Phillips v. Toro

• Decision Date: 19 May 2022
• Docket Number: 11-cv-2021 (EGS)
• Parties: SEBASTIAN PHILLIPS, et al ., Plaintiffs, v. CARLOS DEL TORO, [1] Secretary of the Navy, et al ., Defendants.
• Court: U.S. District Court — District of Columbia

SEBASTIAN PHILLIPS, et al ., Plaintiffs, v. CARLOS DEL TORO, ^[1] Secretary of the Navy, et al ., Defendants.

No. 11-cv-2021 (EGS)

United States District Court, District of Columbia

May 19, 2022

MEMORANDUM OPINION

Emmet G. Sullivan United States District Judge.

I. Introduction

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 eleven individuals on various federal constitutional and state common-law claims.

Plaintiffs brought federal constitutional claims against 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”). In a Memorandum Opinion issued on July 15, 2019, the Court dismissed all of these claims. No federal claims remain before the Court.

Plaintiffs also sued four private individuals, who are former employees of MDD: Michael J. Mazzocco (“Mr. Mazzocco”), William J. Muras (“Mr. Muras”), Volker Stammnitz (“Mr. Stammnitz”), and Matthew K. Miller (“Mr. Miller”). Plaintiffs contend that these defendants are liable for breach of fiduciary duty, defamation, and civil conspiracy. The Court dismissed all claims against Mr. Miller in its July 15, 2019, Memorandum Opinion.

Pending before the Court is a Motion to Dismiss filed by Mr. Mazzocco, Mr. Muras, and Mr. Stammnitz (collectively, the “Individual Defendants”). The Individual Defendants move to dismiss the remaining breach of fiduciary duty, defamation, and civil conspiracy claims against them. Upon careful consideration of the Parties' submissions, the applicable law, and the entire record, the Court will retain supplemental jurisdiction over the remaining claims in the case. Accordingly, the Court DENIES the Individual Defendants' Motion to Dismiss.

II. Background

A. Factual

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 three prior opinions. See Phillips v. Mabus (“Phillips I”), 894 F.Supp.2d 71 (D.D.C. 2012); Phillips v. Mabus (“Phillips II”), 319 F.R.D. 36 (D.D.C. 2016); Phillips v. Spencer (“Phillips III”), 390 F.Supp.3d 136 (D.D.C. 2019). Accordingly, the Court provides only a brief summary of those facts that are relevant to resolving the instant motion to dismiss.

In 2005, Mr. Phillips, a Naval Architect, formed MDD, a District of Columbia-based Naval Architecture firm specializing in ship energy conservation for the Department of the Navy and other government clients. See Am. Compl., ECF No. 42 at 4 ¶¶ 67.^[2] Between 2006 and 2011, MDD was one of the subcontractors for Computer Sciences Corporation (“CSC”), id. at 6 ¶ 23; which served as one of the contractors supporting the Navy's Operational Logistics Integration Program (“OPLOG”), id. at 7-8 ¶¶ 25-30.

Between March 2011 and July 2011, four MDD employees who had performed significant work on the OPLOG projects left MDD:

Mr. Mazzocco, Mr. Stammnitz, Mr. Muras, and Mr. Miller. Id. at 14-21 ¶¶ 45-67. In their Amended Complaint, Plaintiffs allege that all four former employees either started or joined business entities that competed with MDD to perform the same work for OPLOG. See id. Plaintiffs also allege that Mr. Mazzocco spread false rumors that MDD was double- or triple-billing the government for its work. Id. at 16 ¶¶ 52-54.

Shortly thereafter, on or about May 18, 2011, Mr. Mazzocco, Mr. Stammnitz, and Mr. Muras met in Boston with Naval Sea Systems Command (“NAVSEA”) and OPLOG employees. Id. at 21-23 ¶¶ 68-77. Plaintiffs allege that during that meeting, two federal Navy officials, working with the Individual Defendants, decided to eliminate MDD entirely from the OPLOG budget for the following year and redirect Plaintiffs' work to the departing or already-departed MDD employees. Id. Plaintiffs further allege that they have been awarded no new work for OPLOG, through the CSC contract or any other contract, since July 2011. Id. at 25 ¶ 83.

B. Procedural

On January 3, 2012, Plaintiffs filed the Amended Complaint. See generally id. Counts I and II assert federal-question claims against the Federal Defendants, id. at 29-35 ¶¶ 99-126; and Count IX asserts common-law claims against two of the Federal Defendants, id. at 47-49 ¶¶ 193-200. Counts III, IV, V, and VI assert a breach of fiduciary duty claim against Mr. Mazzocco, Mr. Stammnitz, Mr. Muras, and Mr. Miller, respectively. Id. at 35-44 ¶¶ 127-78. Count VII asserts a defamation claim against Mr. Mazzocco. Id. at 44-45 ¶¶ 179-86. Count VIII asserts a civil conspiracy claim against all four individual defendants. Id. at 46 ¶¶ 187-92.

On September 30, 2012, the Court denied the following motions: (1) the Federal Defendants' Motion to Dismiss, or in the alternative, Motion for Summary Judgment, (2) Plaintiffs' Motion to Enforce the Stipulated Preliminary Injunction, and (3) the Motions to Dismiss filed by Mr. Mazzocco, Mr. Stammnitz, and Mr. Muras. Phillips I, 894 F.Supp.2d at 76. The Parties engaged in limited discovery and settlement discussions as to the Federal Defendants only but never reached a resolution. Phillips II, 319 F.R.D. at 37.

On July 15, 2019, after full rounds of briefing, the Court granted the Federal Defendants' Renewed Motion to Dismiss, or in the alternative, for Summary Judgment as to Counts I, II, and IX. Phillips III, 390 F.Supp.3d at 183. The Court also granted Mr. Miller's Motion for Summary Judgment as to Counts VI and VIII. Id.

Thereafter, the Individual Defendants filed the instant Motion to Dismiss the remaining claims for breach of fiduciary duty, defamation, and civil conspiracy. See Defs.' Mot. Dismiss, ECF No. 140; Defs.' Br. Supp. Mot. Dismiss (“Defs.' Mot.”), ECF No. 140-1. Plaintiffs filed a brief in opposition, see Pls.' Opp'n Defs.' Mot. Dismiss (“Pls.' Opp'n), ECF No. 141, and Defendants filed a reply in support of their motion, see Defs.' Reply Supp. Mot. Dismiss (“Defs.' Reply”), ECF No. 142. This motion is ripe and ready for the Court's adjudication.

III. Standard of Review

Federal Rule of Civil Procedure 12(b)(1) provides for dismissal of an action for “lack of subject matter jurisdiction.” Fed.R.Civ.P. 12(b)(1). On a Rule 12(b)(1) motion to dismiss, the party asserting jurisdiction has the burden of establishing that the Court has subject matter jurisdiction over the case. See Logan v. Dep't of Veterans Affs., 357 F.Supp.2d 149, 153 (D.D.C. 2004) (citing McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 182-83, (1936)). “Because Rule 12(b)(1) concerns a court's ability to hear a particular claim, the court must scrutinize the [party]'s allegations more closely when considering a motion to dismiss pursuant to Rule 12(b)(1) than it would under a motion to dismiss pursuant to Rule 12(b)(6).” Schmidt v. U.S. Capitol Police Bd., 826 F.Supp.2d 59, 65 (D.D.C. 2011) (citations omitted).

To assess whether a complaint sufficiently alleges subject matter jurisdiction, the Court accepts as true the allegations of the complaint, see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); and liberally construes the pleadings in the plaintiff's favor, see Barr v. Clinton, 370 F.3d 1196, 1199 (D.C. Cir. 2004). The Court may also consider “undisputed facts evidenced in the record” as well as its own “resolution of disputed facts.” Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992).

IV. Analysis

“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). They “possess only the power authorized by the Constitution and by statute.” Jarkesy v. S.E.C., 803 F.3d 9, 15 (D.C. Cir. 2015). “When a federal court has an independent basis for exercising federal jurisdiction, it may, in certain circumstances, also exercise pendent, or supplemental jurisdiction over related claims under state law.” Women Prisoners of D.C. Dep't of Corr. v. Dist. of Columbia, 93 F.3d 910, 920 (D.C. Cir. 1996).

In United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), the Supreme Court crafted a two-part test to determine when the assertion of jurisdiction over a state law claim is appropriate. First, the district court must determine whether the state and the federal claims “derive from a common nucleus of operative fact”; if they do, the court has the power, under Article III of the Constitution, to hear the state claim. Id. at 725, 86 S.Ct. at 1138. Second, even if it concludes that it has that power, the district court must then decide whether to exercise its discretion to assert jurisdiction over the state issue. Id. at 726, 86 S.Ct. at 1139. The Supreme Court cautioned that

pendent jurisdiction is a doctrine of discretion, not of plaintiff's right. Its justification lies in considerations of judicial economy, convenience and fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims .... Needless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law.

Id. (quoting United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725-26 (1966)). “A district court's decision to resolve state law claims is reviewed for an abuse of discretion.” Id. (citing Edmondson & Gallagher v. Alban Towers Tenants Ass'n, 48 F.3d 1260, 1265-66 (D.C. Cir. 1995)).

In 1990, Congress enacted the supplemental jurisdiction statute, which

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