25, 1998, however, the AFGE and some of its members filed suit in federal court pursuant to the Administrative Procedure Act ("APA"). 5 U.S.C. § 702. 2

Although the plaintiffs did not directly challenge the RIF, they claimed that the Army failed to comply with relevant statutes in its decisions not to transfer the M1A2 tank mount work from the Detroit Arsenal to Rock Island and to bar Rock Island from bidding on the VIPER project. The first statute, known as the Arsenal Act, provides that Army supplies shall be "made in arsenals or factories owned by the United States" if it can be done "on an economical basis." 10 U.S.C. § 4532. According to the plaintiffs, this provision requires a cost analysis comparing in-house and private production costs before the Army can award work to a private contractor. The plaintiffs claim the Army failed to make this comparison prior to allowing General Dynamics to retain its portion of the M1A2 work and before deciding to limit bidding on the VIPER program to non-government entities. The plaintiffs also claimed that 10 U.S.C. § 2462, referred to by the parties as the "private procurement statute," mandates a similar cost comparison which the Army allegedly never undertook. That statute requires the Secretary of Defense to procure supplies and services from "a source in the private sector if such a source can provide [them] at a cost that is lower ... than the cost at which the [government] can provide [them]." 10 U.S.C. § 2462. Finally, the plaintiffs asserted that the Army violated 10 U.S.C. § 2304, known as the Competition in Contracting Act. That statute directs the heads of federal agencies contemplating the procurement of supplies or services to "obtain full and open competition through the use of competitive procedures ..." 10 U.S.C. § 2304(a)(1)(A). This, claimed the plaintiffs, necessarily implies that both the M1A2 and the VIPER work should have been bid to all qualified candidates including Rock Island.

The Army's failure to comply with any of these statutes, argued the plaintiffs, contributed to Rock Island's dwindling work load and led directly to the RIF. This in turn has caused, or threatens to cause, severe harm to the arsenal's employees through job loss, demotions, lower average pay, and fewer opportunities for advancement.

The government moved to dismiss the suit under Rule 12(b)(1) of the Federal Rules of Civil Procedure, for lack of standing to enforce the statutes at issue. After reviewing these provisions, the court determined that, together, they merely detailed "procedures for minimizing contract costs and ensuring that the government resources are put to efficient use when contracting for goods or downsizing." The court concluded that because "the purpose of these statutes is not to protect the tenure and working conditions of workers employed at government installations," the plaintiffs' interests were not within the "zone-of-interests" protected by the statutes and they therefore lacked standing. The court also suggested that to the extent the federal workers were attempting to enforce the rights of their employer, Rock Island, their alleged injuries were only derivative, and not sufficient to support standing. See J.F. Shea Co. v. City of Chicago, 992 F.2d 745 (7th Cir.1993). The court therefore granted the government's motion.

The plaintiffs now appeal, claiming that the court applied the zone-of-interest test too narrowly, particularly in light of the

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Supreme Court's subsequent statement of that test in National Credit Union Admin. v. First Nat'l Bank & Trust, 522 U.S. 479, 118 S.Ct. 927, 140 L.Ed.2d 1 (1998) ("NCUA").


We review de novo an order dismissing for lack of standing, see Family & Children's Center v. School City of Mishawaka, 13 F.3d 1052, 1057-58 (7th Cir.1994), accepting as true all material allegations of the complaint and construing the complaint in favor of the complaining party. Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975); see also Lujan v. National Wildlife Federation, 497 U.S. 871, 889, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990) (on a motion to dismiss, the court presumes that general factual allegations embrace those specific facts necessary to support the claim). In deciding on a motion to dismiss, this court considers whether relief would be possible under any set of facts that could be established consistent with the allegations in the complaint. Venture Associates Corp. v. Zenith Data Systems, 987 F.2d 429, 432 (7th Cir.1993). Obviously, if a plaintiff cannot establish standing to sue, relief from this court is not possible, and dismissal under 12(b)(1) is the appropriate disposition. Id.

Those seeking judicial review of administrative actions under the APA must show that they have been "adversely affected or aggrieved by agency action within the meaning of the relevant statute." 5 U.S.C. § 702. That entails the establishment of two standing requirements: an injury-in-fact and an interest falling within the "zone-of-interests" protected by the relevant statutes. Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970) ("Data Processing"). The first requirement is constitutional while the second is considered prudential. 3 Although the district court's dismissal relied solely on prudential grounds obviating the need to inquire into injury-in-fact, see National Federation of Federal Employees v. Cheney, 883 F.2d 1038, 1041 n. 8 ("NFFE"), because the constitutional limitation goes directly to this court's jurisdiction, we are free to examine it at any time. See Steel Co. v. Citizens for a Better Tomorrow, 523 U.S. 83, 118 S.Ct. 1003, 1016, 140 L.Ed.2d 210 (1998). The Army raises constitutional and prudential objections to the plaintiffs' standing, so we will examine both.

Initially, however, the Army separately challenges the standing of AFGE as a representative of the individual plaintiffs. Representational standing is appropriate where: a) an association's members would otherwise have standing to sue in their own right; b) the interests it seeks to protect are germane to the organization's purpose; and c) the participation of...

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