Alf v. Donley

• Decision Date: 29 October 2009
• Docket Number: Civil Action No. 09-0802 (RMU).
• Citation: 666 F.Supp.2d 60
• Parties: Christopher J. ALF, Plaintiff, v. Michael B. DONLEY et al., Defendants.
• Court: U.S. District Court — District of Columbia

666 F.Supp.2d 60

Christopher J. ALF, Plaintiff, v. Michael B. DONLEY et al., Defendants.

Civil Action No. 09-0802 (RMU).

United States District Court, District of Columbia.

October 29, 2009.

COPYRIGHT MATERIAL OMITTED

Warren Jay Devecchio, Jenner & Block LLP, Washington, DC, for Plaintiff.

Jennifer Zachary, Laurie J. Weinstein, D.C., U.S. Attorney's Office, Washington, DC, for Defendants.

MEMORANDUM OPINION

GRANTING THE PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION

RICARDO M. URBINA, District Judge.

I. INTRODUCTION

This matter is before the court on the plaintiff's motion for a preliminary injunction. The plaintiff is the former CEO of National Air Cargo, Inc. ("NAC"), a transportation business that contracted with the Department of Defense ("DOD") to coordinate the delivery of military equipment, commercial goods, medical supplies and other freight for the Air Force. As a result of the events discussed below, the Air Force debarred the plaintiff from doing business with the government in July 2008. In response, the plaintiff brought suit claiming that his debarment violated the Administrative Procedure Act, 5 U.S.C. §§ 701 et seq. In addition, the plaintiff filed a motion for a preliminary injunction enjoining his debarment. Because the plaintiff has satisfied the criteria necessary for the issuance of a preliminary injunction, the court grants the plaintiff's motion.

II. FACTUAL & PROCEDURAL BACKGROUND

The plaintiff is the founder and former CEO of NAC, "a `freight forwarder' that relies on a network of shippers, including air carriers and trucking companies, to deliver goods on its behalf." Pl.'s Mot. at 2. As of May 2008, approximately ninety percent of NAC's shipments were made on behalf of government clients. Id. at 43. In 1997, NAC entered into a contract with the DOD to provide freight forwarding services for the DOD. Id. at 2-3; Defs.' Opp'n at 2.

In 2005, an NAC employee filed a qui tam complaint alleging that NAC had violated the False Claims Act, 31 U.S.C. §§ 3729 et seq., by submitting inflated invoices to the DOD. Defs.' Opp'n at 3. The DOD conducted an investigation into NAC's shipping and billing practices and "uncovered considerable evidence of improper conduct" at NAC. Id. at 3-4. NAC ultimately pleaded guilty to a one-count Information charging NAC with knowingly and willfully making a material false statement to the DOD.¹ Id. Contemporaneously, NAC reached a global settlement of the qui tam suit in which it denied any wrongdoing aside from the false statement underlying the plea agreement. Id. at 5.

Following the guilty plea and civil settlement, the Air Force proposed that NAC, the plaintiff and four other NAC employees be debarred on May 21, 2008, pursuant to the Federal Acquisition Regulations ("FAR"), which govern the debarment of federal contractors. Pl.'s Mot. at 3; Defs.' Opp'n at 5. The Air Force ultimately chose not to debar NAC, but debarred the plaintiff on July 30, 2008. Pl.'s Mot. at 3; Defs.' Opp'n at 5-6. The initial notice of debarment ("the Initial Decision") imposed a period of debarment of ten years. Pl.'s Mot., Ex. 2 ("Initial Decision"). In February 2009, the plaintiff administratively appealed the Initial Decision. Pl.'s Mot. at 3-4; Defs.' Opp'n at 7. On April 17, 2009, the Air Force issued a letter ("the Amended Decision") upholding the plaintiff's debarment, but reducing the period of debarment from ten years to three years. See Pl.'s Mot., Ex. 6 ("Am. Decision").² Following the issuance of the Amended Decision, the plaintiff commenced this action and filed the instant motion. See generally Pl.'s Mot. The defendants opposed the motion on May 15, 2009, see generally Defs.' Opp'n, and filed the Administrative Record on May 19, 2009, see Notice (May 19, 2009).³ The plaintiff filed a reply in support of his motion on May 22, 2009, see generally Pl.'s Reply, and with the plaintiff's consent, the defendants filed a surreply on June 8, 2009, see generally Defs.' Sur-Reply. The court turns now to the applicable legal standards and the parties' arguments.

III. ANALYSIS

A. Legal Standard for Injunctive Relief

This court may issue interim injunctive relief only when the movant demonstrates "[1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest." Winter v. Natural Res. Def. Council, Inc., ___ U.S. ___, 129 S.Ct. 365, 374, 172 L.Ed.2d 249 (2008) (citing Munaf v. Geren, ___ U.S. ___, 128 S.Ct. 2207, 2218-19, 171 L.Ed.2d 1 (2008)). It is particularly important for the movant to demonstrate a likelihood of success on the merits. Cf. Benten v. Kessler, 505 U.S. 1084, 1085, 112 S.Ct. 2929, 120 L.Ed.2d 926 (1992) (per curiam). Indeed, absent a "substantial indication" of likely success on the merits, "there would be no justification for the court's intrusion into the ordinary processes of administration and judicial review." Am. Bankers Ass'n v. Nat'l Credit Union Admin., 38 F.Supp.2d 114, 140 (D.D.C.1999) (internal quotation omitted).

The other critical factor in the injunctive relief analysis is irreparable injury. A movant must "demonstrate that irreparable injury is likely in the absence of an injunction." Winter, 129 S.Ct. at 375 (citing Los Angeles v. Lyons, 461 U.S. 95, 103, 103 S.Ct. 1660, 75 L.Ed.2d 675 (1983)). Indeed, if a party fails to make a sufficient showing of irreparable injury, the court may deny the motion for injunctive relief without considering the other factors. CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 747 (D.C.Cir.1995). Provided the plaintiff demonstrates a likelihood of success on the merits and of irreparable injury, the court "must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief." Amoco Prod. Co. v. Gambell, 480 U.S. 531, 542, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987). Finally, "courts of equity should pay particular regard for the public consequences in employing the extraordinary remedy of injunction." Weinberger v. Romero-Barcelo, 456 U.S. 305, 312, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982).

As an extraordinary remedy, courts should grant such relief sparingly. Mazurek v. Armstrong, 520 U.S. 968, 972, 117 S.Ct. 1865, 138 L.Ed.2d 162 (1997). The Supreme Court has observed "that a preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion." Id. Therefore, although the trial court has the discretion to issue or deny a preliminary injunction, it is not a form of relief granted lightly. In addition, any injunction that the court issues must be carefully circumscribed and "tailored to remedy the harm shown." Nat'l Treasury Employees Union v. Yeutter, 918 F.2d 968, 977 (D.C. Cir.1990).

B. The Plaintiff Is Entitled to Injunctive Relief

1. Likelihood of Success on the Merits

The APA entitles "a person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action ... to judicial review thereof." 5 U.S.C. § 702. Under the APA, a reviewing court must set aside an agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." Id. § 706; Tourus Records, Inc. v. Drug Enforcement Admin., 259 F.3d 731, 736 (D.C.Cir.2001). Courts have interpreted this requirement to mean that the decision must be upheld unless it was not supported by substantial evidence. See, e.g., Kisser v. Cisneros, 14 F.3d 615, 619 (D.C.Cir.1994). In making this inquiry, the reviewing court "must consider whether the [agency's] decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Marsh v. Or. Natural Res. Council, 490 U.S. 360, 378, 109 S.Ct. 1851, 104 L.Ed.2d 377 (1989) (internal quotations omitted). At a minimum, the agency must have considered relevant data and articulated an explanation establishing a "rational connection between the facts found and the choice made." Bowen v. Am. Hosp. Ass'n, 476 U.S. 610, 626, 106 S.Ct. 2101, 90 L.Ed.2d 584 (1986); Tourus Records, 259 F.3d at 736.

As explained in the Initial and Amended Decisions, the plaintiff's debarment was based on two rationales. First, the plaintiff "was debarred because his conduct as NAC's CEO and sole shareholder was of so serious or compelling a nature as to affect his present responsibility to be a Government contractor or subcontractor pursuant to FAR 9.406-2(c)." Am. Decision at 7. Second, the debarring official concluded that "[a] separate and independent basis for [the plaintiff's] debarment rest[ed] on the imputation of NAC's criminal, fraudulent, and seriously improper conduct to [the plaintiff]" under FAR 9.406-5(b). Id. For the reasons discussed below, the court concludes that there is a likelihood that each of these rationales was flawed.

a. Present Responsibility

The debarring official's first rationale for the plaintiff's debarment was that the plaintiff's "conduct ... was of so serious or compelling a nature as to affect his present responsibility to be a Government contractor or subcontractor pursuant to FAR 9.406-2(c)." Am. Decision at 7. In support of this conclusion, the debarring official explained that "[a]t a minimum, as NAC's CEO and sole-shareholder, [the plaintiff] failed to establish managerial, oversight and compliance capabilities such that unethical behavior either was not caught or was permitted." Id. More specifically, the debarring official determined that NAC engaged in a scheme to defraud the government by delivering freight late but billing the DOD as though the deliveries had been made on time. Id. at 1-2. To support this determination in the Initial Decision, the debarring official stated that the DOD conducted a "review of NAC records...