L-3 Communications Corporation v. Serco, Inc.

926 F.3d 85
CourtCourt of Appeals for the Fourth Circuit
DecidedJune 10, 2019
Docket18-1423
StatusPublished
Cited by23 cases

This text of 926 F.3d 85 (L-3 Communications Corporation v. Serco, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fourth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
L-3 Communications Corporation v. Serco, Inc., 926 F.3d 85 (4th Cir. 2019).

Opinion

BARBARA MILANO KEENAN, Circuit Judge:

This case comes before us for the second time. Plaintiffs L-3 Communications Corporation and L-3 Applied Technologies, Inc. (L-3 ATI) (collectively, the plaintiffs) appeal from the district court's award of summary judgment to Serco, Inc. in the plaintiffs' action alleging numerous claims arising out of a failed business relationship. The plaintiffs contend that Serco conspired with another company, Jaxon Engineering & Maintenance, Inc. (Jaxon), to "rig" a bidding process related to work for the United States Air Force Space Command (the Air Force), thereby interfering with the plaintiffs' reasonable business expectancy in that work. The plaintiffs assert that Serco's conduct amounted to tortious interference with the plaintiffs' business expectancy, common law conspiracy and statutory business conspiracy under Virginia law, and violations of the Colorado Organized Crime Control Act (COCCA), Colo. Rev. Stat. § 18-17-104 .

Upon our review, we conclude that the district court properly awarded summary judgment to Serco on the claims of tortious interference with business expectancy, because those claims fail as a matter of law. However, for the reasons discussed below, we conclude that the district court erred in awarding summary judgment to Serco with respect to the plaintiffs' conspiracy *89 claims and COCCA claims. 1 We therefore affirm in part, and vacate in part, the district court's judgment and remand for further proceedings.

I.

A detailed factual background of this case is included in our prior opinion. L-3 Commc'ns Corp. v. Serco, Inc. , 673 F. App'x 284 , 285-87 (4th Cir. 2016). We restate those facts as necessary here. In 2004, the Air Force awarded an indefinite delivery indefinite quantity contract to Serco (the prime contract). The prime contract required that Serco provide testing and upgrading services to certain Air Force facilities to protect those sites from high altitude electromagnetic pulse (HEMP) events.

Under the prime contract, the Air Force periodically would provide Serco with a statement of work that outlined the requirements for a specific HEMP-related project. If Serco could not complete the work itself, Serco would issue a request for proposal (RFP), which invited certain qualified companies to bid on the identified work as a subcontractor.

A few months after being awarded the prime contract, Serco entered into a subcontract for HEMP-related work (the subcontract) with the Titan Corporation, a predecessor to plaintiff L-3 ATI. 2 The subcontract provided, in relevant part, that "[Serco] has no obligation to issue and there is no guaranty to [the plaintiffs] that [they] will receive any work under the terms of this Subcontract." Instead, the plaintiffs still were required to submit proposals to bid on HEMP-related work, which was issued in the form of individual task orders.

Between December 2004 and June 2009, Serco awarded every task order issued under the prime contract to the plaintiffs or their predecessors. And although Serco was required by the prime contract to select subcontractors on a competitive basis to the maximum extent practicable, the plaintiffs were the only subcontractors that Serco considered for HEMP-related work during this time period.

In July 2009, Serco began to award HEMP-related task orders to another company, Jaxon, which was formed by a longtime L-3 employee. The plaintiffs allege that Jaxon was not qualified to perform this work, and that Serco's decision to award HEMP-related work to Jaxon was based on a "fraudulent scheme" between Serco and Jaxon in which Serco actively prevented the plaintiffs from fairly competing for work under the task orders. The plaintiffs allege that Serco facilitated this scheme (1) by encouraging and assisting former L-3 employees, now working for Jaxon, to use the plaintiffs' confidential information when bidding on HEMP-related projects for Jaxon, and (2) by providing *90 Jaxon with inside information about government costs and requirements for such projects. Based on this purported scheme, the plaintiffs claim that between July 2009 and November 2014, Serco awarded 32 HEMP-related task orders to Jaxon that otherwise would have been awarded to the plaintiffs. During that same period, Serco awarded 11 other HEMP-related task orders to the plaintiffs and 13 such task orders to other contractors.

In June 2015, the plaintiffs initiated the present action. The plaintiffs asserted claims of: (1) tortious interference with the plaintiffs' business expectancy in HEMP-related task orders from July 2009 to the time of filing (Counts 1-34) (the tortious interference claims); (2) aiding and abetting Jaxon to tortiously interfere with this business expectancy (Counts 35-68) (the aiding and abetting claims); (3) civil conspiracy in violation of Virginia common law, and statutory business conspiracy in violation of Virginia Code §§ 18.2-499 and 18.2-500 (Counts 69-70) (the conspiracy claims); and (4) violations of the Colorado Organized Crime Control Act, Colo. Rev. Stat. § 18-17-104 (Counts 71-73) (the COCCA claims).

The district court initially dismissed the plaintiffs' action under Federal Rule of Civil Procedure 12(b)(1), holding that the plaintiffs lacked standing because they did not have a business expectancy in the losses alleged. We reversed, concluding that the plaintiffs had standing, and that the question whether the plaintiffs plausibly had alleged a business expectancy was one properly considered under Federal Rule of Civil Procedure 12(b)(6) or on a motion for summary judgment. See L-3 Commc'ns Corp. , 673 F. App'x at 285 .

Following extensive discovery on remand, Serco filed a motion for summary judgment, which the district court granted. The court concluded that although the plaintiffs' tortious interference and aiding and abetting claims were timely, the plaintiffs could not establish a valid business expectancy in any task order because the subcontract expressly disclaimed any expectancy. The court also determined that the plaintiffs could not rely on their past course of dealing to establish a business expectancy, because such course of dealing did not arise independently of the subcontract.

With respect to the plaintiffs' conspiracy claims, the court held that those claims were time-barred under Virginia's five-year statute of limitations, based on the court's finding that the plaintiffs initially suffered an injury in 2008 resulting from the alleged conspiracy.

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Bluebook (online)
926 F.3d 85, Counsel Stack Legal Research, https://law.counselstack.com/opinion/l-3-communications-corporation-v-serco-inc-ca4-2019.