Justia Civil Procedure Opinion Summaries

Drinking water provided by North Edwards Water District (North Edwards) to its customers contained three times the legal limit of arsenic. Using funds earmarked for safe drinking water, the State of California (State) agreed to pay for North Edwards to construct a water treatment facility (the Project) to address this issue. In December 2013, Clark Bros., Inc. (Clark) was awarded the $6.2 million contract (Contract). But almost from inception, disputes arose between Clark and North Edwards. Ultimately in October 2014, while Clark still had three months to perform, North Edwards terminated the Contract. Clark sued North Edwards for breach of contract (and related claims); North Edwards cross-complained against Clark alleging similar theories. A jury unanimously found North Edwards breached the Contract and awarded Clark over $3 million in damages. Clark also prevailed on North Edwards’s cross-complaint. Under Public Contracts Code section 20104.50 (b), a local agency that fails to pay progress payments within 30 days “shall pay interest” on the late payment. Here, as it waited for money from the State, North Edwards frequently took 60 days or more to pay. Based on this statute, which was incorporated into the Contract, the court instructed the jury that North Edwards was contractually “required” to pay Clark within 30 days. On appeal, North Edwards contended the instruction was prejudicially erroneous because (1) section 20104.50 provided for interest on late payments, but did not make late payment a breach of contract; (2) the statute did not apply to State-funded projects; (3) Clark waived its claim by repeatedly accepting late payments; and (4) North Edwards was not required to pay Clark until it received reimbursement from the State for each payment claim. The Court of Appeal agreed with North Edwards’s first argument, but found the error was not prejudicial: the record affirmatively showed the verdict was unaffected by any instructional error concerning prompt payment requirements. In addition, North Edwards contended the trial court prejudicially erred in making several evidentiary rulings. Finding these unpersuasive, the Court affirmed the trial court's judgment. View "Clark Bros., Inc. v. North Edwards Water District" on Justia Law

In 2012, United Healthcare of Mississippi (United) entered into provider agreements with Mississippi’s fourteen Community Mental Health Centers (CMHCs) to provide Medicaid services under the Division of Medicaid’s (DOM’s) managed care program. From 2012 until 2019, United paid the CMHCs an agreed upon amount for Medicaid services - 100 percent of the medicaid fee schedule rates. In July 2019, United unilaterally imposed a 5 percent rate cut, retroactive to January 1, 2019, and later demanded that the CMHCs refund 5 percent of all payments made from July 1, 2018, through December 31, 2018, all of which totaled more than $1 million. The CMCHs demanded that United immediately cease and desist from the 5 percent rate cut and recoupments. When United refused, the CMHCs filed a Complaint for Damages and Injunctive Relief, specifically requesting, inter alia, a preliminary injunction. United responded with a motion to compel arbitration and to stay the proceedings. After a two-day evidentiary hearing, the circuit court denied United’s motion to compel arbitration, granted the CMHCs’ request for injunctive relief, and issued a preliminary injunction. The limited issues presented to the Mississippi Supreme Court were whether the trial court properly enjoined United from imposing a 5 percent rate cut and whether the trial court erred by denying arbitration. After review, the Supreme Court affirmed the trial court’s decision to grant a preliminary injunction and to deny the motion to compel arbitration. View "United Healthcare of Mississippi Inc. et al. v. Mississippi's Community Mental Health Commissions, et al." on Justia Law

VAS leased a facility that housed “ICE” in Warwick, Rhode Island. In 2017, the General Services Administration (GSA) issued a request for lease proposals for a facility to house ICE in Rhode Island. VAS offered the building that ICE was already occupying, indicating that the building met the requirements. After several revisions, GSA awarded the contract to a competitor. An Office of the Inspector General report found that the procurement was “significantly flawed,” because GSA accepted a late proposal; used a calculation of the lease’s present value that favored the chosen bid; awarded the contract to a bidder that did not own or control the property at the time of its proposal; failed to timely and adequately debrief VAS; and used unclear acquisition terminology. GSA declined to take any corrective action.The Claims Court dismissed VAS’s bid protest for lack of standing, reasoning that VAS failed to show it has a substantial chance of winning the lease. The Federal Circuit reversed. If VAS’s protest proves successful, VAS would have an opportunity to participate in any new procurement. Under such circumstances, a protester has a substantial chance of winning the award for standing purposes. View "VAS Realty, LLC v. United States" on Justia Law

Employees of a Navy services contractor, SA-TECH, sued the contractor in California state court for violations of the state’s labor laws. Before and during that suit, SA-TECH sought guidance from the Navy as to whether California’s labor laws applied to it and its subcontractors, given the federal nature of its service contract. Those requests went unanswered. SA-TECH’s claim with its contracting officer under the Contract Disputes Act was denied. SA-TECH then sought declaratory relief on the questions: whether the modified understanding of California labor laws would control SA-TECH’s operations on Navy and Navy-chartered ships; whether SA-TECH would be permitted or required by the Navy, under its contracts, to pay any sleep-time over-time; and whether costs incurred by SA-TECH in settling the state-court litigation would be allowable costs under its current contract.The district court dismissed the complaint, citing lack of subject matter jurisdiction pursuant to the Contract Disputes Act’s exhaustion requirements, 41 U.S.C. 7103(a)(1)–(3). The Fourth Circuit affirmed. SA-TECH did not specifically assert any legal or contractual grounds entitling it to the Navy’s opinion on its agency status. Its other issues are monetary claims for which SA-TECH did not present a requested sum certain, as required to exhaust its remedies. View "Systems Application & Technologies, Inc. v. United States" on Justia Law

Childs leased military family housing at Naval Amphibious Base Coronado, which was owned by SDFH, a public-private venture created by statute, in which the U.S. Navy is a minority LLC member. Lincoln managed the property. Childs reported water and mold problems to SDFH and Lincoln. The problems were not resolved. SDFH and Lincoln moved to dismiss Childs's subsequent lawsuit for lack of subject-matter jurisdiction, arguing they were government contractors acting at the direction of the federal government, and therefore had derivative sovereign immunity. The district court denied their motion.The Ninth Circuit dismissed an appeal for lack of appellate jurisdiction. The district court’s order was not immediately appealable under the collateral order doctrine, under which an order that does not terminate the litigation is nonetheless treated as final if it conclusively determines the disputed question, resolves an important issue completely separate from the merits of the action, and is effectively unreviewable on appeal from a final judgment. While the first two prongs were satisfied, the denial of derivative sovereign immunity was not effectively unreviewable on appeal from a final judgment because denying an immediate appeal would not imperil a substantial public interest. The public interest underlying derivative sovereign immunity is extending the federal government’s immunity from liability, in narrow circumstances, to government agents carrying out the federal government’s directions. That interest could be vindicated after trial. View "Childs v. San Diego Family Housing LLC" on Justia Law

El-Khalil, a podiatrist, joined the Oakwood Taylor medical staff in 2008. During his time there, El-Khalil alleges that he saw Oakwood employees submit fraudulent Medicare claims, which he reported to the federal government. In 2015, Oakwood Taylor’s Medical Executive Committee (MEC) rejected El-Khalil’s application to renew his staff privileges. El-Khalil alleges that the MEC did so in retaliation for his whistleblowing. Pursuant to Oakwood’s Medical Staff Bylaws, El-Khalil commenced a series of administrative appeals. On September 22, 2016, Oakwood’s Joint Conference Committee, which had the authority to issue a final, non-appealable decision, voted to affirm the denial of El-Khalil’s staff privileges. On September 27, the Committee sent El-Khalil written notice of its decision.On September 27, 2019, El-Khalil sued Oakwood for violating the whistleblower provision of the False Claims Act (FCA), 31 U.S.C. 3730(h). The Sixth Circuit affirmed the dismissal of the suit as untimely under a three-year limitations period, which commenced when Oakwood decided not to renew El-Khalil’s medical-staff privileges, rather than when it notified El-Khalil of that decision five days later. Section 3730(h) contains no notice requirement. As soon as Oakwood “discriminated against” El-Khalil “because of” his FCA-protected conduct, he had a ripe “cause of action triggering the limitations period,” View "El-Khalil v. Oakwood Healthcare, Inc." on Justia Law

The Army requested bids for helicopter flight training and awarded the contract to L3. In a bid-protest action filed by disappointed bidder S3, the Claims Court set aside the award. After reevaluation of the bids, the Army awarded the contract to CAE. S3 filed another bid protest.The Claims Court rejected most of S3’s arguments but agreed that the assignment by the Army’s source selection authority (SSA) of a certain “strength” to CAE was irrational because that strength, which purported to provide a “significant cost savings benefit,” would result in only small and unpredictable savings, if any. Nevertheless, the Claims Court upheld the award, finding no prejudice to S3 from the identified error. The Claims Court observed that the erroneously found strength had been treated as falling within a non-price-factor category for which CAE’s proposal had been “clearly superior,” an assessment that would not be altered by the loss of a strength for which the only possible benefit could be monetary; when explicitly comparing the added benefits of the CAE proposal with its higher price in the best-value tradeoff analysis, the SSA had not made any adjustment to CAE’s price based on a cost-saving from the strength.The Federal Circuit affirmed, rejecting an argument that there is a presumption of prejudice whenever the Claims Court determines that the agency acted irrationally in making an award decision and finding no clear error in the determination that there was no prejudice. View "System Studies & Simulation, Inc. v. United States" on Justia Law

Tolliver had a contract with the United States under which Tolliver was obliged to write technical manuals for government-used equipment. The government was obliged to supply Tolliver information relevant to that task. When the government failed to obtain and therefore failed to supply that information, the parties modified the contract. Tolliver ultimately produced the manuals. After the modification, however, a third party sued Tolliver in the name of the government under the False Claims Act, alleging that Tolliver had made a false certification of compliance with the original contract. The government, rather than intervening in the qui tam case and then dismissing it, allowed it to proceed. With evidentiary help from the government, Tolliver prevailed after incurring substantial legal fees.The contracting officer denied Tolliver's claim under the Contract Disputes Act, 41 U.S.C. 7101, for an “equitable adjustment” for reimbursement of “allowable legal fees.” The Claims Court entered judgment for Tolliver, concluding that the United States had breached an implied warranty of performance. The Federal Circuit vacated. Because Tolliver never submitted a claim of breach of that warranty to the contracting officer, the Claims Court lacked jurisdiction to adjudicate such a claim. The claim that Tolliver presented to the contracting officer was, on its face, based on legal fees, not on a breach of the implied warranty of performance. View "Tolliver Group, Inc. v. United States" on Justia Law

Dr. Polansky was an official at the Centers for Medicare and Medicaid Services (CMS) before consulting for EHR, a “physician advisor” company that provides review and billing certification services to hospitals and physicians that bill Medicare. Polansky became concerned that EHR was systematically enabling its client hospitals to over-admit patients by certifying inpatient services that should have been provided on an outpatient basis.In 2012, Polansky filed suit under the False Claims Act (FCA), 31 U.S.C. 3729, alleging EHR was causing hospitals to bill the government for inpatient stays that were not “reasonable and necessary” for diagnosis or treatment as required by the Medicare program, 42 U.S.C. 1395y(a)(1)(A). His complaint remained under seal for two years while the government conducted its own investigation and ultimately determined it would not participate in the case.In 2019, the government notified the parties that it intended to dismiss the entire action under 31 U.S.C. 3730(c): “[t]he Government may dismiss the action notwithstanding the objections of the [relator]” so long as the relator receives notice and an opportunity to be heard on the Government’s motion. The district court eventually granted the motion. The Third Circuit affirmed. The government is required to intervene before moving to dismiss and its motion must meet the standard of FRCP 41(a). The district court acted within its discretion in granting the government’s motion. View "Polansky v. Executive Health Resources Inc" on Justia Law

Schindler filed suit alleging that WMATA arbitrarily eliminated it from consideration of a bid to replace escalators throughout WMATA's Metrol Rail System stations even though it complied with the Request for Proposal's (RFP) requirements and offered a better value than that proposed by the awardee.The DC Circuit affirmed the district court's dismissal sua sponte of Schindler's complaint based on lack of subject matter jurisdiction on the ground that WMATA, an interstate compact entity, had not waived its sovereign immunity. The court explained that neither the interstate compact creating WMATA, the Authority's procurement documents nor the Administrative Procedure Act waives WMATA's sovereign immunity for challenges to procurement decisions like Schindler's. View "Schindler Elevator Corp. v. Washington Metropolitan Area Transit Authority" on Justia Law