Phillips v. Mabus
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Opinion
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
SEBASTIAN PHILLIPS, et al.,
Plaintiffs, v. No. 11-cv-02021 (EGS) RICHARD V. SPENCER, 1 Secretary of the Navy, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiff Sebastian Phillips (“Mr. Phillips”), a Naval
Architect, and his architecture and engineering firm, Plaintiff
Marine Design Dynamics, Inc. (“MDD”), allege that they have been
effectively debarred from future government contracts with the
United States Department of the Navy since 2011. Plaintiffs sued
the Secretary of the Navy, the Chief and Deputy Chief of Naval
Operations, and four officials of the Naval Sea Systems Command
(“NAVSEA”) and Operational Logistics Integration Program
(“OPLOG”) (collectively, the “Federal Defendants”). Plaintiffs
contend that the Federal Defendants violated the Fifth Amendment
to the United States Constitution by blacklisting MDD from
government contracting without due process. The Federal
Defendants deny these allegations, listing several contracts and
1 Richard V. Spencer has been automatically substituted as the lead defendant in this case. See Fed. R. Civ. P. 25(d). 1 government work awarded by the Navy to MDD as proof against any
alleged de facto debarment. Plaintiffs do not dispute that MDD
received more than $14 million in contracts, purchase orders,
delivery orders, and funding modifications between 2011 and
2016. Rather, Plaintiffs argue that they were de facto debarred
from competing for OPLOG work and Military Sealift Command
(“MSC”) work. Plaintiffs also assert common-law tort claims
against four former MDD employees and two Navy officials.
Pending before the Court are the parties’ motions: (1) the
Federal Defendants’ Renewed Motion to Dismiss, or in the
alternative, for Summary Judgment as to Counts I, II, and IX;
(2) Plaintiffs’ Motion for Partial Summary Judgment as to Count
I; (3) the parties’ cross-motions for summary judgment as to
Counts VI and VIII against Defendant Matthew Miller
(“Mr. Miller”); and (4) Plaintiffs’ Motion for Entry of Order
for Summary Judgment. Upon careful consideration of the parties’
submissions, the applicable law, and the entire record, the
Court concludes that: (1) Plaintiffs have not met the high
standard of proving de facto debarment, and Defendants Charles
Traugh (“Mr. Traugh”) and Michael Bosworth (“Mr. Bosworth”) are
entitled to qualified immunity; (2) Plaintiffs’ tort claims
against Defendant William Robinson (“Mr. Robinson”) and
Mr. Traugh fall under the Federal Tort Claims Act;
(3) Plaintiffs have not met their burden of demonstrating that
2 Mr. Robinson and Mr. Traugh were acting outside the scope of
their employment; thus, the United States will be substituted as
the defendant as to the tort claims asserted against Mr. Traugh
and Mr. Robinson pursuant to the Westfall Act; (4) the United
States has not waived its sovereign immunity for the tort claims
against Mr. Robinson and Mr. Traugh; (5) the undisputed facts
demonstrate that Mr. Miller did not breach his fiduciary duty
owed to MDD; and (6) Plaintiffs’ civil conspiracy claim as to
Defendant Miller fails as a matter of law. Accordingly, the
Court GRANTS the Federal Defendants’ Renewed Motion to Dismiss,
or in the alternative, for Summary Judgment as to Counts I, II,
and IX, and DENIES Plaintiffs’ Motion for Partial Summary
Judgment as to Count I. The Court DENIES AS MOOT Plaintiffs’
Motion for Entry of Order for Summary Judgment. Finally,
the Court GRANTS Defendant Miller’s Motion for Summary Judgment
as to Counts VI and VIII, and DENIES Plaintiffs’ Motion for
Summary Judgment as to Counts VI and VIII.
I. Background
The Court assumes the parties’ familiarity with the factual
background and the long history of this litigation, which are
set forth in the Court’s two prior opinions. See Phillips v.
Mabus, 894 F. Supp. 2d 71 (D.D.C. 2012) (“Phillips I”); see also
Phillips v. Mabus, 319 F.R.D. 36 (D.D.C. 2016) (“Phillips II”).
The following facts—drawn from the parties’ submissions—are
3 undisputed, except where indicated.
A. MDD’s Work for the Navy
In 2005, Mr. Phillips, a Naval Architect, formed MDD.
Am. Compl., ECF No. 42 at 4 ¶ 6. 2 MDD is a Naval architecture and
marine engineering firm based in the District of Columbia. See,
e.g., Phillips I, 894 F. Supp. 2d at 77. Mr. Phillips serves as
MDD’s president and chief executive officer. Fed. Defs.’
Statement of Material Facts Not in Genuine Dispute (“SOMF”), ECF
No. 88 at 3 ¶ 2. The firm specializes in ship energy
conservation, and it primarily serves as a government contractor
and subcontractor for the Navy and its components. Phillips I,
894 F. Supp. 2d at 77-78; see also Def. Miller’s Opp’n, ECF No.
133 at 1-2 (noting that MDD’s website lists contracts valued at
more than $44 million). 3 Relevant here is MDD’s government
contracting work under a subcontract with Computer Sciences
Corporation (“CSC”) and a contract with the MSC.
1. MDD and CSC Subcontract
Between 2006 and 2011, MDD was one of the subcontractors
for CSC, see Am. Compl., ECF No. 42 at 6 ¶ 23, and CSC was one
2 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document. 3 The Court takes judicial notice of the representations made on MDD’s website at www.marinedd.com. See Mundo Verde Pub. Charter Sch. v. Sokolov, 315 F. Supp. 3d 374, 381 n.3 (D.D.C. 2018) (“The court may take judicial notice of representations made on Plaintiff’s website.”). 4 of the contractors supporting the Navy’s OPLOG. Fed. Defs.’
SOMF, ECF No. 88 at 4 ¶ 10. The Navy, through its SeaPort-e
program, awarded CSC a contract to provide support services to
NAVSEA. 4 Decl. of Robert C. Beaubien (“Beaubien Decl.”), ECF No.
88-1 at 2-3 ¶¶ 2-3. Under that contract, CSC and MDD entered
into “a firm-fixed price, indefinite-delivery, indefinite
quantity [sub]contract under which MDD provided services only
when it received a task order from CSC to do so.” Id. at 3 ¶ 4.
In turn, MDD subcontracted AirClean Technologies, Inc.
(“AirClean”), a company based in Seattle, Washington, to assist
MDD with its work under the CSC-MDD subcontract. Decl. of
Sebastian Phillips (“Phillips Decl.”), ECF No. 94-1 at 3 ¶¶ 13-
15. The period of performance for the CSC-MDD subcontract
commenced on June 18, 2009 and ended on April 4, 2014. Fed.
Defs.’ Ex. B, ECF No. 88-2 at 12.
As CSC’s senior program manager, Robert C. Beaubien
(“Mr. Beaubien”) was CSC’s contract monitor for MDD, and his
duties consisted of, inter alia, managing its subcontractors’
performance and payments under CSC’s contract with NAVSEA. Fed.
Defs.’ SOMF, ECF No. 88 at 4 ¶ 11. The CSC-MDD subcontract
4 NAVSEA is “the largest of the Navy’s five system commands. With a fiscal year budget of nearly $30 billion, NAVSEA accounts for nearly one quarter of the Navy’s entire budget.” About NAVASEA, Naval Sea Systems Command, U.S. Navy, https://www.navsea.navy.mil/Who-We-Are/ (last visited May 28, 2019). 5 provided that “CSC [was] under no obligation to issue any Task
Orders” to MDD. Fed. Defs.’ Ex.
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
SEBASTIAN PHILLIPS, et al.,
Plaintiffs, v. No. 11-cv-02021 (EGS) RICHARD V. SPENCER, 1 Secretary of the Navy, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiff Sebastian Phillips (“Mr. Phillips”), a Naval
Architect, and his architecture and engineering firm, Plaintiff
Marine Design Dynamics, Inc. (“MDD”), allege that they have been
effectively debarred from future government contracts with the
United States Department of the Navy since 2011. Plaintiffs sued
the Secretary of the Navy, the Chief and Deputy Chief of Naval
Operations, and four officials of the Naval Sea Systems Command
(“NAVSEA”) and Operational Logistics Integration Program
(“OPLOG”) (collectively, the “Federal Defendants”). Plaintiffs
contend that the Federal Defendants violated the Fifth Amendment
to the United States Constitution by blacklisting MDD from
government contracting without due process. The Federal
Defendants deny these allegations, listing several contracts and
1 Richard V. Spencer has been automatically substituted as the lead defendant in this case. See Fed. R. Civ. P. 25(d). 1 government work awarded by the Navy to MDD as proof against any
alleged de facto debarment. Plaintiffs do not dispute that MDD
received more than $14 million in contracts, purchase orders,
delivery orders, and funding modifications between 2011 and
2016. Rather, Plaintiffs argue that they were de facto debarred
from competing for OPLOG work and Military Sealift Command
(“MSC”) work. Plaintiffs also assert common-law tort claims
against four former MDD employees and two Navy officials.
Pending before the Court are the parties’ motions: (1) the
Federal Defendants’ Renewed Motion to Dismiss, or in the
alternative, for Summary Judgment as to Counts I, II, and IX;
(2) Plaintiffs’ Motion for Partial Summary Judgment as to Count
I; (3) the parties’ cross-motions for summary judgment as to
Counts VI and VIII against Defendant Matthew Miller
(“Mr. Miller”); and (4) Plaintiffs’ Motion for Entry of Order
for Summary Judgment. Upon careful consideration of the parties’
submissions, the applicable law, and the entire record, the
Court concludes that: (1) Plaintiffs have not met the high
standard of proving de facto debarment, and Defendants Charles
Traugh (“Mr. Traugh”) and Michael Bosworth (“Mr. Bosworth”) are
entitled to qualified immunity; (2) Plaintiffs’ tort claims
against Defendant William Robinson (“Mr. Robinson”) and
Mr. Traugh fall under the Federal Tort Claims Act;
(3) Plaintiffs have not met their burden of demonstrating that
2 Mr. Robinson and Mr. Traugh were acting outside the scope of
their employment; thus, the United States will be substituted as
the defendant as to the tort claims asserted against Mr. Traugh
and Mr. Robinson pursuant to the Westfall Act; (4) the United
States has not waived its sovereign immunity for the tort claims
against Mr. Robinson and Mr. Traugh; (5) the undisputed facts
demonstrate that Mr. Miller did not breach his fiduciary duty
owed to MDD; and (6) Plaintiffs’ civil conspiracy claim as to
Defendant Miller fails as a matter of law. Accordingly, the
Court GRANTS the Federal Defendants’ Renewed Motion to Dismiss,
or in the alternative, for Summary Judgment as to Counts I, II,
and IX, and DENIES Plaintiffs’ Motion for Partial Summary
Judgment as to Count I. The Court DENIES AS MOOT Plaintiffs’
Motion for Entry of Order for Summary Judgment. Finally,
the Court GRANTS Defendant Miller’s Motion for Summary Judgment
as to Counts VI and VIII, and DENIES Plaintiffs’ Motion for
Summary Judgment as to Counts VI and VIII.
I. Background
The Court assumes the parties’ familiarity with the factual
background and the long history of this litigation, which are
set forth in the Court’s two prior opinions. See Phillips v.
Mabus, 894 F. Supp. 2d 71 (D.D.C. 2012) (“Phillips I”); see also
Phillips v. Mabus, 319 F.R.D. 36 (D.D.C. 2016) (“Phillips II”).
The following facts—drawn from the parties’ submissions—are
3 undisputed, except where indicated.
A. MDD’s Work for the Navy
In 2005, Mr. Phillips, a Naval Architect, formed MDD.
Am. Compl., ECF No. 42 at 4 ¶ 6. 2 MDD is a Naval architecture and
marine engineering firm based in the District of Columbia. See,
e.g., Phillips I, 894 F. Supp. 2d at 77. Mr. Phillips serves as
MDD’s president and chief executive officer. Fed. Defs.’
Statement of Material Facts Not in Genuine Dispute (“SOMF”), ECF
No. 88 at 3 ¶ 2. The firm specializes in ship energy
conservation, and it primarily serves as a government contractor
and subcontractor for the Navy and its components. Phillips I,
894 F. Supp. 2d at 77-78; see also Def. Miller’s Opp’n, ECF No.
133 at 1-2 (noting that MDD’s website lists contracts valued at
more than $44 million). 3 Relevant here is MDD’s government
contracting work under a subcontract with Computer Sciences
Corporation (“CSC”) and a contract with the MSC.
1. MDD and CSC Subcontract
Between 2006 and 2011, MDD was one of the subcontractors
for CSC, see Am. Compl., ECF No. 42 at 6 ¶ 23, and CSC was one
2 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document. 3 The Court takes judicial notice of the representations made on MDD’s website at www.marinedd.com. See Mundo Verde Pub. Charter Sch. v. Sokolov, 315 F. Supp. 3d 374, 381 n.3 (D.D.C. 2018) (“The court may take judicial notice of representations made on Plaintiff’s website.”). 4 of the contractors supporting the Navy’s OPLOG. Fed. Defs.’
SOMF, ECF No. 88 at 4 ¶ 10. The Navy, through its SeaPort-e
program, awarded CSC a contract to provide support services to
NAVSEA. 4 Decl. of Robert C. Beaubien (“Beaubien Decl.”), ECF No.
88-1 at 2-3 ¶¶ 2-3. Under that contract, CSC and MDD entered
into “a firm-fixed price, indefinite-delivery, indefinite
quantity [sub]contract under which MDD provided services only
when it received a task order from CSC to do so.” Id. at 3 ¶ 4.
In turn, MDD subcontracted AirClean Technologies, Inc.
(“AirClean”), a company based in Seattle, Washington, to assist
MDD with its work under the CSC-MDD subcontract. Decl. of
Sebastian Phillips (“Phillips Decl.”), ECF No. 94-1 at 3 ¶¶ 13-
15. The period of performance for the CSC-MDD subcontract
commenced on June 18, 2009 and ended on April 4, 2014. Fed.
Defs.’ Ex. B, ECF No. 88-2 at 12.
As CSC’s senior program manager, Robert C. Beaubien
(“Mr. Beaubien”) was CSC’s contract monitor for MDD, and his
duties consisted of, inter alia, managing its subcontractors’
performance and payments under CSC’s contract with NAVSEA. Fed.
Defs.’ SOMF, ECF No. 88 at 4 ¶ 11. The CSC-MDD subcontract
4 NAVSEA is “the largest of the Navy’s five system commands. With a fiscal year budget of nearly $30 billion, NAVSEA accounts for nearly one quarter of the Navy’s entire budget.” About NAVASEA, Naval Sea Systems Command, U.S. Navy, https://www.navsea.navy.mil/Who-We-Are/ (last visited May 28, 2019). 5 provided that “CSC [was] under no obligation to issue any Task
Orders” to MDD. Fed. Defs.’ Ex. B, ECF No. 88-2 at 6. It also
stated that “[t]he value for services to be provided by [MDD]
will be specified in each Task Order” and that “in no way
obligates CSC to award Task Orders under this Agreement . . . .”
Id. at 5.
Based on NAVSEA’s instructions, CSC distributed the OPLOG
work to subcontractors like MDD. See Beaubien Decl., ECF No. 88-
1 at 3 ¶ 5. Mr. Beaubien oversaw MDD’s services to OPLOG. Fed.
Defs.’ SOMF, ECF No. 88 at 4 ¶ 11. OPLOG’s program manager,
Mr. Traugh, contacted Mr. Beaubien regarding the OPLOG work, and
Mr. Traugh provided “informal” guidance on how CSC should
distribute the OPLOG work. Beaubien Decl., ECF No. 88-1 at 3 ¶
5. In 2011, Mr. Traugh “directed all OPLOG projects, including
those which Plaintiffs were subcontractors to, and coordinated
directly with the Navy.” Pls.’ SOMF, ECF No. 107 at 5 ¶ 13. Mr.
Traugh and NAVSEA’s chief technology officer, Mr. Bosworth, had
the authority to manage the programs concerning OPLOG’s
relationship with Plaintiffs. See, e.g., id. at 5 ¶ 12; Fed.
Defs.’ Mot. to Dismiss, ECF No. 88 at 40 n.25 (citing Phillips
I, 894 F. Supp. 2d at 86 n.5).
On behalf of MDD, Mr. Phillips submitted a monthly package
of status reports and invoices to Mr. Beaubien, and Mr. Beaubien
sent MDD’s package to OPLOG’s program manager, Mr. Traugh, for
6 his approval. Fed. Defs.’ SOMF, ECF No. 88 at 9 ¶ 33. Mr. Traugh
and OPLOG’s assistant program manager, Mr. Robinson, managed
OPLOG’s funding, planned the expenditures of those funds for
various tasks, and assigned certain tasks to MDD. Id. at 9 ¶¶
31-32. MDD’s three employees—Defendants Michael Mazzocco
(“Mr. Mazzocco”), Volker Stammnitz (“Mr. Stammnitz”), and
William Muras (“Mr. Muras”)—performed the OPLOG work, and they
discussed task assignments with Mr. Traugh and Mr. Robinson. See
Fed. Defs.’ SOMF, ECF No. 88 at 9 ¶ 34.
Prior to fiscal year 2012, after receiving an e-mail from
Mr. Phillips in April 2011 about the status of a “new task”
order for OPLOG work, Mr. Beaubien responded that the task was
under “[c]ompliance [r]eview.” Id. at 5 ¶ 14. Mr. Beaubien also
stated that Mr. Traugh “wants me to reduce [MDD’s] allocation by
$700[,000]” in order “to fund these other new start-ups.” E-mail
from Mr. Beaubien, CSC, to Mr. Phillips (Apr. 13, 2011), Pls.’
Ex. G, ECF No. 42-1 at 58. In May 2011, CSC issued MDD a task
order modification for OPLOG work in the amount of $1,707,522,
noting that it reflected a “$700,000 deobligation underway.”
Fed. Defs.’ SOMF, ECF No. 88 at 5-6 ¶ 17. In June 2011, CSC
issued MDD another task order modification for OPLOG work in the
amount of $1,192,522, which established the final funding for
fiscal year 2011. Id. at 6 ¶ 18. CSC disbursed the remainder of
the $700,000 reallocation to its own employees and other
7 subcontractors, such as Gryphon Technologies and D&K
Engineering. Beaubien Decl., ECF No. 88-1 at 5 ¶ 7.
From March 2011 to June 2011, MDD’s three senior-level
employees who worked on OPLOG projects under the CSC-MDD
subcontract resigned from the firm. E.g., Pls.’ SOMF, ECF No.
107 at 6 ¶¶ 15-16, 7 ¶ 22; Pls.’ SOMF, ECF No. 113 at 5 ¶¶ 5, 7;
Am. Compl., ECF No. 42 at 5-6 ¶¶ 15-16, 6 ¶ 17. In March 2011,
Mr. Mazzocco, MDD’s Vice President of Operations, departed the
firm to work as an independent subcontractor, see Pls.’ SOMF,
ECF No. 107 at 6 ¶ 16, and he eventually started his own
company, Alytic, Inc., that performed OPLOG work, Beaubien
Decl., ECF No. 88-1 at 5 ¶ 7. Mr. Stammnitz left his position as
MDD’s Vice President of Systems Engineering in June 2011, and
Mr. Muras left his position as MDD’s Director of Energy
Programs, Financial Analysis and Planning in that same month.
See Am. Compl., ECF No. 42 at 5-6 ¶¶ 16-17. In August 2011, CSC
hired Mr. Stammnitz and Mr. Muras to perform OPLOG work.
Beaubien Decl., ECF No. 88-1 at 5 ¶ 8.
Before their departures and at some point in May 2011, “the
Navy arranged for a multi-day meeting in Boston[,]”
Massachusetts “to discuss the OPLOG energy conservation program
. . . .” Def. Muras’ Answer, ECF No. 80 at 9 ¶ 68. MDD’s two
employees—Mr. Stammnitz and Mr. Muras—and MDD’s former employee—
8 Mr. Mazzocco—attended the meeting with the Navy officials. 5 An e-
mail states that Mr. Bosworth of NAVSEA directed OPLOG’s program
manager, Mr. Traugh, to end the contract with MDD. Mem. from
Steven R. Southard, NAVSEA (July 19, 2011), Pls.’ Ex. D, ECF No.
42-1 at 48 (“Southard Memorandum”). That directive was
memorialized in a memorandum:
On 13 July 2011, during a review of the Operational Logistics Program, in the presence of Mr. Greg Doerrer, Mr. William Robinson, and me, Mr. Michael Bosworth directed Mr. Charles Traugh to terminate the contract of [MDD] and not to resume it in Fiscal Year 2012. This action is due to reasons discussed at the meeting.
Id. Soon thereafter, litigation ensued.
After the filing of this lawsuit, Plaintiffs and the
Federal Defendants agreed and stipulated to a consent
preliminary injunction, requiring, among other things, “the Navy
to allow MDD to compete for new work and to continue performing
contracts it was currently performing under the same standards
applicable to other contractors.” Phillips I, 894 F. Supp. 2d at
5 Mr. Mazzocco, Mr. Stammnitz, and Mr. Muras admit that the meeting in Boston took place in May 2011. E.g., Def. Muras’ Answer, ECF No. 80 at 6 ¶ 40 (“Muras admits that he and others attended a meeting held in Boston on May 2011 convened by the Navy to discuss a variety of issues” and that Mr. Phillips did not attend the meeting.); Def. Mazzocco’s Answer, ECF No. 81 at 5 ¶ 40 (“[I]t is admitted that a meeting took place in May of 2011 in Boston attended by the defendants Mazzocco, Stammnitz, and several OPLOG employees.”); Def. Stammnitz’s Answer, ECF No. 82 at 2 (admitting that “[Mr. Stammnitz] attended a meeting of OPLOG in Boston in May 2011 . . . .”). 9 78. As a result, the Navy appointed an OPLOG employee as a
technical point of contact between CSC and OPLOG so that MDD
could receive OPLOG work under the CSC-MDD subcontract. Id. at
78, 90-92. In December 2011, counsel for the Navy issued a
memorandum, stating that “the Court’s [O]rder require[s] all
personnel of this Command to . . . neither encourag[e] nor
interfer[e] with: (1) the efforts of MDD to obtain work from
prime contractors; or (2) prime contractors’ decisions whether
or not to subcontract with MDD.” Mem. from Sophie A. Krasik,
Counsel, U.S. Dep’t of the Navy (Dec. 16, 2011) (footnote
omitted), Pls.’ Ex. K, ECF No. 54-3 at 18; see also Fed. Defs.’
SOMF, ECF No. 88 at 7 ¶ 24. At Plaintiffs’ request, the Navy
eventually appointed Mr. Doerrer, an OPLOG employee, as the
technical point of contact for any OPLOG work because Plaintiffs
had not charged him with any wrongdoing. Phillips I, 894 F.
Supp. 2d at 90-92.
2. MSC Contract
In November 2009, MDD entered into a contract with the Navy
as the prime contractor for MSC’s energy conservation program. 6
Pls.’ SOMF, ECF No. 107 at 5 ¶ 11. That contract provided for a
6 MSC is “the leading provider of ocean transportation for the Navy and the Department of Defense, operating approximately 125 ships daily around the world.” Organization, Military Sealift Command, U.S. Navy, https://www.msc.navy.mil/organization/ (last visited May 28, 2019). 10 one-year term with options to renew through November 2012.
Phillips I, 894 F. Supp. 2d at 77; see also Fed. Defs.’ Ex. G,
ECF No. 88-7 at 3. In October 2011, MSC ultimately exercised the
second and final option, extending the contract with MDD to
November 1, 2012. Fed. Defs.’ Ex. G, ECF No. 88-7 at 2-3; see
also Fed. Defs.’ SOMF, ECF No. 88 at 6 ¶¶ 21-22.
Prior to that renewal, an MSC employee who worked with MDD
forwarded Mr. Phillips an e-mail from a NAVSEA employee. See E-
mail from Thomas Martin, NAVSEA, to René Fry, MSC (Sept. 15,
2011), Pls.’ Ex. R, ECF No. 42-1 at 79 (“Martin E-mail”). It
states that “my boss [Mr.] Bosworth has dictated that no funding
be sent to MDD in support of OPLOG in FY12. Apparently there was
a problem with tracking the money. The work itself was fine.”
Id. In October 2011, the same MSC employee forwarded Mr.
Phillips another e-mail from the same NAVSEA employee, which
states that “I have been directed by my leadership to not be
involved with any contract that includes MDD. Therefore, I
cannot be the [technical point of contact].” E-mail from Thomas
Martin, NAVSEA, to René Fry, MSC (Oct. 7, 2011), Pls.’ Ex. S,
ECF No. 42-1 at 80. Nonetheless, MSC issued a contract
modification to MDD on October 31, 2011. Fed. Defs.’ SOMF, ECF
No. 88 at 6 ¶ 22.
Between 2012 and 2014, MDD avers that it submitted seven
bids for competitive solicitations for contracts with the Navy
11 and MSC, and that MDD was awarded one of those contracts after
it filed a post-award protest. Pls.’ SOMF, ECF No. 107 at 10 ¶
36. Following MDD’s protest of MSC’s refusal to issue a
solicitation as a “single-award, small-business set-aside,” id.
at 9 ¶ 32, the Government Accountability Office (“GAO”) and the
Small Business Administration (“SBA”) concluded that MSC did not
adequately perform market research to determine if the
solicitation should have been set aside for small businesses,
id. at 9 ¶ 33. In May 2013, the MSC Ombudsman Report concluded
that MSC did not give MDD a “fair opportunity to compete for
this government contract award . . . .” Id. at 10 ¶ 35; see also
Pls.’ Ex. E, ECF No. 107-5 at 2-7.
Despite MDD’s setbacks in government contracting with MSC,
MSC awarded MDD an indefinite-delivery, indefinite quality
contract with a maximum value of more than $2 million in
September 2012. Fed. Defs.’ Reply, ECF No. 104-1 at 6. In June
2013, MSC awarded MDD a task order under MDD’s SeaPort-e
contract with NAVSEA. Id.; see also Def. Miller’s Opp’n, ECF No.
123 at 14. Additionally, MDD received a task order from MSC on
May 23, 2014, and MSC awarded MDD another task order on the same
day. Def. Miller’s Opp’n, ECF No. 123 at 14-15.
3. MDD’s Contracts from the Navy and Its Components
MDD has continued to receive work and funds from the Navy
over the course of this litigation. Beginning in 2011, the Navy
12 and its components awarded MDD new contracts, contract options,
modifications, task orders, and payments. See, e.g., Fed. Defs.’
SOMF, ECF No. 88 at 5, 7 ¶¶ 16, 23, 25-26; Fed. Defs.’ Reply,
ECF No. 104-1 at 5-6. MDD also received work from MSC and
OPLOG’s parent activity. See Fed. Defs.’ Opp’n, ECF No. 124 at
5-10 (listing work awarded to MDD from November 2013 to July
2016). On August 21, 2014, MDD was awarded a NAVSEA contract in
the amount of $14,483,912.86. Fed. Defs.’ Notice to the Court,
ECF No. 118 at 1; see also Def. Miller’s Opp’n, ECF No. 123 at
14. 7 On that same day, MDD received work under a contract from
the Naval Surface Warfare Center, Carderock Division—OPLOG’s
parent activity. Fed. Defs.’ Opp’n, ECF No. 124 at 6-7.
7 The Court takes judicial notice of the SeaPort Enhanced Task Order Award Report located on the Navy’s website. See, e.g., SeaPort Enhanced Task Order Award Report, U.S. Navy, https://buy.seaport.navy.mil/SeaPort/rpt CR ViewScheduledReports .asp?ReportName=SeaPortETOAward (last visited May 29, 2019) (listing contracts awarded to MDD and other awardees); Fed. R. Evid. 201(b)(2) (“The court may judicially notice a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.”); Gerritsen v. Warner Bros. Entm’t Inc., 112 F. Supp. 3d 1011, 1033 (C.D. Cal. 2015) (“[T]he court can take judicial notice of [p]ublic records and government documents available from reliable sources on the Internet, such as websites run by governmental agencies.” (internal quotation marks and citation omitted)). The Court GRANTS Mr. Miller leave to file his Supplemental Reply Memorandum in Support of his Motion for Summary Judgment, ECF No. 106, and his Supplemental Memorandum in Support of His Motion for Summary Judgment, ECF No. 117. See Idas Res. N.V. v. Empresa Nacional De Diamantes De Angola E.P., No. CIV A 06-00570 ESH, 2006 WL 3060017, at *4 n.1 (D.D.C. Oct. 26, 2006) (granting party leave to file certain supplemental submissions). 13 B. MDD and Defendant Matthew Miller
In February 2010, MDD hired Mr. Miller, and he performed
OPLOG and MSC work as a Marine Engineer until his resignation in
July 2011. See, e.g., Pls.’ SOMF, ECF No. 113 at 5 ¶¶ 6-7; Decl.
of Matthew Miller (“Miller Decl.”), ECF No. 123-1 at 1 ¶¶ 1-2, 2
¶ 6; Am. Compl., ECF No. 42 at 6 ¶ 18. Most of Mr. Miller’s work
at MDD consisted of providing engineering and program management
services to MSC’s Energy Conservation Program. Def. Miller’s
SOMF, ECF No. 87 at 15 ¶ 5. Mr. Miller devoted a small
percentage of his time to the CSC subcontract, providing
services to OPLOG. Id. at 15 ¶ 6. His work included creating
MDD’s Statement of Work (“SOW”) for OPLOG work. See Miller
Decl., ECF No. 123-2 at 3 ¶ 17; see also Pls.’ SOMF, ECF No. 113
at 7-8 ¶¶ 22-23.
Mr. Miller was an “at-will” employee who never signed MDD’s
employee handbook (the “MDD Employee Handbook”). 8 See Def.
Miller’s Mot. for Summ. J., ECF No. 87 at 8; see also Miller
Decl., ECF No. 98 at 4 ¶ 3. Mr. Miller admits that he signed the
“Terms and Conditions of Employment,” which contains a
confidentiality provision. Def. Miller’s Reply, ECF No. 99 at 6;
8 Mr. Miller did not sign the two versions of the MDD Employee Handbook. See Pls.’ Ex. A, ECF No. 42-1 at 2-18; see also Pls.’ Ex. B, ECF No. 42-1 at 19-42. The first version was revised in February 2009, Pls.’ Ex. A, ECF No. 42-1 at 5, and the second version was revised in September 2010, Pls.’ Ex. B, ECF No. 42-1 at 20. 14 see also Pls.’ Ex. 1, ECF No. 113-1 at 2 (“[W]hile serving as a
MDD employee, we request that you not assist any person or
organization in competing with MDD, in preparing to compete
against MDD or in hiring any employees away from MDD.”).
During his employment with MDD, Mr. Miller and
Mr. Mazzocco, at some point in 2010, created two versions of a
PowerPoint presentation for the formation of a new company.
E.g., Miller Decl., ECF No. 123-2 at 2 ¶ 6; Pls.’ SOMF, ECF No.
113 at 6 ¶¶ 12-13. The new company aimed to provide energy
conservation products to prospective partners in the industry.
Pls.’ Ex. H, ECF No. 94-8 at 21; see also Pls.’ Ex. G, ECF No.
94-7 at 15. The first version was a business proposal for “East
Coast Energy Engineering,” and the revised version was a
business proposal for “East Coast Energy Management, Inc.”
Compare Pls.’ Ex. H, ECF No. 94-8 at 1, with Pls.’ Ex. G, ECF
No. 94-7 at 1. Both versions listed the “Government” and
“Commercial” as bullet points for the new company’s “Long Term
(1 Year)” goals. Compare Pls.’ Ex. H, ECF No. 94-8 at 6, with
Pls.’ Ex. G, ECF No. 94-7 at 6.
Touting the education and work experience of Mr. Miller and
Mr. Mazzocco, the revised version of the business proposal (the
“Proposed Business Plan”) states that the new company will be
“founded by two graduates from United States Military and
Merchant Marine Academies. [Mr. Miller and Mr. Mazzocco] have
15 over 20 years of engineering experience and have been applying
[their] skills to reducing the US Navy’s fuel consumption.”
Pls.’ Ex. H, ECF No. 94-8 at 21. The Proposed Business Plan
estimates that forty hours per week would be devoted to MDD, and
a total of fifty-six hours per week would be spent on the new
company. Id. at 11. The new company never operated as a business
enterprise or generated any revenue. Suppl. Decl. of Matthew
Miller (“Miller Suppl. Decl.”), ECF No. 100-1 at 1 ¶¶ 2-3.
At MDD, Mr. Miller worked with Mr. Mazzocco, Mr. Stammnitz,
and Mr. Muras. While Mr. Mazzocco, Mr. Stammnitz, and Mr. Muras
attended the meeting in Boston in May 2011 with the Navy
officials, Mr. Miller did not attend that meeting because he was
working on an assignment for MDD. Miller Decl., ECF No. 123-2 at
2 ¶ 11. After resigning from MDD in July 2011, Mr. Miller worked
for AirClean for four months, and AirClean solicited CSC to work
as a subcontractor for Merrill-Dean Consulting, Inc. (“Merrill-
Dean”), based on Merrill-Dean’s pre-existing contract with CSC.
See Miller Decl., ECF No. 98 at 6 ¶¶ 16-18; see also Pls.’ SOMF,
ECF No. 113 at 7 ¶ 21. At some point, Mr. Miller drafted a SOW
for AirClean to provide services to CSC, relying on a version of
MDD’s SOW for OPLOG work from the bidding process. See, e.g.,
Pls.’ SOMF, ECF No. 113 at 7 ¶¶ 22-23; Miller Decl., ECF No.
123-2 at 3 ¶ 17. As an AirClean employee, Mr. Miller did not
perform any work for MSC, Def. Miller’s SOMF, ECF No. 87 at 16 ¶
16 19, and he left AirClean in December 2011, id. at 16 ¶ 21.
In January 2012, CSC hired Mr. Miller, and he worked there
before joining MSC. Beaubien Decl., ECF No. 88-1 at 5 ¶ 8.
Mr. Miller worked as a Mechanical Engineer at CSC from January
2012 until March 2012. Pls.’ SOMF, ECF No. 113 at 8 ¶ 27. On
March 12, 2012, he accepted a position at MSC as a Mechanical
Engineer. Miller Decl., ECF No. 123-2 at 3 ¶ 20; see also Def.
Miller’s SOMF, ECF No. 87 at 17 ¶ 25.
C. Procedural History
On November 16, 2011, Plaintiffs filed the present action
against seven Navy officials and four former MDD employees. See
generally Compl., ECF No. 1. Following a hearing on Plaintiffs’
emergency motions for a temporary restraining order and
preliminary injunction, the Court granted the parties’
Stipulated Preliminary Injunction on December 7, 2011. Phillips
I, 894 F. Supp. 2d at 76; Order, ECF No. 30 (Dec. 7, 2011).
Under the terms of the Stipulated Preliminary Injunction, the
Federal Defendants were enjoined from taking any actions to
implement, enforce, or spread to any federal agency the de facto
debarment of Plaintiffs from government contracting. Phillips I,
894 F. Supp. 2d at 88-89.
On January 3, 2012, Plaintiffs filed the Amended Complaint,
asserting nine claims against the eleven defendants. See Am.
Compl., ECF No. 42 at 29-49 ¶¶ 99-199. Count I asserts that the
17 Federal Defendants violated Plaintiffs’ constitutional right to
due process under the Fifth Amendment by blacklisting them from
government contracting without procedural safeguards, and it
seeks declaratory and injunctive relief. Id. at 29-34 ¶¶ 99–121.
Count II asserts the same claims against Mr. Traugh and Mr.
Bosworth in their individual capacities and it seeks damages of
$2.5 million. Id. at 34-35 ¶¶ 122–26. Counts III-VIII assert
breach of fiduciary duty and civil conspiracy claims against Mr.
Mazzocco, Mr. Stammnitz, Mr. Muras, and Mr. Miller, and a
common-law defamation claim against Mr. Mazzocco. Id. at 35-46
¶¶ 127–92. Count IX alleges common-law interference with
contractual relations by Mr. Traugh and Mr. Robinson in their
official and individual capacities. Id. at 47-49 ¶¶ 193–200.
On September 30, 2012, the Court denied the following
motions: (1) the Federal Defendants’ motion to dismiss, or in
the alternative for summary judgment, (2) Plaintiffs’ motion to
enforce the Stipulated Preliminary Injunction, and (3) the
motions to dismiss filed by Mr. Mazzocco, Mr. Stammnitz, and Mr.
Muras. Phillips I, 894 F. Supp. 2d at 76. After the parties
engaged in settlement discussions and limited discovery on the
issues relevant to Counts II and IX, the parties did not reach a
resolution. Phillips II, 319 F.R.D. at 37.
Thereafter, the parties engaged in full rounds of briefing
on the pending motions: (1) Plaintiffs’ motion for partial
18 summary judgment as to Count I, see generally Pls.’ Mot. for
Partial Summ. J., ECF No. 107; (2) the Federal Defendants’
renewed motion to dismiss, or in the alternative, for summary
judgment as to Counts I, II, and IX, see generally Fed. Defs.’
Renewed Mot. to Dismiss or, in the Alt. for Summ. J. (“Fed.
Defs.’ Mot. to Dismiss”), ECF No. 88; and (3) Plaintiffs’ Motion
for Entry of Order for Summary Judgment, see generally Pls.’
Mot. for Entry of Order for Summ. J., ECF No. 132. Mr. Miller
and Plaintiffs filed cross-motions for summary judgment as to
Counts VI and VII. See Def. Miller’s Mot. for Summ. J., ECF No.
87; see also Pls.’ Mot. for Summ. J., ECF No. 113. 9 These motions
are ripe and ready for the Court’s adjudication.
II. Legal Standard
A. Motion to Dismiss under Rule 12(b)(1)
A motion to dismiss under Federal Rule of Civil Procedure
12(b)(1) “presents a threshold challenge to the Court’s
jurisdiction,” and thus “the Court is obligated to determine
whether it has subject-matter jurisdiction in the first
instance.” Curran v. Holder, 626 F. Supp. 2d 30, 32 (D.D.C.
2009) (citation and internal quotation marks omitted). “It is to
9 On November 4, 2016, this Court denied the Federal Defendants’ motion to strike Plaintiffs’ motion for partial summary judgment, and Mr. Miller’s motions to strike Plaintiffs’ summary judgment motion as to the claims against him. Phillips II, 319 F.R.D. at 40. The Court afforded the parties with the opportunity to fully brief the motions for summary judgment. Id. 19 be presumed that a cause lies outside [a federal court’s]
limited jurisdiction,” Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994), unless the plaintiff can
establish by a preponderance of the evidence that the Court
possesses jurisdiction, see, e.g., United States ex rel. Digital
Healthcare, Inc. v. Affiliated Comput., 778 F. Supp. 2d 37, 43
(D.D.C. 2011) (citation omitted). Thus, the “plaintiff’s factual
allegations in the complaint . . . will bear closer scrutiny in
resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion
for failure to state a claim.” Id. (citation and internal
quotation marks omitted)).
A motion to dismiss for lack of jurisdiction may be
presented as either a facial or factual challenge. Achagzai v.
Broad. Bd. of Governors, 170 F. Supp. 3d 164, 173 (D.D.C. 2016).
“A facial challenge attacks the factual allegations of the
complaint that are contained on the face of the complaint, while
a factual challenge is addressed to the underlying facts
contained in the complaint.” Al-Owhali v. Ashcroft, 279 F. Supp.
2d 13, 20 (D.D.C. 2003) (citation and internal quotations marks
omitted). When a defendant makes a facial challenge, the Court
must accept the allegations contained in the complaint as true
and consider the factual allegations in the light most favorable
to the non-moving party. Erby v. United States, 424 F. Supp. 2d
180, 182 (D.D.C. 2006). With respect to a factual challenge, the
20 Court may consider materials outside of the pleadings to
determine whether it has subject matter jurisdiction over the
claims. Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253
(D.C. Cir. 2005).
B. Motions for Summary Judgment under Rule 56
Under Federal Rule of Civil Procedure 56, “[t]he court
shall grant summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a);
see also Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The
movant “bears the initial responsibility of informing the
district court of the basis for its motion, and identifying
those portions of the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, which it believes demonstrate the absence of
a genuine issue of material fact.” Celotex Corp., 477 U.S. at
323 (internal quotation marks omitted). “To defeat summary
judgment, the non-moving party must ‘designate specific facts
showing that there is a genuine issue for trial.’” James Madison
Project v. CIA, 344 F. Supp. 3d 380, 386 (D.D.C. 2018) (quoting
Celotex Corp., 477 U.S. at 324).
In ruling on cross-motions for summary judgment, the court
shall grant summary judgment only if one of the moving parties
is entitled to judgment as a matter of law upon material facts
21 that are not genuinely disputed. See Citizens for Responsibility
& Ethics in Wash. v. U.S. Dep’t of Justice, 658 F. Supp. 2d 217,
224 (D.D.C. 2009) (citation omitted); see also James Madison
Project, 344 F. Supp. 3d at 386 (“A dispute is ‘genuine’ only if
a reasonable fact-finder could find for the non-moving party; a
fact is ‘material’ only if it is capable of affecting the
outcome of the litigation.” (citations omitted)). The Court
“analyzes the underlying facts and inferences in each party’s
motion in the light most favorable to the non-moving party.”
James Madison Project, 344 F. Supp. 3d at 386 (citing Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986)).
III. Analysis
As stated by Plaintiffs, the “crux of this lawsuit” is
whether Plaintiffs have been de facto debarred from competing
for any OPLOG and MSC work. Pls.’ Surreply, ECF No. 109 at 3;
see also Pls.’ Opp’n, ECF No. 101 at 21 (“MSC has implemented
the de facto debarment and has refused to allow MDD to be
awarded or perform any new contracts.”) (emphasis added). 10 In
moving for summary judgment as to Counts I and II, 11 the Federal
10The Court observes that the Amended Complaint alleges de facto debarment in two ways: (1) the “OPLOG Debarment;” and (2) the “NAVSEA Debarment.” Am. Compl., ECF No. 42 at 30-34 ¶¶ 100-121; see also Pls.’ Reply, ECF No. 130 at 1 (“Plaintiffs allege that the Navy’s [OPLOG] and the [NAVSEA] de facto debarred Plaintiffs from government contracting . . . .”). 11In its previous Opinion, the Court held that Plaintiffs sufficiently stated claims in the Amended Complaint as to Counts 22 Defendants argue that Plaintiffs cannot establish de facto
debarment with respect to the OPLOG and MSC work, and that,
without a showing of de facto debarment, there is no violation
of their constitutional rights to due process under the Fifth
Amendment. See Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 16.
For the reasons explained below, the Court agrees with the
Federal Defendants. 12
Next, the Federal Defendants move to dismiss Count IX—the
I and II to survive a motion to dismiss. Phillips I, 894 F. Supp. 2d at 82-88. The Court declined to treat the motion as one for summary judgment in the alternative as to those claims because the parties had not developed the factual record at that time. Id. at 88. The Court concludes that the parties have adequately developed the record, and that the parties’ motions as to Count I and II present no genuinely disputed material facts that would preclude a grant of summary judgment. 12Pursuant to Federal Rule of Civil Procedure 12(b)(6), the Federal Defendants move to dismiss the claims against the Secretary of the Navy, the Chief of Naval Operations, the Deputy Chief of Naval Operations, and the Commander of NAVSEA “to the extent Plaintiffs are attempting to bring Bivens claims against these individuals for the actions of [Mr.] Bosworth and [Mr.] Traugh,” Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 35-36, arguing that Plaintiffs have not pled any facts demonstrating that these high-level Navy officials were personally involved in the alleged de facto debarment, id. at 36. This Court in Phillips I observed that Plaintiffs do not bring Bivens claims against these four high-level Navy officials. 894 F. Supp. 2d at 80 n.3; see also Bivens v. Six Unknown Fed. Narcotics Agents, 403 U.S. 388, 397 (1971). Plaintiffs make clear that they “do not rely on that theory of respondeat superior as the basis of its claims against these Federal Defendants.” Pls.’ Opp’n, ECF No. 101 at 35. The Court therefore need not address the Federal Defendants’ Bivens argument. See Phillips I, 894 F. Supp. 2d at 80 n.3; see also Liff v. Office of Inspector Gen. for U.S. Dep’t of Labor, 881 F.3d 912, 919 (D.C. Cir. 2018) (concluding that “no Bivens remedy is available for [de facto debarment] claims” because “Congress has provided significant remedies for disputes 23 tort claims asserted against Mr. Traugh and Mr. Robinson—for
lack of jurisdiction on four grounds: (1) those claims fall
under the Westfall Act, 28 U.S.C. § 2679, id. at 36-37; (2) the
evidence shows that both federal employees were acting within
the scope of their employment during the alleged incidents, and
the United States should be substituted as the sole defendant as
the Federal Tort Claims Act (“FTCA”) does not authorize suits
against federal officials, id. at 37-42; (3) Plaintiffs have
failed to exhaust their administrative remedies before bringing
a lawsuit under the FTCA, id. at 42-44; and (4) the United
States has not waived its sovereign immunity for the FTCA
claims, id. at 44-47. For the reasons explained below, the Court
agrees with the Federal Defendants. 13
Finally, Mr. Miller moves for summary judgment with respect
to Counts VI and VIII, arguing that he did not breach his
fiduciary duty owed to MDD because he had a right to compete
between contractors and the government entities that engage them, as well as for persons aggrieved by the government’s collection, maintenance, and dissemination of information”). 13The Court does not address the issue of whether Plaintiffs are entitled to attorneys’ fees and costs under the Equal Access to Justice Act, 28 U.S.C. § 2412, see Pls.’ Mot. for Partial Summ. J., ECF No. 107 at 39-43, because the Court denies Plaintiffs’ cross-motion for summary judgment as to Count I and grants the Federal Defendants’ motion as to Counts I and II. See United States ex rel. Atlas Copco Compressors LLC v. RWT LLC, No. CV 16-00215 ACK-KJM, 2017 WL 2177968, at *9 (D. Haw. May 17, 2017) (denying plaintiff’s summary judgment motion and declining to address the issue of whether plaintiff was entitled to attorneys’ fees). 24 with MDD after his resignation, and that Plaintiffs’ failure to
demonstrate that he breached his fiduciary duty means that
Plaintiffs cannot establish his liability under a theory of
civil conspiracy. See generally Def. Miller’s Mot. for Summ. J.,
ECF No. 87. The Court agrees.
The Court examines each motion separately, first
considering the alleged de facto debarment, next considering the
tort claims asserted against Mr. Robinson and Mr. Traugh, and
concluding with the torts claims asserted against Mr. Miller.
A. The Federal Defendants Are Entitled to Summary Judgment as to Count I (De Facto Debarment); Mr. Bosworth and Mr. Traugh Are Entitled to Summary Judgment as to Count II (Violation of Clearly Established Rights)
In the first round of briefing, Plaintiffs argue that
genuine issues of material fact exist as to Count I and II, see
Pls.’ Opp’n, ECF No. 101 at 5-6, because, inter alia:
(1) Plaintiffs have continued to be effectively debarred from
receiving OPLOG work, see id. at 9-10; and (2) the “OPLOG de
facto debarment of MDD” has extended to NAVSEA and MSC, see id.
at 11. The Federal Defendants respond that Plaintiffs
acknowledge that they received new contracts, contract options,
contract modifications, and contract funding from the Department
of the Navy during the alleged debarment, see Fed. Defs.’ Reply,
ECF No. 104-1 at 2, but “[Plaintiffs] discount their
significance.” Id.
25 In the second round of briefing, Plaintiffs contend that
they are entitled to summary judgment as a matter of law with
respect to Count I because no genuine issue of material fact
exists, Pls.’ Mot. for Partial Summ. J., ECF No. 107 at 1,
arguing that “they continue to be the subject of de facto
debarment by [the] Federal Defendants[,]” id. at 2. Plaintiffs’
argument in the first round of briefing that genuine issues of
material fact exist as to Count I is therefore moot. In
response, the Federal Defendants argue that Plaintiffs cannot
demonstrate the existence of de facto debarment, pointing out
that Plaintiffs ignore “twenty-nine contracts, delivery orders,
purchase orders, and funding modifications that the [Department
of the Navy] has awarded [MDD] since . . . September 2013 . . .
.” Fed. Defs.’ Opp’n, ECF No. 124 at 5. The Federal Defendants
point to a NAVSEA contract awarded to MDD in the amount of
$14,483,912.86 on August 21, 2014, see Fed. Defs.’ Notice, ECF
No. 118 at 1, arguing that said contract in addition to other
contracts, options, and modifications serve as further evidence
that there was no de facto debarment, see id. at 2.
1. Plaintiffs Have Failed to Meet the High Standard to Prove De Facto Debarment
De facto debarment occurs when a contractor or a
subcontractor has, for all practical purposes, been suspended or
blacklisted from working with a government agency without due
26 process, namely, adequate notice and a meaningful hearing.
Phillips I, 894 F. Supp. 2d at 81 (citations omitted). The
United States Court of Appeals for the District of Columbia
Circuit (“D.C. Circuit”) has held:
[W]hen the Government effectively bars a contractor from virtually all Government work due to charges that the contractor lacks honesty or integrity, due process requires that the contractor be given notice of those charges as soon as possible and some opportunity to respond to the charges before adverse action is taken.
Old Dominion Dairy Prods., Inc. v. Sec’y of Def., 631 F.2d 953,
955–56 (D.C. Cir. 1980) (emphasis added); see also Reeve
Aleutian Airways, Inc. v. United States, 982 F.2d 594, 598 (D.C.
Cir. 1993) (“[T]he typical debarment [is a] ban on contracting
for ‘virtually all government work’ for a fixed period of time .
. . .” (citations omitted)).
The standard for proving de facto debarment is high. E.g.,
Pub. Warehousing Co. K.S.C. v. Def. Supply Ctr. Phila., 489 F.
Supp. 2d 30, 45 n.13 (D.D.C. 2007); Highview Eng’g, Inc. v. U.S.
Army Corps of Eng’rs, 864 F. Supp. 2d 645, 649 (W.D. Ky. 2012)
(“Highview II”) (“Plaintiffs must meet a high standard when
seeking to prove a de facto debarment claim.”). To prevail on
their motion for partial summary judgment as to Count I,
Plaintiffs must demonstrate that there is no genuine dispute of
a material fact as to: a “systematic effort by the procuring
27 agency to reject all of the bidder’s contract bids.” TLT Constr.
Corp. v. United States, 50 Fed. Cl. 212, 215 (2001) (emphasis
added) (citation omitted). The Court can find de facto debarment
based on either: (1) “a statement that the agency will not award
a contract to the disappointed bidder in the future”; or
(2) “the conduct of the agency.” Leslie & Elliott Co. v.
Garrett, 732 F. Supp. 191, 195 (D.D.C. 1990); see also TLT
Constr. Corp., 50 Fed. Cl. at 215-16. “A Federal agency may
debar a person . . . .” 2 C.F.R. § 180.800; see also Highview
Eng’g, Inc. v. U.S. Army Corps of Eng’rs, No. 3:08-CV-647-S,
2010 WL 2106664, at *5 (W.D. Ky. May 24, 2010) (“Highview I”)
(“[N]o individual person debars a contractor. Rather, the [U.S.
Army] Corps [of Engineers] takes such actions as an entity.”). 14
As the Federal Defendants observe, see Fed. Defs.’ Mot. to
Dismiss, ECF No. 88 at 27 n.12, “[p]reclusion from a single
contract is insufficient to establish de facto debarment.”
14Congress has defined the term “Federal agency” as “the executive departments, the judicial and legislative branches, the military departments, independent establishments of the United States, and corporations primarily acting as instrumentalities or agencies of the United States, but [the term] does not include any contractor with the United States.” 28 U.S.C. § 2671 (emphasis added). The Department of the Navy is one of the “military departments.” 50 U.S.C. § 3004 (defining the term “Department of the Navy” and listing its operating forces); see also GAF Corp. v. United States, 818 F.2d 901, 906 n.15 (D.C. Cir. 1987) (noting that the Department of the Navy is a federal agency). 28 Highview II, 864 F. Supp. 2d at 653. 15 The Court must grant the
Federal Defendants’ motion for summary judgment where Plaintiffs
“though perhaps injured in some respects, cannot demonstrate
broad preclusion from government contracting, as the law of this
[C]ircuit requires . . . .” Trifax Corp. v. District of
Columbia, 314 F.3d 641, 642 (D.C. Cir. 2003) (“Trifax II”)
(emphasis added); see also Mem. Op., Trifax Corp. v. District of
Columbia, No. 98-cv-2824 (GK) (D.D.C. Nov. 2, 2001), ECF No. 166
at 19 (“Trifax I”) (granting defendant’s motion for summary
judgment and finding that “Plaintiff has suffered no broad
preclusion because it cannot demonstrate that its business has
been ‘seriously affected’ or ‘destroyed’”).
The undisputed facts do not demonstrate that Plaintiffs
have been de facto debarred on a systematic basis from
government contracting work in violation of the Due Process
Clause of the Fifth Amendment because Plaintiffs cannot
15Courts agree that a plaintiff cannot establish a systematic effort of de facto debarment from a single incident. See, e.g., Nat’l Career Coll., Inc. v. Spellings, 371 F. App’x 794, 796 (9th Cir. 2010) (“This single incident is insufficient to prove a de facto debarment.”); Redondo-Borges v. U.S. Dep’t of Hous. & Urban Dev., 421 F.3d 1, 9 (1st Cir. 2005) (“A single incident is insufficient to establish a pattern or practice of exclusion (and, thus, to establish even a de facto debarment).”). In TLT Constr. Corp., the court found that the disqualification of two projects did not establish a systematic pattern of de facto debarment where “the Army awarded [the plaintiff] two contracts, “albeit smaller and of a different nature . . . .” 50 Fed. Cl. at 216. 29 establish that the Navy has effectively debarred MDD from
virtually all government work. It is uncontested that Plaintiffs
have received millions of dollars in government contracting work
from the Navy and its components since 2011, and that MDD has
been awarded new contracts, contract options, contract
modifications, and task orders through 2016. See, e.g., Fed.
Defs.’ Mot. to Dismiss, ECF No. 88 at 15; Pls.’ Opp’n, ECF No.
101 at 11; Fed. Defs.’ Reply, ECF No. 104-1 at 3-7; Fed. Defs.’
Notice, ECF No. 118 at 1-2; Fed. Defs.’ Opp’n, ECF No. 124 at 3,
5-10; Pls.’ Reply, ECF No. 130 at 3; Def. Miller’s Opp’n, ECF
No. 123 at 14-15; Pls.’ Reply, ECF No. 129 at 4. Plaintiffs do
not deny their receipt of this work. See Pls.’ Reply, ECF No.
130 at 3. There is also no dispute that a contract modification
constitutes government work, and the parties agree that a
modification of a contract is not a new contract. See, e.g.,
Pls.’ Opp’n, ECF No. 101 at 15; Fed. Defs.’ Reply, ECF No. 104-1
at 11. Relying on Art-Metal USA, Inc. v. Solomon, 473 F. Supp.
1, 4-5 (D.D.C. 1978), Plaintiffs argue that “[r]eceipt of any
government contract is not proof that Plaintiffs have not been
victimized by a debarment.” Pls.’ Reply, ECF No. 130 at 3
(emphasis in original); see also Pls.’ Surreply, ECF No. 109 at
5. Plaintiffs’ reliance on Art-Metal USA, Inc., however, is
misplaced.
In Art-Metal USA, Inc., the General Services Administration
30 (“GSA”) summarily cancelled the plaintiff-contractor’s file
cabinet contract in its entirety following a series of newspaper
articles that described the plaintiff-contractor’s alleged
abuses in its contract dealings with GSA. 473 F. Supp. at 3. The
plaintiff-contractor also claimed that GSA “suspended all
further contracts[,]” “ceased doing business with [the
plaintiff,]” and failed to issue “purchase orders on existing
contracts . . . .” Id. at 5 n.7. In granting the plaintiff-
contractor’s motion for preliminary injunction, the court found
that GSA debarred the plaintiff-contractor for an “indefinite
period” because GSA terminated the contract and held in abeyance
the awards of four additional contracts for which the plaintiff-
contractor had submitted bids. Id. at 4.
Here, the undisputed facts demonstrate the opposite. The
Navy and its components did not stop doing business with MDD.
MDD competed for and received OPLOG and MSC work under
additional contracts and contract options that the Navy and its
components did not hold in abeyance. See, e.g., Fed. Defs.’ Mot.
to Dismiss, ECF No. 88 at 17; Fed. Defs.’ Reply, ECF No. 104-1
at 5-7, 10; Fed. Defs.’ Opp’n, ECF No. 124 at 5-10. Furthermore,
the record does not support Plaintiffs’ contention that “MDD has
received no work orders or contracts from CSC for OPLOG or any
other agency contract.” Pls.’ Opp’n, ECF No. 101 at 3-4
(emphasis added). While it is undisputed that CSC did not issue
31 task orders to MDD in fiscal year 2012, see, e.g., Pls.’ Mot.
for Partial Summ. J., ECF No. 107 at 12; Fed. Defs.’ Mot. to
Dismiss, ECF No. 88 at 22-26, the lack of work orders under the
CSC subcontract alone is insufficient to prove de facto
debarment. See Trifax II, 314 F.3d at 643-44. Indeed, the D.C.
Circuit has made clear that facts showing that a contractor “won
some and lost some” government contracting work is “more than
sufficient to preclude a reasonable jury from finding [that the
contractor was] broadly precluded from government contracting .
. . .” Id. at 644-45 (citation omitted).
Trifax II is instructive. In that case, the D.C. Circuit
held that a plaintiff-contractor failed to show that it was
effectively debarred from bidding on government contracts where
the record demonstrated that the plaintiff-contractor “won some
and lost some” in bidding and obtaining government contracts.
Id. at 644 (citation omitted). There, “the District [of
Columbia] declined to renew at least two contracts” with the
plaintiff-contractor after the District’s Office of Inspector
General (“OIG”) issued a report about the plaintiff-contractor’s
alleged misconduct. Id. at 645. One of the District’s
contracting agencies later awarded the plaintiff-contractor a
new contract, but the plaintiff-contractor subsequently failed
to win two other federal contracts through the bidding process.
Id. For one of the bids, “the United States Comptroller General
32 formally prohibited the contracting agency from penalizing [the
plaintiff-contractor] for the OIG report”; and a local agency
wrote a favorable letter of recommendation about the plaintiff-
contractor for another bid. Id. The D.C. Circuit concluded that
a reasonable jury could not have found that the plaintiff-
contractor was broadly precluded from government contracting.
Id.
The situation here is indistinguishable: “[T]he undisputed
facts show that Plaintiff[s] ‘won some and lost some’ in
retaining and bidding on government contracts” following the
Southard Memorandum and the Martin E-mail. Mem. Op., Trifax I,
ECF No. 166 at 14 (emphasis added). Furthermore, Plaintiffs have
not presented evidence demonstrating that the Navy has
“seriously affected” or “destroyed” their ability to obtain
contracts in their field. Trifax II, 314 F.3d at 644.
Notwithstanding the fact that MDD did not receive task orders
under the CSC subcontract in fiscal year 2012, Plaintiffs do not
dispute that the Navy awarded MDD other contracts. Those awards
provide undisputed evidence demonstrating that Plaintiffs were
not de facto debarred. See Nat’l Career Coll., Inc., 371 F.
App’x at 796 (“When a party is debarred, that party cannot seek
to enter into any contract with any federal agency.” (emphasis
in original)).
Plaintiffs’ argument that they were effectively debarred
33 from receiving MSC contracting work is unavailing. See Pls.’
Mot. for Partial Summ. J., ECF No. 107 at 28. Plaintiffs argue
that modifications of existing contracts do not constitute
opportunities for future government contracting work from OPLOG
and MSC. Pls.’ Opp’n, ECF No. 101 at 15-16. Acknowledging that
MSC exercised its final option on MDD’s contract, id. at 11,
Plaintiffs contend that “MSC simply removed the vast majority of
planned task orders,” id. at 14, and “redirect[ed] work to the
other NAVSEA [indefinite delivery, indefinite quantity]
contracts[,]” id. at 15. Plaintiffs contend that they continued
to be “deprived of access to additional small business
opportunities” in 2012 and 2013, id. at 12, because MSC never
responded to MDD’s inquiry about a certain “single-award, small-
business set aside,” id. (citing Pls.’ Exs. D, E, & F, ECF No.
101 at 136-43). And Plaintiffs point out that the GAO decision,
SBA findings, and MSC Ombudsman Report indicate that the Federal
Defendants de facto debarred them from government work. See
Pls.’ Mot. for Partial Summ. J., ECF No. 107 at 30-32. However,
Plaintiffs are in the same position as the plaintiff-contractor
in Trifax II: they failed to win some contracts, but they also
won some. See 314 F.3d at 644; see also Bannum, Inc. v. Samuels,
221 F. Supp. 3d 74, 87 (D.D.C. 2016) (“Merely showing that the
plaintiff ‘won some and lost some in retaining and bidding on
government contracts’ is insufficient.” (quoting Trifax II, 314
34 F.3d at 644)).
Plaintiffs’ argument—that the alleged statements made by
two individuals prove de facto debarment—is equally unavailing.
See Pls.’ Mot. for Partial Summ. J., ECF No. 107 at 26.
Plaintiffs contend that de facto debarment exists based on the
following two statements: (1) “Mr. Michael Bosworth directed
Mr. Charles Traugh to terminate the [CSC] [sub]contract of [MDD]
and not to resume it in Fiscal Year 2012[,]” Pls.’ Mot. for
Partial Summ. J., ECF No. 107 at 27; and (2) “Mike Bosworth has
dictated that no funding be sent to MDD in support of OPLOG in
FY12[,]” id. at 28. “[I]t is true that a statement that the
agency will not award a contract to the disappointed bidder in
the future will support a claim of de facto debarment . . . .”
Leslie & Elliott Co., 732 F. Supp. at 195. But it is also true
that preclusion from a single contract is insufficient to
establish de facto debarment even if a plaintiff can show a
statement from an agency that the agency would not award the
plaintiff a future contract. Highview II, 864 F. Supp. 2d at
653.
The parties agree that individuals cannot debar a
contractor. See, e.g., Fed. Defs.’ Mot. to Dismiss, ECF No. 88
at 29 (citing Highview I, 2010 WL 2106664, at *5); Pls.’ Opp’n,
ECF No. 101 at 28 (same). As such, the Federal Defendants argue
that Mr. Bosworth and Mr. Traugh were two employees who “could
35 not be held to know that the decision to discontinue a
subcontracting relationship on a single program would be
tantamount to instituting a de facto debarment” because, inter
alia, they were program managers and engineers “rather than
warranted contracting officers.” Fed. Defs.’ Mot. to Dismiss,
ECF No. 88 at 33-34. Plaintiffs disagree. Pls.’ Opp’n, ECF No.
101 at 33 (citing Highview Eng’g, Inc. v. U.S. Army Corps of
Eng’rs, No. 3:08-CV-647-S, 2010 WL 2961182, at *2 (W.D. Ky. July
26, 2010) (denying a motion to dismiss because “the statements
alleged in the complaint make out a plausible [de facto
debarment] claim as to the first path to relief” because “[i]f
proved, these statements could plausibly be interpreted to mean
that the Corps would not award any future contracts to Hawkins
or his businesses.”)). Neither party disputes that “courts have
previously held that statements alleged in a complaint to be
made by project managers make out a plausible claim as to
constitute a statement that the agency will no longer awarded a
subcontractor future contracts.” Pls.’ Opp’n, ECF No. 101 at 33
(emphasis in original); see also Pls.’ Mot. for Partial Summ.
J., ECF No. 107 at 28-29. In fact, this Court found that
Plaintiffs met their burden to allege de facto debarment to
survive a motion to dismiss based, in part, on certain
employees’ statements. Phillips I, 894 F. Supp. 2d at 81-82. At
the summary judgment stage, however, Plaintiffs must meet the
36 “high standard” to prove de facto debarment. Highview II, 864 F.
Supp. 2d at 649.
Both parties rely on Highview II. See Pls.’ Mot. for
Partial Summ. J., ECF No. 107 at 29-30; see also Fed. Defs.’
Mot. to Dismiss, ECF No. 88 at 15, 30. Highview II is not
binding precedent, but the Court finds the reasoning in Highview
II—a decision granting summary judgment in favor of a federal
agency—persuasive. In that case, the plaintiff and his company
argued that they were effectively debarred from working with the
Army Corps of Engineers without due process. Highview II, 864 F.
Supp. 2d at 648. The plaintiff and his business partner
submitted a wetlands mitigation bank proposal to the federal
agency, and the agency’s program manager met with the
plaintiff’s business partner to express her concerns with
working with the plaintiff. Id. at 647. The business partner
interpreted the program manager’s sentiments as if “she did not
want any wetlands mitigation bank proposals in which [the
plaintiff] played a role.” Id. The business partner also
interpreted her “comments and mannerisms to indicate that [the
plaintiff] was being ‘blacklisted’ by the [agency].” Id. at 651.
The plaintiff relied on the program manager’s alleged comments,
along with his business partner’s notes and e-mail about the
meeting, to estblish de facto debarment. Id. at 649. The court
noted that the details of the meeting were “not entirely
37 clear[,]” but “[the business partner] was not told that ‘the
[agency] wanted no proposals in which [the plaintiff] played a
role.’” Id. (emphasis in original).
The court granted the federal agency’s motion for summary
judgment and found that “[t]here was nothing stated or
demonstrated by the Corps indicating that it would not grant
[the plaintiff] future contracts, beyond the one contract then
before it.” Id. at 652. The court reasoned that the business
partner admitted that the program manager’s statement was not a
quote, that it was his opinion that the agency was blacklisting
the plaintiff, and that the program manager never told him that
the Corps would not approve the proposal. Id. at 652-53. The
court determined that the plaintiff could not establish de facto
debarment through an agency statement that it would not award
future contracts. Id. at 653. The court explained that even if
the plaintiff could have proven that he was prevented from
obtaining the contract with the Corps because he was removed
from the project with his business partner, “such a finding
would be insufficient to carry the day.” Id. at 653. The court
concluded that “[t]here [was] simply no evidence . . . of a
systematic effort by the agency to reject all of the plaintiffs’
contract bids.” Id. (collecting cases).
As the present case closely resembles Highview II, the
Court reaches the same outcome. Like the details from the
38 meeting between the business partner and the agency’s program
manager in Highview II, the details from the meeting referenced
in the Southard Memorandum are not entirely clear. Compare Pls.’
Mot. for Partial Summ. J., ECF No. 107 at 15-16, with Beaubien
Decl., ECF No. 88-1 at 4 ¶ 5 (“At no time, however, did
Mr. Traugh or any other OPLOG, NAVSEA, or Department of the Navy
employee ask me to refuse to permit MDD to quote or perform
subtask under CSC’s contract with NAVSEA or any other
contract.”). Even if Plaintiffs could prove that Mr. Bosworth
directed the termination of the MDD’s subcontract relationship
with CSC, the record does not support Plaintiffs’ contention
that “the Southard Memorandum is a statement in writing
purporting that Federal Defendants would not use Plaintiffs for
FY12 contracts . . . .” Pls.’ Mot. for Partial Summ. J., ECF No.
107 at 29 (emphasis added). The Southard Memorandum states that
the single subcontract would be terminated and “not to resume
[the subcontract] in Fiscal Year 2012.” Id. at 16. As the court
indicated in Highview II, a program manager’s statement does not
mean that the federal agency would no longer grant future
contracts to MDD. 864 F. Supp. 2d at 652-53. Even if Plaintiffs
could prove that they were precluded from the CSC subcontract in
fiscal year 2012 based on e-mail conversations, see Pls.’ Mot.
for Partial Summ. J., ECF No. 107 at 30, Plaintiffs cannot
establish de facto debarment based on preclusion from the single
39 subcontract. See Highview II, 864 F. Supp. 2d at 653.
Finally, Plaintiffs cannot prove de facto debarment through
the Navy’s conduct. See Leslie & Elliott Co., 732 F. Supp. at
195. The parties do not dispute that MDD has received millions
of dollars in contracts and other government work. See Fed.
Defs.’ Opp’n, ECF No. 124 at 3, 5-11; see also Pls.’ Reply, ECF
No. 130 at 3. Rather, Plaintiffs argue that the “evidence of
contracts awarded to Plaintiffs” is “irrelevant to a
determination of whether Plaintiffs were subject of a de facto
debarment as a result of the OPLOG or MSC Debarments.” Pls.’
Reply, ECF No. 130 at 3. Plaintiffs maintain that the MSC
Ombudsman Report shows that MSC did not provide MDD with a fair
opportunity for awards under proposed MSC contract
solicitations. Pls.’ Opp’n, ECF No. 101 at 23-27. Plaintiffs’
arguments are unavailing.
MDD’s other contracts and work from the Navy and its
components are relevant because Plaintiffs must prove a
systematic effort by the Navy to reject all of MDD’s contract
bids. See, e.g., Highview II, 864 F. Supp. 2d at 649; TLT Const.
Corp., 50 Fed. Cl. at 215–16. Plaintiffs have failed to do so.
Contrary to Plaintiffs’ assertion, the Federal Defendants have
not admitted that their “conduct has established the continuing
de facto debarment of Plaintiffs” in violation of the Stipulated
Preliminary Injunction. Pls.’ Opp’n, ECF No. 101 at 27. Rather,
40 the record demonstrates that the Federal Defendants have
complied with the Stipulated Preliminary Injunction, requiring
the Federal Defendants to allow MDD “to compete for, and if
awarded, receive and perform contracts, subcontracts, task
orders, task instructions and orders under indefinite quantity
contracts, in the same manner and under the same standards
applicable to other contractors and subcontractors . . . .”
Phillips I, 894 F. Supp. 2d at 89. The Court therefore finds
that MDD’s receipt of contracts from the Navy and its components
are relevant. Because Plaintiffs cannot establish that they were
de facto debarred on a systematic basis, the Court DENIES
Plaintiffs’ motion for partial summary judgment as to Count I,
and GRANTS the Federal Defendant’s motion for summary judgment
as to Count I. 16
2. Mr. Traugh and Mr. Bosworth Are Entitled to Qualified Immunity
Having found that the Federal Defendants are entitled to
summary judgment as to Count I, the Court next turns to the
issue of whether Mr. Traugh and Mr. Bosworth are entitled to
qualified immunity as to Count II. Plaintiffs sue Mr. Traugh and
16Because the Court denies Plaintiffs’ Motion for Partial Summary Judgment as to Count I, the Court need not reach Plaintiffs’ requests for: (1) declaratory and injunctive relief; (2) sanctions against the Federal Defendants for alleged violations of the Stipulated Preliminary Injunction; and (3) an award of attorneys’ fees and costs under the Equal Access to Justice Act. 41 Mr. Bosworth in their individual capacities for the alleged de
facto debarment. Phillips I, 894 F. Supp. 2d at 79, 87. The
parties do not dispute that Mr. Traugh, as OPLOG’s program
manager, and Mr. Bosworth, as NAVSEA’s Acting Chief Technology
Officer, were government employees acting in their discretionary
functions. Indeed, “[g]overnment officials performing
discretionary functions are protected by qualified immunity and
cannot be liable for damages unless they violate ‘clearly
established statutory or constitutional rights of which a
reasonable person would have known.’” Townsend v. United States,
236 F. Supp. 3d 280, 323 (D.D.C. 2017) (quoting Harlow v.
Fitzgerald, 457 U.S. 800, 818 (1982)).
The Federal Defendants argue that Mr. Traugh and
Mr. Bosworth are entitled to qualified immunity because “a
reasonable Government employee could not be held to know that
the decision to discontinue a subcontracting relationship on a
single program would be tantamount to instituting a de facto
debarment . . . on an agency-wide basis.” Fed. Defs.’ Mot. to
Dismiss, ECF No. 88 at 34. Plaintiffs contend that Mr. Traugh
and Mr. Bosworth violated Plaintiffs’ “clearly established
rights”; therefore, both government employees are not entitled
to qualified immunity. See Pls.’ Opp’n, ECF No. 101 at 31-32.
Whether a government official may enjoy qualified immunity
is a close question to be resolved within this Court’s sound
42 discretion. Bame v. Dillard, 637 F.3d 380, 384 (D.C. Cir. 2011).
“Qualified immunity depends upon the answers to two questions:
(1) Did the officer’s conduct violate a constitutional or
statutory right? If so, (2) was that right clearly established
at the time of the violation?” Jones v. Kirchner, 835 F.3d 74,
84 (D.C. Cir. 2016); see also Reichle v. Howards, 566 U.S. 658,
664 (2012) (“[C]ourts may grant qualified immunity on the ground
that a purported right was not ‘clearly established’ by prior
case law, without resolving the often more difficult question
whether the purported right exists at all.”).
“For a right to be clearly established, existing precedent
must have placed the statutory or constitutional question beyond
debate.” Daugherty v. Sheer, 891 F.3d 386, 390 (D.C. Cir. 2018)
(citations and internal quotation marks omitted), cert. denied,
139 S. Ct. 1294 (2019). “[T]he touchstone remains whether the
‘contours of the right are clear to a reasonable officer.’” Id.
(quoting Reichle, 566 U.S. at 665). “This standard does not
‘require a case directly on point.’” Id. (quoting Ashcroft v.
al-Kidd, 563 U.S. 731, 741 (2011)); see also Bame, 637 F.3d at
384 (“[W]e look to cases from the Supreme Court and this court,
as well as to cases from other courts exhibiting a consensus
view—if there is one.” (citation and internal quotation marks
omitted)). “The proponent of [the] purported right has the
‘burden to show that the particular right in question . . . was
43 clearly established’ for qualified-immunity purposes.”
Daugherty, 891 F.3d at 390 (quoting Dukore v. District of
Columbia, 799 F.3d 1137, 1145 (D.C. Cir. 2015)).
The Court is persuaded that Plaintiffs have a “clearly
established” constitutional right of freedom from de facto
debarment. The D.C. Circuit has recognized that de facto
debarment of a government contractor without due process and on
grounds of dishonesty, fraud or lack of integrity violates the
Fifth Amendment. See, e.g., Taylor v. Resolution Trust Corp., 56
F.3d 1497, 1506 (D.C. Cir. 1995) (“[G]overnment action
precluding a litigant from future employment opportunities will
infringe upon his constitutionally protected liberty interests
only when that preclusion is either sufficiently formal or
sufficiently broad.”); Old Dominion Dairy Prods., Inc., 631 F.2d
at 955. Accordingly, the question before the Court is whether
the government officials violated Plaintiffs’ clearly
established right. See Phillips I, 894 F. Supp. 2d at 88 n.6.
The United States Supreme Court has instructed that “[e]ven if
the plaintiff’s complaint adequately alleges the commission of
acts that violated clearly established law, the defendant is
entitled to summary judgment if discovery fails to uncover
evidence sufficient to create a genuine issue as to whether the
defendant in fact committed those acts.” Mitchell v. Forsyth,
472 U.S. 511, 526 (1985) (emphasis added).
44 Here, discovery has not “uncover[ed] evidence sufficient to
create a genuine issue as to whether” Mr. Traugh and
Mr. Bosworth violated Plaintiffs’ constitutional rights. Id.
After this Court denied the Federal Defendants’ motion to
dismiss with regard to qualified immunity, the parties engaged
in discovery on the issue of qualified immunity. See Phillips
II, 319 F.R.D. at 39; see also Phillips I, 894 F. Supp. 2d at
88. Despite that discovery, Plaintiffs rely heavily on the
allegations in the Amended Complaint to support their contention
that Mr. Bosworth and Mr. Traugh are not entitled to qualified
immunity. See Pls.’ Opp’n, ECF No. 101 at 32-33. However, other
than a self-serving declaration, see Phillips Decl., ECF No. 101
at, 48-52, and the two statements in the Southard Memorandum and
the Martin E-mail, see Pls.’ Mot. for Partial Summ. J., ECF No.
107 at 16-17, Plaintiffs have not uncovered evidence to support
their allegation that Mr. Bosworth or Mr. Traugh ordered the
Navy to blacklist MDD from all future government contracts.
The qualified immunity analysis ends with Plaintiffs’
failure to demonstrate that Mr. Bosworth and Mr. Traugh’s
conduct violated Plaintiffs’ rights. See Gallup Org. v. Scully,
No. CIV.A. 03-849 CKK, 2005 WL 3213963, at *3 (D.D.C. Oct. 5,
2005) (“Because Plaintiffs’ iterated facts do not demonstrate
that Defendant’s actions violated Plaintiffs’ constitutional
rights, the Court shall grant Defendant’s Motion for Summary
45 Judgment without proceeding further with the qualified immunity
analysis.” (footnote omitted)). Because Plaintiffs did not
demonstrate a constitutional violation, the Court need not
assess whether Plaintiffs have presented evidence demonstrating
that Mr. Bosworth and Mr. Traugh would have known that they
violated Plaintiffs’ clearly established rights. See id. at *3
n.5. The Court therefore finds that Mr. Bosworth and Mr. Traugh
are entitled to qualified immunity because there is no genuine
issue of material fact as to whether they, in fact, de facto
debarred Plaintiffs. See Mitchell, 472 U.S. at 526. Accordingly,
the Court GRANTS the Federal Defendants’ motion for summary
judgment as to Count II.
B. Dismissal Is Warranted as to Count IX (Interference with Contractual Relations, Prospective Contractual Relations and Prospective Advantageous Economic Relationship) against Mr. Robinson and Mr. Traugh
The Court next considers the issue of whether Plaintiffs
have met their burden of proving that Mr. Robinson and
Mr. Traugh were acting outside of the scope of their employment
to rebut the Federal Defendants’ certification under the
Westfall Act, 28 U.S.C. § 2679. See Fed. Defs.’ Mot. to Dismiss,
ECF No. 88 at 37. In its prior Opinion, the Court permitted
limited discovery on the scope-of-employment issue, finding that
Plaintiffs met their burden for such discovery. Phillips I, 894
F. Supp. 2d at 85. The Federal Defendants contend that the
46 evidence from discovery shows that Mr. Robinson and Mr. Traugh
were acting within the scope of their employment because they
were performing their duties as OPLOG’s program manager and
assistant program manager, respectively, when they engaged in
the alleged misconduct. See Fed. Defs.’ Mot. to Dismiss, ECF No.
88 at 37-42.
1. The United States Will Be Substituted as the Defendant Pursuant to the Westfall Act Since Mr. Traugh and Mr. Robinson Acted Within the Scope of Their Employment
“The Federal Employees Liability Reform and Tort
Compensation Act of 1988, 28 U.S.C. § 2679, commonly referred to
as the Westfall Act, ‘accords federal employees absolute
immunity from common-law tort claims arising out of acts they
undertake in the course of their official duties.’” Bannum, 221
F. Supp. 3d at 81 (quoting Osborn v. Haley, 549 U.S. 225, 229
(2007)). Where, as here, the Attorney General or the Attorney
General’s delegate certifies that “the defendant employee was
acting within the scope of his office or employment at the time
of the incident out of which the claim arose” then the immunity
is triggered, and “any civil action or proceeding commenced upon
such a claim in a United States district court shall be deemed
an action against the United States . . . and the United States
shall be substituted as the party defendant.” 28 U.S.C.
47 § 2679(d)(1); see also Bannum, 221 F. Supp. 3d at 81 (citing
Jacobs v. Vrobel, 724 F.3d 217, 219–20 (D.C. Cir. 2013)).
As this Court explained in Phillips I:
The Attorney General’s certification constitutes prima facie evidence that the employee was acting within the scope of his employment, and once the certification has been made, the plaintiff challenging the certification has the burden of “alleging facts that, if true, would establish that the defendants were acting outside the scope of their employment.”
894 F. Supp. 2d at 85 (quoting Stokes v. Cross, 327 F.3d 1210,
1215 (D.C. Cir. 2003)). Because Plaintiffs have challenged the
certifications filed by United States Attorney’s Office on
behalf of Mr. Robinson and Mr. Traugh, the Court must resolve
the scope-of-employment issue. See Jacobs, 724 F.3d at 221.
To determine whether Mr. Robinson and Mr. Traugh were
acting within the scope of their employment, the Court will
apply District of Columbia law, the location in which the
alleged torts occurred. Phillips I, 894 F. Supp. 2d at 86
(citing Stokes, 327 F.3d at 1214). 17 “District of Columbia law,
17The parties rely on District of Columbia law in their submissions to the Court. See, e.g., Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 37-42; Pls.’ Opp’n, ECF No. 101 at 36; Def. Miller’s Mot. for Summ. J., ECF No. 87 at 10; Pls.’ Opp’n, ECF No. 94 at 11; Fed. Defs.’ Mot. for Summ. J., ECF No. 88 at 41; Pls.’ Mot. for Summ. J., ECF No. 113 at 23, 28. Accordingly, the Court will apply District of Columbia law to Plaintiffs’ common-law claims. See Sabre Int’l Sec. v. Torres Advanced Enter. Sols., LLC, 13 F. Supp. 3d 62, 67 n.2 (D.D.C. 2014) (applying District of Columbia law because “[b]oth parties cite 48 which the parties agree applies in this case, defines the scope
of employment in accordance with the Restatement (Second) of
Agency (1958) (‘Restatement’).” Wuterich v. Murtha, 562 F.3d
375, 383 (D.C. Cir. 2009). The first prong of Section 228(1) of
the Restatement is pertinent here: “[c]onduct of a servant is
within the scope of employment if, but only if . . . it is of
the kind he is employed to perform . . . .” Restatement (Second)
of Agency § 228(1)(a); see also Phillips I, 894 F. Supp. 2d at
86 (“The second, third and fourth elements are irrelevant here
because [P]laintiffs do not contest that the alleged events
occurred substantially within authorized time and space limits
or were actuated, in some part, with the purpose to serve the
master, nor do they allege the use of force.”).
To qualify as conduct of the kind they were employed to
perform, Mr. Robinson and Mr. Traugh’s actions must have either
been “of the same general nature as that authorized” or
“incidental to the conduct authorized.” Restatement (Second) of
Agency § 229(1). Here, the Federal Defendants point to
Mr. Traugh and Mr. Robinson’s annual performance evaluations,
job descriptions, and e-mail communications with MDD’s employees
District of Columbia law and thus appear to agree that such law applies.”); see also Young v. District of Columbia, 107 F. Supp. 3d 69, 82 n.8 (D.D.C. 2015) (“The Court applies the law of the forum state—in this instance, the District of Columbia—when adjudicating common law claims.”). 49 to show that their conduct was the kind that they were employed
to perform. Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 38-40. As
OPLOG’s program manager, Mr. Traugh was expected to
“demonstrate[] [an] ability to identify, plan, resource, staff,
monitor and support technical programs in the areas of
technology assessment, development, selection and transition to
Navy/Marine Corp craft, ships and ship systems.” Fed. Defs.’ Ex.
L, ECF No. 88-12 at 2 (emphasis added). An assessment from
Mr. Traugh’s supervisor states, in part, that “he provided
direction to all OPLOG projects and provided direct interface
with the OPNAV N42 customer.” Id. at 3. And Mr. Robinson’s role
involved “[leading] several efforts within the Operations
Logistics (OPLOG) program and act[ing] as the Deputy Program
Manager.” Fed. Defs.’ Ex. M, ECF No. 88-13 at 3. Mr. Robinson
“led the OPLOG EnCon program, defining and refining investment
and execution plan projected to save the customer $350M over the
FYDP.” Id. (emphasis added).
Plaintiffs do not dispute Mr. Traugh and Mr. Robinson’s
annual performance evaluations and job descriptions. See
generally Pls.’ Opp’n, ECF No. 101. Neither do Plaintiffs
contest that the e-mail communications among Mr. Traugh,
Mr. Robinson, and MDD’s employees demonstrate that Mr. Traugh
and Mr. Robinson managed OPLOG’s funding. See Fed. Defs.’ Reply,
ECF No. 104-1 at 21; see also Pls.’ Resp. to Fed Defs.’ SOMF,
50 ECF No. 101-1 at 12 ¶ 31. Rather, Plaintiffs argue that
Mr. Traugh and Mr. Robinson’s statements indicate that “they
redirected funds allocated for MDD contracts and interfered with
said contracts, to ensure MDD did not receive subcontracts from
prime contractors.” Pls.’ Opp’n, ECF No. 101 at 39. Plaintiffs
contend that Mr. Traugh and Mr. Robinson “actively discouraged
people from working with Plaintiffs on Navy subcontracts, by
making false and defamatory statements to OPLOG and MSC to the
effect that MDD’s billing reflected a lack of transparency and
responsiveness.” Id. at 40. Plaintiffs reiterate that
Mr. Robinson and Mr. Traugh “published false statements
regarding MDD’s billing practices to ensure MDD did not receive
subcontracts from prime contractors.” Id. But Plaintiffs’ own
assertions regarding Mr. Traugh and Mr. Robinson’s statements
regarding MDD’s purported funding and billing issues fall
squarely within the scope of Mr. Traugh and Mr. Robinson’s
employment as OPLOG’s program manager and assistant program
manager, respectively, because they were tasked with monitoring
the funds for the various programs. See, e.g., Fed. Defs.’ Ex.
L, ECF No. 88-12 at 2-3; Fed. Defs.’ Ex. M, ECF No. 88-13 at 3.
Plaintiffs’ contention—that Mr. Robinson and Mr. Traugh
“communicated the false statements to OPLOG prime contractors
and directed that they not work with MDD”—misses the mark. Pls.’
Opp’n, ECF No. 101 at 40. Plaintiffs focus on the “nature of the
51 tort.” Weinberg v. Johnson, 518 A.2d 985, 992 (D.C. 1986)
(citation omitted). The D.C. Circuit has instructed that “[t]he
proper [scope-of-employment] inquiry . . . ‘focuses on the
underlying dispute or controversy, not on the nature of the
tort, and is broad enough to embrace any intentional tort
arising out of a dispute that was originally undertaken on the
employer’s behalf.’” Council on Am. Islamic Relations v.
Ballenger, 444 F.3d 659, 664 (D.C. Cir. 2006) (quoting Weinberg,
518 A.2d at 992).
In Ballenger, the D.C. Circuit affirmed a district court’s
decision that a Member of Congress acted within the scope of his
employment when he made certain statements about a non-profit
organization to a reporter during a telephone conversation. Id.
at 661. There, the plaintiff-organization argued that the
congressman’s “allegedly defamatory statement itself was not
conduct of the kind he is employed to perform.” Id. at 664
(emphasis in original). In rejecting that argument, the D.C.
Circuit made clear that “[t]he appropriate question, then, is
whether that telephone conversation—not the allegedly defamatory
sentence—was the kind of conduct [the congressman] was employed
to perform.” Id. The D.C. Circuit held that “[s]peaking to the
press during regular work hours in response to a reporter’s
inquiry falls within the scope of a congressman’s ‘authorized
duties’” and the congressman’s “allegedly defamatory statement
52 was incident to the kind of conduct he was employed to perform.”
Id. at 664-65. The same is true here.
The Court is persuaded that Mr. Robinson and Mr. Traugh’s
involvement in managing OPLOG’s budget and work fell within the
scope of their duties. As in Ballenger, Mr. Robinson and
Mr. Traugh’s “allegedly defamatory statement[s] [about MDD were]
incidental to the kind of conduct they were employed to perform”
as OPLOG’s program manager and assistant program manager,
respectively. 444 F.3d at 664-65. It is undisputed that
Mr. Robinson and Mr. Traugh oversaw OPLOG funding. See Pls.’
Resp. to Fed. Defs.’ SOMF, ECF No. 101-1 at 12 ¶ 31.
Furthermore, Mr. Robinson and Mr. Traugh’s participation in the
tasks assigned to MDD and their attendance at the meeting in
Boston were consistent with their roles of managing OPLOG’s
relationships with contractors and subcontracts, and addressing
any issues with OPLOG’s budget. See id. at 12 ¶ 32. Indeed, it
is undisputed that Mr. Traugh approved MDD’s work as part of his
duties to monitor the programs. See id. at 13 ¶ 33; see also
Fed. Defs.’ Ex. L, ECF No. 88-12 at 2-3. The Court therefore
finds that Plaintiffs have failed to rebut the presumption in
the Westfall Act certifications, and the Court also finds that
the record demonstrates that Mr. Robinson and Mr. Traugh were
acting within the scope of their employment. Accordingly,
53 pursuant to the Westfall Act, the Court substitutes the United
States as the sole defendant as to Count IX. 18
2. The Court Lacks Jurisdiction Over Plaintiffs’ Tort Claims
Having substituted the United States as the defendant with
respect to Count IX, “the suit is governed by the Federal Tort
Claims Act (‘FTCA’) and is subject to all of the FTCA’s
exceptions for actions in which the [g]overnment has not waived
sovereign immunity.” Wuterich, 562 F.3d at 380. Under the FTCA,
Plaintiffs cannot assert certain claims against the government,
see 28 U.S.C. § 2680, and the FTCA imposes administrative
exhaustion and filing requirements for administrative claims, 28
U.S.C. § 2401(b). The Federal Defendants correctly state that
“the exhaustion requirement mean[s] that Plaintiffs were
required to submit an administrative claim to the Department of
the Navy” and “Plaintiffs have offered no evidence, nor have
they even asserted, that they have presented a claim under the
FTCA to the Department of the Navy regarding the alleged conduct
of [Mr.] Robinson and [Mr. Traugh].” Fed. Defs.’ Mot. to
18In a footnote, the Federal Defendants argue that Mr. Robinson and Mr. Traugh are entitled to “official immunity” for their discretionary acts. See Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 42 n.28. Plaintiffs do not respond to this argument. See generally Pls.’ Opp’n, ECF No. 101. The Court need not address the Federal Defendants’ “official immunity” argument because the United States will be substituted as the defendant with respect to Count IX pursuant to the Westfall Act.
54 Dismiss, ECF No. 88 at 43. Plaintiffs argue that the FTCA is
“inapplicable.” Pls.’ Opp’n, ECF No. 101 at 41. The Court
disagrees.
The claims in Count IX of the Amended Complaint as to
Mr. Robinson and Mr. Traugh fall under an exception to the FTCA.
See, e.g., 28 U.S.C. § 2680(h); Am. Compl., ECF No. 42 at 47-48
¶ 195; Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 46-47
(summarizing the tort allegations as to Mr. Robinson and Mr.
Traugh: “(a) induced employees to work for OPLOG; (b) prevented
Plaintiff MDD from having the opportunity to quote or perform
any task orders; (c) redirected funds on the [CSC] contract; and
(d) interfered with other contracts such as Plaintiff MDD’s
contract with the [MSC]”). 19 As stated by the Federal Defendants,
“these claims ‘arise out of’ the interference with prospective
contract rights and, therefore, fall squarely within the scope
of Section 2680(h).” Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at
19Section 2680(h), in relevant part, provides: Any claim arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights: Provided, [t]hat, with regard to acts or omissions of investigative or law enforcement officers of the United States Government, the provisions of this chapter and section 1346(b) of this title shall apply to any claim arising, on or after the date of the enactment of this proviso, out of assault, battery, false imprisonment, false arrest, abuse of process, or malicious prosecution. 28 U.S.C. § 2680(h) (emphasis in original). 55 47 (collecting cases); see also Simpkins v. Shalala, 999 F.
Supp. 106, 119 (D.D.C. 1998) (“The common law torts alleged by
plaintiff arise out of the actions of federal employees
performing their official duties.”). The United States has not
waived its sovereign immunity with respect to Plaintiffs’ tort
claims. See Upshaw v. United States, 669 F. Supp. 2d 32, 44
(D.D.C. 2009) (dismissing tort claim for lack of subject matter
jurisdiction because it “[arose] out of . . . libel, slander,
misrepresentation, [or] deceit” (quoting 28 U.S.C. § 2680(h)));
see also Fed. Defs.’ Mot. to Dismiss, ECF No. 88 at 47 (stating
that “the United States has not waived its sovereign immunity”).
The Court therefore finds that it lacks subject matter
jurisdiction over Plaintiffs’ tort claims. Accordingly, the
Court GRANTS the Federal Defendants’ motion to dismiss Count IX,
and that count is DISMISSED.
C. Cross-Motions for Summary Judgment as to Count VI (Breach of Fiduciary Duty) and Count VIII (Civil Conspiracy) against Defendant Matthew Miller
Plaintiffs assert two claims against Mr. Miller: (1) breach
of fiduciary duty and (2) civil conspiracy. Am. Compl.,
ECF No. 42 at 43-44 ¶¶ 169-78, 46 ¶¶ 187-92. According to
Plaintiffs, Mr. Miller breached his fiduciary duty to MDD by:
(1) leaving MDD to work for AirClean to compete with MDD, Am.
Compl., ECF No. 42 at 43 ¶ 174; (2) using “confidential and
proprietary information of [MDD] he obtained while still
56 employed at [MDD] in violation of his non-compete/non-
solicitation agreement with [MDD],” id.; (3) “failing and
refusing to act in the best interest of [MDD],” id. at 44 ¶ 175,
and (4) “acting . . . in his own personal interest in matters
relating to his employment by [MDD][,]” id. Plaintiffs also
allege that Mr. Miller conspired with MDD’s former employees—Mr.
Muras, Mr. Stammnitz, and Mr. Mazzocco—by eliminating MDD from
OPLOG’s fiscal year 2012 budget and soliciting MDD’s principal
client, OPLOG “during the period of their non-solicitation/non-
compete obligation.” Id. at 46 ¶ 188. Plaintiffs maintain that
Mr. Miller’s actions were inconsistent with the confidentiality,
non-solicitation, and non-compete clauses contained in the MDD
Employee Handbook. See, e.g., Am. Compl., ECF No. 42 at 9-11 ¶¶
34-36, 44 ¶ 177; Pls.’ Mot. for Summ. J., ECF No. 113 at 12-15,
27.
Before the Court addresses each tort claim in turn, the
Court must determine the threshold issue of whether the MDD
Employee Handbook created a binding employment contract between
Mr. Miller and MDD.
1. The MDD Employee Handbook Did Not Create a Binding Contract
Plaintiffs argue that Mr. Miller was bound by the clauses
contained in the MDD Employee Handbook. See, e.g., Pls.’ Opp’n,
ECF No. 94 at 13; Pls.’ Statement of Genuine Issues of Material
57 Fact (“SOMF”), ECF No. 94 at 18 ¶ 4; Am. Compl., ECF No. 42 at
10-11 ¶¶ 34-36. Specifically, Plaintiffs argue that the MDD
Employee Handbook was binding on “employees who wished to remain
employed to its terms, and the non-compete/non-solicitation
agreement contained therein . . . .” Pls.’ SOMF, ECF No. 94 at
18 ¶ 4. Mr. Miller contends that he had no contractual
obligations to MDD because: (1) he never signed the MDD Employee
Handbook; (2) he was not subject to the clauses contained
therein; and (3) MDD disclaimed any express or implied contract
therein. Def. Miller’s Mot. for Summ. J., ECF No. 87 at 10; see
also Def. Miller’s Reply, ECF No. 99 at 5-6.
The issue of “[w]hether a contract exists is a question of
law for the Court to resolve.” Dawson v. Wash. Metro. Area
Transit Auth., 256 F. Supp. 3d 30, 33 (D.D.C. 2017). Under
District of Columbia law, “[f]or an enforceable contract to
exist, there must be both (1) agreement as to all material
terms; and (2) intention of the parties to be bound.” Georgetown
Entm’t Corp. v. District of Columbia, 496 A.2d 587, 590 (D.C.
1985). “[T]he party asserting the existence of a contract has
the burden of proof on that issue.” Jack Baker, Inc. v. Office
Space Dev. Corp., 664 A.2d 1236, 1238 (D.C. 1995).
As a matter of District of Columbia law, “an implied
contract may arise from the language of an employee handbook or
manual . . . .” Smith v. Union Labor Life Ins. Co., 620 A.2d
58 265, 269 (D.C. 1993) (citing Wash. Welfare Ass’n, Inc. v.
Wheeler, 496 A.2d 613, 615 (D.C. 1985)); see also Strass v.
Kaiser Found. Health Plan of Mid-Atl., 744 A.2d 1000, 1011 (D.C.
2000) (recognizing that “contractual rights may arise from
language in employee manuals” and “employers can effectively
disclaim any implied contractual obligation arising from such
provisions”). “[I]n the absence of an express contract, a court
may imply a contract from the course of the parties’ conduct.”
Grunseth v. Marriott Corp., 872 F. Supp. 1069, 1073 (D.D.C.
1995), aff’d, 79 F.3d 169 (D.C. Cir. 1996).
The law in this District makes clear that employers “may
effectively disclaim any implied contracts.” Smith, 620 A.2d at
269 (quoting Goos v. Nat’l Ass’n of Realtors, 715 F. Supp. 2, 4
(D.D.C. 1989)). “The legal effect of such a disclaimer is, in
the first instance, a question for the court to decide.” Id.;
see also Grove v. Loomis Sayles & Co., L.P., 810 F. Supp. 2d
146, 150 (D.D.C. 2011) (“[H]andbook language that is ‘rationally
at odds’ with a disclaimer can render a disclaimer ineffective .
. . .” (quoting Strass, 744 A.2d at 1013)). In Goos, the court
found that an employee handbook did not create an implied
contract between an employee and her employer where the
disclaimers stated “[t]his handbook does not constitute an
employment contract in whole or in part” and “you are considered
to be an employee-at-will.” 715 F. Supp. at 4.
59 The same is true here. The MDD Employee Handbook states:
“This handbook is not a contract, express or implied,
guaranteeing employment for any MDD specific duration and either
you or MDD may terminate this relationship at any time, for any
reason with or without cause or notice.” Pls.’ Ex. A, ECF No.
42-1 at 5 (emphasis added); see also Pls.’ Ex. B, ECF No. 42-1
at 19. The unsigned “Acknowledgment Receipt of Employee
Handbook” contains the same language. Compare Pls.’ Ex. A, ECF
No. 42-1 at 2, with Pls.’ Ex. B, ECF No. 42-1 at 19. As
Mr. Miller points out, “such a proviso renders the handbook
‘unenforceable at law.’” Def. Miller’s Mot. for Summ. J., ECF
No. 87 at 10 (quoting Martin v. Arc of D.C., 541 F. Supp. 2d 77,
85 (D.D.C. 2008) (citation omitted)). Plaintiffs take issue with
this statement of the law, arguing that Mr. Miller’s cited
“cases apply to the characterization of an employee as either
at-will or for-cause.” Pls.’ Opp’n, ECF No. 94 at 12-13, n.13
(citing Martin, 541 F. Supp. 3d at 85; United States ex rel.
Yesudian v. Howard Univ., 153 F.3d 731, 747 (D.C. Cir. 1998)).
Contrary to Plaintiffs’ position, however, employment status is
relevant to the question of whether the language in a handbook
establishes contractual obligations: “Even if the employer has
provided its employees with an employee handbook, the handbook
is not enforceable as an employment contract if it disclaims the
establishment of contractual obligations and explicitly provides
60 that employment may be terminated at-will.” Grove, 810 F. Supp.
2d at 149 (collecting cases).
Further, Plaintiffs fail to argue that the disclaimer is
ineffective, nor do they point to any provisions in the MDD
Employee Handbook that are “rationally at odds” with the
disclaimer. See Grove, 810 F. Supp. 2d at 150-51. In Grove, the
court found that a handbook did not give rise to enforceable
contractual rights where there was an express disclaimer. Id. at
151. There, a certain provision in the handbook was “expressly
made subject to ‘management’s reasonable discretion’ . . . and
the word ‘encourages’ [was] permissive, not mandatory language.”
Id. at 150-51. The court found that the provision could not be
considered as “rationally at odds” with the disclaimer because
“such permissive language in a personnel manual is, as a matter
of law, insufficient to create contractual rights.” Id. at 151
(citing Perkins v. Dist. Gov’t Emps. Fed. Credit Union, 653 A.2d
842, 843 (D.C. 1995)).
Here, the MDD Employee Handbook contains similar language
that indicates it cannot be construed to be a contract. For
example, the MDD Employee Handbook provides that “[t]he policies
in this manual are guidelines only and are subject to change at
the sole discretion of [MDD], as are all other policies,
procedures, benefits, or other programs of MDD.” Pls.’ Ex. A,
ECF No. 42-1 at 5 (emphasis added). It explicitly states that
61 “[l]etters, benefit or policy statements, performance
appraisals, employee handbooks or other employee communications
should not be interpreted as a contractual relationship.” Pls.’
Ex. B, ECF No. 42-1 at 23 (emphasis added). In a letter to MDD
employees, MDD’s President states: “We encourage you to review
this handbook carefully and use it as a valuable resource to
understanding the company.” Pls.’ Ex. A, ECF No. 42-1 at 3
(emphasis added); see also Pls.’ Ex. B, ECF No. 42-1 at 20.
Viewed as a whole, the language—i.e. “[t]he policies stated in
this manual are guidelines only”—is consistent with the language
that disclaims any express or implied contracts in the MDD
Employee Handbook. Pls.’ Ex. B, ECF No. 42-1 at 19 (emphasis
added). The Court therefore finds that the MDD Employee Handbook
expressly disclaims any express or implied contracts.
Finally, the Court is not persuaded that Mr. Miller
assented to the terms in the MDD Employee Handbook. “Mutual
assent to a contract, often referred to as a ‘meeting of the
minds,’ is most clearly evidenced by the terms of a signed
written agreement, but such a signed writing is not essential to
the formation of a contract.” Davis v. Winfield, 664 A.2d 836,
838 (D.C. 1995). “The purpose of a signature is simply to
demonstrate mutual assent to a contract, but that may be shown
instead, or in addition, by the conduct of the parties.” Id.
It is undisputed that Mr. Miller never signed the MDD
62 Employee Handbook. See, e.g., Def. Miller’s Mot. for Summ. J.,
ECF No. 87 at 10; Pls.’ Opp’n, ECF No. 94 at 12-13; Pls.’ Mot.
for Summ. J., ECF No. 113 at 23. Citing no authority to support
their position, Plaintiffs argue that Mr. Miller “[a]gree[d] to
the clauses contained in the MDD Employee Handbook as “a
condition of employment.” Pls.’ Opp’n, ECF No. 94 at 13; see
also Phillips Decl., ECF No. 94-1 at 1 ¶ 4. But that argument
has been foreclosed by D.C. Circuit precedent. See Bailey v.
Fed. Nat’l Mortg. Ass’n, 209 F.3d 740, 746 (D.C. Cir. 2000)
(holding that “[t]here was no ‘meeting of the minds’” where an
employee never said anything to his employer to indicate his
assent to a policy and never signed any agreement). In Bailey,
the D.C. Circuit rejected an employer’s argument that an
employee showed his assent to a policy when he continued to work
for the employer because the employee “did nothing whatsoever to
embrace the employer’s proposal.” Id.
The record does not demonstrate that Mr. Miller’s conduct
indicates his assent to the provisions in the MDD Employee
Handbook. While Plaintiffs do not explicitly raise the
“condition of employment” argument in their cross-motion for
summary judgment, see generally Pls.’ Mot. for Summ. J., ECF No.
113, Plaintiffs argue that “[Mr.] Miller confirmed that he fully
read and comprehended the employee handbook, that he understood
his obligations to MDD and his contingencies of employment, and
63 that he would abide by the confidentiality covenants provided.”
Id. at 12 (citing Phillips Decl., ECF No. 94-1 at 1-2 ¶¶ 4-6).
Plaintiffs then repeat that argument: “[Mr. Miller] was
presented with MDD’s employee handbook advising him of the
fiduciary capacity and he confirmed he understood its terms,
which required confidentiality of proprietary information and
prohibited solicitation and direct competition.” Id. at 23-24.
The Court cannot agree with Plaintiffs on this point
because the record does not support their contentions. See,
e.g., Pls.’ Ex. A, ECF No. 42-1 at 2 (showing an unsigned
“Acknowledgement Receipt of Employee Handbook”); Pls.’ Ex. B,
ECF No. 42-1 at 19 (same); E-mail from Amanda R. Jones, MDD, to
Mr. Miller (Apr. 12, 2011), Pls.’ Ex. D, ECF No. 94-4 (“You
didn’t sign the previous handbook.”); Miller Decl., ECF No. 98
at 4 ¶ 3 (stating that he never signed the MDD Employee
Handbook). Besides a self-serving declaration, see Phillips
Decl., ECF No. 94-1 at 1-2 ¶¶ 4-6, there is no evidence
demonstrating that Mr. Miller assented to the terms in the MDD
Employee Handbook. See, e.g., Gen. Elec. Co. v. Jackson, 595 F.
Supp. 2d 8, 36 (D.D.C. 2009)(observing that when a
“declaration is self-serving and uncorroborated,” it is “of
little value at the summary judgment stage”); Fields v. Office
of Johnson, 520 F. Supp. 2d 101, 105 (D.D.C. 2007) (“Self-
serving testimony does not create genuine issues of material
64 fact, especially where that very testimony suggests that
corroborating evidence should be readily available.”).
Accordingly, the Court finds that the MDD Employee Handbook was
not a binding contract, and that Mr. Miller was not bound by the
clauses contained therein.
2. Mr. Miller Is Entitled to Summary Judgment on the Breach of Fiduciary Duty Claim
The Court next addresses the elements of Plaintiffs’ breach
of fiduciary duty claim, 20 concluding that undisputed material
facts support summary judgment in favor of Mr. Miller. Under
District of Columbia law, a claim for breach of fiduciary duty
20Plaintiffs assert that an “agent owes a duty of good faith” to a principal. Pls.’ Opp’n, ECF No. 94 at 11 (citation omitted). Mr. Miller acknowledges that “[u]nder District of Columbia law, every contract is deemed to contain an implied covenant of good faith and fair dealing that means that neither party shall do anything that would deny the right of the other party to receive the fruits of the contract.” Def. Miller’s Opp’n, ECF No. 123 at 4 (citing Paul v. Howard Univ., 754 A.2d 297, 310 (D.C. 2000)). “[S]uch a claim cannot be made by an at-will employee because there is no contract to provide a basis for the covenant.” Paul, 754 A.2d at 310 n.28. Mr. Miller argues that “[P]laintiffs cannot proceed against [him] on the basis that any of his conduct breached this implied covenant of good faith and fair dealing.” Def. Miller’s Opp’n, ECF No. 123 at 4. To the extent that Plaintiffs seek to assert a claim for breach of the implied covenant of good faith and fair dealing, this Court will not address the claim because Plaintiffs do not assert that claim in the Amended Complaint. See Coulibaly v. Tillerson, 273 F. Supp. 3d 16, 39 n.30 (D.D.C. 2017) (declining to address a claim that was not asserted in the complaint); see also District of Columbia v. Barrie, 741 F. Supp. 2d 250, 263 (D.D.C. 2010) (“[A] party may not amend its complaint or broaden its claims through summary judgment briefing.”).
65 requires the Plaintiffs to show that Mr. Miller: “(1) owed
plaintiff[s] a fiduciary duty; (2) the defendant breached that
duty; and (3) the breach proximately caused injury to the
plaintiff[s].” Gadaire v. Orchin, 197 F. Supp. 3d 5, 8-9 (D.D.C.
2016) (quoting 3M Co. v. Boulter, 842 F. Supp. 2d 85, 118–19
(D.D.C. 2012)); see also Mawalla v. Hoffman, 569 F. Supp. 2d
253, 257 (D.D.C. 2008) (Sullivan, J.) (“A cause of action for
breach of fiduciary duty includes breaches of the duty of
loyalty . . . .”).
a. Mr. Miller Owed a Duty of Loyalty to MDD
The parties do not dispute that Mr. Miller owed a fiduciary
duty of loyalty to MDD during his employment under the
principles of agency law. See, e.g., Pls.’ Mot. for Summ. J.,
ECF No. 113 at 23; Def.’s Opp’n, ECF No. 123 at 4. In the first
round of summary judgment briefing, Plaintiffs argue that
Mr. Miller owed a duty to MDD after his resignation based on the
MDD Employee Handbook. Pls.’ Opp’n, ECF No. 94 at 12. But
Plaintiffs did not raise this argument in the second round of
summary judgment briefing. See generally Pls.’ Mot. for Summ.
J., ECF No. 113. Instead, Plaintiffs limit their cross-motion
for summary judgment to Mr. Miller’s actions while he was
employed at MDD. See Pls.’ Reply, ECF No. 129 at 1-2.
The Court observes at the outset that the parties agree
agency law applies to this claim. See, e.g., Def. Miller’s Mot.
66 for Summ. J., ECF No. 87 at 9; Pls.’ Opp’n, ECF No. 94 at 10-11;
Pls.’ Mot. for Summ. J., ECF No. 113 at 22-25; Def. Miller’s
Opp’n, ECF No. 123 at 3-8. Under the common law of agency, “it
has been established that employees—especially managers,
corporate officers, and directors—owe an undivided and unselfish
loyalty to the corporation such that there shall be no conflict
between duty and self interest.” PM Servs. Co. v. Odoi Assocs.,
Inc., No. CIV.A. 03-1810 (CKK), 2006 WL 20382, at *27 (D.D.C.
Jan. 4, 2006) (citations and internal quotations marks omitted);
see also Restatement (Third) of Agency § 8.01 (2006) (“An agent
has a fiduciary duty to act loyally for the principal’s benefit
in all matters connected with the agency relationship.”).
A threshold question is whether Mr. Miller was an “agent”
of MDD. See Nat’l R.R. Passenger Corp. v. Veolia Transp. Servs.,
Inc., 791 F. Supp. 2d 33, 46 (D.D.C. 2011) (“Amtrak”).
Plaintiffs bear the burden to prove the existence of an agency
relationship. See Henderson v. Charles E. Smith Mgmt., Inc., 567
A.2d 59, 62 (D.C. 1989) (“The existence of an agency
relationship is a question of fact, for which the person
asserting the relationship has the burden of proof.”). “This
jurisdiction has established a two-part test for determining
whether such a relationship exists: (1) ‘the court must look for
evidence of the parties’ consent to establish a principal-agent
relationship,’ and (2) ‘the court must look for evidence that
67 the activities of the agent are subject to the principal’s
control.’” Alkanani v. Aegis Def. Servs., LLC, 976 F. Supp. 2d
1, 11 (D.D.C. 2013) (emphasis in original) (citations omitted)).
As to the evidence of consent, the “facts indicat[e] that
[MDD] has manifested a desire for [Mr. Miller] to act on behalf
of [MDD]” and that “[Mr. Miller] has consented to act on behalf
of [MDD].” Id. Plaintiffs point out that Mr. Miller was the
“lead energy auditor” for MDD’s “MSC contract and for other MDD
customers such as Siemen’s and the U.S. Coast Guard.” Pl.’s
Opp’n, ECF No. 6-7; see also Pls.’ Mot. for Summ. J.,
ECF No. 113 at 23 (stating that Mr. Miller “serv[ed] as a Marine
Engineer and Lead Auditor for MDD”). Plaintiffs characterize
Mr. Miller’s role as “pivotal” at MDD. Pls.’ Mot. for Summ. J.,
ECF No. 113 at 12. It is undisputed that Mr. Miller performed
assignments on behalf of MDD. See Phillips Decl., ECF No. 94-1
at 2 ¶ 10 (stating that Mr. Miller “was on MDD assignment to
conduct a ship audit in Cape Canaveral, Florida”). In his own
words, Mr. Miller avers that he “worked [for MDD] almost
exclusively under a contract to provide engineering and program
management service to the Military Sealift Command (‘MSC’)
Energy Conservation Program . . . .” Miller Decl., ECF No. 98 at
4 ¶ 4; see also Pls.’ SOMF, ECF No. 113 at 5 ¶ 6.
With respect to MDD’s control of Mr. Miller, “[r]elevant
factors that are indicative of control include ‘(1) the
68 selection and engagement of the servant, (2) the payment of
wages, (3) the power to discharge, (4) the power to control the
servant’s conduct, (5) and whether the work is part of the
regular business of the employer.’” Alkanani, 976 F. Supp. 2d at
11 (quoting Judah v. Reiner, 744 A.2d 1037, 1040 (D.C. 2000)).
“[T]he right to control, rather than its actual exercise, is
usually dispositive of whether there is an agency relationship.”
Judah, 744 A.2d at 1040 (citation omitted)). “In deciding this
question, courts will look both to the terms of any contract
that may exist and to the actual course of dealings between the
parties.” Id.
Here, neither party disputes that Mr. Miller was an at-will
employee at MDD. See, e.g., Def. Miller’s Mot. for Summ. J., ECF
No. 87 at 8; Pls.’ Opp’n, ECF No. 94 at 6; Pls.’ Mot. for Summ.
J., ECF No. 113 at 23. Despite his employment status, Mr. Miller
acknowledges that he signed the “Terms and Conditions of
Employment.” Def. Miller’s Opp’n, ECF No. 123 at 12. That
document classified him as an “Employee-Exempt[,]” and it
outlined, inter alia, his compensation and pay period. Pls.’ Ex.
J, ECF No. 94-10 at 1. Mr. Miller avers that he performed work
for MDD under certain contracts. Miller Decl., ECF No. 98 at 4
¶¶ 4-5. Plaintiffs assert that Mr. Miller “was responsible for
serving the ENCON needs of . . . [MDD’s primary customer—
OPLOG[,]” and that, at the request of OPLOG, MDD assigned Mr.
69 Miller to “the Carderrock project” where he “served as a marine
engineer for OPLOG.” Am. Compl., ECF No. 42 at 9 ¶ 33. In 2011,
Mr. Miller was on a “ship audit assignment in Cape Canaveral,
Florida, which he performed for MDD.” Pls.’ Mot. for Summ. J.,
ECF No. 113 at 19 (citing Pls.’ SOMF, ECF No. 94 at 19 ¶ 10).
Accordingly, the Court is persuaded that the record reflects
that there was an agency relationship because Mr. Miller
consented to act on behalf of MDD, and MDD had the right to
control Mr. Miller’s work.
Finally, Plaintiffs cite Amtrak for the proposition that an
at-will employee owes a general duty of loyalty to his employer
“[w]here a company enacts a ‘policy prohibiting its employees
from engaging in activities that create a conflict of interest’
with the company . . . .” Pls.’ Mot. for Summ. J., ECF No. 113
at 23 (quoting Amtrak, 791 F. Supp. 2d at 47). Mr. Miller does
not challenge that proposition. See Def.’s Opp’n, ECF No. 123 at
4 (“[Mr.] Miller is limited only by the general rule of agency
law that an at-will employee must act for the benefit of the
principal in all matters concerning the subject of the agency
for so long as the agency exists.” (citing Gross v. Akin, Gump,
Strauss, Hauer & Feld, LLP, 599 F. Supp. 2d 23, 32 (D.D.C.
2009))). Indeed, the court in Amtrak found that three at-will
employees, including a senior analyst, owed a general duty of
loyalty to a company where one employee was aware of and the
70 other two employees acknowledged a policy prohibiting them from
engaging in activities that create conflicts of interest with
the company. 791 F. Supp. 2d at 47-48; see also Draim v. Virtual
Geosatellite Holdings, Inc., 631 F. Supp. 2d 32, 39 (D.D.C.
2009) (indicating that “even in the absence of a written
contract and even in an employment agreement that is at will, an
employee must, as a matter of agency law, act solely for the
benefit of her principal in all matters concerning her agency”).
The Court therefore finds that Plaintiffs have established the
first element of their breach of fiduciary duty claim because
Mr. Miller owed a fiduciary duty of loyalty to MDD during his
employment there.
In their opposition brief, Plaintiffs argue that
“Mr. Miller continued to owe a fiduciary duty to MDD after he
terminated his employment.” Pls.’ Opp’n, ECF No. 94 at 12
(emphasis added). Plaintiffs rely on the non-compete clause in
the MDD Employee Handbook to support their position. Id.; see
also Pls.’ Ex. C, ECF No. 94-3 at 1. Mr. Miller responds that he
owed no such duty to MDD after his resignation, and that he had
no contractual obligations to MDD. Def. Miller’s Mot. for Summ.
J., ECF No. 87 at 10. Mr. Miller argues that he could not be
bound by the non-compete clause because he never signed the MDD
Employee Handbook. Def. Miller’s Reply, ECF No. 99 at 2. In
their cross-motion for summary judgment, Plaintiffs argue that
71 Mr. Miller’s post-MDD employment conduct constitutes a breach of
fiduciary duty as a result of the non-compete agreement. Compare
Pls.’ Mot. for Summ. J., ECF No. 113 at 28, with Pls.’ Opp’n,
ECF No. 94 at 12-13. Nevertheless, Plaintiffs state that their
cross-motion for summary judgment “set[s] forth the facts
evidencing that [Mr. Miller] was competing with MDD while still
employed at the company.” Pls.’ Reply, ECF No. 129 at 1
(emphasis in original). Plaintiffs reiterate that the “basis for
summary judgment, again, is with regards to the actions taken
while [Mr.] Miller was still employed at MDD that injured
Plaintiffs.” Id. at 2 (emphasis added).
There is no dispute that Mr. Miller owed a fiduciary duty
to MDD while he was employed there. As this Court has already
decided, Mr. Miller was not bound by the clauses in the MDD
Employee Handbook, including the non-compete clause therein.
Mr. Miller correctly points out that “none of [his] post-
termination activities can serve as the basis for [the breach of
fiduciary duty] claim.” Def. Miller’s Opp’n, ECF No. 123 at 5;
see also Draim, 631 F. Supp. 2d at 40 (An agent’s “post-
termination activities therefore cannot serve as the basis for
any claim of breach of an agent’s fiduciary duty to his
principal [where the agent] went to work for a competitor and in
fact competed against [his former principal].”). The Court
therefore finds that Mr. Miller did not owe a fiduciary duty to
72 MDD after his resignation. 21
b. Breach
Having determined that Mr. Miller owed a duty of loyalty to
MDD during his employment, the Court next considers whether
Mr. Miller breached that duty. As an initial matter, Mr. Miller
could compete with MDD after his resignation. See Def. Miller’s
Opp’n, ECF No. 123 at 4-5 (collecting cases); see also Pls.’
Reply, ECF No. 129 at 1. Under District of Columbia law, “[a]n
agent after termination of his employment, in the absence of an
agreement to the contrary, may compete with his former
principal, and he may take with him all the skill and
information he has acquired, excluding only the property of his
previous employer.” U.S. Travel Agency, Inc. v. World-Wide
Travel Serv. Corp., 235 A.2d 788, 789 (D.C. 1967) (footnotes
omitted); see also Grp. Ass’n Plans, Inc. v. Colquhoun, 466 F.2d
469, 474 (D.C. Cir. 1972) (recognizing “the existence of a
common law right to compete” with a former employer and “the
existence of a right to ‘steal’ clients absent a contractual
relation to the contrary”). The question remains whether Mr.
21Because this Court has determined that the MDD Employee Handbook was not a contract and that Mr. Miller was not bound by the clauses therein, the Court need not address the parties’ arguments with regard to the validity and reasonableness of the non-compete clause in the MDD Employee Handbook. See, e.g., Pls.’ Opp’n, ECF No. 94 at 13-14; Def. Miller’s Reply, ECF No. 99 at 2, 6-8; Pls.’ Mot. for Summ. J., ECF No. 113 at 17-18. 73 Miller’s actions constitute a breach of his fiduciary duty to
MDD while working there.
Mr. Miller argues that he is entitled to summary judgment
because Plaintiffs’ breach of fiduciary duty claim lacks merit
as a matter of law. Def. Miller’s Mot. for Summ. J., ECF No. 87
at 5. First, Mr. Miller contends that he did not “breach any
fiduciary duty owed to MDD[,]” id. at 5-6, because he (1) never
attended the meeting in Boston, id.; (2) did not know about the
e-mail with his alleged role in the Proposed Business Plan or
the proposed re-allocation funding at the time of his employment
at MDD, id. at 9; and (3) “never solicited MDD contracts from
OPLOG, CSC, or MSC[,]” id. at 8. Next, Mr. Miller argues that
leaving MDD to work for AirClean to compete with MDD cannot
constitute a breach of fiduciary duty because, as a matter of
law, he was “entitled to make arrangements or plans to go into
competition with [his] principal before terminating [his]
employment.” Id. at 9 (quoting Amtrak, 791 F. Supp. 2d at 49).
To the contrary, Plaintiffs contend that they are entitled
to summary judgment because Mr. Miller breached the fiduciary
duty by “[1] exposing confidential proprietary information,
[2] soliciting MDD clients, and [3] competing directly with MDD,
because such activities created a conflict of interest with
MDD.” Pls.’ Mot. for Summ. J., ECF No. 113 at 24. Specifically,
Plaintiffs contend that “[o]n departure, [Mr.] Miller
74 essentially took the work he had been performing on behalf of
MDD for OPLOG, which was summarized in the MDD [SOW] that [he]
previously prepared with OPLOG for MDD’s contract prior to the
$700,000 reallocation.” Id. at 21. According to Plaintiffs,
Mr. Miller breached his fiduciary duty to MDD by developing a
proposed, “sophisticated business plan aimed at reallocating MDD
contract funds and established a competing business, while
continuing to be an employee of MDD, and successfully diverted
funds allocated for MDD contracts to himself, under the guise of
a new subcontractor.” Id. at 11.
As the parties correctly observe, “an employee ‘is entitled
to make arrangements to compete’ with his employer—even before
terminating his employment—subject to several limitations.”
Hedgeye Risk Mgmt., LLC v. Heldman, 271 F. Supp. 3d 181, 188
(D.D.C. 2017) (quoting Mercer Mgmt. Consulting, Inc. v. Wilde,
920 F. Supp. 219, 233 (D.D.C. 1996)). “The employee, ‘[i]n
preparing to compete, . . . may not commit fraudulent, unfair,
or wrongful acts, such as misuse of confidential information.’”
Id. (quoting Mercer, 920 F. Supp. at 234). “And the employee
‘must refrain from actively and directly competing with [his
existing] employer for customers and employees’ through
solicitation, while he is still employed.” Id. (citation
omitted).
In Amtrak, the court stated:
75 Acts that have been deemed to constitute preparation rather than actual competition include “mere preparation to open a competing business[,] . . . [o]pening a bank account and obtaining office space and telephone service,” Harllee v. Prof’l Serv. Indus., Inc., 619 So.2d 298, 300 (Fla. Dist. Ct. App. 1992), as well as “purchas[ing] a rival business and upon termination of employment immediately compet[ing]” with a former employer, Gov’t Relations, 2007 WL 201264, at *11 (quoting Mercer, 920 F. Supp. at 233); see also Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486, 494 (Colo. 1989).
791 F. Supp. 2d at 49 (emphasis added). “By comparison, acts
that have been found to constitute actual competition include
solicitation of business for an employee’s personal endeavor,
which otherwise the employee had an obligation to obtain for an
employer, [and] competing with the employer for customers or
employees . . . .” Id. (emphasis in original) (citing
Mercer, 920 F. Supp. at 234; Sci. Accessories Corp. v.
Summagraphics Corp., 425 A.2d 957, 965 (Del. 1980)). “The
ultimate determination of whether an employee has breached his
fiduciary duties to his employer by preparing to engage in a
competing enterprise must be grounded upon a thorough[]
examination of the facts of the particular case.” Furash & Co.,
Inc. v. McClave, 130 F. Supp. 2d 48, 54 (D.D.C. 2001) (quoting
Md. Metals, Inc. v. Metzner, 282 Md. 31, 382 A.2d 564, 569–70
(1978)).
76 Guided by the principles of agency law espoused in Amtrak, 22
the Court will examine, in turn, the three separate acts that
Plaintiffs contend constitute Mr. Miller’s breaches of his
fiduciary duty to MDD. See Pls.’ Mot. for Summ. J., ECF No. 113
at 25-28. Before turning to those acts, the Court addresses the
issue of whether Mr. Miller’s role in the development of the
Proposed Business Plan itself constitutes a breach of the
fiduciary duty.
In Amtrak, the court addressed the issue of whether certain
acts of at-will employees constituted “mere preparation” or
“actual competition.” 791 F. Supp. 2d at 49. There, Amtrak
argued that the employees breached their fiduciary duties by
22The court in Amtrak examined the plaintiff’s claim for aiding and abetting the breach of a fiduciary duty under District of Columbia law. 791 F. Supp. 2d at 47 n.19 (citation omitted). However, the District of Columbia Court of Appeals has not expressly recognized a cause of action for aiding and abetting the breach of fiduciary duty. Pietrangelo v. Wilmer Cutler Pickering Hale & Dorr, LLP, 68 A.3d 697, 711 (D.C. 2013) (“[W]e need not decide here whether a cause of action exists in the District of Columbia for aiding and abetting the breach of fiduciary duty . . . .”); see also Halberstam v. Welch, 705 F.2d 472, 479 (D.C. Cir. 1983) (stating that “[t]he separate tort of aiding-abetting has not yet, to our knowledge, been recognized explicitly in the District”). Here, Plaintiffs allege a claim for breach of fiduciary duty, and District of Columbia law recognizes “an independent tort for breach of a fiduciary duty.” Cumis Ins. Soc’y, Inc. v. Clark, 318 F. Supp. 3d 199, 210 (D.D.C. 2018); see also Randolph v. ING Life Ins. & Annuity Co., 973 A.2d 702, 709 (D.C. 2009) (recognizing that a breach of fiduciary duty claim is cognizable under D.C. law). Nonetheless, this Court will rely on the reasoning in Amtrak to analyze whether Mr. Miller breached his fiduciary duty to MDD in this case. See 791 F. Supp. 2d at 46-51. 77 competing with Amtrak—purported acts that were prohibited by the
company’s policy—because they: (1) permitted their names and
résumés to be included in a competitor’s bid proposal for a
contract; (2) accepted the competitor’s contingent offers for
employment; and (3) agreed to withhold their names from Amtrak’s
bid. Id. at 48. Amtrak contended that those “employees did not
merely prepare to compete” with Amtrak, id. at 49, but that they
directly competed with Amtrak. Id. at 49. The competitor
responded that the employees did not breach their fiduciary
duties because they “did not solicit customers or employees for
it, that it did not divert any Amtrak corporate opportunities,
and it did not misuse any of Amtrak’s trade secrets.” Id. The
competitor argued that “the employees merely prepared to go into
competition with Amtrak by making plans to work for [the
competitor] after their employment ended.” Id. (emphasis in
original).
In examining the facts and circumstances of that case, the
court found that “the employees’ conduct was not so egregious
that it can be said to have constituted a breach of their
fiduciary duties to Amtrak as a matter of law, but neither is it
so benign to entitle [the competitor] to summary judgment on
this issue.” Id. at 50. The court also recognized that “a fact-
finder could reasonably conclude that the employees’
participation in the rival bid was more akin to preparation
78 rather than actual competition.” Id. at 50. The court concluded
that a material question of fact existed as to whether the
employees breached their fiduciary duties of loyalty to Amtrak
because a reasonable jury could find that the employees’
participation in the competitor’s bid was a breach of the
fiduciary duties they owed to Amtrak. Id. at 50.
Here, the Proposed Business Plan is “more akin to
preparation rather than actual competition.” Amtrak, 791 F.
Supp. 2d at 50. Mr. Miller does not deny that he developed the
Proposed Business Plan to form a new company that would be
positioned to compete with MDD after his resignation. See Def.
Miller’s Opp’n, ECF No. 123 at 9; see also Miller Decl., ECF No.
123-2 at 2 ¶ 6. Neither does Mr. Miller dispute that the
Proposed Business Plan outlined a plan to work for both MDD and
the new company concurrently. See generally Def. Miller’s Opp’n,
ECF No. 123. The record does not show that this proposal moved
beyond the planning phase. See Pls.’ SOMF, ECF No. 113 at 6 ¶ 13
(stating that the Proposed Business Plan “identified the
government as a prospective customer”). There is no evidence in
the record demonstrating that Mr. Miller provided the Proposed
Business Plan to competitors or used the Proposed Business Plan
for personal gain because the proposed company never transacted
any business. See, e.g., Miller Suppl. Decl., ECF No. 100-1 at 1
¶¶ 2-3; Pls.’ SOMF, ECF No. 113 at 6 ¶¶ 12-15; cf. Sias v. Gen.
79 Elec. Info. Servs. Co., No. 80-1561, 1981 WL 186, at *4 (D.D.C.
May 18, 1981) (finding that an employee breached his fiduciary
duty where the employee established his own company and competed
with his employer during his employment). The Court therefore
finds that the creation and existence of the Proposed Business
Plan alone does not constitute a breach of the fiduciary duty
because Mr. Miller was not prohibited from making arrangements
to compete with MDD while still employed there. See, e.g.,
Mercer, 920 F. Supp. at 233 (recognizing that employees can make
plans to compete with their employers while employed in the
absence of unfair acts or injury to the employer); Sci.
Accessories Corp., 425 A.2d at 965 (“[Former employees’]
concealment from [their former employer] of their plans to enter
into competition with [the former employer] was not, without
more, a violation of their fiduciary duty of loyalty.”).
i. Confidentiality
Plaintiffs argue that Mr. Miller breached his fiduciary
duty by exposing MDD’s proprietary and confidential information
in violation of the confidentiality agreement in the MDD
Employee Handbook and the “Terms and Conditions of Employment.”
As far as the Court can discern, the MDD Employee Handbook and
the “Terms and Conditions of Employment” appear to be separate
and distinct documents. Compare Pls.’ Ex. A, ECF No. 42-1 and
Pls.’ Ex. B, ECF No. 42-1, with Pls.’ Ex. 1, ECF No. 113-1. It
80 is uncontested that Mr. Miller signed the “Terms and Conditions
of Employment,” which contains a confidentiality provision.
E.g., Pls.’ Ex. 1, ECF No. 113-1 at 2 § 7; Pls.’ Ex. J, ECF No.
94-10. 23 By virtue of his signature, Plaintiffs contend that
“Mr. Miller specifically agreed that strategic business plans
and competitive type information would not be made available to
any person or organization, not used for personal gain.” Pls.’
Opp’n, ECF No. 94 at 12; see also Pls.’ Ex. J, ECF No. 94-10.
Plaintiffs argue that Mr. Miller breached his fiduciary duty by
failing to keep MDD’s proprietary information confidential when
he developed the Proposed Business Plan. Pls.’ Mot. for Summ.
J., ECF No. 113 at 25-26. 24 According to Plaintiffs, Mr. Miller
23The “Confidentiality” provision provides: Because of the confidential nature of the information that you will handle, we request that all information be held confidential and not disclosed to anyone outside Marine Design Dynamics (“MDD”) without written authorization. MDD may, from time-to-time, exchange confidential business information such as plans for future events, strategic plans, or other competitive-type information. As to such information, the employee shall not make it available to competitors or use such information for a personal gain. Also, while serving as a MDD employee, we request that you not assist any person or organization in competing with MDD, in preparing to compete against MDD or in hiring any employees away from MDD. Pls.’ Ex. 1, ECF No. 113-1 at 2 § 7. 24Plaintiffs assert that Mr. Miller drafted a SOW for Merrill- Dean to reroute $700,000 to AirClean by “copying, verbatim, MDD’s [SOW] submitted for their OPLOG subcontract . . . .” Pls.’ Mot. for Summ. J., ECF No. 113 at 20. Mr. Miller responds that “[MDD’s] [SOW] is not confidential or proprietary” for three reasons. Def. Miller’s Opp’n, ECF No. 123 at 10; see also Def. Miller’s Reply, ECF No. 99 at 5. First, “[MDD’s SOW] is made 81 improperly used his exposure to MDD’s “confidential energy
management planning process as his own” because in the Proposed
Business Plan he touted his skills and more than “20 years of
engineering experience.” Id. at 25.
Mr. Miller does not deny that he agreed to the terms in the
“Terms and Conditions of Employment,” including its
confidentiality provision. Def. Miller’s Reply, ECF No. 99 at 6.
Rather, Mr. Miller argues that “[t]here is no evidence that [he]
violated [the confidentiality] provision.” Id. According to him,
the Proposed Business Plan—“an aborted business plan developed
in 2010 to start a company called East Coast Energy Engineering,
Inc.”—was “a plan that never got off the ground, and certainly
caused no harm to Plaintiffs.” Def. Miller’s Opp’n, ECF No. 123
at 9. Further, Mr. Miller does not deny that the Proposed
part of the public record in the bidding process.” Def. Miller’s Opp’n, ECF No. 123 at 10. Next, “[it] is a template containing form language that is used by multiple companies, generally derived from the government’s requests for proposals.” Id. at 10-11. “Finally, MDD’s [SOW] was prepared by [Mr.] Miller for MDD.” Id. at 11 (emphasis in original). Mr. Miller argues that Plaintiffs were not “harmed by Air[C]lean’s use of form language from a previous contract[,]” Def. Miller’s Reply, ECF No. 99 at 5, and that “[he] was not appropriating material of the employer for his own use” because “he [was] simply relying on the knowledge he acquired when working for MDD.” Def. Miller’s Opp’n, ECF No. 123 at 11. Because of their failure to respond to Mr. Miller’s arguments that the SOW is not confidential or proprietary, Plaintiffs have conceded these points. See Campbell v. Nat’l R.R. Passenger Corp., 311 F. Supp. 3d 281, 327 (D.D.C. 2018) (“Plaintiffs do not offer any response to this argument, and thus concede it.”). 82 Business Plan was located on MDD’s work computers, which he
contends “suggest[s] there was no effort to hide it.” Id. at 10;
see also Phillips Decl., ECF No. 94-1 at 2 ¶ 9 (“Two business
plans were created on MDD’s computers and were captured in the
course-of-business back-up program.”).
There is no evidence supporting Plaintiffs’ contention that
Mr. Miller exposed MDD’s confidential information in the
Proposed Business Plan. Mr. Miller was permitted to include the
skills and experience that he gained from MDD in the Proposed
Business Plan, and he could take all those skills with him to
his next position. See U.S. Travel Agency, Inc., 235 A.2d at
789. The question remains whether the development of the
Proposed Business Plan is evidence that Mr. Miller committed
“fraudulent, unfair, or wrongful acts, such as the misuse of
confidential information . . . .” Riggs Inv. Mgmt. Corp. v.
Columbia Partners, L.L.C., 966 F. Supp. 1250, 1266 (D.D.C. 1997)
(citing Sci. Accessories, 424 A.2d at 965). In Riggs, an agent
agreed to “‘treat in strict confidence’ bank business, including
the affairs of its customers, which he would learn in the course
of his employment.” Id. at 1265 n.5. The court concluded that
the agent went “beyond his privilege to prepare for future
competition” when he shared confidential information, such as
the salary information of employees and fees paid by clients.
Id. at 1265.
83 Here, there is no evidence that Mr. Miller shared the
Proposed Business Plan, which allegedly included confidential
information, with anyone outside of MDD. Neither party disputes
that both versions of the Proposed Business Plan were created
and located on MDD’s computers. See, e.g., Pls.’ Opp’n, ECF No.
94 at 7; Pls.’ Mot. for Summ. J., ECF No. 113 at 16; Def.
Miller’s Opp’n, ECF No. 123 at 10. Plaintiffs assert that the
Proposed Business Plan “was retrieved from MDD email records.”
Pls.’ Opp’n, ECF No. 94 at 7. But Plaintiffs do not present any
evidence that Mr. Miller disseminated the two versions of the
Proposed Business Plan to anyone other than within MDD to the
then-current MDD employees. See generally Pls.’ Mot. for Summ.
J., ECF No. 113; Pls.’s Reply, ECF No. 129. Furthermore,
Plaintiffs do not point to any specific language in the Proposed
Business Plan that contains MDD’s confidential information. The
Court therefore finds that Plaintiffs have failed to demonstrate
that Mr. Miller misused MDD’s confidential information. 25
25To the extent that Plaintiffs argue that Mr. Miller violated the confidentiality provision in the “Terms and Conditions of Employment” by using “information acquired while working for MDD to enrich himself and his next employer, AirClean,” Pls.’ Mot. for Summ. J., ECF No. 113 at 26, the Court rejects that argument because Plaintiffs have not identified the specific information that Mr. Miller allegedly acquired at MDD. Furthermore, Mr. Miller did not enter into a non-compete agreement; therefore, he was permitted to compete with MDD after his resignation, and he could take with him all the skills and information that he acquired at MDD to AirClean. See U.S. Travel Agency, Inc., 235 A.2d at 789. 84 ii. Non-Solicitation
Next, Plaintiffs argue that the Proposed Business Plan and
Mr. Miller’s solicitation of MDD’s customers prove that
Mr. Miller breached his fiduciary duty. Pls.’ Mot. for Summ. J.,
ECF No. 113 at 26-27. Plaintiffs contend that the Proposed
Business Plan identifies the federal government as a prospective
client, which is “evidence of [Mr.] Miller’s solicitation of the
government for his own personal gain, rather than soliciting MDD
business.” Id. at 27. According to Plaintiffs, “[t]he Proposed
Business Plan specifically identified the goal of obtaining a
major government contract which, in essence, was successfully
carried out when a portion of the $700,000 worth of MDD’s funds
were reallocated from MDD to [Mr.] Miller’s subsequent employer,
AirClean and the other former MDD employees.” Id. at 27.
Plaintiffs point out that Mr. Miller solicited MDD’s customers,
including CSC and OPLOG, before his resignation. Pls.’ Opp’n,
ECF No. 94 at 9. Plaintiffs contend that Mr. Miller’s
solicitation and his goal of obtaining a major government
contract qualify as “unfair acts” that “injured” MDD. Pls.’ Mot.
for Summ. J., ECF No. 113 at 27 (quoting Mercer, 920 F. Supp. at
233). Finally, Plaintiffs argue that Mr. Miller’s actions went
beyond mere preparation because Mr. Miller “utilized MDD
professional contacts to undermine MDD and fashion a lucrative
opportunity at Plaintiffs’ expense.” Pls.’ Opp’n, ECF No. 94 at
85 10.
Mr. Miller denies that he solicited MDD’s customers during
his employment at MDD. See, e.g., Def. Miller’s Opp’n, ECF No.
123 at 12; Miller Decl., ECF No. 98 at 5 ¶¶ 12-13. Mr. Miller
maintains that he “never solicited any work from any MDD
customer, or anyone else, the entire time he was employed by
MDD.” Def. Miller’s Opp’n, ECF No. 123 at 12. According to him,
“[a]ll of the work done by Air[C]lean was solicited by CSC after
Mr. Miller resigned.” Def. Miller’s Reply, ECF No. 99 at 6.
Mr. Miller avers that the “future CSC subcontract work worth
$700,000 allegedly ‘budgeted to MDD’, and the $2.7 million
budgeted for OPLOG work in 2012, was not confidential or
proprietary business information, but rather, matters of public
record.” Miller Decl., ECF No. 123-2 at 2 ¶ 9. Finally,
Mr. Miller argues that “[s]olicitation of MDD’s customers alone
could never give rise to liability because Miller never agreed
not to solicit or compete.” Def. Miller’s Opp’n, ECF No. 123 at
11 (citing Aetna Cas. & Sur. Co. v. Lee, 229 F.2d 787, 790 (D.C.
Cir. 1956)).
As previously stated, “[i]n preparing to compete, an
employee may not commit fraudulent, unfair, or wrongful acts,
such as . . . solicitation of the firm’s customers, or
solicitation leading to a mass resignation of the firm’s
employees.” Mercer, 920 F. Supp. at 234. After termination, a
86 former employee cannot be held liable for soliciting her former
employer’s customers or competing with her former employer,
absent an agreement to the contrary. Aetna Cas. & Sur. Co., 229
F.2d at 788-89 (citing Restatement (First) of Agency § 393 cmt.
e (1933)).
The Court is not persuaded that Mr. Miller solicited MDD’s
customers during his employment there. While the Proposed
Business Plan states that a long-term goal of the proposed
company (“East Coast Energy Management, Inc.”) was to secure
major governmental and commercial contracts, Pls.’ Ex. 2, ECF
No. 113-2 at 7, Plaintiffs have not presented evidence that Mr.
Miller solicited the federal government while employed by MDD.
Neither have Plaintiffs provided facts that would lead to an
inference that Mr. Miller solicited the federal government or
MDD’s other customers while he was employed at MDD. The Court
disagrees with Plaintiffs’ contention that because a portion of
the $700,000 of “MDD’s funds” were reallocated from MDD to
AirClean, this suggests that the Proposed Business Plan was in
fact carried out because there is nothing in the record
indicating that the Proposed Business Plan was shared with
anyone outside of MDD. Furthermore, Plaintiffs do not contest
Mr. Miller’s averment that the future CSC subcontract work,
which was worth $700,000, was a matter of public record. See
generally Pls.’ Reply, ECF No. 129. Nor do Plaintiffs dispute
87 that MDD had no right to future subcontracts with CSC. See Def.
Miller’s Reply, ECF No. 99 at 8; see generally Pls.’ Mot. for
Summ. J., ECF No. 113. Plaintiffs’ allegation—that Mr. Miller
conspired with others to influence OPLOG to reallocate $700,000
of work from MDD to competitors—is unsupported by any evidence
in the record. Further, Plaintiffs concede that Mr. Miller did
not attend the meeting in Boston where government employees
allegedly decided to eliminate MDD from OPLOG’s fiscal year 2012
budget. See Pls.’ Mot. for Summ. J., ECF No. 113 at 18-19.
Plaintiffs’ other argument—that Mr. Miller drafted a SOW to
redirect the CSC subcontract from MDD to AirClean—also fails.
See id. at 19-20. Mr. Miller drafted the SOW when he was an
employee of MDD in order for MDD to secure the OPLOG work.
Miller Decl., ECF No. 123-2 at 3 ¶ 17. After his resignation
from MDD, Mr. Miller, as an employee of AirClean, used the
public version of MDD’s SOW to draft a SOW for AirClean. Def.
Miller’s Opp’n, ECF No. 123 at 9-11. Analyzing the facts and
inferences in Plaintiffs’ cross-motion in the light most
favorable to Mr. Miller, the Court finds that the undisputed
facts do not support a finding that Mr. Miller solicited MDD’s
customers during his employment at MDD. See James Madison
Project, 344 F. Supp. 3d at 386 (“When the court is presented
with cross-motions for summary judgment, it analyzes the
underlying facts and inferences in each party’s motion in the
88 light most favorable to the non-moving party.”).
iii. Direct Competition
Under the “Terms and Conditions of Employment,” “[MDD]
request[ed] that [Mr. Miller] not assist any person or
organization in competing with MDD” during his employment. Pls.’
Ex. 1, ECF No. 113-1 at 2 § 7. Neither party disputes that
Mr. Miller was permitted to make arrangements to compete with
MDD, see Pl.’s Mot. for Summ. J., ECF No. 113 at 25, and that
the “failure to disclose plans to enter into competition is not
itself necessarily a breach of fiduciary duty[,]” Pls.’ Mot. for
Summ. J., ECF No. 113 at 24. Rather, the parties disagree about
whether Mr. Miller “was competing with MDD while still employed
at the company.” Pls.’ Reply, ECF No. 129 at 1 (emphasis in
Plaintiffs argue that the Proposed Business Plan shows
Mr. Miller’s actions to directly compete with MDD. Pls.’ Mot.
for Summ. J., ECF No. 113 at 28. Mr. Miller contends that “[t]he
[Proposed] [B]usiness [P]lan gives no indication of any intent
to compete with MDD for government contract work.” Def. Miller’s
Opp’n, ECF No. 123 at 10. Mr. Miller maintains that “the
[Proposed] [B]usiness [P]lan never came to fruition” and the
proposed company “never performed any work, or earned any
revenue.” Id. The Court agrees.
“To survive a summary judgment motion, [Plaintiffs] need
89 only produce “more than a ‘mere existence of a scintilla of
evidence’ in support of its position,” so that a “jury could
reasonably find for the non-moving party.” Amtrak, 791 F. Supp.
2d at 51 (quoting Threadgill v. Spellings, 377 F. Supp. 2d 158,
160 (D.D.C. 2005) (quoting Anderson, 477 U.S. at 252)).
Plaintiffs have not presented a scintilla of evidence that
Mr. Miller directly competed with MDD while employed there.
Plaintiffs do not deny that East Coast Energy Management, Inc.,
the proposed company, never transacted any business. See
generally Pls.’ Reply, ECF No. 129. The undisputed facts
demonstrate that the Proposed Business Plan was a proposal that
was never sent to anyone outside of MDD and provides no support
for Plaintiffs argument that Mr. Miller directly competed with
MDD while he was employed there. Because Plaintiffs have failed
to present any evidence demonstrating that Mr. Miller engaged in
any business activity in competition with MDD, there is no issue
of genuine fact that would make summary judgment in favor of
Plaintiffs appropriate on this element of the breach of
fiduciary duty claim. See Amtrak, 791 F. Supp. 2d at 51.
c. Proximate Cause
The Court’s analysis with respect to the breach of
fiduciary duty claim ends with the third and final element:
proximate cause. Plaintiffs allege that they lost approximately
$2.5 million, Am. Compl., ECF No. 42 at 44 ¶ 178, in part,
90 because Mr. Miller “continu[ed] to solicit the business of OPLOG
for himself and his new employer AirClean.” Id. at 44 ¶ 177.
Plaintiffs assert that OPLOG budgeted $2.7 million for MDD in
fiscal year 2012, but Mr. Miller played a role in redirecting
$700,000 of OPLOG work away from MDD. Pls.’ SOMF, ECF No. 113 at
7-8 ¶¶ 18-22.
Plaintiffs’ burden is to prove that Mr. Miller’s breach
proximately caused their injuries. See Gadaire, 197 F. Supp. 3d
at 8-9. “To establish proximate cause, the plaintiff must
present evidence from which a reasonable juror could find that
there was a direct and substantial causal relationship between
the defendant’s breach of the standard of care and the
plaintiff’s injuries and that the injuries were foreseeable.”
District of Columbia v. Zukerberg, 880 A.2d 276, 281 (D.C. 2005)
(quoting District of Columbia v. Wilson, 721 A.2d 591, 600 (D.C.
1998)). Mr. Miller correctly states that he “cannot be held
liable for breach of fiduciary duty unless Plaintiffs can prove
they lost business as a result of his alleged misconduct.” Def.
Miller’s Reply, ECF No. 99 at 9 (citing Maxwell v. Gallagher,
709 A.2d 100, 103 (D.C. 1998)). Plaintiffs cannot establish a
causal connection between their alleged damages in the amount of
$2.5 million and Mr. Miller’s alleged misconduct because
Plaintiffs have not demonstrated that Mr. Miller breached his
fiduciary duty owed to MDD. Accordingly, the Court GRANTS the
91 Federal Defendants’ cross motion for summary judgment as to
Count VI and DENIES the Plaintiffs’ motion for summary judgment
as to Count VI.
3. Mr. Miller Is Entitled to Summary Judgment on Plaintiffs’ Civil Conspiracy Claim
Plaintiffs argue that Mr. Miller conspired with Mr. Muras,
Mr. Stammnitz, and Mr. Mazzocco to leave MDD and to take MDD’s
business for themselves in their new ventures. Phillips II, 894
F. Supp. 2d at 96. Mr. Miller denies that he “conspire[d] with
any of his co-workers to leave MDD,” “work[ed] for any of them
after he left, or solicit[ed] any MDD contracts.” Def. Miller’s
Mot. for Summ. J., ECF No. 87 at 6. Plaintiffs must establish
the necessary elements for civil conspiracy under District of
Columbia law:
(1) an agreement between two or more persons; (2) to participate in an unlawful act, or in a lawful act in an unlawful manner; and (3) an injury caused by an unlawful overt act performed by one of the parties to the agreement (4) pursuant to, and in furtherance of, the common scheme.
Griva v. Davison, 637 A.2d 830, 848 (D.C. 1994) (internal
citations omitted). “Civil conspiracy, of course, is not
actionable in and of itself but serves instead ‘as a device
through which vicarious liability for the underlying wrong may
be imposed upon all who are a party to it, where the requisite
agreement exists among them.’” Hall v. Clinton, 285 F.3d 74, 82
92 (D.C. Cir. 2002) (quoting Riddell v. Riddell Wash. Corp., 866
F.2d 1480, 1493 (D.C. Cir. 1989)).
Plaintiffs have presented no facts to establish the first
element: an agreement between two or more persons. Plaintiffs
urge this Court to consider the Proposed Business Plan because
it allegedly “evidences the explicit agreement between [Mr.]
Miller and [Mr.] Mazzocco to start a new business together and
the early conniving with their ‘influential’ government
contracts to redirect MDD contracts.” Pls.’ Mot. for Summ. J.,
ECF No. 113 at 29. But Plaintiffs concede that Mr. Miller did
not attend the meeting in Boston where Mr. Mazzocco,
Mr. Stammnitz, and Mr. Muras allegedly entered into an agreement
to conspire to terminate the CSC-MDD subcontract. See id. at 18-
19, 29. Thus, the Proposed Business Plan does not provide any
support for Plaintiffs’ contention that Mr. Miller conspired
with others to injure MDD.
In the alternative, Plaintiffs argue that Mr. Miller was
“complicit.” Pls.’ Opp’n, ECF No. 94 at 15. While “[p]roof of a
tacit, as opposed to explicit, understanding is sufficient to
show agreement[,]” Halberstam, 705 F.2d at 476, Plaintiffs have
identified no evidence of a tacit understanding. To support
their position, Plaintiffs primarily rely on their allegations
that Mr. Miller’s “behavior in taking advantage of all the
opportunities presented to him by the other conspirators, and
93 the roundabout way in which [Mr. Miller] left MDD, and the
continued performance of the exact same tasks, under the same
contracts that he performed for MDD, at AirClean and MSC . . .
.” Pls.’ Mot. for Summ. J., ECF No. 113 at 29 (arguing that Mr.
Miller “wrongfully agreed and contributed to MDD’s loss of the
business reallocated to AirClean and to the success of the
entire de facto debarment alleged in the Verified Amended
Complaint.”); see also Am. Compl., ECF No. 42 at 20-21, 46
¶¶ 67, 188. However, “allegations in a complaint unsupported by
evidence cannot serve as the basis for opposing a motion for
summary judgment.” Council on Am.-Islamic Relations Action
Network, Inc. v. Gaubatz, 82 F. Supp. 3d 344, 356 (D.D.C. 2015)
(holding that plaintiffs failed to meet their burden at the
summary judgment stage that a defendant conspired with his co-
defendant because plaintiffs relied on allegations of an
agreement between the defendant and his co-defendant without
evidence of an agreement). The Court therefore finds that
Plaintiffs have not established the first element.
Even assuming, arguendo, that Plaintiffs can prove the
first element, Plaintiffs cannot establish the second element.
“[C]ivil conspiracy depends on the performance of some
underlying tortious act.” Griva, 637 A.2d at 848. Plaintiffs
contend that their claim for breach of fiduciary duty is the
underlying tortious act. See Pls.’ Opp’n, ECF No. 94 at 15; see
94 also Am. Compl., ECF No. 42 at 46 ¶ 191 (alleging that Mr.
Miller is “vicariously liable for the underlying tort of breach
of fiduciary dut[y]”). Plaintiffs argue that Mr. Miller left MDD
to compete for the same contracts at AirClean and MSC “in
violation of his covenant not compete.” Pls.’ Opp’n, ECF No. 94
at 15. But under that theory, Plaintiffs fail to make out a
claim for civil conspiracy for two reasons. First, Mr. Miller
was not bound by the non-compete clause in the MDD Employee
Handbook because it was not an enforceable contract between him
and MDD. Next, Plaintiffs have not demonstrated that Mr. Miller
breached his fiduciary duty owed to MDD. Mr. Miller correctly
points out that “to state a claim for civil conspiracy, the
Plaintiff must show that the defendants committed a breach of
fiduciary duty.” Def. Miller’s Mot. for Summ. J., ECF No. 87 at
11. The underlying breach of fiduciary duty against Mr. Miller
is not viable; thus, Plaintiffs cannot rely on Mr. Miller’s
alleged breach of his fiduciary duty as the underlying tortious
act. See Riddell, 866 F.2d at 1494 (“[A]s a matter of
substantive law, one cannot be liable for a conspiracy that does
not have as its object an actionable wrong.”). The Court
therefore finds that Mr. Miller is entitled to summary judgment
95 on Plaintiffs’ civil conspiracy claim. See Hall, 285 F.3d at
82. 26
IV. Conclusion
For the reason set forth above, the Court GRANTS the
alternative, for Summary Judgment as to Counts I, II, and IX,
ECF No. 88, and DENIES Plaintiffs’ Motion for Partial Summary
Judgment as to Count I, ECF No. 107. The Court DENIES AS MOOT
Plaintiffs’ Motion for Entry of Order for Summary Judgment, ECF
No. 132. The Court GRANTS Defendant Matthew Miller’s Motion for
Summary Judgment as to Counts VI and VIII, ECF No. 87, and
DENIES Plaintiffs’ Motion for Summary Judgment as to Counts VI
26In its prior Opinion, the Court found that Plaintiffs stated plausible claims for breach of fiduciary duty and civil conspiracy to withstand a motion to dismiss. Phillips I, 894 F. Supp. 2d at 95-96. Although the Court grants Mr. Miller’s motion for summary judgment as to Counts VI and VIII, the Court does not reach the merits of the breach of fiduciary duty and civil conspiracy claims with respect to Mr. Mazzocco, Mr. Stammnitz, and Mr. Muras. See, e.g., Sloan ex rel. Juergens v. Urban Title Servs., Inc., No. CIV.A. 06-01524 CKK, 2011 WL 1137297, at *8 (D.D.C. Mar. 27, 2011) (“So long as the underlying fraud count . . . remains viable, Plaintiff is free to rely upon civil conspiracy as a theory to establish [defendants’] liability for the underlying fraud.”); de Lupis v. Bonino, No. CIVA 07-01372 (RBW), 2010 WL 1328813, at *10 (D.D.C. Mar. 31, 2010) (holding that a plaintiff could maintain a conspiracy claim against defendants because it had been adequately pled). Accordingly, Plaintiffs may maintain their breach of fiduciary duty and civil conspiracy claims against Mr. Mazzocco, Mr. Stammnitz, and Mr. Muras.
96 and VIII, ECF No. 113. A separate Order accompanies this
Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan United States District Judge July 15, 2019
Related
Cite This Page — Counsel Stack
Phillips v. Mabus, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-v-mabus-dcd-2019.