America CARGO Transp. INC. v. USA

• Decision Date: 05 November 2010
• Docket Number: No. 08-35010,08-35276.,08-35010
• Citation: 625 F.3d 1176
• Parties: AMERICA CARGO TRANSPORT, INC., a Corporation, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. America Cargo Transport, Inc., a Corporation, Plaintiff-Appellant, v. United States of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

625 F.3d 1176

AMERICA CARGO TRANSPORT, INC., a Corporation, Plaintiff-Appellant,

v.UNITED STATES of America, Defendant-Appellee.

America Cargo Transport, Inc., a Corporation, Plaintiff-Appellant,

v.United States of America, Defendant-Appellee.

Nos. 08-35010, 08-35276.

United States Court of Appeals,Ninth Circuit.

Argued and Submitted Sept. 1, 2010.

Filed Nov. 5, 2010.

Timothy R. Lord and Vickey L. Quinn, San Francisco, CA, for the plaintiff-appellant.

Brian Kipnis and Thomas Merton Woods, Assistant United States Attorneys, Seattle, WA, for the defendant-appellee.

Appeal from the United States District Court for the Western District of Washington, James L. Robart, District Judge, Presiding. D.C. Nos. CV-05-00393-JLR, 2:05-cv-00393-JLR.

Before: MICHAEL DALY HAWKINS and M. MARGARET McKEOWN, Circuit Judges, and THOMAS J. WHELAN, Senior District Judge. ^*

OPINION

McKEOWN, Circuit Judge:

This appeal centers around federal cargo shipping preferences related to the United States government's Food for Peace program. Specifically, we consider whether the government's changed position with respect to the administrative process governing international food aid shipments moots this appeal and whether the government is nonetheless subject to money damages for failing to comply with those requirements.

Background

America Cargo Transport, Inc. (“ACT”) filed suit against the United States government, naming the Department of State Agency for International Development (“USAID”) and the Department of Transportation Maritime Administration (“MARAD”) as defendants. ¹ ACT's amended complaint alleges a violation of federal cargo preference laws and requests injunctive and declaratory relief as well as damages for unjust enrichment. ACT also moved for attorney's fees and costs under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412.

Under Title II of the Food for Peace program, 7 U.S.C. § 1721, Congress authorized USAID to distribute food aid worldwide to countries in need and to “promote economic and community development.” Id. Shipping food overseas is not a simple matter from a regulatory point of view, as the process implicates multiple agricultural, shipping, and other laws and regulations.

To transport food to foreign countries, USAID works with organizations that receive bids directly from cargo carriers that transport the food shipments. See id. § 1722. The Cargo Preference Act of 1954 (“CPA”), 46 U.S.C. § 55305(b), provides that USAID must take steps to ensure that fifty percent of the gross tonnage of commodities under Title II are transported on U.S.-flag vessels “to the extent those vessels are available at fair and reasonable rates.” Id. Where agricultural commodities, like the vegetable oil at issue here, are involved, the Food Security Act (“FSA”) requires an additional twenty-five percent of the gross tonnage be shipped on U.S.-flag vessels, see 46 U.S.C. § 55314(a)(1), raising the minimum to seventy-five percent. The cargo preference regulation relevant to this case provides that “each full shipload of cargo” must be shipped on a U.S.-flag vessel, unless MARAD agrees with USAID that (a) such “vessels are not available at fair and reasonable rates,” or (b) there is a “substantially valid reason” for using a foreign-flag vessel. 46 C.F.R. § 381.5.

In February 2005, two freight forwarders for eligible organizations issued solicitations for ocean transportation of Title II food aid-specifically, 5,660 metric tons of vegetable oil-from Texas to multiple port destinations in India. These solicitations provided that the “lowest responsive offeror meeting the mandatory requirements of the solicitations” would receive the bid. Maersk Sea-Land (“Maersk”) offered to transport a portion of the vegetable oil for $125 per metric ton, and ACT offered to transport the full shipload for $520 per metric ton. Both offers were Priority 1 (“P1”) bids, or bids for transport on U.S.-flag vessels. USAID recommended that the organizations award the contract for the partial shipment to Maersk. USAID recommended awarding the remainder of the vegetable oil shipment to Priority 2 and 3 bids-those involving either partial or full shipment on a foreign-flag vessel-because ACT had not offered to transport less than a full shipload and there were no other offers on P1 vessels.

ACT claims that the vessel offered by Maersk was not actually a P1 vessel (i.e., not a U.S.-flag vessel), and that if USAID had sought MARAD's concurrence, as USAID was required to do under 46 C.F.R. § 381.5, it would have discovered that fact and recommended acceptance of ACT's bid. Under USAID's interpretation of § 381.5, the agency was not required to seek MARAD's concurrence. MARAD viewed the process differently, claiming that USAID needed MARAD's concurrence because ACT offered to carry a full shipload of cargo.

In April 2006, in the midst of ongoing discovery disputes, and upon a joint stipulation of the parties, the district court stayed the proceedings to allow the Department of Justice to reconcile this conflict between the federal agencies and to determine the government's litigation position going forward. The court extended the stay through October 2006, but the stay expired prior to a resolution of the dispute between USAID and MARAD. Nonetheless, almost a year later, in its motion for summary judgment, the government advised the district court that the dispute between USAID and MARAD had been resolved in favor of MARAD, which took the same position as ACT. The government stated that “MARAD's concurrence is required prior to accepting an offer to carry less than a full shipload of cargo, if a shipping company has offered to carry a full shipload of cargo on a P1 vessel, and that offer is responsive and otherwise meets the agency's needs.” In short, the Government “do[es] not dispute that USAID was required by 46 C.F.R. § 381.5 to recommend that the ACT offer be accepted.”

The district court granted the government's motion for summary judgment, finding ACT's § 381.5 claims for injunctive and declaratory relief moot because “the Government ... adopted ACT's position that USAID was required to seek a concurrence from MARAD before making a recommendation about the cargo and has conceded that doing so would have led to ACT being awarded the bid.” The district court also dismissed ACT's claims for unjust enrichment and money damages, concluding that the government had not waived its sovereign immunity under the Suits in Admiralty Act (“SAA”), 46 U.S.C. § 30903. Finally, the district court denied ACT's motion for attorney's fees and costs under EAJA.

Analysis

I. Mootness of Claims Under 46 C.F.R. § 381.5

[1] We first consider whether this appeal is moot in light of the government's changed position on the issue that is at the heart of the suit-the requirement of MARAD review. The district court found ACT's claims for injunctive and declaratory relief under 46 C.F.R. § 381.5 were moot because the United States adopted ACT's position going forward-that USAID was required to seek MARAD's concurrence before making a recommendation about the cargo because ACT offered to carry a full shipload. We agree.

[2] Courts are understandably reluctant to declare a case moot based on the defendant's voluntary cessation of the challenged activity. See, e.g., Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (“[A] defendant claiming that its voluntary compliance moots a case bears the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur.”); United States v. W.T. Grant Co., 345 U.S. 629, 633, 73 S.Ct. 894, 97 L.Ed. 1303 (1953) (noting the defendant's burden of “demonstrat[ing] that there is no reasonable expectation that the wrong will be repeated ... is a heavy one” (internal quotation marks omitted)). Nevertheless, where there is “no reasonable ... expectation that the alleged violation will recur,” and where “interim relief or events have completely and irrevocably eradicated the effects of the alleged violation,” the case is moot. County of Los Angeles v. Davis, 440 U.S. 625, 631, 99 S.Ct. 1379, 59 L.Ed.2d 642 (1979) (internal quotation marks omitted).

ACT argues that its § 381.5 claims are not moot because the government has not met the heavy burden of showing that it would not repeat the “same illegal conduct” in the future. This argument is unavailing. The government was faced with conflicting agency interpretations and resolved the interpretive dispute in favor of MARAD. This approach mirrors ACT's claims, thus mooting any need for declaratory relief. Because the shipment at issue has already been completed-the ship has in this case literally sailed-ACT's claim for injunctive relief is moot as well.

ACT's effort to forestall mootness by characterizing the government's action as “strategic mootness” does not save the day. The fact is the government changed its policy and agreed with ACT. Although this change certainly affects the litigation, there is no basis to suggest it is a transitory litigation posture. At a hearing before the district court on the government's motion for summary judgment, counsel for the government emphasized: “The government's position is [changed] to the new permanent ... policy set forth in our summary judgment papers. We stand by that.”

The government's change of policy presents a special circumstance in the world of mootness. Of course there is always the possibility of bad faith and a change of heart. But, unlike in the case of a private party, we presume the government is acting in good faith. Our prior cases are consistent with this principle, see, e.g., White v. Lee, 227 F.3d 1214, 1243 (9th Cir.2000) (holding that permanent change in HUD's policy with respect to Fair Housing Act investigations was sufficient to render plaintiff's claim moot); Lyons v. City...