L-3 Communications Corporation v. Serco, Incorporated
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 1:15-cv-00701-GBL-JFA Copies to all parties and the district court/agency. [999986535].. [15-2385]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2385
L-3 COMMUNICATIONS CORPORATION; L-3 APPLIED TECHNOLOGIES,
INC.,
Plaintiffs - Appellants,
v.
SERCO, INC.,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:15-cv-00701-GBL-JFA)
Argued:
September 21, 2016
Decided:
December 14, 2016
Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.
Affirmed in part, vacated in part, and remanded by unpublished
per curiam opinion.
ARGUED: Steven L. Levitt, LEVITT LLP, Mineola, New York, for
Appellants. Amy Elizabeth Miller, MCGUIREWOODS LLP, Washington,
D.C., for Appellee.
ON BRIEF: Benjamin G. Chew, Nigel L.
Wilkinson, Rory E. Adams, Joshua N. Drian, MANATT, PHELPS &
PHILLIPS LLP, Washington, D.C.; Karen L. Weiss, Catherine B.
Silliman, LEVITT LLP, Mineola, New York, for Appellants.
John
D. Wilburn, Steven P. Mulligan, Tysons Corner, Virginia, Anand
V. Ramana, Jeffrey L. Brown, Elizabeth H. Goodall, MCGUIREWOODS
LLP, Washington, D.C., for Appellee.
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Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Plaintiffs
Technologies,
filed
this
against
L-3
Inc.
(L-3
diversity
Serco,
relationship.
Communications
ATI)
action
Inc.
Corp.
and
(collectively,
alleging
arising
out
the
numerous
of
a
L-3
Applied
plaintiffs)
tort
failed
claims
business
The plaintiffs contended that Serco engaged in a
“bid rigging” scheme with another company, Jaxon Engineering &
Maintenance,
Inc.,
to
exclude
the
plaintiffs
from
conducting
work on certain task orders issued under Serco’s prime contract
with
the
United
States
government.
The
plaintiffs
alleged,
among other things, that Serco’s conduct amounted to tortious
interference with the plaintiffs’ business expectancy as well as
statutory business conspiracy under Virginia law.
The
district
court
dismissed
the
Federal Rule of Civil Procedure 12(b)(1).
entire
action
under
The court concluded
that the plaintiffs did not have standing under Article III of
the Constitution, because they had not established the existence
of a valid business expectancy.
The court also dismissed two of
the claims on ripeness grounds, holding that the plaintiffs’
alleged injuries had not yet occurred.
We conclude that the plaintiffs’ allegations satisfy the
constitutional requirement of a concrete, particularized injury
for purposes of standing.
whether
the
plaintiffs
The separate but related question
plausibly
3
have
alleged
a
business
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expectancy
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is
one
properly
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considered
under
Federal
Rule
of
Civil Procedure 12(b)(6) or on a motion for summary judgment.
We
also
hold
that
the
plaintiffs’
declaratory
judgment
claims are not ripe for adjudication, and therefore affirm the
district court’s dismissal of those claims.
Accordingly, we
affirm the judgment of the district court in part, vacate in
part, and remand for further proceedings.
I.
In 2004, the United States Air Force Space Command (the Air
Force)
awarded
an
(the
prime
contract
indefinite
delivery,
contract)
indefinite
Serco. 1
to
Under
quantity
the
prime
contract, Serco, as the prime contractor, was responsible for
testing
military
protection
events.
statement
from
sites
around
high-altitude
the
world
regarding
electromagnetic
pulse
their
(HEMP)
In practice, when the Air Force provided Serco with a
of
work
under
the
prime
contract,
subcontract HEMP work to other companies.
subcontractors
by
issuing
qualified companies.
requests
for
Serco
would
Serco selected these
proposal
to
certain
According to the complaint, between 2004
and July 2009, Serco awarded “most, if not all of the [HEMP]
task orders” under the prime contract to the plaintiffs.
1
In 2004, Serco was known as SI International.
4
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The plaintiffs’ complaint alleged that plaintiff L-3 ATI
was
a
“wholly
owned
indirect
subsidiary”
of
plaintiff
L-3
Communications, and that L-3 ATI was the “successor in interest”
to other entities that performed subcontracted HEMP work, namely
“Jaycor,
the
Titan
Corporation,
and
the
applied
technologies
division of L-3 Services, Inc.” The complaint also specified
that
references
in
the
complaint
to
the
plaintiffs
included
their predecessors in interest.
After 2009, Serco allegedly began awarding all HEMP task
orders to another company, Jaxon Engineering & Maintenance, Inc.
(Jaxon).
The plaintiffs alleged that Jaxon was not qualified to
perform the assigned work, and that Serco’s decision to award
HEMP work to Jaxon was based on a “fraudulent scheme” between
Serco and Jaxon in which Serco actively prevented the plaintiffs
from fairly competing for the task orders.
To facilitate this
scheme, the plaintiffs alleged that Jaxon hired the plaintiffs’
employees, who used the plaintiffs’ proprietary information to
benefit Jaxon in the bidding process.
In 2010, the plaintiffs sued their former employees and
Jaxon on numerous claims, including that these employees took
certain
that
proprietary
information
to
information
Jaxon.
from
The
the
plaintiffs
parties
and
stipulated
dismissal of the complaint with prejudice in March 2016.
gave
to
a
See L-
3 Commc’ns. Corp. v. Jaxon Eng’g & Maint., Inc., 10-cv-2868,
5
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Dkt. No. 1370 (D. Colo. Mar. 3, 2016).
filed
a
complaint
in
Virginia
In 2014, the plaintiffs
state
court
against
Serco
asserting similar claims to those at issue here, but took a
voluntary nonsuit.
In
filed
the
an
claims
81-count
of
HEMP
present
case,
initiated
in
amended
complaint
against
tortious
task
orders
interference
from
2009
plaintiffs’
“long
experience”
(Counts
1-34);
the
business
the
present,
of
and
asserting
expectancy
based
incumbency
aiding
plaintiffs
Serco,
with
to
history
2015,
and
abetting
on
for
the
unmatched
Jaxon
to
tortiously interfere with this business expectancy (Counts 3568); civil conspiracy and business conspiracy under Virginia law
(Counts
69-70);
Control
Act
violations
(Counts
of
71-73);
the
Colorado
tortious
Organized
interference
Crime
with
the
plaintiffs’ former employees’ non-disclosure agreements (Counts
74-78); negligent misrepresentation of the plaintiffs’ business
relationship
(Count
79);
and
breach
of
fiduciary
duty
and
misappropriation of trade secrets, based on Serco’s intent to
use the plaintiffs’ confidential information to compete with the
plaintiffs
for
plaintiffs
sought
unjust
future
enrichment,
HEMP
damages
and
of
projects
(Counts
$80,000,000
disgorgement
of
resulting from Serco’s scheme with Jaxon.
for
80-81).
The
lost
profits,
unlawful
profits
They also sought a
declaratory judgment in Counts 80 and 81, asking the court to
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“declare that any competition against [the plaintiffs] by Serco
in the HEMP-Testing area would constitute a breach of Serco’s
fiduciary duties” to the plaintiffs and a misappropriation of
the plaintiffs’ trade secrets.
Serco filed motions to dismiss under Rules 12(b)(1) and
12(b)(6), as well as a motion for summary judgment.
In its Rule
12(b)(1) motion, Serco asserted that the plaintiffs’ claims of
tortious
interference
with
business
expectancy
rose
and
fell
under a certain subcontract issued in 2004 (the subcontract)
between Serco and Titan Corporation (Titan), a predecessor of L3 Services, which is not a named plaintiff in the present case.
The subcontract provided, in relevant parts:
Prime Contractor has no obligation to issue and there
is no guaranty to Subcontractor that it will receive
any work under the terms of this Subcontract. . . .
All work will be assigned to Subcontractor in the form
of
[task
orders]
issued
by
Prime
Contractor’s
authorized Subcontract Administrator.
Work not set
forth
in
a
written
Task
Order,
executed
by
subcontractor
and
Prime
Contractor’s
authorized
Subcontract Administrator, is not authorized. . . .
Neither this Subcontract nor any right or duty under
it, except the right to receive payment, may be
assigned by Subcontractor, without prior written
consent of Prime Contractor, which consent may be
withheld in the sole discretion of Prime Contractor.
The
subcontract
also
provided
that
any
waiver
of
these
requirements must be made in writing and authorized by Serco,
and that the subcontractor must notify the prime contractor of
any changes in ownership.
In March 2008, Serco entered into a
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written subcontract modification with L-3 Services to identify
that
entity,
instead
of
Titan,
as
the
named
subcontractor.
Serco contended in its motion to dismiss brought under Rule
12(b)(1)
that
because
neither
of
the
named
plaintiffs,
L-3
Communications nor L-3 ATI, were parties to the subcontract,
they lacked standing under Article III of the Constitution to
bring their claims.
The plaintiffs responded that, under their
allegations, their claimed business expectancy arose from their
history
of
performance
subcontract. 2
complaint
The
asserted
of
HEMP
plaintiffs
claims
of
work,
further
tortious
regardless
the
that
explained
of
the
interference
with
employees’ non-disclosure agreements, completely apart from the
subcontract.
After a hearing, the district court granted Serco’s motion
to dismiss under Rule 12(b)(1).
plaintiffs
had
presented
The court concluded that the
insufficient
evidence
of
a
business
expectancy in the losses alleged, because the plaintiffs were
not parties to the subcontract and, thus, did not have standing
2
The plaintiffs argued in the alternative that they were
the assignees of the subcontract and the current causes of
action, pursuant to the terms of a 2011 contribution agreement
which transferred all of the “assets” of L-3 Services to L-3
ATI.
8
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to bring this suit. 3
alleged
in
because
Counts
the
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The court additionally held that the claims
80
and
injuries
81
were
alleged
not
had
ripe
not
yet
for
adjudication
occurred.
The
plaintiffs now appeal.
II.
The
plaintiffs
argue
that
the
district
court
dismissing their complaint under Rule 12(b)(1).
erred
in
They maintain
that the issue whether they had a valid business expectancy is a
question
claims,
regarding
not
a
the
merits
question
of
of
the
tortious
constitutional
interference
standing.
The
plaintiffs further assert that, in any event, they adequately
pleaded
the
elements
of
tortious
interference
with
business
expectancy based on their previous course of performance of HEMP
work.
The
plaintiffs
also
contend
that
the
court
erred
in
focusing on the existence of a business expectancy arising from
the subcontract when many of the claims were unrelated to the
subcontract.
Finally,
the
plaintiffs
submit
that
the
declaratory judgment claims in Counts 80 and 81 were ripe for
adjudication.
In response, Serco primarily contends that the plaintiffs
did not have the “personal stake” in their lawsuit necessary to
3
The district court also rejected the plaintiffs’ assertion
that they had standing to sue as assignees of the subcontract.
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satisfy the Article III standing requirement, because they did
not have any rights or expectancies under the subcontract to
which
they
were
neither
parties
nor
assignees.
Serco
also
argues that the district court properly dismissed Counts 80 and
81 on ripeness grounds, because the plaintiffs did not identify
an immediate, “real” controversy.
We agree with the plaintiffs that the district court erred
in dismissing Counts 1 through 79 on jurisdictional grounds, but
conclude that the district court properly dismissed Counts 80
and 81 for lack of ripeness.
We first address the issue of
standing for Counts 1 through 79.
We
complaint
review
under
de
Rule
novo
a
district
12(b)(1).
In
court’s
re
KBR,
Litig., 744 F.3d 326, 333 (4th Cir. 2014).
constitutional
requirement
of
standing
Article
arises
III,
from
and
is
the
a
dismissal
Inc.,
of
Burn
a
Pit
The doctrine of
case
or
controversy
jurisdictional
inquiry
regarding the power of the courts to adjudicate a litigant’s
claim.
Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60
(1992); see also Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547
(2016).
The case or controversy requirement generally ensures
that “the conflicting contentions of the parties present a real,
substantial
controversy
between
parties
having
adverse
legal
interests, a dispute definite and concrete, not hypothetical or
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abstract.”
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Miller v. Brown, 462 F.3d 312, 316 (4th Cir. 2006)
(citation and internal quotation marks omitted).
To
establish
Article
III
standing,
a
plaintiff
invoking
federal jurisdiction bears the burden to show that he has a
“personal stake” in the outcome of the suit.
563 U.S. 692, 701 (2011).
Camreta v. Greene,
This requirement is satisfied if the
plaintiff has shown an actual or imminent injury in fact that is
concrete
and
particularized,
a
causal
connection
between
the
injury and the conduct complained of, and a likelihood that the
injury would be redressed by a favorable decision.
504 U.S. at 560-61.
opposed
to
Id.; Lujan,
An injury is “concrete” if it is “real,” as
“abstract,”
Spokeo,
136
S.
Ct.
at
1548,
and
is
“particularized” if it “affect[s] the plaintiff in a personal
and
individual
way,”
rather
collective grievance.
than
as
an
undifferentiated,
Id. (citing United States v. Richardson,
418 U.S. 166, 177 (1974)); Lujan, 504 U.S. at 560 n.1.
An
present
examination
case
of
reveals
the
that
district
the
court’s
court,
in
analysis
accepting
in
the
Serco’s
arguments, effectively conducted a merits-related evaluation of
the
plausibility
of
the
plaintiffs’
claims
jurisdictional inquiry under Article III.
rather
than
a
The court dismissed
the case for lack of standing based on its finding that the
plaintiffs were not parties to the subcontract, through which
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the HEMP work previously flowed, and therefore had not shown
that they had a valid business expectancy.
The question whether the plaintiffs had a valid business
expectancy is relevant to the issue whether they satisfied an
element of their claim for tortious interference under Virginia
law.
Priority Auto Grp. v. Ford Motor Co., 757 F.3d 137, 143
(4th
Cir.
2014).
Accordingly,
the
requirement
that
the
plaintiffs establish that they had such an expectancy, arising
either out of the subcontract or the parties’ course of conduct,
does
not
involve
an
issue
of
constitutional
standing,
but
presents the question whether the plaintiffs can establish the
substantive elements of their claim.
See Katz v. Pershing, LLC,
672 F.3d 64, 72 (1st Cir. 2012) (by “alleg[ing] the existence of
a contract, express or implied, and a concomitant breach of that
contract,
[the
plaintiff’s]
complaint
adequately
show[ed]
an
injury to her rights” for purposes of standing, even though she
was not a party to the contracts in question and could not
survive a motion to dismiss under Rule 12(b)(6)); Curtis Lumber
Co., Inc. v. La. Pac. Corp., 618 F.3d 762, 770-71 (8th Cir.
2010) (whether a plaintiff ultimately recovers the damages he
seeks “is a question better left to the applicable substantive
law” rather than a standing inquiry under Article III).
We acknowledge that the distinction between the “personal
stake” requirement for purposes of standing, and the sufficiency
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of a plaintiff’s allegations of injury as an element of a claim,
often may be unclear.
disagree
with
the
Nevertheless, in the present case, we
district
court’s
conclusion
that
the
plaintiffs lacked a “personal stake” in the dispute because they
did not have a business expectancy arising from the subcontract.
Although the plaintiffs’ allegations of a business expectancy
inform our understanding of the claimed injury for purposes of
standing, the question whether the plaintiffs’ claims ultimately
lack merit does not resolve the issue whether the court had the
constitutional
authority
to
adjudicate
those
claims.
For
purposes of the present standing analysis, we must determine
only
whether
the
plaintiffs
sufficiently
established
at
this
stage of the proceedings that they were injured by Serco in a
concrete and particularized manner redressable by the court. 4
See Camreta, 563 U.S. at 701.
Thus, Serco’s parallel contention
that a business expectancy did not arise from the subcontract,
or
from
a
separate
course
of
conduct,
4
is
more
appropriately
The plaintiffs also argue that the district court
effectively analyzed whether the plaintiffs were the real
parties in interest under Federal Rule of Civil Procedure 17(a),
not whether the court had the power to adjudicate the dispute
under Article III.
Based on our holding, we need not address
this issue.
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addressed
in
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an
evaluation
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of
the
merits
of
the
plaintiffs’
claims. 5
The plaintiffs have alleged financial injury in the amount
of $80,000,000 based on several theories of liability arising
from
the
same
set
of
facts.
In
particular,
the
plaintiffs
claimed that, absent the fraudulent scheme between Serco and
Jaxon, Serco would have awarded certain specific task orders to
the plaintiffs.
actions
The plaintiffs further alleged that Serco’s
“assisting,
financing,
and
vouching
for
Jaxon
as
a
viable HEMP-Testing operation” resulted in the plaintiffs being
denied
“many
millions
of
dollars
in
contracts that instead went to Jaxon.”
non-Serco
HEMP-related
These alleged injuries
are concrete and particularized to the plaintiffs, and are “not
conjectural or hypothetical.”
462 F.3d at 316-17.
Lujan, 504 U.S. at 560; Miller,
The injuries also are traceable to Serco’s
challenged conduct and can be redressed by a favorable decision
of
the
conclude
Court.
that
Miller,
the
462
F.3d
plaintiffs
5
at
have
316.
met
Accordingly,
their
burden
we
of
In
addition
to
their
disagreement
regarding
the
plaintiffs’ rights under the subcontract, the parties also
dispute whether their course of conduct established a business
expectancy. For the reasons discussed above, the district court
may evaluate the parties’ course of conduct in considering a
motion under Rule 12(b)(6) or a motion for summary judgment.
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demonstrating a “personal stake” in the dispute for purposes of
Article III standing.
Additionally, we observe that although the district court’s
standing analysis focused on the plaintiffs’ business expectancy
allegations, our conclusion applies equally to the plaintiffs’
other
claims
that
are
unrelated
to
the
subcontract.
The
plaintiffs generally alleged in each of their claims the same
injuries suffered by the same parties.
claims
alleged
a
breach
of
the
None of the plaintiffs’
subcontract,
and
all
of
the
claims relied on the same series of tortious conduct allegedly
committed
by
Serco.
To
the
extent
that
the
plaintiffs
are
unable to establish an element of any of these causes of action,
such a deficiency properly is addressed under Rule 12(b)(6) or
through entry of summary judgment.
In reaching this conclusion, we express no opinion whether
the
plaintiffs’
allegations
are
sufficiently
plausible
to
survive a motion under Rule 12(b)(6), nor whether the evidence
ultimately will substantiate their claims.
We hold only that
the plaintiffs have shown the concrete and particularized nature
of their alleged injury and, thus, that the district court has
the constitutional authority to adjudicate their claims. 6
6
Because we vacate the district court’s judgment on the
basis that the plaintiffs have demonstrated Article III standing
at this stage of the proceedings, we do not reach the district
(Continued)
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Finally, the plaintiffs argue that the district court erred
in
dismissing
for
lack
of
ripeness
Counts
80
and
81,
which
sought declaratory judgment for breach of fiduciary duty and
misappropriation of trade secrets.
The doctrine of ripeness,
also a component of the case or controversy requirement, asks
whether
a
clean-cut
controversy
and
between
concrete
the
form.”
parties
Scoggins
“is
v.
presented
Lee’s
in
Crossing
Homeowners Ass’n, 718 F.3d 262, 270 (4th Cir. 2013); Miller, 462
F.3d at 318-19 (citation and internal quotation marks omitted).
A case is ripe and “fit for judicial decision when the issues
are purely legal and when the action in controversy is final and
not dependent on future uncertainties.”
Doe v. Va. Dep’t of
State Police, 713 F.3d 745, 758 (4th Cir. 2013) (quoting Miller,
462 F.3d at 319).
Accordingly, a claim should be dismissed for
lack of ripeness “if the plaintiff has not yet suffered injury
and
any
future
impact
remains
wholly
speculative.”
Id.
(citation and internal quotation marks omitted).
The
plaintiffs
alleged
in
Counts
80
and
81
that
Serco
intends to use their confidential information to compete against
them for a future HEMP project currently being “contemplated” by
the Air Force.
Thus, the plaintiffs’ injuries have not yet
court’s additional conclusion that the subcontract had not been
assigned to the plaintiffs.
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occurred.
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The plaintiffs seek a broad declaration that “any
competition” against the plaintiffs for future HEMP work would
constitute
a
breach
of
Serco’s
fiduciary
duties
and
a
misappropriation of the plaintiffs’ trade secrets.
Based on the allegations in the complaint, it is entirely
speculative at this stage whether the plaintiffs or Serco might
bid on any future projects announced by the Air Force and, if
so,
whether
Serco
will
information improperly.
that
the
injuries
use
the
plaintiffs’
confidential
Under these circumstances, we conclude
alleged
in
the
complaint
are
speculative” and “dependent on future uncertainties.”
F.3d
at
758
(citation
omitted).
We
therefore
“wholly
Doe, 713
affirm
the
district court’s conclusion that Counts 80 and 81 are not ripe
for adjudication.
III.
For these reasons, we vacate the district court’s ruling
regarding
standing,
affirm
the
court’s
dismissal
of
the
declaratory judgment claims, and remand this case for further
proceedings
consistent
with
the
principles
expressed
in
this
opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
17
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