Grumman Ohio Corp. v. Dole, 84-5543
| Decision Date | 15 November 1985 |
| Docket Number | No. 84-5543,84-5543 |
| Citation | 776 F.2d 338 |
| Parties | GRUMMAN OHIO CORPORATION, Appellant, v. Elizabeth Hansford DOLE, Secretary U.S. Department of Transportation, et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (Civil Action No. 83-02034).
Milton Eisenberg, Washington, D.C., with whom Francis J. O'Toole and Jack B. Gordon, Washington, D.C., were on the brief, for appellant Grumman Ohio Corp. John T. Boese and Richard Lehfeldt, Washington, D.C., entered appearances for appellant.
Michael J. Ryan, Asst. U.S. Atty., Washington, D.C., for appellees. Joseph E. diGenova, U.S. Atty., Royce C. Lamberth, R. Craig Lawrence, Richard A. Stanley, Asst. U.S. Attys. and Trudy B. Levy, Asst. Chief Counsel, Urban Mass Transportation Administration, Washington, D.C., were on the brief, for federal appellees.
Richard C. Gering, Chicago, Ill., with whom David N. Webster, Washington, D.C., was on the brief, for appellee-intervenor Regional Transp. Authority.
Before WALD and STARR, Circuit Judges, and PARKER, * District Judge.
Opinion for the Court filed by Circuit Judge STARR.
This appeal has its roots in contract litigation pending in the United States District Court for the Northern District of Illinois between a bus manufacturer and a regional transit authority. In that action, the federal court in Chicago determined that the parties there (Grumman Ohio Corporation, the bus manufacturer, and the Regional Transportation Authority of Chicago, the purchaser of buses) were required to submit their contract dispute to a federal administrative agency, the Urban Mass Transportation Administration (UMTA), for extrajudicial resolution. When the dispute was thereafter submitted to UMTA, however, that agency refused to provide the type of arbitral forum and procedure requested by Grumman. Suit was then brought by Grumman in the United States District Court for the District of Columbia to compel UMTA to fill what Grumman viewed as the agency's arbitral role. The District Court in Washington, however, granted summary judgment in favor of UMTA, holding that UMTA was not required to resolve a common-law dispute. Grumman timely appealed, contending that UMTA was required to arbitrate the Regional Transportation Authority-Grumman dispute, with the full panoply of hearing procedures. We now affirm.
UMTA is an agency within the Department of Transportation charged with responsibility under the Urban Mass Transportation Act of 1964, Pub.L. No. 88-365, 78 Stat. 302 (1964) (), for furthering the improvement and development of mass transportation. Pursuant to that charge, UMTA provides funding to local transportation agencies to assist in defraying the cost of purchasing new buses. Regional Transportation Authority ("RTA") of Chicago, Illinois is a local agency which received funding through a UMTA grant. The funds were used to purchase buses manufactured by Grumman Flxible Corporation, the predecessor of Grumman of Ohio Corporation (both referred to as "Grumman"). The relationship between UMTA and RTA was thus one of grantor and grantee respectively, while the relation between RTA and Grumman was one of purchaser and vendor respectively.
Pursuant to its statutory responsibility, UMTA had previously promulgated, after public notice and comment, see 42 Fed.Reg. 9645 (1977); 42 Fed.Reg. 13,816 (1977), a document entitled "Baseline Advanced Design Transit Coach Specifications," commonly referred to within the industry as the "White Book." The White Book contained provisions for the solicitation, offer and award of contracts, technical specifications for the buses themselves, quality assurance provisions, and warranty provisions that must be met by contractors. See White Book, reprinted in Joint Appendix at 318. Included in the White Book was the Disputes Clause at issue here. That clause, which is critical to our resolution of this case, provides as follows:
Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by an agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be finaland conclusive unless within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to UMTA a written appeal. The decision of UMTA's duly authorized representative for the determination of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision.
This clause does not preclude consideration of law questions in connection with decisions provided for in this clause, provided that nothing in this contract shall be construed as making final the decision of any administrative official, representative, or board on a question of law.
White Book at I-27-I-28, Joint Appendix at 351-52.
Use of White Book specifications was binding on UMTA grantees at all times relevant to the case at hand, see 46 Fed.Reg. 49,038 (1981) (), although mandatory use of White Book specifications has since been rescinded, see 47 Fed.Reg. 44,457 (1982). As a UMTA grantee, RTA was hence required to include the Disputes Clause in its contract to purchase buses. RTA solicited bids for the purchase of 205 buses and entered into a contract with Grumman for their sale and delivery. The contract accordingly contained the Disputes Clause.
A dispute subsequently arose between RTA and Grumman when the buses were discovered to have stress problems in their understructures. While the problem proved correctable and Grumman made the required repairs, RTA demanded consequential damages resulting from the loss of service of the buses during the repair period. RTA brought suit in Illinois state court, whereupon Grumman removed the action to United States District Court for the Northern District of Illinois (the "Illinois litigation" or the "RTA-Grumman litigation"), Regional Transportation Authority v. Grumman Flxible Corp., 532 F.Supp. 665 (N.D.Ill.1982). UMTA, it is important to note, was not a party to the Illinois litigation. In that litigation, Grumman moved to dismiss the complaint on the grounds that RTA had failed to exhaust the administrative remedy embodied in the Disputes Clause. The federal court in Chicago determined that the particular dispute was indeed within the scope of the Disputes Clause and thus dismissed the suit, without prejudice, so the prescribed administrative procedures could be exhausted.
In the wake of this decision in the Illinois litigation, RTA submitted the dispute, along with additional claims, to the RTA Contracting Officer who, in an ex parte proceeding, found in favor of RTA. In accordance with the Disputes Clause, Grumman notified the UMTA Administrator that it was appealing the Contracting Officer's decision. Grumman specifically requested "a copy of UMTA's UMTA's reply set forth a detailed set of procedures by which Grumman was to submit a written statement indicating the specific portions of the Contracting Officer's In this same reply, UMTA set out its reasoning for adopting the limited, paper procedure it was offering. Because of its importance to our resolution of the present appeal, we now set forth the pertinent part of UMTA's reply to Grumman:
procedures for processing appeals of this nature, including procedures for a formal hearing in Washington, D.C. with stenographic transcription, sworn testimony, etc., and the procedures for prehearing discovery (interrogatories, depositions, and the like)." Joint Appendix at 72. Grumman went on to state its assumption "that all proceedings in this matter are de novo, that the Contracting Officer's determination is to be accorded no evidentiary or other weight or consideration, and that RTA bears the burden of proving each and every element of the claims it has asserted." Id
decision that were being challenged, along with Grumman's position with regard to each disputed finding and the rationale for its position. Under these procedures, UMTA would furnish a copy of that submission to RTA for comment. RTA's response would then be provided to Grumman, and both parties would be allowed to submit further comments. UMTA also designated the individual who would render decision in the matter, based entirely on the foregoing written submissions with no formal hearing or discovery. Joint Appendix at 78-79
Since UMTA is not a direct party to the contract between a grantee and the selected manufacturer, the Disputes Clause was viewed as a mechanism whereby UMTA's assistance could be sought in resolving issues relating to the specifications, and to ensure that competition would continue to be fostered by having consistent interpretations of the contract requirements.... The Disputes Clause was intended to allow UMTA to decide, on a de novo basis, only those issues directly related to the interpretation and effectiveness of the White Book Specification. It was never intended to apply to issues relating...
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