Trusted Integration, Inc. v. US

• Decision Date: 20 January 2010
• Docket Number: Civil Action No. 09-898 (ESH).
• Citation: 679 F. Supp.2d 70
• Court: U.S. District Court — District of Columbia
• Parties: TRUSTED INTEGRATION, INC., Plaintiff, v. UNITED STATES of America, Defendant.

679 F.Supp.2d 70

TRUSTED INTEGRATION, INC., Plaintiff, v. UNITED STATES of America, Defendant.

Civil Action No. 09-898 (ESH).

United States District Court, District of Columbia.

January 20, 2010.

John A. Bonello, David Brody Dondershine LLP, Reston, VA, for Plaintiff.

Jane M. Lyons, United States Attorney's Office, Washington, DC, for Defendant.

MEMORANDUM OPINION

ELLEN SEGAL HUVELLE, District Judge.

Plaintiff Trusted Integration, Inc., has sued the United States for violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125, unfair competition, and breach of a fiduciary duty. Defendant now moves to dismiss for lack of subject matter jurisdiction, arguing that plaintiff's claims sound in contract, the claims are barred by the Federal Tort Claims Act ("FTCA"), and plaintiff has failed to properly invoke the Lanham Act's sovereign immunity waiver. In the alternative, defendant argues that the Lanham Act claim should be dismissed for failure to state a claim upon which relief can be granted.

BACKGROUND

In 2002, Congress passed the Federal Information Security Management Act ("FISMA"), 44 U.S.C. §§ 3541-3549, as Title III of the E-Government Act. Pub. L. No. 107-347, 116 Stat. 2899. Under FISMA, the National Institute of Standards and Technology must set standards and best practices for information security at federal agencies, and agencies must meet security standards and conduct annual, independent evaluations of their information security. 44 U.S.C. §§ 3543-3545.

Plaintiff is the maker of "TrustedAgent," a software product that allows agencies to automate compliance with FISMA. (Id. ¶¶ 11-12.) The Department of Justice ("DOJ") began using TrustedAgent in December 2003 and purchased a license to use the product "approximately seven months" later. (Id. ¶ 17.) The DOJ complied with other FISMA requirements by using a proprietary program that certified and accredited users of its information systems. (Id. ¶¶ 10, 18.) Together, Trusted Agent and the DOJ program made up the DOJ's "FISMA solution" and were called "Cyber Security Assessment Management" ("CSAM"). (Id. ¶ 18.)

In the summer of 2006, the Office of Management and Budget ("OMB") informed the federal agencies that it was planning to evaluate how they complied with FISMA. (Id. ¶ 20.) Based on the agencies' "capabilities, industry experiences, value, and supporting infrastructure," and a demonstration that "the products and services being offered were being successfully used," OMB would designate several as Centers of Excellence. (Id. ¶¶ 20-21, 28.) Agencies that were not designated as Centers of Excellence would be required to purchase a FISMA solution from one of the Centers. (Id. ¶ 21.) The OMB invited agencies to submit their solutions for consideration. (Id. ¶ 20.)

Plaintiff and the DOJ agreed to submit CSAM. (Compl. ¶ 23.) Plaintiff agreed that Trusted Integration would only participate in the DOJ's proposal. (Id. ¶ 24.) In its proposal, the DOJ included a "Statement of Capabilities," which stated that plaintiff's staff would provide technical services and that TrustedAgent was a part of CSAM. (Id. ¶¶ 31-38.) The agency also performed demonstrations of TrustedAgent as part of its proposal. (Id. ¶ 39.) In February 2007, OMB selected the DOJ and the Environmental Protection Agency as the two Centers of Excellence. (Id. ¶ 41.) On March 13, 2007, the DOJ performed a demonstration for "potential customers of the Centers of Excellence" during a "customer information day." (Id. ¶ 49.) The demonstration suggested that TrustedAgent was a "key component" of its FISMA solution. (Id.)

By late 2006, however, the DOJ had already begun to develop an alternative to TrustedAgent in order to "increase the revenue" it would receive if selected as a Center. (Id. ¶¶ 26-27.) The DOJ could not submit this new program in its proposal to OMB because it had not yet been "successfully used." (Id. ¶ 29) However, in March 2007, it announced that it had completed development on the replacement for TrustedAgent. (Id. ¶ 45.) It then began including the new program as part of the FISMA solution it sold to other agencies. (Id. ¶¶ 46.) It also made "disparaging comments" about TrustedAgent to various potential customers. (Id. ¶ 52.) In April 2007, the agency informed plaintiff that it would no longer offer TrustedAgent as part of its FISMA solution. (Id. ¶ 53.)

In June 2008, plaintiff filed a complaint with the DOJ Procurement Services Staff under the Contract Disputes Act of 1978 ("CDA"), 41 U.S.C. §§ 601-613. (Def.'s Mot., Ex. 1 ("CDA Claim") at 1.) The DOJ's Contracting Officer rejected this claim in November 2008. (Def.'s Mot., Ex. 2 (Decision Re: Claim of Trusted Integration, Inc.) at 1.) Plaintiff filed this action in May 2009.

In Count I, plaintiff claims that the DOJ violated the Lanham Act by falsely claiming that its FISMA solution would include TrustedAgent. (Id. ¶¶ 56-57.) In Count II, plaintiff claims that the DOJ "disparaged" its product, "interfered with" its access to customers, and misled customers into thinking that TrustedAgent would be a part of the FISMA solution and that the replacement program "had a higher level of quality than it actually did." (Id. ¶¶ 66.) In Count III, plaintiff alleges that the DOJ owed it a fiduciary duty "based upon their relationship" and violated that duty by failing to inform it that it was developing an alternative to TrustedAgent, by replacing TrustedAgent, by failing to offer Trusted-Agent as part of its solution, by disparaging TrustedAgent, and by preventing plaintiff from seeking other potential customers. (Id. ¶ 70.) Plaintiff seeks $15 million in damages. Defendant now moves for dismissal as to all claims under Fed. R.Civ.P. 12(b)(1), or, in the alternative, for dismissal under Fed.R.Civ.P. 12(b)(6) as to the Lanham Act in Count I.

ANALYSIS

I. STANDARD OF REVIEW

A. Lack of Subject Matter Jurisdiction

On a motion to dismiss pursuant to Rule 12(b)(1), plaintiff bears the burden of establishing by a preponderance of the evidence that the court has subject matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The Court must accept all factual allegations in the complaint as true and give plaintiff the benefit of all reasonable inferences from the facts alleged. Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1114 (D.C.Cir.2000). A court may dismiss for lack of subject matter jurisdiction only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Richardson v. United States, 193 F.3d 545, 549 (D.C.Cir.1999) (quoting Caribbean Broad. Sys., Ltd. v. Cable & Wireless PLC, 148 F.3d 1080, 1086 (D.C.Cir.1998)).

B. Failure to State a Claim

"In determining whether a complaint fails to state a claim, courts may consider only the facts alleged in the complaint, any documents either attached to or incorporated in the complaint and matters of which courts may take judicial notice." E.E.O.C. v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C.Cir.1997). This includes "public records," and documents "appended to a motion to dismiss and whose authenticity is not disputed" if they are "referred to in the complaint and are integral" to plaintiff's claim. Kaempe v. Myers, 367 F.3d 958, 965 (D.C.Cir.2004).

When ruling on a Rule 12(b)(6) motion to dismiss, courts may employ a "two-pronged approach." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). Courts must first assume the veracity of all "well-pleaded factual allegations" in the complaint. Id. Courts need not, however, accept as true "`naked assertions' devoid of `further factual enhancement,'" id. at 1949 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)), or "legal conclusions cast in the form of factual allegations." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994). A pleading must offer more than "`labels and conclusions' or `a formulaic recitation of the elements of a cause of action' ...." Iqbal, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

Once the court has determined that there are well-pleaded factual allegations, it must determine whether the allegations "plausibly give rise to an entitlement to relief" by presenting "sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face,'" such that "the court can draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 1949-50 (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). Merely pleading facts "consistent with a defendant's liability ... stops short of the line between possibility and plausibility of entitlement to relief." Id. at 1949.

C. Tort Actions Against the Government

The United States is "immune from suit save as it consents to be sued." Hercules Inc. v. United States, 516 U.S. 417, 422-23, 116 S.Ct. 981, 134 L.Ed.2d 47 (1996) (internal quotations omitted). However, the FTCA makes the United States liable for tort claims "in the same manner and to the same extent as a private individual under like circumstances." 28 U.S.C. § 2674. Plaintiff may recover "under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." 28 U.S.C. § 1346(b).

Though the FTCA "generally authorizes a broad waiver of the government's sovereign immunity for claims sounding in tort," Loughlin v. United States, 286 F.Supp.2d 1, 8 (D.D.C.2003), it does not waive immunity for "any claim arising out of ... libel, slander, misrepresentation, deceit, or interference with contract rights." 28 U.S.C. § 2680(h). Thus, claims arising out of libel, slander, "fraud" and "misrepresentation" must be dismissed for lack of jurisdiction. See Stoyanov v. Winter, 643 F.Supp.2d 4, 9-10 (D.D.C.2009). The...