Challenger Transportation, Inc. v. Washington Metropolitan Area Transit Authority
Filing
50
MEMORANDUM OPINION Signed by Judge Theodore D. Chuang on 7/30/2015. (cags, Deputy Clerk)
UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
CHALLENGER TRANSPORTATION,
INC.,
Plaintiff,
v.
Civil Action No. TDC- I 4-3322
WASHINGTON METROPOLITAN AREA
TRANSIT AUTHORITY,
Defendant.
MEMORANDUM
Plaintiff Challenger Transportation,
OPINION
Inc. ("Challenger")
brings this consolidated action
against Defendant Washington Metropolitan Area Transit Authority ("WMATA")
declaratory
requesting
and injunctive relief for an allegedly unfairly awarded contract for paratransit
services and for WMATA's refusal to release records relating to the contract award process.
Pending before the Court are two Motions to Dismiss, which were filed separately in the two
related actions before the case was consolidated.
The first argues that the protest claims should
be dismissed under Fedeml Rule of Civil Procedure 12(b)(6) for lack of timeliness.
Dismiss, ECF No. 26 (TDC-14-3322).
Mot.
lbe second argues that the records request claims should
be dismissed under Federal Rules of Civil Procedure 12(b)(7) and 19 for failure to join necessary
parties.
Mot. Dismiss, ECF No. 12 (TDC-14-3463).
As the case has since been consolidated,
the Court will resolve both Motions to Dismiss in this Memorandum Opinion and accompanying
Order. lbe Court has reviewed the pleadings and the briefs and finds no hearing necessary. See
Local Rule 105.6 (D. Md. 2014). For the reasons stated below, both Motions to Dismiss will be
DENIED.
BACKGROUND
WMA TA is a mass transit system that spans the Washington, D.C. metropolitan area. It
was fonned by Congress through an interstate compact (the "WMA TA Compact"), which was
then adopted by the states of Maryland and Virginia and by the District of Columbia.
L. No. 89-774, 80 Stat. 1324 (1966); Md. Code Ann., Transp.
Ann.
S 33.2-3100
(West 2015); D.C. Code Ann.
S 9-1107.01
S
See Pub.
10-204 (West 2015); Va. Code
(2015).
WMATA is therefore an
instrumentality of those jurisdictions and enjoys the benefits of such a status. Lizzi v. Alexander,
255 F.3d 128, 131 (4th Cir. 2001), overruled in porIon olher ground, by Nevada Dep'l oj
Human Res. v. Hibbs, 538 U.S. 721 (2003).
On or about June I, 2012, WMATA published a request for proposals,
CQI2169/KAM
RFP No.
(the "RFP"), seeking proposals from contractors for the provision of paratransit
services for the period from July 1,2013 until June 30, 2018, with a five-year extension option.
In response to the RFP, Challenger submitted a proposal on August 24, 2012. Among the other
bidders were Veolia Transportation,
Diamond Transportation
Inc. e'Veolia"),
Services, Inc. ("Diamond").
First Transit, Inc. ("First Transit"), and
Challenger
alleges that, during the
proposal evaluation process, WMATA contacted Veolia, First Transit, and Diamond regarding
deficiencies in their proposals and invited them to revise their proposals, but did not offer the
same opportunity to Challenger.
On March 1,2013, WMATA notified Veolia, First Transit, and Diamond that they had
been awarded contracts for paratransit services. Seven days later, on March 8, 2013, Challenger
received a letter from WMATA notifying it that Challenger would not be awarded a contract.
Challenger then requested an agency debriefing, which was held on March 21, 2013. Challenger
alleges that, at the debriefing, WMATA informed Challenger that the reasons its proposal was
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not selected were that its evaluated price was approximately $10 million higher per year than that
of Veolia; that Challenger's proposal appeared to be for only a single service delivery level; that
the proposal lacked sufficient detail regarding past performance, fare collection, billing, and
accounting; and that there was a perceived weakness in Challenger's maintenance plan, safety
plan, and severe weather operations plan and capabilities.
On March 26, 2013, Challenger filed a protest with WMA TA and the next day submitted
a request to inspect and copy public records related to the RFP, pursuant to WMATA's Public
Access to Records Policy ("PARP").
Challenger alleges that although WMATA slowly released
some records responsive to its PARP request, it failed to produce all of the required information
by improperly withholding or redacting records.
On February 12, 2014, Challenger filed an
appeal of WMATA's PARP response, which resulted in the release of one additional document.
Although
WMATA failed to disclose First Transit's
price proposal
as Challenger
requested, Challenger alleges that the documents that were disclosed revealed that Challenger's
proposed priciog of $325,989,400.69 fur the base five-year contract and $410,351,610.41 for the
five-year extension was, in fact, lower than Veolia's proposed pricing of $406,550,668.28 for the
base five-year contract and $491,423,149.84 for the five-year extension.
On April 10,2014, Challenger sent a letter to WMATA's Procurement Officer requesting
a final decision regarding Challenger's pending protest and asking WMA TA to justify its award
of the largest contract to Veolia. In response, WMATA issued a denial of Challenger's protest
on July 30, 2014.
Challenger
subsequently
filed suit on August 27, 2014 in the Circuit
Court for
Montgomery County, Maryland, on the basis of its protest claims (the "protest case").
In the
protest case, for which Challenger subsequently filed an Amended Complaint, Challenger alleges
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that WMA TA deviated from the policies laid out in its own 2007 Procurement
Procedures
Manual ("PPM") by entering discussions with the successful offerors and allowing them to
amend their proposals without extending the same privilege to Challenger.
I
PPM ~ 619.1.
In
addition, Challenger asserts that WMATA improperly awarded the largest contract to Veolia
despite the fact that Veolia's
proposal cost millions of dollars more than Challenger's.
Challenger also claims that there was a conflict of interest because at the time, WMATA's
Chairman of the Board, Thomas DO¥ms, was also the Chairman of the Veolia Board of Advisors.
Asserting that the awards contradicted the PPM and were arbitrary, capricious, and lacking in
rational basis, Challenger requests declaratory relief and an injunction requiring that the awards
be rescinded.
On October 2, 2014, Challenger filed a second suit in the Circuit Court of Montgomery
County on the basis of its PARP claims (the "PARP case"), alleging that WMA TA unreasonably
delayed and redacted the requested documents and asking that the Court grant declaratory relief
and enjoin WMATA from withholding the records it had failed to produce.
WMATA removed both cases to this Court on October 22, 2014 and November 3, 2014,
respectively, on the basis of the Court's original jurisdiction over the case under the WMATA
Compact, Md. Code Ann. Transp. ~ 10-204(81).
WMATA filed two separate Motions to
Dismiss: (I) a Motion to Dismiss the protest case (TDC-14-1322) under Federal Rule of Civil
Procedure 12(b)(6) based on Challenger's
failure to protest its rejection within the five-day
period mandated by the PPM, or, in the alternative, its failure to bring the claim within one year
of WMATA's award of the contract to the other offerors, which WMATA argues was required
Challenger has not attached the 2007 PPM to its Complaint, but the Complaint contains
quotations from the manual, which the Court accepts as accurate for purposes of resolving this
Motion to Dismiss.
4
under Maryland law; and (2) a Motion to Dismiss the PARP case (TDC-14-3463) under Rules
12(b)(7) and 19 for failure to join the other successful offerors as necessary parties.
On December 17,2014, at the parties' request, the Court consolidated the two cases. The
Court now addresses both Motions to Dismiss, which are ripe for adjudication.
DISCUSSION
I.
Failure to State a Claim
In the protest case (TDC-14-1322), Challenger alleged that it was not afforded the same
trcaUDent as other ofTerors and that WMAT A's award of its paratransit conlract "was arbitrary
and capricious, lacked a rational basis," and violated "'agency regulations and procedures."
Campl.'l
Am.
1.4, 18-23, 92. The Court will first address the Motion to Dismiss these claims under
Federal Rule of Civil Procedure l2(b)(6).
A. Rule I2(b)(6) Slandard
In order to defeat a Rule 12(b)(6) motion to dismiss for failure to state a claim, a
complaint must allege enough facts to state a plausible claim for relief. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
A claim is
plausible when "the plaintiff pleads factual content that allows the Court to draw the reasonable
inference that the defendant is liable for the misconduct alleged."
Iqbal, 556 U.S. at 678. In
assessing whether this standard has been met, the Court must examine the complaint as a whole,
consider the factual allegations in the complaint as true, and construe the factual allegations in
the light most favorable to tbe plaintiff. Albright v. Oliver, 510 U.S. 266, 268 (1994); Lamberh v.
Bd ofComm'rs
of Davidson Cn/y., 407 F.3d 266, 268 (4th Cir. 2005).
Legal conclusions or
conclusory statements do not suffice and are not entitled to the assumption of truth. Iqbal, 556
U.S. at 678.
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8. Five-Day Time Limit under the PPM
In its Rule 12(b)(6) motion, WMATA argues that Challenger's protest claims should be
dismissed because, under the PPM, a written protest regarding an award decision must be
received by WMATA "not later than five calendar days after the interested party knows, or
through exercise of reasonable diligence should have known, of the grounds for the protest."
TDC-14-3322 Mot. Dismiss at 2-3. WMATA argues that under this provision, Challenger was
required to submit its protest within five days of March 8, 2013, the date Challenger received
WMATA's letter stating that Challenger had not been selected for the paratransit services
contract. Challenger filed its protest on March 26, 2013.
Significantly, section 2002.2 of the PPM states that the five-day clock begins when a
protestor "knows, or through the exercise of reasonable diligence should have known, of the
grounds for the protest." TDC-14-3322 Am. Compi.
28 (quoting PPM 9 2002.2). In other
words, a disappointed offeror has five days to submit its protest, beginning from the day it knows
the reason for rejection, not simply from the day it knows that it was rejected.
Both the
Comptroller General and the Maryland State Board of Contract Appeals ("MSBCA") have read
similar provisions in government contract cases in the same way. See, e.g., Easi-Wesl Riggers &
Constructors, B-213091, 84-1 CPD
478,1984 WI. 44075, at '2 (Comp. Gen. Apr. 25, 1984)
(holding that a 10-day deadline for protests was measured from the date of the debriefing
between the agency and the protestor, because the decision letter rejecting the protestor's offer
lacked sufficient specificity to provide notice of the grounds for protest); Eisner Commc 'ns, Inc.,
MSBCA Nos. 2438, 2442, 2445, at 14 (MSBCA Mar. 11, 2005) (holding that the protest
submission clock begins to run, at the earliest, on the date of the debriefing session when the
protestor had an opportunity to question the agency's scoring of the proposals because otherwise,
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the protestor "could not have known of the basis for its protests,,).2 Here, although Challenger
received notification that it had not been awarded the paratransit services contract on March 8,
2013, the letter contained no reason for rejection and thus no infonnation that provided a basis
for protest.
See Am. Com pI., Ex. 3, ECF No. 19 at 35 (TDC-14-3322).
Challenger therefore
was not and could not have been aware of its grounds for protest until its debriefing with
WMATA on March 21, 2013. Challenger filed its protest five days later, on March 26, 2013.
Thus, the protest was timely filed, and the Motion to Dismiss on this basis is denied.
C. One-Year Limitation
Under Section 12-202
WMATA also argues that Maryland's
one-year limitation on waIver of sovereIgn
immunity in contract actions against the state government, Md. Code Ann., State Gov't ~ 12202, bars Challenger's
protest claims because Challenger filed them more than a year after
WMATA awarded its paratransit services contract to other companies.
the Court concludes that Challenger's
It further argues that if
protest claims do not sound in contract such that the
limited waiver of immunity granted by section 12-202 does not apply, then it must also conclude
that Challenger's claims are barred by the doctrine of sovereign immunity because there are no
other bases for waiver of WMATA's immunity. The Court denies WMATA 's motion to dismiss
on these grounds because neither section 12-202 nor sovereign immunity bars Challenger from
bringing its claims.
WMATA enjoys the same sovereign immunity as the State of Maryland and therefore is
immune from all common law claims unless waived. Lizzi, 255 F.3d at 132 C'WMA TA is a state
agency, subject to all the benefits and liabilities ofa state itself, including sovereign immunity.");
see also Magnetti v. Univ. of Md, 937 A.2d 219, 224 (Md. 2007) (stating that the doctrine of
MSBCA opinions dating from 1997 forward are available through the MSHCA website.
Eisner Commc 'ns can be found at http://msbca.state.md.usldecisionsI2005/pdfI2438eisner.pdf.
2
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sovereign immunity applies in actions against the State, its officers, and its units unless explicitly
or implicitly waived by the legislature).
Maryland law provides that sovereign immunity is
waived in the case of "a contract action ...
based on a written contract that an official or
employee executed for the State," provided that "the claimant files suit within 1 year after the
later of: (1) the date on which the claim arose; or (2) the completion of the contract that gives
rise to the claim."
99
Md. Code Ann., State Gov't
12-201 to .202.
This provision has been
interpreted as establishing a condition precedent requiring that, as part of the State's waiver of
sovereign immunity, contract actions against the State must be brought within one year of the
injury. Samuels v. Tschechtelin, 763 A.2d 209, 240 (Md. Ct. Spec. App. 2000) (affirming that
"'ltJhe rule in Maryland is that when a statute creating a cause of action contains a limitation
period on the filing of such cause of action that limitation will not be considered an ordinary
statute of limitations but rather a condition precedent").
However, section 12-202 does not apply to Challenger's
protest claims because those
claims do not state a cause of action under contract law. Challenger does not allege any breach
of contract by WMATA; rather, it alleges that WMATA arbitrarily and capriciously violated its
own procurement policies and procedures, PPM
9
619.1 and 2000.3, in awarding the paratransit
services contract to Veolia and the other successful offerors. Courts have treated WMATA as a
federal agency when a party seeks to challenge WMATA's procurement decisions in federal
court. See Seal & Co.. Inc. v. WMATA, 768 F. Supp. 1150, 1156 (E.D. Va. 1991) (finding that an
aggrieved offeror had standing to sue because the statutory language and legislative history of
the WMAT A Compact shows that "Congress intended WMATA to conduct its procurements as
a federal agency would" and "to be subject to suits by aggrieved bidders for procurement
activities in violation of the Compact or WMATA's regulations"); Monument Realty, LLC v.
8
WMATA, 535 F. Supp. 2d 60, 73 (D.D.C. 2008) (treating WMATA as a federal agency for
purposes of standing in an action challenging a procurement decision by WMA TA); see a/so
£lcon Enters., Inc. v. WMATA, 977 F.2d 1472, 1479-80 (D.C. Clr. 1992) (assuming arguendo
that WMATA is a federal agency and therefore subject to applicable federal procurement law).
Therefore, contract award protest claims, such as those Challenger brings against WMATA in
this case, are statutory causes of action that arise out of the Administrative
Procedure Act
("APA"), 5 U.S.C. ~~ 500-596, and federal procurement law. See Monument Realty, 535 F.
Supp. 2d at 73-74 (concluding that "WMATA's
procurement decisions must be in accordance
with the APA and applicable federal law," and applying that law to a challenge to WMATA's
contract award process); see a/so E/con, 977 F.2d at 1480 (applying the APA and relevant
procurement law in a contract award protest case against WMATA). Thus, section 12-202 does
not bar Challenger's
protest claims because it applies only to contract claims, not to statutory
causes of action. See Three Lower Cnties. Cmty Healrh Servs. v. Md Dep '/ of Healrh & Men/al
Hygiene, No. WMN-10-2488, 2011 WL 31444, at '6 (D. Md. Jan. 5, 2011) (determining that
section 12-202 did not apply to a claim seeking enforcement of the reimbursement system under
the Medicaid Act because it was a statutory claim),
aff'd 490
Fed. App'x 601 (4th Cir. 2012).
Likewise, WMATA's claim that there is no other waiver of sovereign immunity to allow
Challenger's
protest action also fails.
Courts within the Fourth Circuit and the District of
Columbia Circuit have recognized that such suits by disappointed offcrors against WMAT A are
permitted, either under the WMATA Compact or under federal law. See, e.g., Seal & Co., 768 F.
Supp. at 1157 ("[Tlhe existence of a cause of action for disappointed bidders is arguably implicit
...
in the scheme of the [WMATAJ Compact"); Monument Realty, 535 F. Supp. 2d at 73
(finding that WMATA is a federal agency for purposes of challenges to procurement decisions,
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and stating that "[ilt is well settled that actions of a federal agency alleged to be arbitrary and
capricious violations of the statutes and regulations governing the awards of federal contracts are
subject to judicial review" under the APA); E/con, 977 F.2d at 1479-80. The Court therefore
denies the Motion to Dismiss Challenger's protest claims.
II.
Failure to Join Necessary Parties
The Court next addresses WMATA's second Motion to Dismiss, originally filed in
Challenger's PARP case (TDC.14-3463), which alleges that WMATA wrongfully withheld and
redacted information that Challenger requested under PARP. WMATA seeks dismissal under
Federal Rule of Civil Procedure 12(b)(7) for failure to join a required party, based on its position
that the successful offerors are necessary parties to these claims under Rule 19(a)(I). WMATA
therefore requests that the Court direct Challenger to file an amended complaint joining Veolia,
First Transit, and Diamond. or, if Challenger fails to do so, dismiss Challenger's PARP claims
altogether. The Court concludes, however, that the successful offerors are not necessary parties.
A. Rule 12(b)(7) Standard
Under Federal Rule of Civil Procedure 12(b)(7), a party may move for dismissal "for
failure to join a party under Rule 19." Id. When faced with a Rule 12(b)(7) motion to dismiss,
the court engages in a two-step inquiry. First, it must determine whether the absent party is
necessary under Rule 19 because complete relief could not be provided without that party's
involvement in the case, or because the absent party claims an interest in the action such that the
result of the case could impede that party's ability to protect its interest or impose double or
inconsistent obligations. Fed. R. Civ. P. 19(a)(I); Owens-J//inois, Inc. v. Meade, 186 F.3d 435,
440 (4th Cir. 1999). Second, if the party is necessary but joinder would destroy jurisdiction over
the case, the court must determine that the absent party is indispensable to the action in order to
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grant dismissal. Owens-Illinois, 186 F.3d at 440. "Courts are loath to dismiss cases based on
nonjoinder of a party, so dismissal will be ordered only when the resulting defect cannot be
remedied and prejudice or inefficiency will certainly result." Id. at 44 J.
B. Joinder of Successful Offerors
Challenger's PARP claim alleges that WMATA impermissibly withheld information to
which Challenger is entitled under the PARP. The successful offerors are not necessary parties
for resolution of those claims because the Court can provide complete relief to Challenger
without involving them in this case, and because the result of this case would not impede their
ability to protect their interests.
A party's entitlement to records under the PARP is analogous to that provided by the
Freedom of Information Act ("FOIA"), 5 U.S.C. ~ 552. See ERG Transit Sys. (USA), Inc. v.
WMATA, 593 F. Supp. 2d 249, 250 (D.D.C. 2009) (noting that, for purposes of determining
whether certain records are exempt from compelled disclosure, "WMATA's Public Access to
Records Policy ... is identical to, and interpreted in accordance with, the FOIA."). Under both
the PARP and FOIA processes, an agency may decline to release agency records that contain
"trade secrets and commercial or financial information obtained from a person" that are
"privileged or confidential."
5 U.S.C. ~ 552(b)(4); PARP ~ 6.1.4.
Such information is
confidential only if its disclosure is likely to "impair the Government's ability to obtain
necessary information in the future" or "to cause substantial hann to the competitive position" of
the source of the information. Pub. Citizen Hea/lh Research Grp. v. FDA, 185 F.3d 898, 903-05
(D.C. Cir. 1999).
WMATA argues that release of the previously withheld documents as a result of this
litigation could disclose sensitive information regarding the successful offerors, such that those
I1
companies must be joined in the suit to protect their interests. WMATA also argues that if the
Court does not mandate their joinder, it would open the door for the successful offerors to bring
reverse FOIA suits against WMATA.]
These arguments are unpersuasive. Both the PARP and FOIA processes contemplate the
need to consider the views of third parties whose documents may be subject to disclosure. Under
PARP rules, WMATA is required to notify offerors when there is a request for documents
containing their business information, if WMATA determines that such documents should be
released, and when there is a lawsuit seeking to compel such disclosure. PARP
99
7.11.4,
7.11.7, and 7.11.9. WMATA is required to consider any objections by the offerors to such
disclosure. PARP
9
7.11.7. Thus, there is already a mechanism by which to receive and
incorporate the views of the successful offerors into the process. Under such circumstances, the
successful offerors need not be named parties in this action in order to allow for complete relief,
and the result of the case will not impede their ability to protect their interests or impose double
or inconsistent obligations. Fed. R. Civ. P. 19.
Significantly, in its Reply Brief, WMATA informed the Court that it initiated contact
with the successful offerors to determine whether they intended to file motions to intervene in
this litigation to protect any interests they may have in its result. The Reply Brief was filed on
January 5, 2015, and neither WMATA nor the successful ofTerorshave filed anything further on
this issue of joinder. Thus, the successful ofTerorshave been notified of this action and have
apparently declined to join or to file a reverse FOIA action, which in any event would likely be
3 In a reverse FOIA case, a party brings an action seeking an injunction to prevent the release by
a government agency of information it believes to be proprietary or a trade secret. See, e.g.,
Canadian Cummercial Corp. v. Dep't ufthe Air Force, 514 F.3d 37, 39 (D.C, Cit, 2008).
12
consolidated with this action. Accordingly, the Court denies the motion to dismiss for failure to
join required parties under Rule 12(b)(7).
CO),;CLUSION
For the foregoing reasons, both Motions to Dismiss, ECF No. 26 (TDC-14-3322) and
ECF No. 12 (TDC-14-3463), are DENIED. A separate Order follows.
Date: July 30,2015
TIIEODORE D. II
United States Distn
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