NetJets Aviation, Inc. v. U.S. Dep't of Agric.

• Decision Date: 13 January 2022
• Docket Number: Civil Action 2:20-cv-4464
• Court: U.S. District Court — Southern District of Ohio
• Parties: NETJETS AVIATION, INC., et al., Plaintiffs, v. U.S. DEPARTMENT OF AGRICULTURE, et al., Defendants.

NETJETS AVIATION, INC., et al., Plaintiffs,
v.
U.S. DEPARTMENT OF AGRICULTURE, et al., Defendants.

Civil Action No. 2:20-cv-4464

United States District Court, S.D. Ohio, Eastern Division

January 13, 2022

OPINION AND ORDER

KIMBERLY A. JOLSON UNITED STATES MAGISTRATE JUDGE

This matter, in which the parties have consented to the jurisdiction of the Magistrate Judge, is before the Court on Defendant U.S. Department of Treasury's (“DOT”) Motion to Dismiss for Lack of Jurisdiction, Motion to Dismiss for Failure to State a Claim, and Motion to Sever (Doc. 84). For the reasons that follow, the Motion is DENIED.

I. BACKGROUND

Elsewhere, the Court has explained this case in detail. (Doc. 80 at 1-2). Relevant here, Plaintiff Executive Jet Management, Inc. (“EJM”) owes U.S. Department of Agriculture (“USDA”) unpaid fees, interest, and statutory penalties. (Doc. 81 at ¶ 44). USDA forwarded this claim against EJM to DOT for collection. (Doc. 81 at ¶ 55). DOT then billed EJM for the full amount of the underlying USDA debt, plus an additional charge for DOT's “costs for collection.” (Id.). “This additional charge is a ‘cross-servicing fee,' which DOT's Fiscal Service's Debt Management Service (‘DMS') charges to debt-referring agencies.” (Doc. 80 at 2 (citing Doc. 71 at 4)). Each fiscal year, DOT sets the cross-servicing fee, which the Court refers to as “the Fee.” DOT says that it is based upon the collection costs necessary to recover debts. (Id. (citing Doc. 71 at 4)). EJM challenges DOT's assessment of the Fee to its underlying debt. (See Doc. 81, ¶ 104-

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35). Specifically, EJM says the Fee “is a rule that is arbitrary and capricious and is an abuse of agency discretion; that was adopted without observance of required procedures; and that lacked substantial evidence.” (Doc. 81, ¶ 124).

DOT filed a Motion to Dismiss the First Amended Complaint on February 10, 2021. (Doc. 37). After the parties briefed the matter, the Court sought additional information about DOT's collection process. (Doc. 63). While briefing was underway, Plaintiff filed a Motion to Amend the Complaint (Doc. 74), seeking to file a second amended complaint. In an August 2021 Opinion and Order, the Court denied DOT's Motion to Dismiss (Doc. 37), and granted EJM leave to file the Second Amended Complaint (Doc. 81). (Doc. 80).

DOT now challenges the Second Amended Complaint in multiple ways. (Doc. 84). First, DOT asks the Court to vacate its prior opinion (Doc. 80). Traveling familiar ground, DOT argues: it is immune; there is no cognizable claim under the Declaratory Judgment Act; and it is not a proper party. Next, making new arguments, DOT says EJM's claims lack standing and its claims are not ripe; and even if they are, EJM cannot win because the Fee is an interpretive rule not subject to notice and comment rulemaking requirements. Alternatively, and finally, DOT argues that claims against it should wait until the underlying claims against USDA and Customs and Border Patrol (“CBP”) are resolved. The parties have fully briefed the issues. (Docs. 84, 87, 90).

II. DISCUSSION

A. Motion to Vacate

The Court previously held that the Administrative Procedures Act (“APA”) waived DOT's sovereign immunity and subject-matter jurisdiction exists in this case. (Doc. 80 at 5). It also held that DOT is a proper party. (Id. at 18). DOT now asks the Court, in its discretion, to vacate its prior Opinion and Order. (Doc. 84 at 12-13). The Court declines to do so.

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Federal Rule of Civil Procedure 54(b) states:

[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities

Fed. R. Civ. P. 54. Thus, “[d]istrict courts possess the authority and discretion to reconsider and modify interlocutory judgments any time before final judgment.” Rodriguez v. Tennessee Laborers Health & Welfare Fund, 89 Fed.Appx. 949, 952 (6th Cir. 2004). And “yet that does not make all pretrial orders inherently tentative” because “[m]any other orders . . . are made with the expectation that they will be the final word on the subject addressed.” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 n.14 (1983). When evaluating whether there is sufficient justification to reconsider an interlocutory order, district courts consider whether there has been “(1) an intervening change of controlling law; (2) new evidence available; or (3) a need to correct a clear error or prevent manifest injustice.” Luna v. Bell, 887 F.3d 290, 297 (6th Cir. 2018). In exercising this discretion, the Court is “guided by concerns of finality and judicial economy on the one hand, balanced against the court's ultimate responsibility to reach a correct judgment, on the other.” Stryker Corp v. TIG Ins. Co., No. 1:05-CV-51, 2014 WL 198678, at *2 (W.D. Mich. Jan. 15, 2014), aff'd sub nom. Stryker Corp. v. TIG Ins. Co., No. 1:05-CV-51, 2014 WL 1328151 (W.D. Mich. Apr. 1, 2014).

Just five months ago, the Court considered and rejected DOT's arguments. Specifically, the Court held that the APA waived DOT's sovereign immunity for purposes of this lawsuit (Doc. 80 at 5-17), and because DOT assessed the Fee, it was the proper party to be sued (id. at 18). Since that ruling, the law has not changed; no new evidence has been presented; and there is no concern that a manifest injustice has occurred. Guided by concerns of finality and efficiency-and

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confidence that the previous ruling was correct-the Court declines to vacate the prior Opinion and Order (Doc. 80).

B. Jurisdiction

The Court next turns to DOT's new jurisdictional arguments. The challenge has two parts. First, DOT questions whether EJM has standing to sue. And, second, DOT argues that EJM's claims are not yet ripe. (Doc. 84 at 14-20).

1. Standing

Standing, derived from Article III of the Constitution, requires that “a litigant ‘prove that he has suffered a concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision.'” Carney v. Adams, 141 S.Ct. 493, 498 (2020) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). Thus, when broken down, standing has three elements: injury-in-fact, traceability, and redressability.

a. Injury-in-fact

To demonstrate an injury-in-fact, a plaintiff must show that “he has sustained or is immediately in danger of sustaining some direct injury as the result of the challenged official conduct and the injury or threat of injury must be both real and immediate, not conjectural or hypothetical.” City of Los Angeles v. Lyons, 461 U.S. 95, 101-02 (1983) (internal quotation marks omitted). The injury must be “over and above the abstract generalized grievance suffered by all citizens ....” Carney, 141 S.Ct. at 499. Time and again, courts have held that economic harm satisfies the requirement. See, e.g., Czyzewski v. Jevic Holding Corp., 137 S.Ct. 973, 983 (2017) (“For standing purposes, a loss of even a small amount of money is ordinarily an ‘injury.'”); Carpenters Indus. Council v. Zinke, 854 F.3d 1, 5 (D.C. Cir. 2017) (“Economic harm to a business clearly constitutes an injury-in-fact.”).

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Here, EJM experienced an injury-in-fact because it suffered an economic harm: DOT billed EJM for the Fee. Arguing otherwise, DOT says that the Fee is too speculative to be a concrete injury because the Fee might go away if EJM wins its underlying challenge against USDA. (Doc. 84 at 16 (“There is . . . no guarantee that EJM will ever pay the costs related to Treasury fees in full because those fees are charged to and collected from federal agencies on a contingency basis-i.e. fees are charged only on amounts actually collected.”)). But, at the time this suit was filed, EJM owed (and still owes) the underlying debt plus the Fee. That timing is what matters. See Cleveland Branch, NAACP v. City of Parma, 263 F.3d 513, 524 (6th Cir. 2001) (holding that standing is determined at the time a complaint is filed). Further, even if EJM prevails in its challenge to the underlying debt, its challenge to the Fee will continue. (Doc. 87 at 6). This is so because EJM conceded liability for part of the underlying debt, and it paid that undisputed portion. (Id.). Because the debt already had been referred to DOT, DOT applied part of the payment to the Fee, rather than the principal. (Id.). So the Fee already has caused EJM economic harm.

b. Traceability

Next, a plaintiff must show “a causal connection” between the injury and the challenged action. Garland v. Orlans, PC, 999 F.3d 432, 440 (6th Cir. 2021) (citing Lujan, 504 U.S. at 560) (internal brackets and quotation marks omitted). Said differently, the injury must be “traceable to the challenged action of the defendant, not some independent action of some third party.” Id. at 440-41 (citing Lujan, 504 U.S. at 560) (internal brackets and quotation marks omitted). EJM has demonstrated traceability. Notably, this requirement is “relatively modest[.]” Bennett v. Spear, 520 U.S. 154, 170-71 (1997) (finding it “not difficult to conclude” the petitioners met their

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traceability burden which “at this stage of the litigation” is light). It is undisputed that DOT calculated and issued the Fee applied to EJM's debt.

Still, DOT argues that the harm is not directly traceable to it; rather, it is “directly traceable only to EJM's failure to timely and fully pay the underlying debt . . . and not to any action of the government.” (Doc. 84 at 16 (citing Buchholz, 946 F.3d 855)). In other words, if EJM had paid its underlying debt, which EJM challenges in part, then the Fee would not have been assessed. So, says DOT, EJM's harm is self-inflicted.^[1] But this...