Rothe Development Corp. v. Department of Defense

• Decision Date: 28 June 2005
• Docket Number: No. 04-1552.,04-1552.
• Parties: ROTHE DEVELOPMENT CORPORATION, Plaintiff-Appellant, v. DEPARTMENT OF DEFENSE and Department of the Air Force, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

413 F.3d 1327

ROTHE DEVELOPMENT CORPORATION, Plaintiff-Appellant, v. DEPARTMENT OF DEFENSE and Department of the Air Force, Defendants-Appellees.

No. 04-1552.

United States Court of Appeals, Federal Circuit.

June 28, 2005.

COPYRIGHT MATERIAL OMITTED

David F. Barton, The Gardner Law Firm, of San Antonio, Texas, argued for plaintiff-appellant. With him on the brief was Jay K. Farwell.

David White, Attorney, Appellate Section, Civil Rights Division, United States Department of Justice, of Washington, DC, argued for defendants-appellees. With him on the brief were R. Alexander Acosta, Assistant Attorney General, Sheldon Bradshaw, Deputy Assistant Attorney General, and David K. Flynn, Chief.

John H. Findley, Pacific Legal Foundation, of Sacramento, California, for amici curiae Pacific Legal Foundation and Center for Equal Opportunity.

Before MICHEL, Chief Judge, NEWMAN and GAJARSA, Circuit Judges.

MICHEL, Chief Judge.

Rothe Development Corporation ("Rothe") appeals from the judgment of the United States District Court for the Western District of Texas. The primary issue in this appeal is the district court's grant of summary judgment to the United States Department of Defense and the United States Department of the Air Force (collectively, the "government") on Rothe's claim of facial unconstitutionality as to the presently applicable, 2002 reauthorization of section 1207 of the National Defense Authorization Act of 1987, Pub.L. No. 99-661, 100 Stat. 3859, 3973 (1986), codified at 10 U.S.C. § 2323, as amended by the Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub.L. No. 107-314, § 816, 116 Stat. 2458, 2610 (2002). See Rothe Dev. Corp. v. United States Dep't of Def., 324 F.Supp.2d 840 (W.D.Tex.2004) ("Rothe IV"). The government urges that we lack jurisdiction over this constitutional issue because it is unripe for adjudication and for other reasons. Also at issue are the district court's holdings that Rothe's damages and equitable-award-of-a-contract claims are moot, as well as the district court's denial of Rothe's motion for attorney fees related to other claims on which Rothe prevailed.

This case was submitted for decision after oral argument on March 7, 2005. We hold that we do have jurisdiction to consider the facial constitutionality of the present reauthorization of section 1207 but that the record is inadequate to decide the issue because the district court declined to provide the necessary opportunity to expand the record despite explicit remand instructions. We, therefore, have no option but, once again, to vacate and remand to the district court for necessary development of the evidentiary record. We further hold that Rothe's damages claim is not moot but its equitable award of a contract claim is moot. Finally, we hold that because Rothe did not preserve for appeal its contention that the district court erred in denying its request for attorney fees, the denial stands.

I

We have considered this case in a prior appeal. Rothe Dev. Corp. v. United States Dep't of Def., 262 F.3d 1306 (Fed.Cir.2001) ("Rothe III"); see also Rothe Dev. Corp. v. United States Dep't of Def., 194 F.3d 622 (5th Cir.1999) ("Rothe II") (transferring the case to this court); Rothe Dev. Corp. v. United States Dep't of Def., 49 F.Supp.2d 937 (W.D.Tex.1999) ("Rothe I").

Because we extensively discussed the factual and legal background of this case in Rothe III, we need not repeat the details here. See Rothe III, 262 F.3d at 1313-16. In short, Rothe alleges that it was denied equal protection under the Fifth Amendment's Due Process Clause by the enactment and application of section 1207, which provides certain benefits to businesses controlled by socially and economically disadvantaged individuals ("SDBs"). Section 1207 sets a goal that five percent of the total dollar amount of defense contracts per year be awarded to SDBs. Regulations enacted pursuant to section 1207 provide mechanisms for achieving that goal. The mechanism most important in this case is the price-evaluation adjustment, which authorized a contracting agency of the Department of Defense to raise the bid of non-SDB bidders by as much as ten percent.

Section 1207 was originally enacted for a three-year time period to end in 1990. Prior to the most recent reauthorization, section 1207 was reauthorized in 1989 for the period from 1990 to 1993, in 1992 for the period from 1993 to 2000, and in 1999 for the period from 2000 to 2003. See Rothe III, 262 F.3d at 1313-14 (collecting citations to prior reauthorizations). Most recently, in December 2002, section 1207 was reauthorized through September 2006. Bob Stump National Defense Authorization Act for Fiscal Year 2003, Pub.L. No. 107-314, § 816, 116 Stat. 2458, 2610 (2002).

Rothe alleges that it was harmed by the application of section 1207 to the bidding process for a contract for computer-related services with an Oklahoma Air Force base in 1998. Although Rothe submitted the lowest bid, it lost the contract to International Computer and Telecommunications, Inc. ("ICT") when Rothe's bid was increased by ten percent because ICT qualified as an SDB and Rothe did not. Rothe brought suit in federal district court alleging, inter alia, that section 1207 is unconstitutional as enacted and applied. The district court granted summary judgment in favor of the government. Rothe I, 49 F.Supp.2d at 953-54.

In Rothe III, we reversed the district court's judgment, holding that the district court did not properly apply strict scrutiny in analyzing the constitutionality of section 1207 and that it erred in relying on evidence that post-dated the various reauthorizations of section 1207 under consideration. 262 F.3d at 1332. On remand, the district court held that Rothe's claim to damages and to an equitable award of the 1998 contract were moot. On the merits, the district court held that the reauthorization of section 1207 in 1992 was facially unconstitutional but the present, i.e., 2002, reauthorization was not. Rothe IV, 324 F.Supp.2d at 860. Because the government did not appeal the district court's decision as to the invalidity of the 1992 reauthorization, only the present reauthorization is before us on appeal. The district court also denied Rothe's request for attorney fees.

Rothe filed a timely notice of appeal from the final judgment of the district court and we have jurisdiction under 28 U.S.C. § 1295(a)(2).

II

Rothe has made claims for (A) damages, (B) an equitable award of the 1998 contract, and (C) a declaration that section 1207 is facially unconstitutional. The government argues that jurisdiction is lacking for each of these claims for one or more of the following reasons: the claim is moot, Rothe lacks standing to assert the claim, and the claim is unripe.

A

Considering first Rothe's claim to damages, the district court held, and the government argues on appeal, that jurisdiction over Rothe's damages claim is lacking on mootness grounds because the government has already tendered the maximum amount to which Rothe could be entitled.¹ In general, a claim must be dismissed as moot "when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome." City of Erie v. Pap's A.M., 529 U.S. 277, 287, 120 S.Ct. 1382, 146 L.Ed.2d 265 (2000) (internal quotation omitted). The tender of the entire amount of damages claimed by a plaintiff moots the damages claim. A.A. Allen Revivals, Inc. v. Campbell, 353 F.2d 89, 90 (5th Cir.1965) (per curiam); Holstein v. City of Chicago, 29 F.3d 1145, 1147 (7th Cir.1994) ("Once the defendant offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate . . . ." (internal quotation omitted)).

In this case, the district court held that Rothe's damages claim is moot because the government tendered $10,000, which is the maximum amount available to Rothe for a Little Tucker Act claim, see 28 U.S.C. § 1346(a)(2), and the maximum amount claimed in the First Amended Complaint. Rothe disagrees, contending that $10,000 "was never paid by the Government or accepted by Rothe." Rothe thus disputes both whether a tender was made and whether a tender, if made, was accepted. Addressing the latter contention first, Rothe's claimed non-acceptance of a tender is irrelevant because a plaintiff may not prolong a case merely by refusing to accept a valid tender. Holstein, 29 F.3d at 1147 (holding that a plaintiff "may not spurn this offer of all the damages he is owed and proceed to trial").

The questions remains, however, whether a valid tender was made by the government. "The essential characteristics of a tender are an unconditional offer to tender, coupled with a manifested ability to carry out the offer, and production of the subject matter of the tender." Riley-Stabler Constr. Co. v. Westinghouse Elec. Corp., 396 F.2d 274, 278 (5th Cir.1968) (internal quotation omitted).

Because the facts surrounding the government's alleged tender of $10,000 are not described in sufficient detail in the district court's summary judgment order or the record on appeal, we questioned the parties at oral argument. Government counsel stated:

[T]he government did offer $10,000 to Rothe, submitted a letter stating that it would satisfy Tucker Act damages of $10,000. There is a letter to that effect that was written by the Employment Litigation Division of DOJ that was sent to Rothe. . . . I presume that Rothe either rejected it or did not respond because I don't know of any reply that Rothe made.

Even assuming government's counsel's factual contentions to be true, they do not suffice to show a tender. At most, the government's contentions demonstrate only an offer to tender. Under Riley-Stabler Construction, however, a mere offer to perform does not suffice. 369 F.2d at 278. Because the government has provided no evidence that it produced the subject matter of the tender, e.g., by providing Rothe with a $10,000 check or...