United States District Court, S.D. California
1) GRANTING MOTIONS TO DISMISS [Dkt. Nos. 23, 47, 48, 51, 53, 55, 66, 85, 86, 87.]
2) DENYING MOTION TO FILE UNDER SEAL [Dkt. No. 112.]
GONZALO P. CURIEL, District Judge.
Plaintiff Bona Fide Conglomerate Inc. ("Plaintiff") brings this antitrust action against twelve separate Defendants. (Dkt. No. 1.) Plaintiff has voluntarily dismissed The Ginn Group from the action. (Dkt. No. 54.) The remaining eleven Defendants Job Options, Inc. ("Job Options"); Lakeview Center, Inc. ("Lakeview"); ServiceSource, Inc. ("ServiceSource"); PRIDE Industries, Inc. ("PRIDE"); Opportunity Village, Inc. ("Opportunity Village"); Goodwill Industries of Southern California ("GSC"); Corporate Source, Inc. ("Corporate Source"); Source America; Kent, Campa & Kate, Inc.; CW Resources; and National Council of SourceAmerica Employers ("NCSE") (collectively, "Defendants"), have filed ten separate motions to dismiss Plaintiff's Complaint. (Dkt. Nos. 23, 47, 48, 51, 53, 55, 66, 85, 86, 87.) The Parties have fully briefed the motions. (Dkt. Nos. 93, 96, 99, 100, 101, 102, 103-108, 109, 110, 114, 115, 116, 117, 118, 120.) The Court finds the motion suitable for disposition without oral argument pursuant to Civil Local Rule 7.1(d)(1). Upon review of Plaintiff's Complaint, the moving papers and subsequent briefing, judicially noticeable facts, the Parties' objections, and the applicable law, the Court GRANTS in part and DENIES in part Defendants' motions to dismiss Plaintiff's Complaint.
Plaintiff brings this civil antitrust action against SourceAmerica and various for-profit and non-profit entities for allegedly rigging the process through which service providers may compete for government contracts through the federal "AbilityOne Program." (Dkt. No. 1, Compl. ¶ 1-2.) Plaintiff Bona Fide Conglomerate, Inc. is a California non-profit corporation providing janitorial and grounds maintenance services to the Federal Government through the AbilityOne Program. (Id. ¶ 6.)
I. The AbilityOne Program and SourceAmerica
As alleged in Plaintiff's Complaint, the AbilityOne Program is a "government procurement system whereby non-profit service providers and producers of goods substantially employing either blind or "severely disabled"persons ("Affiliates") can list their pre-approved products or services for purchase by the government." (Id. ¶ 2.) Plaintiff is one such Affiliate of the AbilityOne Program. (Id. ¶ 6.)
As part of the AbilityOne Program, the government via the AbilityOne Commission ("the Commission") has chosen SourceAmerica as one of two "Central Non-profit Agencies" responsible for allocating procurement opportunities among Affiliates. (Id. ¶ 3.) SourceAmerica is a non-profit corporation, (id. ¶ 7), formed by six non-profit corporations for the purpose of participating as a Central Nonprofit Agency in the AbilityOne Program. (Id. ¶ 27.) Plaintiff alleges SourceAmerica's Board of Directors includes a member from each of the six founding corporations as well as the President of Defendant National Council of SourceAmerica Employers ("NCSE"), and that the SourceAmerica Board of Directors selects SourceAmerica executive officers and, by subcommittee, determines the compensation of the SourceAmerica executive officers. (Id. ¶ 28.)
Plaintiff alleges SourceAmerica publishes its procedures and criteria in distributing AbilityOne opportunities to Affiliates in its "Bulletin No. B-1, " which is periodically updated. (Id. ¶ 32.) Notwithstanding the criteria published in the bulletin, Plaintiff alleges the "actual criteria implemented var[ies] from opportunity to opportunity and are made known to Affiliates through the sources sought notice for a given contract." (Id. ¶ 34.) Plaintiff alleges that while the criteria for each opportunity may be weighted, the weight assigned to each individual criterion is "usually not included in sources sought notices and may only be discovered by an unsuccessful responder in a post-award debriefing." (Id.)
In addition, Plaintiff alleges a history of disputes between Plaintiff and SourceAmerica over the allocation of AbilityOne opportunities. Plaintiff alleges filing a post-award bid protest in the Court of Federal Claims in October, 2010, challenging the government's award of a General Services Administration contract to Defendant Opportunity Village pursuant to SourceAmerica's recommendation. (Id. ¶ 36.) Following the voluntary voidance of SourceAmerica's recommendation and a re-solicitation of the General Services Administration contract opportunity, Plaintiff's post-award bid protest was dismissed as moot. (Id.) Plaintiff then commenced a second bid protest in April 2012 challenging the re-solicited contract award again made to Opportunity Village pursuant to SourceAmerica's recommendation. (Id. ¶ 37.) Plaintiff and SourceAmerica reached a settlement memorialized in a July 27, 2012 agreement ("Settlement Agreement") prior to conducting discovery. (Id. ¶¶ 38-39.) Under the terms of the Settlement Agreement, SourceAmerica agreed to:
use best efforts to provide that Bona Fide is treated objectively, fairly, and equitably in its dealings with [SourceAmerica], with specific attention to contract allocation... [SourceAmerica] will also use best efforts to provide that Bona Fide is afforded equal access to services provided by [SourceAmerica] including, regulatory assistance; information technology support; engineering, financial and technical assistance; legislative and workforce development assistance; communications and public expertise; and an extensive training program.
(Id. ¶ 39) (alterations in original). The Settlement Agreement also provided that SourceAmerica would "reasonably monitor" Bona Fide's participation in the AbilityOne Program for three years. (Id. ¶ 40.) Plaintiff alleges it has "not been awarded a single new contract by SourceAmerica since the Settlement Agreement was signed." (Id. ¶ 41.)
III. Allegations regarding the other Defendants
Along with Defendant SourceAmerica, Plaintiff seeks remedies against ten additional remaining Defendants. Defendant NCSE is an unincorporated association of all AbilityOne Affiliates. (Id. ¶ 17.) Plaintiff alleges Defendant NCSE acts as a liaison between SourceAmerica and the Affiliates, providing Affiliates with "current information about doing business with the Government and the AbilityOne Program." (Id. ¶ 35.) Plaintiff alleges NCSE has "denied Bona Fide its vote in the association as a member and AbilityOne Affiliate, " which has hindered Bona Fide's ability to voice concerns regarding SourceAmerica's administration of the AbilityOne Program. (Id. ¶ 43.)
The nine additional Defendants in this action are various for-profit and non-profit Affiliates who have been awarded AbilityOne Program contracts over Bona Fide. These Defendants include: Opportunity Village; PRIDE; Kent, Campa & Kate, Inc.; ServiceSource; Job Options; GSC; Lakeview; Corporate Source; and CW Resources. (Id. ¶¶ 8-14, 16, 74.)
IV. Exemplary AbilityOne Opportunities
Plaintiff's Complaint includes allegations regarding twelve AbilityOne Program opportunities "demonstrating bid rigging, group boycott, and illegal standard setting": (1) Notice No. 10709 for custodial and grounds maintenance for the Lloyd D. George U.S. Courthouse and Federal Building and Alan Bible Federal Building in Las Vegas, Nevada; (2) Notice No. 1065 for janitorial services for 18 Customs and Border Patrol sites in San Diego, California; (3) Notice No. 1108 for custodial services for Vandenberg Air Force Base in San Luis Obispo, California; (4) Notice No. 1483 for custodial services for nine child development centers in Fort Hood, Texas; (5) Notice No. 1723 for custodial services for the Veterans Affairs Headquarters in Washington D.C.; (6) Notice No. 1692 for grounds maintenance and snow and ice removal for Denver Federal Center in Lakewood, Colorado; (7) Notice No. 1690, withdrawn and reissued as Notice No. 1741, for information technology services for Department of Defense Human Resource Activity's Defense Manpower Data Centers in Alexandria, Virginia and Monterrey, California; (8) Notice No. 1944 for custodial services for the St. Elizabeth's U.S. Coast Guard Headquarters, Washington DC; (9) Notice No. 1953 for total facility management services for the National Geospatial Intelligence Agency in Springfield, Virginia; (10) Notice No. 2161 for custodial and grounds maintenance services for a federal building, courthouse, and GSA Center building in Puerto Rico; (11) Notice No. 2075 for total facilities management services for the National Geospatial-Intelligence Agency Building in St. Louis, Missouri; and (12) Notice No. 2379 for operation and maintenance services for agricultural facilities in Peoria, Illinois. (Id. ¶¶ 44-153.)
Plaintiff claims the twelve AbilityOne opportunities demonstrated bid rigging, group boycott, and illegal standard setting due to the following allegations: (1) Defendants conspired to require Cleaning Industry Management Standard certification or Top Secret Security Clearance for the notice of opportunity in order to preclude Plaintiff from the eligibility criteria for four of the twelve AbilityOne opportunities, (id. ¶¶ 75, 111, 120, 143); (2) Defendants utilized a post hoc evaluation scheme to ensure that a co-conspirator would be awarded the contract opportunity for three of the twelve AbilityOne opportunities, (id. ¶¶ 53, 66, 104); (3) Defendants cancelled three of the twelve AbilityOne opportunities, in some cases because Plaintiff would have otherwise been awarded the contract, (id. ¶¶ 60, 83, 149-50); (4) Defendants departed from well-established course of dealing to reject Plaintiff's bid for one of the twelve AbilityOne Opportunities, (id. ¶ 92); and (5) Defendants defined geographic criterion in an unprecedented way for one of the twelve AbilityOne Opportunities, (id. ¶ 130).
On April 1, 2014, Plaintiff filed the Complaint in this matter alleging four causes of action: (1) standard setting in violation of section 1 of the Sherman Act, 15 U.S.C. § 1; (2) bid rigging in violation of section 1 of the Sherman Act, 15 U.S.C. § 1; (3) group boycott in violation of section 1 of the Sherman Act, 15 U.S.C. § 1; and (4) breach of contract (against Defendant SourceAmerica only). (Dkt. No. 1, Compl.) Defendants have filed ten separate motions to dismiss Plaintiff's Complaint. (Dkt. Nos. 23, 47, 48, 51, 53, 55, 66, 85, 86, 87.) In addition, Plaintiff has filed a request for judicial notice, (Dkt. No. 96-2), to which Defendants Opportunity Village, (Dkt. No. 109), CW Resources (Dkt. No. 107), and Job Options, (Dkt. No. 116), have objected. Along with its reply brief in support of its motion to dismiss Plaintiff's Complaint, Defendant SourceAmerica also seeks to file an exhibit under seal. (Dkt. No. 112.) Plaintiff opposes SourceAmerica's motion to file under seal. (Dkt. No. 120.)
Before the Court are ten motions to dismiss Plaintiff's Complaint for lack of subject matter jurisdiction under Federal Rules of Civil Procedure ("FRCP") 12(b)(1), (Dkt. Nos. 23, 51, 66, 85, 87), for improper venue under FRCP 12(b)(3), (Dkt. No. 66), and for failure to state a claim under FRCP 12(b)(6), (Dkt. Nos. 23, 47, 48, 51, 53, 55, 66, 85, 86, 87). The Court first addresses Plaintiff's Request for Judicial Notice, (Dkt. No. 96-2), then addresses Defendants' arguments regarding subject matter jurisdiction, venue, and the sufficiency of Plaintiff's allegations in turn.
I. Request for Judicial Notice
Plaintiff requests judicial notice of seven documents in support of its opposition to Defendants' motions to dismiss Plaintiff's Complaint. (Dkt. No. 96-2.) Under Federal Rule of Evidence 201(b), a district court may take notice of facts not subject to reasonable dispute that are capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned. Fed.R.Evid. 201(b); see also Lee v. City of Los Angeles , 250 F.3d 668, 689 (9th Cir. 2001) (noting that the court may take judicial notice of undisputed matters of public record), overruled on other grounds by Galbraith v. County of Santa Clara , 307 F.3d 1119, 1125-26 (9th Cir. 2002). The Court finds Plaintiff's requests for judicial notice irrelevant to the present motions to dismiss the Complaint and DENIES Plaintiff's request. See Santa Monica Food Not Bombs v. City of Santa Monica , 450 F.3d 1022, 1025 n. 2 (9th Cir. 2006) (declining to take judicial notice of reports not relevant to the resolution of the matters before the court); Flick v. Liberty Mut. Fire Ins. Co. , 205 F.3d 386, 393 n. 7 (9th Cir. 2000) (same).
II. 12(b)(1) Lack of Subject Matter Jurisdiction
Defendants Job Options, Opportunity Village, SourceAmerica, Kent, Campa & Kate, and NCSE first move to dismiss Plaintiff's Complaint under FRCP 12(b)(1) for lack of subject matter jurisdiction. (Dkt. Nos. 23, 51, 66, 85, 87.) Defendants argue: (1) Plaintiff has failed to allege a cognizable antitrust injury and thus lacks standing, (Dkt. Nos. 23, 85); and (2) the Federal Claims Court has exclusive jurisdiction over bid protest cases, (Dkt. Nos. 51, 66, 87).
A. Legal Standard
Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss based on the court's lack of subject matter jurisdiction. See Fed.R.Civ.P. 12(b)(1). "A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." Stock West, Inc. v. Confederated Tribes , 873 F.2d 1221, 1225 (9th Cir. 1989) (citation omitted). "Article III of the Constitution confines the federal courts to adjudication of actual Cases' and Controversies.'" Lujan v. Defenders of Wildlife , 504 U.S. 555, 590 (1992). Consequently, a "lack of Article III standing requires dismissal for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)." Maya v. Centex Corp. , 658 F.3d 1060, 1067 (9th Cir. 2011) (emphasis omitted). "For the purposes of ruling on a motion to dismiss for want of standing, " the court "must accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Warth v. Seldin , 422 U.S. 490, 501 (1975); see also Tyler v. Cuomo , 236 F.3d 1124, 1131 (9th Cir. 2000).
Defendants Job Options and Kent, Campa & Kate argue Plaintiff fails to allege an antitrust injury necessary for standing to maintain a claim under section 1 of the Sherman Act. (Dkt. No. 23-1 at 1; Dkt. No. 85-1 at 7.) Defendants argue Plaintiff fails to allege a cognizable injury of the "type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." (Dkt. No. 23-1 at 6) (citing ...