Cartwright Intern. Van Lines, Inc. v. Doan
| Citation | 525 F.Supp.2d 187 |
| Decision Date | 05 December 2007 |
| Docket Number | Civ. No. 07-1454 (EGS). |
| Parties | CARTWRIGHT INTERNATIONAL VAN LINES, INC., et al., Plaintiffs, v. Lurita Alexis DOAN, Administrator of General Services Administration, Defendant. |
| Court | U.S. District Court — District of Columbia |
Alan F. Wohlstetter, Denning & Wohlstetter, Washington, DC, for Plaintiffs.
Robin Michelle Meriweather, Assistant United States Attorney, Washington, DC, for Defendant.
This case arises out of a dispute between the General Services Administration ("GSA") and Cartwright International Van Lines ("Cartwright") and Foremost Forwarders, Inc. ("Foremost") (collectively "plaintiffs") regarding overcharges billed for plaintiffs' shipments of household goods to military bases and military airports. Pending before the Court is plaintiffs' Motion for a Preliminary Injunction and defendant's Motion to Dismiss or in the Alternative to Transfer the Case to the Court of Federal Claims. Upon consideration of the Motions, the responses and replies thereto, the applicable law, and the entire record, the Court DENIES plaintiffs' Motion for a Preliminary Injunction, DENIES Defendant's Motion to Dismiss, and GRANTS defendant's Motion to Transfer this Case. For the reasons stated herein, this case shall be transferred to the Court of Federal Claims.
Plaintiffs are transportation service providers ("TSPs") exclusively engaged in the forwarding of military household good shipments through a program administered by the Department of the Army's Surface Deployment and Distribution Command ("SDDC"). Am. Compl. ¶ 8. The shipments at issue in this case are known as "Code J" shipments, which involve plaintiffs' movement of household goods to and from military bases and military airport's. Id. at ¶ 9. Authorized charges for those services are set forth in single factor rates (SFRs) filed by plaintiffs and other carriers with the SDDC. Id. The government periodically publishes Rate Solicitations which set forth certain additional surcharges that TSPs may "pass through" to the government. These surcharges do not apply to all shipments and are not included in the SFRs. Id. The terms of each TSP's transportation contract provides the basis for determining the correctness of its bills and whether a carrier has inappropriately billed the government for surcharges not allowed by the Solicitation. Def.'s Ex. 1, ¶ 5.
Plaintiffs and other TSPs electronically submit their bills to the Department of Defense. Finance and Accounting Service ("DFAS") through an Electronic Data Interface ("EDI"). Id. Bills submitted via EDI are paid without prepayment audit or verification and are effectively paid automatically upon submission. Def.'s Mein. at 5. DFAS subsequently provides the EDI data to GSA to conduct a post-payment audit of a TSP's bills. Id.
A. Statutory and Regulatory Framework
Under the Transportation Act of 1940; the Administrator of GSA has the authority to conduct pre — or post-payment audits of transportation bills of any Federal Agency to verify their correctness. 31 U.S.C. § 3726(b). If the post-payment audit process reveals that the government has paid a carrier or freight forwarder more than the allowable rate, the government may recoup the overpayments via offsets against future amounts due to that carrier. Offsets may be imposed up to three years after the original overpayment was made. Id. § 3726(d). GSA's regulations implementing the Transportation Act authorize the agency to issue a Notice of Overcharge ("NOC") if it determines that a TSP owes the government a debt and to offset overcharges from other payments clue to that TSP. Def.'s Mem. at 3. Specifically:
When GSA performs a post-payment audit, the GSA Audit Division has the delegated authority to implement the following procedures:
(a) Audit selected TSP bills after payment;
(b) Audit selected TSP bills before payment as needed to protect the Government's interest (i.e., bankruptcy, fraud);
(c) Examine, settle, and adjust accounts involving payment for transportation and related services for the account of agencies;
(d) Adjudicate and settle transportation claims by and against agencies;
(e) Offset an overcharge by any TSP from an amount subsequently found to be due that TSP;
(f) Issue a Notice of Overcharge stating that a TSP owes a debt to the agency. This notice states the amount paid, the basis for the proper charge for the document reference number, and cites applicable tariff or tender along with other data relied on to support the overcharge. A separate Notice of Overcharge is prepared and mailed for each bill.
A TSP may dispute a notice of overcharge by filing a written request for reconsideration with GSA's Audit Division. Id. § 102-118.600. If the request is denied, then GSA is authorized to begin offsetting the debt against future amounts owed that carrier. Following the offset, the TSP may submit a written claim to GSA requesting a refund with an explanation of the basis on which the TSP believes the refund should be granted. Id. § 102-118.645; see also Def.'s Ex. 1 at 3. If GSA disallows the claim, the agency will issue a Settlement Certificate informing the TSP of, the denial. Id. § 102-118.620. A TSP desiring reconsideration of a settlement action can submit a request for review by the Administrator of GSA. Id. § 102-118.625. If the request for review, is also denied, then the TSP can either seek review in the Civilian Board of Contract Appeals ("CBCA") or file a claim in the Court of Federal Claims. Id. § 102-118.650:
B. Plaintiffs' Overcharge Dispute with GSA.
When conducting the post-payment audits for several of plaintiffs' EDI billings, GSA auditors determined that the government had paid plaintiffs and other TSPs transportation charges that exceeded the amounts allowable under the SDDC International. Rate Solicitation. Def.'s Mem. at 5. Specifically, GSA alleges that certain surcharges coded as "WAR" and "CON" were being billed inconsistently with the terms of the solicitation. "WAR" is the war risk surcharge which the SDDC has defined as "insurance coverage for loss of goods resulting from an act of war or as a result of the vessel entering the war risk area when billed by ocean/air TSP." Id., at 6. "CON" is the port congestion surcharge, defined as an "extra charge that is billed to the TSP for controlling the congestion of trucks/vessels entering/departing the port." Id.
As a result of the audits, on April 3, 2006, GSA issued Notices of Overcharge ("NOCs") to plaintiffs and 36 other carriers based on the alleged misuse of the "WAR" and "CON" surcharges. Id. The NOC issued to Cartwright indicated an overcharge of $241,210.84 while the NOC issued to Foremost indicated an overcharge of $1,202,698.45 Id. Plaintiffs protested the offsets, contending that GSA had based its decision on an incorrect interpretation of the SDDC's rate solicitation and that the WAR and CON surcharges were properly applied to their Code J Shipments. On June 23, 2006, GSA denied the protest, sustained the NOCs, and recommended that Cartwright enter into a repayment plan. Plaintiffs' attorney and GSA exchanged several letters and emails over the course of the next year discussing the disputed charges. GSA temporarily suspended the offset and deduction process during the course of these negotiations. Id. at 8.
On July 25, 2007 GSA resumed offsetting the disallowed charges from amounts due on plaintiffs' bills. Plaintiffs then filed this action, alleging that GSA has violated its own regulations by offsetting monies from plaintiffs on a basis other than that stated in the NOCs. Am. Compl. ¶ 1. Plaintiffs claim that over the course of the negotiations regarding the propriety of the offsets, GSA put forth an alternate justification to sustain the offsets, other than the improper billing of the WAR and CON surcharges on Code J shipments. Plaintiffs state that GSA is actually basing the offsets on the contention that the charges at issue should have been billed as "waiting time" under Item 503 of the Rate Solicitation, rather than as they were, as WAR or CON surcharges under Item 433 of the Solicitation. While plaintiffs also disagree with the merits of this interpretation, their main argument before this Court is that GSA is obligated to issue new NOCs stating the disputed charges should have been billed under Item 503 and then give the plaintiffs the opportunity to protest that rationale before any offsets are made. According to the complaint, "GSA has failed to accord plaintiffs the right to respond to the different grounds relied upon by defendant (but not set forth in the Notices of Overcharge) prior to the offsets being made." Id.
Plaintiffs represent that GSA has collected a combined total of $501,370 to date via offset. Am. Compl. ¶ 1. Based on the outstanding NOCs, GSA intends to offset an additional $1,622,947 to recoup the plaintiffs' alleged debt. Plaintiffs seek an order of this Court "declaring that the action of GSA's Audit Division in offsetting monies from plaintiffs in violation of its own regulations, without according plaintiffs' the opportunity to respond, is unlawful, arbitrary and capricious and an abuse of discretion in violation of the Administrative Procedure Act (`APA'), 5 U.S.C. § 706(2)(A)." Id. 113. Plaintiffs ask the Court to preliminarily enjoin defendants from continuing to deduct monies from plaintiffs pursuant to Notices of Overcharge issued and to be issued until the basis for the overcharge is set forth in the Notices of Overcharge and plaintiffs are given the opportunity to respond before offset, as specifically provided for in GSA's Transportation Payment and Audit Regulations.
Id. ¶ 19. Plaintiffs contend they will suffer irreparable harm if GSA proceeds with...
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