Boeing Co. v. United States

• Decision Date: 29 May 2019
• Docket Number: No. 17-1969C,17-1969C
• Parties: THE BOEING COMPANY, Plaintiff, v. THE UNITED STATES, Defendant.
• Court: U.S. Claims Court

THE BOEING COMPANY, Plaintiff, v. THE UNITED STATES, Defendant.

No. 17-1969C

United States Court of Federal Claims

May 29, 2019

Contract; Cost Accounting Standards Dispute; Failure to Establish Jurisdiction for Illegal Exaction Claim; Cross-Motions for Summary Judgment, RCFC 56; Waiver of Claims.

Charles J. Cooper, Washington, DC, for plaintiff. Michael W. Kirk, Howard C. Nielson, Jr., John D. Ohlendorf, and Seth H. Locke, of counsel.

Erin K. Murdock-Park, Trial Attorney, with whom were Joseph H. Hunt, Assistant Attorney General, Robert E. Kirschman, Jr., Director, Elizabeth M. Hosford, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, for defendant. Arthur Taylor and Kara M. Klaas, Defense Contract Management Agency, Chantilly, VA, of counsel.

OPINION

CAMPBELL-SMITH, Judge.

This case is before the court on dispositive cross-motions, brought under Rules 12(b)(1), 12(b)(6), 12(c) and 56 of the Rules of the United States Court of Federal Claims (RCFC). Plaintiff filed a motion for judgment on the pleadings, ECF No. 11, which was countered by defendant's motion to dismiss, or, in the alternative, motion for summary judgment, ECF No. 15. Replies were filed by plaintiff, ECF No. 16, and by defendant, ECF No. 17; oral argument was held on August 1, 2018, ECF No. 20 (oral argument transcript).

The court ordered supplemental briefing on topics discussed at oral argument. See ECF No. 18 (order). Plaintiff's supplemental brief was filed on September 21, 2018. See ECF No. 22. Defendant's supplemental response brief was filed on November 2, 2018. See ECF No. 27. Finally, plaintiff's supplemental reply brief was filed on November 20, 2018. See ECF No. 28.

The focus of this lawsuit is on the application of cost accounting standards to a contract between the United States military and The Boeing Company (Boeing). For the reasons set forth below, plaintiff's motion for judgment on the pleadings is DENIED, and defendant's combined motion to dismiss and motion for summary judgment is GRANTED.

I. Background

Boeing contracts with the government to provide military aircraft and related services; the division of Boeing implicated here had the United States Department of Defense as its primary customer. ECF No. 1 at 8-9 (complaint). This suit challenges a contracting officer's final decision on a government claim, issued by the Defense Contract Management Agency (DCMA) on December 21, 2016. See id.; ECF No. 1-2 at 2-9. Plaintiff also challenges DCMA's subsequent rejection of Boeing's related claim on November 21, 2017. ECF No. 1 at 7-8; ECF No. 1-1 at 2-3. The gravamen of plaintiff's complaint is that the government incorrectly applied cost accounting standards (CAS), which are set forth in 41 U.S.C. §§ 1501-1506 (2012) and 48 C.F.R. § 9903.201-4 (2018).¹ ECF No. 1 at 1. Plaintiff seeks relief regarding one representative contract, Contract No. N00019-09-C-0019. Id.; ECF No. 1-2 at 4.

However, plaintiff also seeks declaratory relief that would apply to "each of the relevant contracts between Boeing and the United States." ECF No. 1 at 35. Even if this request for relief is limited to the Boeing division that is identified in the complaint, that division entered into "hundreds of contracts" from 1992 through 2015. Id. at 9. Much of the complaint addresses Federal Acquisition Regulation (FAR) 30.606, which, according to plaintiff, "violates the CAS statute."² Id. at 5. Plaintiff's challenge to FAR 30.606 is multi-faceted, but only a few aspects of that challenge will be examined in detail in this opinion. At oral argument, plaintiff noted that Boeing has raised this type of challenge to FAR 30.606 in three suits before the undersigned, and in twelve cases before the board of contract appeals. ECF No. 20 at 17-18. Defendant argued that the impact of declaratoryrelief invalidating FAR 30.606 would affect "thousands of contracts across the Government." Id. at 46-47.

In the representative contract, FAR 30.606 prevented Boeing from offsetting "eight simultaneous accounting changes" which "had mixed effects on the composition of Boeing's pool of costs on its CAS-covered contracts." ECF No. 1 at 3, 5. The first three counts of the complaint could be characterized as claims founded on the contract (or contracts) between Boeing and the United States. Id. at 31-34. The fourth count of the complaint asserts that an illegal exaction occurred when FAR 30.606 was applied to Boeing's contract, in violation of 41 U.S.C. § 1503(b). Id. at 34-35. When only the representative contract is considered, Boeing asserts that the government's claim for $1,064,773 is invalid, and that damages for the payments paid by Boeing on the government's claim, plus interest, should be awarded to Boeing. Id. at 35.

FAR 30.606, in relevant part, went into effect on April 8, 2005. ECF No. 15-1 at 112. Boeing entered into the representative contract on December 4, 2008. Id. at 136. Boeing implemented eight simultaneous accounting changes on January 1, 2011, which were deemed to be "unilateral" changes under the FAR. ECF No. 1 at 24-29. It is these accounting changes, and their treatment under FAR 30.606 by the DCMA, that give rise to the dispute in this case.

II. Standards of Review

A. Motion to Dismiss under RCFC 12(b)(1)

When reviewing a complaint to determine its jurisdiction over a plaintiff's claims, this court must presume all undisputed factual allegations to be true and construe all reasonable inferences in favor of the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800 (1982); Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 747 (Fed. Cir. 1988) (citations omitted). Plaintiff bears the burden of establishing subject matter jurisdiction by a preponderance of the evidence. Reynolds, 846 F.2d at 748 (citations omitted). If jurisdiction is found to be lacking, this court must dismiss the action. RCFC 12(h)(3).

B. Motion to Dismiss under RCFC 12(b)(6) Converted to RCFC 56 Motion

When considering a motion to dismiss brought under RCFC 12(b)(6), "the allegations of the complaint should be construed favorably to the pleader." Scheuer, 416 U.S. at 236. "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When the parties rely on materials outside of the pleadings, and the court must consider those materials to decide a motion brought under RCFC 12(b)(6), as is the case here, the motion must be treated as one for summary judgment. See RCFC12(d) ("If, on a motion under RCFC 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under RCFC 56.").

C. Motion for Judgment on the Pleadings Treated as a Motion for Summary Judgment

If the parties support their arguments regarding a motion for judgment on the pleadings with matters outside the pleadings, the court will convert the RCFC 12(c) motion to a motion for summary judgment under RCFC 56. See RCFC 12(d). That is the situation in this case. See ECF No. 11-2; ECF No. 15-1; ECF No. 17-1; ECF No. 27-1; ECF No. 28-1; ECF No. 28-2. When the RCFC 12(c) motion is converted to a summary judgment motion, the parties must be given a "reasonable opportunity to present all the material that is pertinent to the motion." RCFC 12(d). The court confirmed that the briefing schedule proposed by the parties and adopted by the court afforded the parties a reasonable opportunity to brief their dispute under the standard applicable to RCFC 56. See ECF No. 20 at 37, 62, 65. Thus, plaintiff's motion for judgment on the pleadings will be considered pursuant to the standard of review applicable to RCFC 56. See Schultz v. United States, 5 Cl. Ct. 412, 415-16 (1984) (converting a motion for judgment on the pleadings to a motion for summary judgment in similar circumstances).

D. Cross-Motions for Summary Judgment

The party moving for summary judgment will prevail "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." RCFC 56(a). A genuine dispute of material fact is one that could "affect the outcome" of the litigation. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "[A]ll evidence must be viewed in the light most favorable to the nonmoving party, and all reasonable factual inferences should be drawn in favor of the nonmoving party." Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202 (Fed. Cir. 1994) (citations omitted). For cross-motions for summary judgment, "the court must evaluate each party's motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration." Mingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987) (citation omitted).

III. Analysis

Defendant has raised one jurisdictional challenge to the claims in Boeing's complaint that is persuasive to the court, and another that is not. The court will address these challenges first. The court will then consider whether the affirmative defense of waiver entitles defendant to summary judgment and compels dismissal of plaintiff's claims on the merits.

A. Jurisdictional Challenge to Plaintiff's Illegal Exaction Claim

1. Overview of Precedent

Plaintiff argues that there is no jurisdictional barrier to its illegal exaction claim. ECF No. 11-1 at 42-44; ECF No. 16 at 15-18; ECF No. 22 at 29-33; ECF No. 28 at 22-24. Plaintiff relies to a great extent on three decisions of the United States Court of Appeals for the Federal Circuit: Aerolineas Argentinas v. United States, 77 F.3d 1564 (Fed. Cir. 1996); Norman v. United States, 429 F.3d 1081 (Fed. Cir. 200...