Nat'l Motor Freight Traffic Ass'n, Inc. v. Gen. Servs. Admin.

• Decision Date: 12 March 2014
• Docket Number: Civil Action No. 13-0429 (ABJ)
• Parties: NATIONAL MOTOR FREIGHT TRAFFIC ASSOCIATION, INC., et al., Plaintiffs, v. GENERAL SERVICES ADMINISTRATION, et al., Defendants.
• Court: U.S. District Court — District of Columbia

NATIONAL MOTOR FREIGHT

TRAFFIC ASSOCIATION, INC., et al., Plaintiffs, v. GENERAL SERVICES ADMINISTRATION, et al., Defendants.

Civil Action No. 13-0429 (ABJ)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

DATE: March 12, 2014

MEMORANDUM OPINION

Plaintiffs National Motor Freight Association, Inc. and five of its motor carrier members¹ (collectively, "plaintiffs") filed suit against defendants General Services Administration ("GSA") and Daniel M. Tangherlini, in his official capacity as the Acting Administrator, pursuant to 5 U.S.C. § 701 et seq., arguing that GSA exceeded its statutory authority under 31 U.S.C. § 3726 and 49 U.S.C. § 13710 when it conducted post-payment audits and offset alleged overcharges against amounts due to some of the plaintiffs under their government contracts. Defendants filed a motion to dismiss the complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) or, in the alternative, for failure to state a claim pursuant to Rule 12(b)(6). See generally Defs.' Mot. to Dismiss Compl. ("Defs.' Mot.") [Dkt. # 11]. Defendants also argued that plaintiff New England Motor Freight should be dismissed for lack of standing. Id. at 27-28. Plaintiffs opposed the motion and argued that the Court should enter judgment onthe pleadings in their favor instead pursuant to Rule 12(c). Pls.' Resp. in Opp. to Defs.' Mot. to Dismiss ("Pls.' Resp.") at 4 n.3 [Dkt. # 13]. Since the Court finds that it has concurrent subject matter jurisdiction in this case, and that plaintiffs have alleged sufficient facts to state plausible claims, the motion to dismiss will be denied. But because the Court also finds that plaintiff New England Motor Freight has not alleged the necessary injury in fact, the Court will grant defendants' motion to dismiss its claims for lack of standing. The rest of plaintiffs' claims may proceed, and the Court will address the merits of the dispute in accordance with the schedule set forth in the order that accompanies this opinion.

BACKGROUND

I. Statutory and Regulatory Background

Five of the plaintiffs in this case are motor carriers that provide government agencies with transportation services pursuant to negotiable commercial rates. This case concerns GSA's authority to conduct post-payment audits of their bills up to three years after the reviewed charges have been paid. Defendants argue that 31 U.S.C. § 3726(b), (d) provides it with authority to conduct those audits. Defs.' Mot. at 18-19. Plaintiffs maintain that section 3726 does not cover transportation contracts performed at negotiable commercial rates, so any government review must be conducted pursuant to 49 U.S.C. § 13710, which requires that billing disputes be raised within 180 days. Pls.' Resp. at 2.

A. 31 U.S.C. § 3726 and 41 C.F.R. § 102-118.415 et seq.

Section 3726 of title 31 of the United States Code governs both pre- and post-payment audits of bills received by the government for transportation services. 31 U.S.C. § 3726(a), (b) (2006). Most pertinent to this case is subsection (b), which provides that "[t]he Administrator [of General Services] may conduct pre- or post-payment audits of transportation bills of anyFederal Agency. The number and types of bills audited shall be based on the Administrator's judgment." Id. § 3726(b). If an audit reveals that the government overpaid for the services provided, the government may,

[n]ot later than 3 years (excluding time of war) after the time a bill is paid, . . . deduct from an amount subsequently due a carrier or freight forwarder an amount paid on the bill that was greater than the rate allowed under—(1) a lawful tariff under title 49 or on file with the Secretary of Transportation with respect to foreign air transportation . . . , the Federal Maritime Commission, or a State transportation Authority; (2) a lawfully quoted rate subject to the jurisdiction of the Surface Transportation Board; or (3) sections 10721, 13712, and 15504 of title 49 or an equivalent arrangement or an exemption.

Id. § 3726(d). If the challenged transportation charges are not billed at a rate specified in one of the three subsections of section 3726(d), then GSA does not have authority under that section to withhold overcharges.

The statute does not detail the procedures that GSA must follow when reviewing agency transportation bills, and GSA has promulgated regulations establishing an audit procedure and appeals process. See 41 C.F.R. §§ 102-118.435, 102-118.600, 102-118.625, 102-118.650, 102-118.655 (2009). It also published questions and answers to provide additional guidance to government agencies that contract with motor carriers. See generally 41 C.F.R. §§ 102-118.5 et seq. Most pertinent to this case is section 102-118.435(f), which notes that, if the Audit Division discovers an overcharge, GSA will "[i]ssue a Notice of Overcharge stating that [the motor carrier] owes a debt to the agency" and include information regarding "the amount paid, the basis for the proper charge for the document reference number, and cit[ing] applicable tariff or tender along with other data relied on to support the overcharge." Id. § 102-118.435(f). The regulations do not require that the Notice of Overcharge ("NOC") be sent within a specific time period. See generally id.

B. 49 U.S.C. § 13710

There is another statute with potential application to this case. Section 13710 of title 49 of the U.S. Code governs, among other things, billing disputes between motor carriers and shippers. 49 U.S.C. § 13710(a)(3) (2006). Specifically, it provides that, "[i]f a shipper seeks to contest the charges originally billed or additional charges subsequently billed, the shipper may request that the [Surface Transportation] Board determine whether the charges billed must be paid." Id. § 13710(a)(3)(B). The Board then reviews the reasonableness of the charged rates "under section 13701 . . . based on the record before it." Id. § 13710(a)(2). A shipper must raise a challenge to the transportation charges "within 180 days of receipt of the bill," otherwise its challenge is time-barred. Id. § 13710(a)(3)(B).

Although the statute does not specifically define "shipper" or elaborate upon the term, the statute has been applied to government agencies that contract for transportation services. The statute defines "motor carrier" as a motor carrier of property, "other than a motor carrier providing transportation in noncontiguous domestic trade." Id. § 13710(a)(1), (3)(A).

II. Factual and Procedural Background

Plaintiffs are five individual motor carriers and a trade association comprised of motor carriers. Compl. ¶¶ 4-9 [Dkt. # 1]. The membership organization, NMFTA, is a nonprofit entity "whose membership consists of motor carriers of freight and transportation companies operating in interstate, intrastate, and foreign commerce," many of which "provide cargo transportation services for the United States government." Compl. ¶ 4; see also Compl. ¶ 20. The other five plaintiffs are "motor carrier member[s] of NMFTA." Compl. ¶¶ 5-9. Like most NMFTA members, all five operate "in interstate commerce throughout the United States and Canada," Compl. ¶¶ 5-9, and four of the five motor carrier plaintiffs - ABF Freight, Boyle, Tri-StateMotor, and YRC - devote "[a] significant portion of [their] business [to] the provision of general cargo transportation services for the United States government."² Compl. ¶¶ 5-6, 8-9.

Recently, NMFTA members raised concerns with the organization regarding a perceived increase in the number of GSA "post-payment audits of transportation bills for transportation services provided to Government shippers." Compl. ¶ 22. The post-payment audits resulted in the issuance of thousands of NOCs, which demanded refunds of money "between 2 and 3 years after the Government was billed for the involved transportation services." Compl. ¶¶ 22-23. Specifically, the following overcharge notices were received approximately one to three years after the government received the transportation bills:

• ABF Freight: In 2009, ABF Freight received 1,483 NOCs, totaling more than $401,000 in overcharges that it must repay. In 2010, it received 2,662 NOCs, amounting to more than $507,000 in repayments. And in 2012, it received 347 NOCs, seeking repayment of more than $27,000. Compl. ¶ 24.

• Boyle: In 2010, Boyle received 257 NOCs, totaling about $71,000 in overcharges that it must repay. In 2011, it received 255 NOCs, amounting to approximately $186,000 in repayments. And in 2012, it received 131 NOCs, seeking repayment of about $121,000. Compl. ¶ 25.

• Tri-State Motor: In 2009, Tri-State Motor received 27 NOCs, totaling about $71,000 in overcharges that it must repay. In 2010, it received 524 NOCs, amounting to approximately $160,000 in repayments. And in 2011, it received 181 NOCs, seeking repayment of about $62,000. Compl. ¶ 27. Tri-State Motors also assert that "GSA, without explanation, has withdrawn some of these Notices on multiple occasions." Compl. ¶ 27.

• YRC: In 2011, YRC received 2,310 NOCs, totaling about $600,000 in overcharges that it must repay. And in 2012, it received 1,310 NOCs, seeking repayment of about $418,000. Compl. ¶ 28.

Plaintiff New England Motor Freight does not allege that it has been audited by the GSA or that it has received a NOC. Compl. ¶ 26. The complaint only notes that the company stopped contracting with the government in the mid-1990s because "overcharge and payment issues . . . made the traffic unprofitable." Compl. ¶ 26. Moreover, New England Motor Freight states that it now engages in government transport at "a very limited level," and that "it has been reluctant to increase that presence because of concerns regarding possible payment issues, including overcharge issues arising out of GSA's post-payment audits." Compl. ¶ 26.

On April 4, 2013, plaintiffs filed the instant lawsuit to press their claim that GSA acted unlawfully in issuing NOCs to ABF Freight, Boyle, Tri-...