Howes Leather Co., Inc. v. Carmen, 81-2094

• Decision Date: 15 June 1982
• Docket Number: No. 81-2094,81-2094
• Citation: 680 F.2d 818
• Parties: , 29 Cont.Cas.Fed. (CCH) 82,686 HOWES LEATHER CO., INC., Appellant, v. Gerald CARMEN, Administrator, General Services Administration, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 818

680 F.2d 818

220 U.S.App.D.C. 269, 29 Cont.Cas.Fed. (CCH) 82,686

HOWES LEATHER CO., INC., Appellant, v. Gerald CARMEN, Administrator, General Services Administration, et al.

No. 81-2094.

United States Court of Appeals, District of Columbia Circuit.

Argued May 19, 1982.

Decided June 15, 1982.

Appeal from the United States District Court for the District of columbia.

William J. Kenney, Washington, D. C., with whom Scott R. Schoenfeld, Washington, D. C., was on the brief, for appellant. William A. Duerk, Washington, D. C., entered an appearance for appellant.

Cheryl M. Long, Asst. U. S. Atty., Washington, D. C., with whom Stanley S. Harris, U. S. Atty., Royce C. Lamberth and Kenneth M. Raisler, Asst. U. S. Attys., Washington, D. C., were on the brief, for appellees.

Before MacKINNON, GINSBURG and BORK, Circuit Judges.

Opinion PER CURIAM.

PER CURIAM:

This case involves a disappointed bidder in a government sale of excess materials. The bidder challenged the government's rejection of its bids, and certain government actions taken in connection with that rejection, as contrary to statute and regulation and an abuse of discretion. The government moved to dismiss the complaint; at the conclusion of oral argument on the motion, the district court ruled from the bench that plaintiff lacked standing and had failed to state a claim upon which relief can be granted. This is an appeal from the dismissal order entered pursuant to the bench ruling. We reverse.

I. BACKGROUND

The government stockpiles various materials to ensure their availability in time of war. Management of the stockpile is governed by the Strategic and Critical Materials Stock Piling Act (Stockpiling Act), 50 U.S.C. §§ 98 to 98h-4 (Supp. III 1979). ¹ Congress superintends the stockpile in various ways; periodically, Congress authorizes disposal of materials it determines to be in excess of stockpile needs. E.g., Omnibus Budget Reconciliation Act of 1981, Pub.L.No.97-35, § 201(a), 95 Stat. 357, 380-81; Act of August 11, 1971, Pub.L.No.92-89, 85 Stat. 315; Act of October 9, 1965, Pub.L.No.89-245, 79 Stat. 967. See generally 50 U.S.C. § 98d(b). Day-to-day management of the stockpile, however, is entrusted by statute to the President, see 50 U.S.C. § 98e, who in Exec. Order No. 12,155, 44 Fed.Reg. 53,071 (1979), reprinted in 50 U.S.C. § 98 note, delegated most of his functions to the Administrator of the General Services Administration (GSA).

One of the materials in the stockpile is quebracho, a vegetable tannin extract used in leather-tanning operations. When this action commenced, the stockpile contained 145,000 long tons of quebracho, although the "goal," see 50 U.S.C. § 98b(b)(2); 44 C.F.R. § 328.2(b), (c) (1981), was only 28,000 long tons. Joint Appendix (J.A.) at 11, 111. On October 30, 1980, GSA announced that it would offer for sale approximately 6,000 long tons of excess quebracho and 1,800 long tons of excess chestnut in imperfect condition. ² Howes Leather Company, one of the nation's largest quebracho consumers, tendered bids on eight specific lots of quebracho, totaling 1,627,456 pounds (726.5 long tons). The prices bid by Howes ranged from $.1927/lb. to $.2482/lb. J.A. at 7. GSA, however, accepted only bids of $.2588/lb. or more for quebracho. Of the 5,302,865 pounds of extracts on which bids had been received, GSA sold 2,759,645 pounds. J.A. at 84. There were no competing bids for the lots Howes sought. GSA simply deemed Howes' bids too low and therefore kept the lots on which Howes had bid available for future sale at an acceptable price.

Howes filed three administrative protests, all of which have been acted on in a way unfavorable to Howes, and then filed suit in district court on March 23, 1981. Howes' complaint alleged three grounds for relief: "Contracting Officer Abused Discretion in Failing to Accept Plaintiff's Bids," J.A. at 5; "Defendants Failed to Comply with National Stockpile Act," J.A. at 10; and "Stockpile Disposal Practices Contravene United States Antitrust Policies," J.A. at 13. The specifics of the first charge were that the contracting officer did not accept Howes' bids, "which were clearly reflective of the prevailing fair market price and in the best interests of the United States," and that he "relied on inaccurate and incomplete market price data." J.A. at 9-10. The second charge focused on a single aspect of the Stockpiling Act: an alleged requirement that excess materials be disposed of "expeditiously," and alleged noncompliance with this requirement. J.A. at 10-12. The third charge was that alleged government consultation with an international cartel of quebracho producers, and reliance on market data provided by the cartel, constituted an abuse of discretion, a violation of the antitrust policies of the United States, and a violation of procurement regulations. J.A. at 13-15.

The government answered the complaint and then moved to dismiss the action on alternative grounds: Howes' lack of standing and the complaint's failure to state a claim upon which relief can be granted. The gist of the government's standing argument was that the Stockpiling Act protects the national defense, not Howes. As to the complaint's failure to state a claim, the government contended that Howes did not protest against any violation of applicable law; instead, according to the government, Howes' quarrel concerned the breadth of discretion granted GSA by Congress. The district court, after argument, ruled for the government on both grounds. It reasoned that because the lots on which Howes bid were not "sold to anyone else for a lower price," Howes had no standing to question the actions of the government and, even if Howes did have standing, the complaint stated "no cause of action entitling it to relief." J.A. at 154, 156.

II. DISCUSSION

A. Standing

The present leading case in this circuit on standing to obtain review of administrative action is Control Data Corp. v. Baldridge, 655 F.2d 283 (D.C.Cir.), cert. denied, --- U.S. ----, 102 S.Ct. 363, 70 L.Ed.2d 190 (1981). Control Data sets out a three-part standing test:

1) (the complainant) must allege injury in fact; 2) (the complainant) must assert that arbitrary or capricious agency action injured an interest arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question; 3) there must be no "clear and convincing" indication of a legislative intent to withhold judicial review.

Id. at 288-89 (footnote omitted). We indicate below why Howes falls comfortably within the Control Data test.

1. Injury in fact-As a disappointed bidder, Howes suffers injury in fact. The government has offered no persuasive distinction, for standing purposes, between buyers of goods, such as Howes, and sellers of services, such as the plaintiff in Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859 (D.C. Cir. 1970). Howes also suffers injury in fact, as a quebracho consumer, from any "undue disruption," 50 U.S.C. § 98e(b)(2), caused by defendant-appellees in quebracho markets. Apparently assuming the absence of injury unless the lots on which Howes bid were sold to a lower bidder, the district court misperceived the twin pillars of Howes' argument. Howes argued that as a result of the government conduct it challenges, Howes was unlawfully blocked from acquiring goods it sought at a particular price and under particular conditions. Further, Howes argued, forcibly, that the government's refusal to sell at lower prices the large quantities of quebracho Congress has earmarked for disposal assists in the maintenance of artificially high market prices for the extract. ³

2. Zone of interests-A consumer of stockpiled goods is at least arguably within the "zone of interests" to be protected by the Stockpiling Act.

To the maximum extent feasible-

(2) efforts shall be made in the acquisition and disposal of such materials to avoid undue disruption of the usual markets of producers, processors, and consumers of such materials and to protect the United States against avoidable loss....

50 U.S.C. § 98e(b)(2) (emphasis added). The phrase "undue disruption of the usual markets" encompasses the situation in which the government carries stockpiled materials "to such an extent that they would constitute a threat to private industry in the country on the question of the cost of procuring their own supplies." 49 Cong.Rec. 5682 (1946) (remarks of Congressman May). Howes' contention is that the government, by not selling the large excess quantities of quebracho more quickly, has done just that.

3. Legislative intent to withhold judicial review-The government cites no evidence, let alone "clear and convincing" evidence, of any congressional intent to withhold review. We therefore rely on the "strong presumption of reviewability." NRDC v. SEC, 606 F.2d 1031, 1043 (D.C.Cir.1979); see Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820, 28 L.Ed.2d 136 (1971). This element, like the other two elements of the Control Data test, is met. Howes has standing.

B. Failure to State a Claim

A motion under Fed.R.Civ.P. 12(b)(6) to dismiss for failure to state a claim may be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of (its) claim which would entitle (it) to relief."...