Phillips v. Mabus, Civil Action No. 11–2021 (EGS).

CourtUnited States District Courts. United States District Court (Columbia)
Citation894 F.Supp.2d 71
Docket NumberCivil Action No. 11–2021 (EGS).
PartiesSebastian PHILLIPS, et. al, Plaintiffs, v. Raymond E. MABUS, et. al, Defendants.
Decision Date30 September 2012

894 F.Supp.2d 71

Sebastian PHILLIPS, et. al, Plaintiffs,
Raymond E. MABUS, et.
al, Defendants.

Civil Action No. 11–2021 (EGS).

United States District Court,
District of Columbia.

Sept. 30, 2012.

[894 F.Supp.2d 76]

Bradford Paul Johnson, Johnson Law Group International PLLC, Washington, DC, for Plaintiffs.

Marian L. Borum, U.S. Attorney's Office for the District of Columbia, D. Stephenson Schwinn, Jordan Coyne & Savits, LLP, Washington, DC, Douglas Michael Grimsley, Dickie, McCamey & Chilcote, P.C., Pittsburgh, PA, Stephen Anthony Horvath, Bancroft, McGavin, Horvath & Judkins, P.C., Fairfax, VA, Philip John Harvey, Fiske & Harvey, PLLC, Alexandria, VA, F. Joseph Gormley, Jonathan P. Kagan, Kemp W. Hammond, Baldwin, Kagan & Gormley, LLC, Annapolis, MD, for Defendants.


EMMET G. SULLIVAN, District Judge.

Plaintiffs, Sebastian Phillips and the company he owns, Marine Design Dynamics, Inc. (hereinafter “MDD”), bring suit against various officials in the United States Navy as well as certain of MDD's former employees. Plaintiffs allege they were effectively debarred from government contracting with the Navy without notice and a hearing, in violation of their Fifth Amendment due process rights. Plaintiffs also allege a variety of common law causes of action against MDD's former employees as well as two government employees. When this case was initially filed plaintiffs moved for a temporary restraining order and preliminary injunction against the federal defendants, seeking to enjoin them from de facto debarring MDD from government contracting. On December 7, 2011, following a hearing on plaintiffs' emergency motions, the plaintiffs and federal defendants agreed and stipulated to a consent preliminary injunction. Now pending before the Court are (1) the federal defendants' motion to dismiss, or in the alternative for summary judgment, (2) plaintiffs' motion to enforce the consent preliminary injunction, and (3) motions to dismiss filed by three of plaintiffs' former employees. Upon consideration of the motions, the responses, and the replies thereto, the relevant caselaw and the record in this case as a whole, the motions will be DENIED.

[894 F.Supp.2d 77]


Plaintiff Marine Design Dynamics, Inc., a District of Columbia-based government contractor, is a Naval Architecture firm specializing in ship energy conservation for the Navy and other government clients. In 2006, MDD began working as a subcontractor to Computer Sciences Corporation (“CSC”), performing work under CSC's SeaPort e-prime contract with the Naval Sea Systems Command of the Department of the Navy (“NAVSEA”), contract number N001788–04–D–4030–EHO2. Under CSC's NAVSEA contract, MDD performed work for the Navy's Operational Logistics Integration Program (“OPLOG”) at its Carderock facility. From 2006 through 2011, all the work MDD performed for OPLOG was pursuant to this arrangement under the CSC contract. This work comprised most of MDD's government contracting work, and plaintiffs derive all of their revenue and income from government contracting.

In November 2009, MDD entered into a second contract, this time as a prime contractor for the Navy, to provide engineering and program management services to the energy conservation program for the Combat Logistic Force ships of the Military Sealift Command (“MSC”). That contract, number N00033–10–802, specified a one year term, with an option for MSC to renew for two additional years, until November 2012.

Between March and July of 2011, four key MDD employees who had performed significant work on the OPLOG projects—Michael Mazzocco, Volker Stammnitz, William Muras and Matthew Miller—left MDD. Plaintiffs allege that before leaving MDD, each of the key employees solicited OPLOG management and arranged to take the work they were performing for MDD with them when they left. At least two of the departing employees, Mazzocco and Stammnitz, formed their own businesses to compete with MDD. Plaintiffs allege that after leaving MDD, all four former employees did, in fact, continue to perform the same work for OPLOG as they had performed at MDD. In addition, Mazzocco allegedly spread rumors that MDD was double or triple billing the government for its work. Plaintiffs claim these rumors are false, and that moreover, they have not been given formal notice of the rumors or an opportunity to respond to them. Nevertheless, as a result of the rumors, the government began to deny plaintiffs work. First, on April 13, 2011, plaintiffs were notified that OPLOG manager Charles Traugh was “pulling back” $700,000 of OPLOG work previously budgeted for MDD, under the CSC contract, in FY 2011. Plaintiffs allege that this $700,000 was reallocated to others, including Mazzocco, Stammnitz, Muras, and Miller, who received the money after leaving MDD.

Shortly thereafter, on or about May 18, 2011, Mazzocco, Stammnitz, and Muras met in Boston with NAVSEA and OPLOG employees, including NAVSEA Chief Technology Officer Michael Bosworth, OPLOG program manager Traugh, and assistant program manager William Robinson. Plaintiffs allege that during that meeting, Bosworth and Traugh, working with Mazzocco, Stammnitz and Muras, decided to eliminate MDD entirely from the OPLOG budget in Fiscal Year (“FY”) 2012, and

[894 F.Supp.2d 78]

redirect plaintiffs' work to the departing or already departed MDD employees. Plaintiffs allege that OPLOG's FY 2012 budget, developed by Traugh and Robinson, had included a minimum of $2.7 million for MDD.

During a meeting to review the OPLOG program on July 13, 2011, Bosworth implemented the decisions reached at the May 2011 meeting in Boston. He instructed Traugh that OPLOG was to immediately cease giving any OPLOG work to plaintiffs, and to continue the moratorium through at least FY 2012. On July 28, 2011, Traugh met with plaintiff Phillips and informed him that OPLOG would not be tasking work to MDD for FY 2012 under the CSC prime contract or any existing prime contract. Plaintiffs allege that they have been awarded no new work at OPLOG, through the CSC contract or any other contract, since July 2011.

Without any work to perform at OPLOG, MDD attempted to get additional work through other components of the Navy. Specifically, plaintiffs attempted to obtain work as a subcontractor to Gryphon Technologies, which has a prime contract with NAVSEA. See Am. Compl. Exhibits O, P, Q; see also Fed. Defs.' Mot. to Dismiss or in the Alternative for Summ. J., Ex. C, Decl. of Kevin D. Baetsen (“Baetsen Decl.”), Exs. 1–3. MDD's ability to obtain this work, however, was subject to NAVSEA appointing a government employee to serve as a Technical Point of Contact (“TPOC”). Initially, Tom Martin, director of the energy office at NAVSEA headquarters, agreed to serve as TPOC, but later informed other Navy personnel that he could not do so because he had been informed that there were problems “tracking the money” MDD had charged the government for its OPLOG work. Martin explained that he had been “directed by [his] leadership not to be involved with any contract that includes MDD,” regardless of whether the contract was to perform OPLOG work or work for a different component of the Navy. Am. Complaint ¶¶ 87, 89 (quoting Oct. 7, 2011 email from T. Martin).

Finally, MDD alleges that the defendants attempted to interfere with its existing contract with MSC (contract number N00033–10–802) before it was renewed for FY 2012 by, inter alia, attempting to divert work under that contract to former MDD employees. These alleged attempts were unsuccessful; in the fall of 2011, MSC exercised its final one-year option on its contract with MDD, which will expire in November 2012. Baetsen Decl. ¶ 4.

On November 16, 2011, Plaintiffs initiated this suit against several Navy officials as well as the four former MDD employees discussed above. Plaintiffs moved for a temporary restraining order and preliminary injunction against the federal defendants only, alleging plaintiffs had been de facto debarred from government contracting without notice and a hearing in violation of their fifth amendment right to due process of law. Pls.' Mot. for Temp. Rest. Order at 4–5. Following briefing on the motion, the Court held a hearing on December 7, 2011. At the hearing's conclusion, the parties agreed and stipulated to the entry of a preliminary injunction. See Order Granting Stipulated Prelim. Inj.; see also Minute Order of Dec. 7, 2012. In relevant part, the Stipulated Preliminary Injunction (1) enjoined the government from taking any additional action to implement or spread the de facto debarment, (2) required the Navy to allow MDD to compete for new work and to continue performing contracts it was currently performing under the same standards applicable to other contractors, and (3) required the Navy to communicate the

[894 F.Supp.2d 79]

foregoing information to CSC and Gryphon. See Id.

Following the preliminary injunction proceedings, Plaintiffs filed an Amended Complaint. Count I asserts that the federal defendants violated plaintiffs' constitutional right to due process by blacklisting them for government contracting without procedural safeguards, and seeks declaratory and injunctive relief. Count II asserts the same claims against Bosworth and Traugh in their individual capacities and seeks damages of $2.5 million. Counts III–VIII assert breach of fiduciary duty and civil conspiracy against Mazzocco, Stammnitz, Muras, and Miller, and common law defamation against Mazzocco. Finally, Count IX alleges common law interference with contractual relations by Traugh and Robinson in their official and individual capacities. The federal defendants, as well as Mazzocco, Stammnitz, and Muras have moved to dismiss the Amended Complaint; the federal defendants have also moved in the alternative for summary judgment. Plaintiffs, for their part, have filed a motion to enforce the preliminary injunction. These motions are...

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