State v. United States

• Decision Date: 24 June 2016
• Docket Number: Case No. 15-cv-04907-DDC-KGS
• Citation: 192 F.Supp.3d 1184
• Parties: STATE OF KANSAS, by and through the Kansas Department for Children and Families, Plaintiff, v. UNITED STATES, by and through Honorable Ashton B. Carter, Secretary of Defense, and Honorable Patrick J. Murphy, Secretary of the Army, Defendant, and SourceAmerica and Lakeview Center, Inc., Intervenor Defendants.
• Court: U.S. District Court — District of Kansas

192 F.Supp.3d 1184

STATE OF KANSAS, by and through the Kansas Department for Children and Families, Plaintiff,

v. UNITED STATES, by and through Honorable Ashton B. Carter, Secretary of Defense, and Honorable Patrick J. Murphy, Secretary of the Army, Defendant,andSourceAmerica and Lakeview Center, Inc., Intervenor Defendants.

Case No. 15-cv-04907-DDC-KGS

United States District Court, D. Kansas.

Signed June 24, 2016

David W. Davies, III, Kansas Department for Children and Families, Topeka, KS, Peter A. Nolan, Winstead PC, Austin, TX, for Plaintiff.

D. Brad Bailey, Jackie A. Rapstine, Office of United States Attorney, Topeka, KS, for Defendant.

Andrew Mercer Treaster, Craig A. Holman, Robert Derise, Sonia Tabriz, Arnold

& Porter, LLP, Washington, DC, for Intervenor Defendants.

MEMORANDUM AND ORDER

Daniel D. Crabtree, United States District Judge

This case comes before the court on two motions. First, the intervenor defendants, SourceAmerica and Lakeview Center, Inc., have moved to dismiss for lack of jurisdiction and, alternatively, to alter, amend, or vacate the preliminary injunction (Doc. 37). Plaintiff Kansas has filed its Memorandum in Opposition (Doc. 50) and intervenors have filed their Reply (Doc. 51). Second, Kansas has requested leave to file a surreply brief (Doc. 55). For reasons explained below, the court denies the first motion, but grants the second.

I. The Intervenors

The dispute here involves two acts of Congress that govern services provided to the federal government: the Randolph-Sheppard Vending Facility Act of 1936 (commonly referred to as the "RSA") and the Javits-Wagner-O'Day Act (commonly, the "JWOD"). Earlier in this case, the court issued an injunction against the United States Army. This Order preliminary enjoined the Army from

conducting any procurement, including making any award of contract in connection with cafeteria services at Fort Riley, except as permitted under the RSA and its regulations, until such time as the arbitration proceeding initiated by Kansas under the RSA is concluded, or further order modifying this preliminary injunction.

Docs. 26 at 7; 28 at 33. About a month later, SourceAmerica and Lakeview Center, Inc. ("intervenors") appeared and asked to intervene. See Doc. 32.

The court briefly expands on the facts of this case to explain how the intervenors fit in this dispute.¹ The JWOD requires the Army to procure services on the Procurement List from an AbilityOne designated qualified nonprofit agency. See 41 U.S.C. § 8504. Intervenor SourceAmerica is the central nonprofit agency designated by the AbilityOne Commission to help identify suitable nonprofit agencies employing persons with significant disabilities to provide the services on the Procurement List. See 41 U.S.C. § 8503(c) (explaining that a central nonprofit agency "facilitate[s] the distribution...of orders of the Federal Government for products and services on the procurement list among qualified nonprofit agencies").² SourceAmerica may charge and collect certain fees from facilitating those nonprofits' sales to the federal government. See 41 C.F.R. § 51–3.5. Intervenor Lakeview Center, Inc. ("Lakeview") is one such qualified nonprofit agency.

With Kansas' RSA contract with the Army set to expire on August 31, 2015, Fort Riley's contracting authorities approached SourceAmerica to see if the AbilityOne Commission wished to add Fort Riley's Dining Facility Attendant ("DFA")³ services contract to the Procurement List under the JWOD. And, on July 17, 2015, the AbilityOne Commission published the proposed addition of the DFA services to the Procurement List in the Federal Register , providing an opportunity for public comment. This proposed addition listed Lakeview as the "Mandatory Source of Supply." Less than a week later, on July 22, 2015, Kansas filed its Complaint (Doc. 1) here, seeking to enjoin the Army from conducting "any procurement of cafeteria services" until a Department of Education (DOE) arbitration proceeding under the RSA had concluded. Doc. 1 at 6. Then, the Army and Kansas agreed to extend their existing contract until February 29, 2016. But the Procurement List process continued. And, on January 22, 2016, the AbilityOne Commission approved the addition of DFA services to the JWOD Procurement List with an effective date of February 21, 2016.

When Kansas learned that the Army planned to move forward with procurement under the JWOD after the Fort Riley contract expired February 29, 2016, Kansas filed its Motion for Preliminary Injunction (Doc. 17) on February 3, 2016. The court held a preliminary injunction hearing and issued the preliminary injunction described above on February 26, 2016. The court also stayed the case pending further motions or the outcome of the arbitration proceeding.

Then, intervenors filed their Motion to Intervene (Doc. 32). Though it questioned the timeliness of their request to intervene, the court granted intervenors' motion. Intervenors since have asserted that the court erred by enjoining the Army, and this position relies on four principal arguments.

First, intervenors assert that our court has no business hearing this case. They claim that Kansas has asserted what is, in essence, a bid protest and that, in the Tucker Act, Congress assigned exclusive jurisdiction over such challenges to the United States Court of Federal Claims. No party had questioned subject matter jurisdiction before intervenors arrived and made this argument. Naturally, questions about subject matter jurisdiction raise important issues for the federal courts—even when the challenge asserts that exclusive jurisdiction exists in some other federal court. Since intervenors made this argument, the court has examined the issue closely. As this Order explains, the court has concluded that the Tucker Act does not deprive this court of subject matter jurisdiction over the claims Kansas asserts here.

Second, intervenors contend, even if the Court of Federal Claims does not have exclusive jurisdiction, our court still cannot exercise jurisdiction until arbitration is exhausted because the RSA's exhaustion requirement is a jurisdictional prerequisite. Again, neither of the original parties had made this jurisdictional argument. The court thus considered the preliminary injunction request under Federal Rule of Civil Procedure 65 and its incidental equitable jurisdiction to preserve the status quo. As explained below, the court concludes that it was proper to do so. The RSA's arbitration provision is not jurisdictional and the court had discretion to excuse exhaustion and consider the preliminary injunction motion because an exception to exhaustion, irreparable harm, existed.

Third, intervenors argue that, even if it had jurisdiction to consider Kansas' preliminary injunction motion, the court applied the wrong legal standard. They argue that Kansas must meet a heightened burden for a preliminary injunction because the injunction is a disfavored one. Intervenors also assert that the only possible source of authority for an injunction comes from the All Writs Act, which required Kansas to shoulder a heightened burden. Here again, intervenors make new arguments that no one advanced earlier when the parties litigated the injunction motion. Nonetheless, the court closely has examined intervenors' new arguments. And it now concludes—as similar cases have concluded—that the court has incidental jurisdiction to issue a status quo injunction under the traditional test governing preliminary injunction requests.

And last, intervenors argue that the court committed clear error by disregarding the 2015 NDAA Joint Explanatory Statement. Months after they originally made this argument, intervenors informed the court of new developments under the NDAA. See Doc. 58. The court's original injunction Order considered the Joint Explanatory Statement in detail. And the court is not persuaded that the new developments alter this analysis.

As the court noted in its original Order, the preliminary injunction's purpose is to preserve the status quo until the controversy's merits are tried. See Doc. 28 at 13 (citing Univ. of Tex. v. Camenisch , 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981) ). But, throughout its existence, a preliminary injunction must satisfy the four equitable factors identified by our Circuit. See id. at 13–14 (citing Gen. Motors Corp. v. Urban Gorilla, LLC , 500 F.3d 1222, 1226 (10th Cir.2007) ). If intervenors can show that changed circumstances nullify Kansas' capacity to prevail on all four factors, they may ask the court to vacate the injunction.

The court will begin by addressing Kansas' motion for leave to file a surreply. Then, the court will address intervenors' jurisdictional and non-jurisdictional challenges to the preliminary injunction.

II. Kansas' Motion for Leave to File Surreply

On March 25, 2016, before the court had ruled on intervenors' Motion to Intervene (indeed, the same day intervention was sought), the intervenors prematurely filed their Motion to Dismiss for Lack of Jurisdiction and Motion to Alter, Amend, or Vacate Preliminary Injunction (Doc. 37). Kansas, though opposing intervention, filed its Response to the dismissal motion on April 15, 2016. And intervenors quickly filed their Reply (Doc. 51). When the court granted intervention, Kansas moved for leave to file a surreply brief expanding upon its reasoning for opposing the dismissal motion (Doc. 55).

Kansas seeks leave to file a surreply because the ruling on the intervention motion focused on subject matter jurisdiction. Kansas contends its Surreply, if allowed, would "address further whether this Court has subject matter jurisdiction" and help the court "fully consider [the] vital issues" about subject matter jurisdiction. Doc. 55 at 2–3.

Under D. Kan. R. 7.1(a) and (c), parties are permitted to file a dispositive motion, a response, and a reply. Generally, surreplies are not allowed. Mansoori v. Lappin , No. 04–3241–JAR, 2007 WL 401290, at...