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Dellew Corp. v. United States

United States Court of Appeals, Federal Circuit

May 1, 2017

DELLEW CORPORATION, Plaintiff-Appellee
v.
UNITED STATES, Defendant-Appellant TECH SYSTEMS, INC., Defendant

         Appeal from the United States Court of Federal Claims in No. 1:15-cv-00808-MMS, Judge Margaret M. Sweeney.

          Adam K. Lasky, Oles Morrison Rinker & Baker LLP, Seattle, WA, argued for plaintiff-appellee. Also represented by Shaun Christopher Kennedy.

          Erin Murdock-Park, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by Benjamin C. Mizer, Robert E. Kirschman, Jr., Allison Kidd-Miller.

          Before Lourie, Reyna, and Wallach, Circuit Judges.

          WALLACH, CIRCUIT JUDGE.

         Appellant United States ("the Government") appeals the opinion and order of the U.S. Court of Federal Claims awarding attorney fees and costs to Appellee Dellew Corporation ("Dellew") pursuant to the Equal Access to Justice Act ("the EAJA"), 28 U.S.C. § 2412(a), (d)(1)(A) (2012). The central question here is whether comments that the Court of Federal Claims made during a hearing and prior to the Government taking corrective action materially altered the relationship between the parties such that Dellew qualified as a "prevailing party" under the EAJA. The Court of Federal Claims found its comments sufficient to confer prevailing party status on Dellew. See Dellew Corp. v. United States (Dellew II), 127 Fed.Cl. 85, 89-95 (2016). We reverse because a strong comment by a trial court is not tantamount to a ruling on the merits or a court order.

         Background

         The parties do not dispute the facts material to the instant appeal. The U.S. Department of the Army ("the Army") awarded a contract to Tech Systems, Inc. ("TSI") for "logistics support services" at the Schofield Barracks in Hawai'i. Id. at 87 (citation omitted). Dellew filed a post-award bid protest against the Government in the Court of Federal Claims, alleging that the Army improperly awarded TSI a contract because (1) TSI did not accept a material term of the request for proposals when it refused to cap its proposed general and administrative rate, and (2) the contract awarded varied materially from TSI's proposal. J.A. 53-56. Dellew also argued that the Army failed to perform an adequate cost realism analysis before awarding the contract to TSI.[1] J.A. 56-57.

         After the Government filed the administrative record and the parties briefed the merits, the Court of Federal Claims held oral argument. Dellew II, 127 Fed.Cl. at 87. During oral argument, the Court of Federal Claims provided "hint[s]" about its views favorable to Dellew on the merits, J.A. 65; see J.A. 70-71 (discussing cost realism), 79 (discussing the general and administrative rate), 112- 13 (discussing change in material terms), and stated that it had drafted an opinion, J.A. 143-44. The Court of Federal Claims also repeatedly expressed its belief that corrective action would be appropriate.[2] J.A. 126 ("I also would strongly suggest to the Army that they think about taking corrective action . . . ."), 128 ("[A] corrective action should be taken in this case . . . ."), 137 (similar), 139 (similar), 145-46 (similar). Indeed, the Court of Federal Claims encouraged the Army to "tak[e] corrective action now" so that it could avoid issuing "a needless ruling." J.A. 126. The Court of Federal Claims set a schedule for the parties to provide a joint status report approximately ten days after the hearing, J.A. 152, 156-57, and explicitly agreed not to issue a decision until it received the report, J.A. 153. The Court of Federal Claims also left open the possibility of additional briefing. J.A. 68-69, 126.

         In the Joint Status Report, the Government announced that the Army had determined that certain changes in conditions had occurred, resulting in a decrease in the contract value and requiring an amendment to the solicitation. J.A. 163. As a result of these changed conditions, "as well as the discussions held at oral argument . . ., the Army determined to take corrective action." J.A. 163. The Army subsequently terminated the contract with TSI, and the Government filed a motion to dismiss Dellew's protest as moot in light of the corrective action.

         The Court of Federal Claims granted the Motion and dismissed Dellew's action. Dellew Corp. v. United States (Dellew I), 124 Fed.Cl. 429, 432-33 (2015). In dismissing the action, the Court of Federal Claims declined Dellew's invitation to "issue findings of fact and conclusions of law that [Dellew] is a 'prevailing party'" because doing so would require the Court of Federal Claims to "issue an advisory opinion." Id. at 432 n.2. Notwithstanding mootness, the Court of Federal Claims determined that it retained jurisdiction over the action. Id. at 432.

         Dellew subsequently sought attorney fees and costs from the Government under the EAJA, and the Court of Federal Claims awarded Dellew a total of $79, 456.76 in fees and costs. See Dellew II, 127 Fed.Cl. at 101. Relevant here, the Court of Federal Claims held that it made "numerous substantive comments during oral argument regarding the merits, " id. at 92, that "carried a sufficient judicial imprimatur to materially alter the relationship between [Dellew] and [the Government] such that [Dellew] qualifies as a prevailing party under the EAJA, " id. at 89. After surveying the relevant authorities, id. at 89-92, the Court of Federal Claims articulated four grounds for its decision, id. at 92-94. First, it explained that, at oral argument, it "clearly stated its view that" the Government would lose on the merits and "that it therefore intended to rule in Dellew's favor with respect to th[e] issue[s]." Id. at 92. Second, it stated that it "made clear its view that the Army should take corrective action." Id. at 93. Third, it determined that the Army's corrective action was not voluntary. Id. at 94. Finally, it explained that its comments were made after the parties briefed the case and after it had drafted (though not issued) a written decision. Id. Taken together, the Court of Federal Claims held that the Government knew "how it intended to rule" and, thus, found it appropriate to confer prevailing party status on Dellew. Id. at 92.

         The instant appeal followed. We possess subject matter jurisdiction ...


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