Phillips v. Spencer

• Decision Date: 15 July 2019
• Docket Number: No. 11-cv-02021 (EGS),11-cv-02021 (EGS)
• Parties: Sebastian PHILLIPS, et al., Plaintiffs, v. Richard V. SPENCER, Secretary of the Navy, et al., Defendants.
• Court: U.S. District Court — District of Columbia

390 F.Supp.3d 136

Sebastian PHILLIPS, et al., Plaintiffs,

v.Richard V. SPENCER,¹ Secretary of the Navy, et al., Defendants.

No. 11-cv-02021 (EGS)

United States District Court, District of Columbia.

Signed July 15, 2019

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

Marsha Wellknown Yee, Claire M. Whitaker, U.S. Attorney's Office for the District of Columbia, Washington, DC, Douglas Michael Grimsley, Dickie, McCamey & Chilcote, P.C., Pittsburgh, PA, Melissa H. Katz, Stephen Anthony Horvath, Bancroft, McGavin, Horvath & Judkins, P.C., D. Stephenson Schwinn, Jordan, Coyne LLP, Fairfax, VA, Philip John Harvey, Harvey & Binnall, PLLC, Alexandria, VA, Michael Joseph Marinello, Kagan Law Group LLC, Jonathan P. Kagan, Pro Hac Vice, Baldwin, Kagan & Gormley, LLC, Annapolis, MD, for Defendants.

MEMORANDUM OPINION

Emmet G. Sullivan, United States District Judge

Plaintiff Sebastian Phillips ("Mr. Phillips"), a Naval Architect, and his architecture and engineering firm, Plaintiff Marine Design Dynamics, Inc. ("MDD"), allege that they have been effectively debarred from future government contracts with the United States Department of the Navy since 2011. Plaintiffs sued the Secretary of the Navy, the Chief and Deputy Chief of Naval Operations, and four officials of the Naval Sea Systems Command ("NAVSEA") and Operational Logistics Integration Program ("OPLOG") (collectively, the "Federal Defendants"). Plaintiffs contend that the Federal Defendants violated the Fifth Amendment to the United States Constitution by blacklisting MDD from government contracting without due process. The Federal Defendants deny these allegations, listing several contracts and government work awarded by the Navy to MDD as proof against any alleged de facto debarment. Plaintiffs do not dispute that MDD received more than $14 million in contracts, purchase orders, delivery orders, and funding modifications between 2011 and 2016. Rather, Plaintiffs argue that they were de facto debarred from competing for OPLOG work and Military Sealift Command ("MSC") work. Plaintiffs also assert common-law tort claims against four former MDD employees and two Navy officials.

Pending before the Court are the parties' motions: (1) the Federal Defendants' Renewed Motion to Dismiss, or in the alternative, for Summary Judgment as to Counts I, II, and IX; (2) Plaintiffs' Motion for Partial Summary Judgment as to Count I; (3) the parties' cross-motions for summary judgment as to Counts VI and VIII against Defendant Matthew Miller ("Mr. Miller"); and (4) Plaintiffs' Motion for Entry of Order for Summary Judgment. Upon careful consideration of the parties' submissions, the applicable law, and the entire record, the Court concludes that: (1) Plaintiffs have not met the high standard of proving de facto debarment, and Defendants Charles Traugh ("Mr. Traugh") and Michael Bosworth ("Mr. Bosworth") are entitled to qualified immunity; (2) Plaintiffs' tort claims against Defendant William Robinson ("Mr. Robinson") and Mr. Traugh fall under the Federal Tort Claims Act; (3) Plaintiffs have not met their burden of demonstrating that Mr. Robinson and Mr. Traugh were acting outside the scope of their employment; thus, the United States will be substituted as the defendant as to the tort claims asserted against Mr. Traugh and Mr. Robinson pursuant to the Westfall Act; (4) the United States has not waived its sovereign immunity for the tort claims against Mr. Robinson and Mr. Traugh; (5) the undisputed facts demonstrate that Mr. Miller did not breach his fiduciary duty owed to MDD; and (6) Plaintiffs' civil conspiracy claim as to Defendant Miller fails as a matter of law. Accordingly, the Court GRANTS the Federal Defendants' Renewed Motion to Dismiss, or in the alternative, for Summary Judgment as to Counts I, II, and IX, and DENIES Plaintiffs' Motion for Partial Summary Judgment as to Count I. The Court DENIES AS MOOT Plaintiffs' Motion for Entry of Order for Summary Judgment. Finally, the Court GRANTS Defendant Miller's Motion for Summary Judgment as to Counts VI and VIII, and DENIES Plaintiffs' Motion for Summary Judgment as to Counts VI and VIII.

I. Background

The Court assumes the parties' familiarity with the factual background and the long history of this litigation, which are set forth in the Court's two prior opinions. See Phillips v. Mabus , 894 F. Supp. 2d 71 (D.D.C. 2012) (" Phillips I "); see also Phillips v. Mabus , 319 F.R.D. 36 (D.D.C. 2016) (" Phillips II "). The following facts—drawn from the parties' submissions—are undisputed, except where indicated.

A. MDD's Work for the Navy

In 2005, Mr. Phillips, a Naval Architect, formed MDD. Am. Compl., ECF No. 42 at 4 ¶ 6.² MDD is a Naval architecture and marine engineering firm based in the District of Columbia. See, e.g., Phillips I , 894 F. Supp. 2d at 77. Mr. Phillips serves as MDD's president and chief executive officer. Fed. Defs.' Statement of Material Facts Not in Genuine Dispute ("SOMF"), ECF No. 88 at 3 ¶ 2. The firm specializes in ship energy conservation, and it primarily serves as a government contractor and subcontractor for the Navy and its components. Phillips I , 894 F. Supp. 2d at 77-78 ; see also Def. Miller's Opp'n, ECF No. 133 at 1-2 (noting that MDD's website lists contracts valued at more than $44 million).³ Relevant here is MDD's government contracting work under a subcontract with Computer Sciences Corporation ("CSC") and a contract with the MSC.

1. MDD and CSC Subcontract

Between 2006 and 2011, MDD was one of the subcontractors for CSC, see Am. Compl., ECF No. 42 at 6 ¶ 23, and CSC was one of the contractors supporting the Navy's OPLOG. Fed. Defs.' SOMF, ECF No. 88 at 4 ¶ 10. The Navy, through its SeaPort-e program, awarded CSC a contract to provide support services to NAVSEA.⁴ Decl. of Robert C. Beaubien ("Beaubien Decl."), ECF No. 88-1 at 2-3 ¶¶ 2-3. Under that contract, CSC and MDD entered into "a firm-fixed price, indefinite-delivery, indefinite quantity [sub]contract under which MDD provided services only when it received a task order from CSC to do so." Id. at 3 ¶ 4. In turn, MDD subcontracted AirClean Technologies, Inc. ("AirClean"), a company based in Seattle, Washington, to assist MDD with its work under the CSC-MDD subcontract. Decl. of Sebastian Phillips ("Phillips Decl."), ECF No. 94-1 at 3 ¶¶ 13-15. The period of performance for the CSC-MDD subcontract commenced on June 18, 2009 and ended on April 4, 2014. Fed. Defs.' Ex. B, ECF No. 88-2 at 12.

As CSC's senior program manager, Robert C. Beaubien ("Mr. Beaubien") was CSC's contract monitor for MDD, and his duties consisted of, inter alia , managing its subcontractors' performance and payments under CSC's contract with NAVSEA. Fed. Defs.' SOMF, ECF No. 88 at 4 ¶ 11. The CSC-MDD subcontract provided that "CSC [was] under no obligation to issue any Task Orders" to MDD. Fed. Defs.' Ex. B, ECF No. 88-2 at 6. It also stated that "[t]he value for services to be provided by [MDD] will be specified in each Task Order" and that "in no way obligates CSC to award Task Orders under this Agreement ...." Id. at 5.

Based on NAVSEA's instructions, CSC distributed the OPLOG work to subcontractors like MDD. See Beaubien Decl., ECF No. 88-1 at 3 ¶ 5. Mr. Beaubien oversaw MDD's services to OPLOG. Fed. Defs.' SOMF, ECF No. 88 at 4 ¶ 11. OPLOG's program manager, Mr. Traugh, contacted Mr. Beaubien regarding the OPLOG work, and Mr. Traugh provided "informal" guidance on how CSC should distribute the OPLOG work. Beaubien Decl., ECF No. 88-1 at 3 ¶ 5. In 2011, Mr. Traugh "directed all OPLOG projects, including those which Plaintiffs were subcontractors to, and coordinated directly with the Navy." Pls.' SOMF, ECF No. 107 at 5 ¶ 13. Mr. Traugh and NAVSEA's chief technology officer, Mr. Bosworth, had the authority to manage the programs concerning OPLOG's relationship with Plaintiffs. See, e.g., id. at 5 ¶ 12; Fed. Defs.' Mot. to Dismiss, ECF No. 88 at 40 n.25 (citing Phillips I , 894 F. Supp. 2d at 86 n.5 ).

On behalf of MDD, Mr. Phillips submitted a monthly package of status reports and invoices to Mr. Beaubien, and Mr. Beaubien sent MDD's package to OPLOG's program manager, Mr. Traugh, for his approval. Fed. Defs.' SOMF, ECF No. 88 at 9 ¶ 33. Mr. Traugh and OPLOG's assistant program manager, Mr. Robinson, managed OPLOG's funding, planned the expenditures of those funds for various tasks, and assigned certain tasks to MDD. Id. at 9 ¶¶ 31-32. MDD's three employees—Defendants Michael Mazzocco ("Mr. Mazzocco"), Volker Stammnitz ("Mr. Stammnitz"), and William Muras ("Mr. Muras")—performed the OPLOG work, and they discussed task assignments with Mr. Traugh and Mr. Robinson. See Fed. Defs.' SOMF, ECF No. 88 at 9 ¶ 34.

Prior to fiscal year 2012, after receiving an e-mail from Mr. Phillips in April 2011 about the status of a "new task" order for OPLOG work, Mr. Beaubien responded that the task was under "[c]ompliance [r]eview." Id. at 5 ¶ 14. Mr. Beaubien also stated that Mr. Traugh "wants me to reduce [MDD's] allocation by $700[,000]" in order "to fund these other new start-ups." E-mail from Mr. Beaubien, CSC, to Mr. Phillips (Apr. 13, 2011), Pls.' Ex. G, ECF No. 42-1 at 58. In May 2011, CSC issued MDD a task order modification for OPLOG work in the amount of $1,707,522, noting that it reflected a "$700,000 deobligation underway." Fed. Defs.' SOMF, ECF No. 88 at 5-6 ¶ 17. In June 2011, CSC issued MDD another task order modification for OPLOG work in the amount of $1,192,522, which established the final funding for fiscal year 2011. Id. at 6 ¶ 18. CSC disbursed the remainder of the $700,000 reallocation to its own employees and other subcontractors, such as Gryphon Technologies and D & K Engineering. Beaubien Decl., ECF No. 88-1 at 5 ¶ 7.

From March 2011 to June 2011, MDD's three senior-level employees who worked on OPLOG projects under the CSC-MDD subcontract resigned from the firm. E.g. , Pls.' SOMF, ECF No. 107 at 6...