Filed: Dec. 14, 2016
Latest Update: Mar. 03, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-2385 L-3 COMMUNICATIONS CORPORATION; L-3 APPLIED TECHNOLOGIES, INC., Plaintiffs - Appellants, v. SERCO, INC., Defendant - Appellee. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Gerald Bruce Lee, District Judge. (1:15-cv-00701-GBL-JFA) Argued: September 21, 2016 Decided: December 14, 2016 Before DUNCAN, KEENAN, and DIAZ, Circuit Judges. Affirmed in part, vacated in part, a
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-2385 L-3 COMMUNICATIONS CORPORATION; L-3 APPLIED TECHNOLOGIES, INC., Plaintiffs - Appellants, v. SERCO, INC., Defendant - Appellee. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Gerald Bruce Lee, District Judge. (1:15-cv-00701-GBL-JFA) Argued: September 21, 2016 Decided: December 14, 2016 Before DUNCAN, KEENAN, and DIAZ, Circuit Judges. Affirmed in part, vacated in part, an..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2385
L-3 COMMUNICATIONS CORPORATION; L-3 APPLIED TECHNOLOGIES,
INC.,
Plaintiffs - Appellants,
v.
SERCO, INC.,
Defendant - Appellee.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:15-cv-00701-GBL-JFA)
Argued: September 21, 2016 Decided: December 14, 2016
Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.
Affirmed in part, vacated in part, and remanded by unpublished
per curiam opinion.
ARGUED: Steven L. Levitt, LEVITT LLP, Mineola, New York, for
Appellants. Amy Elizabeth Miller, MCGUIREWOODS LLP, Washington,
D.C., for Appellee. ON BRIEF: Benjamin G. Chew, Nigel L.
Wilkinson, Rory E. Adams, Joshua N. Drian, MANATT, PHELPS &
PHILLIPS LLP, Washington, D.C.; Karen L. Weiss, Catherine B.
Silliman, LEVITT LLP, Mineola, New York, for Appellants. John
D. Wilburn, Steven P. Mulligan, Tysons Corner, Virginia, Anand
V. Ramana, Jeffrey L. Brown, Elizabeth H. Goodall, MCGUIREWOODS
LLP, Washington, D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
Plaintiffs L-3 Communications Corp. and L-3 Applied
Technologies, Inc. (L-3 ATI) (collectively, the plaintiffs)
filed this diversity action alleging numerous tort claims
against Serco, Inc. arising out of a failed business
relationship. The plaintiffs contended that Serco engaged in a
“bid rigging” scheme with another company, Jaxon Engineering &
Maintenance, Inc., to exclude the plaintiffs from conducting
work on certain task orders issued under Serco’s prime contract
with the United States government. The plaintiffs alleged,
among other things, that Serco’s conduct amounted to tortious
interference with the plaintiffs’ business expectancy as well as
statutory business conspiracy under Virginia law.
The district court dismissed the entire action under
Federal Rule of Civil Procedure 12(b)(1). The court concluded
that the plaintiffs did not have standing under Article III of
the Constitution, because they had not established the existence
of a valid business expectancy. The court also dismissed two of
the claims on ripeness grounds, holding that the plaintiffs’
alleged injuries had not yet occurred.
We conclude that the plaintiffs’ allegations satisfy the
constitutional requirement of a concrete, particularized injury
for purposes of standing. The separate but related question
whether the plaintiffs plausibly have alleged a business
3
expectancy is one properly considered under Federal Rule of
Civil Procedure 12(b)(6) or on a motion for summary judgment.
We also hold that the plaintiffs’ declaratory judgment
claims are not ripe for adjudication, and therefore affirm the
district court’s dismissal of those claims. Accordingly, we
affirm the judgment of the district court in part, vacate in
part, and remand for further proceedings.
I.
In 2004, the United States Air Force Space Command (the Air
Force) awarded an indefinite delivery, indefinite quantity
contract (the prime contract) to Serco. 1 Under the prime
contract, Serco, as the prime contractor, was responsible for
testing military sites around the world regarding their
protection from high-altitude electromagnetic pulse (HEMP)
events. In practice, when the Air Force provided Serco with a
statement of work under the prime contract, Serco would
subcontract HEMP work to other companies. Serco selected these
subcontractors by issuing requests for proposal to certain
qualified companies. According to the complaint, between 2004
and July 2009, Serco awarded “most, if not all of the [HEMP]
task orders” under the prime contract to the plaintiffs.
1 In 2004, Serco was known as SI International.
4
The plaintiffs’ complaint alleged that plaintiff L-3 ATI
was a “wholly owned indirect subsidiary” of plaintiff L-3
Communications, and that L-3 ATI was the “successor in interest”
to other entities that performed subcontracted HEMP work, namely
“Jaycor, the Titan Corporation, and the applied technologies
division of L-3 Services, Inc.” The complaint also specified
that references in the complaint to the plaintiffs included
their predecessors in interest.
After 2009, Serco allegedly began awarding all HEMP task
orders to another company, Jaxon Engineering & Maintenance, Inc.
(Jaxon). The plaintiffs alleged that Jaxon was not qualified to
perform the assigned work, and that Serco’s decision to award
HEMP work to Jaxon was based on a “fraudulent scheme” between
Serco and Jaxon in which Serco actively prevented the plaintiffs
from fairly competing for the task orders. To facilitate this
scheme, the plaintiffs alleged that Jaxon hired the plaintiffs’
employees, who used the plaintiffs’ proprietary information to
benefit Jaxon in the bidding process.
In 2010, the plaintiffs sued their former employees and
Jaxon on numerous claims, including that these employees took
certain proprietary information from the plaintiffs and gave
that information to Jaxon. The parties stipulated to a
dismissal of the complaint with prejudice in March 2016. See L-
3 Commc’ns. Corp. v. Jaxon Eng’g & Maint., Inc., 10-cv-2868,
5
Dkt. No. 1370 (D. Colo. Mar. 3, 2016). In 2014, the plaintiffs
filed a complaint in Virginia state court against Serco
asserting similar claims to those at issue here, but took a
voluntary nonsuit.
In the present case, initiated in 2015, the plaintiffs
filed an 81-count amended complaint against Serco, asserting
claims of tortious interference with business expectancy for
HEMP task orders from 2009 to the present, based on the
plaintiffs’ “long history of incumbency and unmatched
experience” (Counts 1-34); aiding and abetting Jaxon to
tortiously interfere with this business expectancy (Counts 35-
68); civil conspiracy and business conspiracy under Virginia law
(Counts 69-70); violations of the Colorado Organized Crime
Control Act (Counts 71-73); tortious interference with the
plaintiffs’ former employees’ non-disclosure agreements (Counts
74-78); negligent misrepresentation of the plaintiffs’ business
relationship (Count 79); and breach of fiduciary duty and
misappropriation of trade secrets, based on Serco’s intent to
use the plaintiffs’ confidential information to compete with the
plaintiffs for future HEMP projects (Counts 80-81). The
plaintiffs sought damages of $80,000,000 for lost profits,
unjust enrichment, and disgorgement of unlawful profits
resulting from Serco’s scheme with Jaxon. They also sought a
declaratory judgment in Counts 80 and 81, asking the court to
6
“declare that any competition against [the plaintiffs] by Serco
in the HEMP-Testing area would constitute a breach of Serco’s
fiduciary duties” to the plaintiffs and a misappropriation of
the plaintiffs’ trade secrets.
Serco filed motions to dismiss under Rules 12(b)(1) and
12(b)(6), as well as a motion for summary judgment. In its Rule
12(b)(1) motion, Serco asserted that the plaintiffs’ claims of
tortious interference with business expectancy rose and fell
under a certain subcontract issued in 2004 (the subcontract)
between Serco and Titan Corporation (Titan), a predecessor of L-
3 Services, which is not a named plaintiff in the present case.
The subcontract provided, in relevant parts:
Prime Contractor has no obligation to issue and there
is no guaranty to Subcontractor that it will receive
any work under the terms of this Subcontract. . . .
All work will be assigned to Subcontractor in the form
of [task orders] issued by Prime Contractor’s
authorized Subcontract Administrator. Work not set
forth in a written Task Order, executed by
subcontractor and Prime Contractor’s authorized
Subcontract Administrator, is not authorized. . . .
Neither this Subcontract nor any right or duty under
it, except the right to receive payment, may be
assigned by Subcontractor, without prior written
consent of Prime Contractor, which consent may be
withheld in the sole discretion of Prime Contractor.
The subcontract also provided that any waiver of these
requirements must be made in writing and authorized by Serco,
and that the subcontractor must notify the prime contractor of
any changes in ownership. In March 2008, Serco entered into a
7
written subcontract modification with L-3 Services to identify
that entity, instead of Titan, as the named subcontractor.
Serco contended in its motion to dismiss brought under Rule
12(b)(1) that because neither of the named plaintiffs, L-3
Communications nor L-3 ATI, were parties to the subcontract,
they lacked standing under Article III of the Constitution to
bring their claims. The plaintiffs responded that, under their
allegations, their claimed business expectancy arose from their
history of performance of HEMP work, regardless of the
subcontract. 2 The plaintiffs further explained that the
complaint asserted claims of tortious interference with
employees’ non-disclosure agreements, completely apart from the
subcontract.
After a hearing, the district court granted Serco’s motion
to dismiss under Rule 12(b)(1). The court concluded that the
plaintiffs had presented insufficient evidence of a business
expectancy in the losses alleged, because the plaintiffs were
not parties to the subcontract and, thus, did not have standing
2
The plaintiffs argued in the alternative that they were
the assignees of the subcontract and the current causes of
action, pursuant to the terms of a 2011 contribution agreement
which transferred all of the “assets” of L-3 Services to L-3
ATI.
8
to bring this suit. 3 The court additionally held that the claims
alleged in Counts 80 and 81 were not ripe for adjudication
because the injuries alleged had not yet occurred. The
plaintiffs now appeal.
II.
The plaintiffs argue that the district court erred in
dismissing their complaint under Rule 12(b)(1). They maintain
that the issue whether they had a valid business expectancy is a
question regarding the merits of the tortious interference
claims, not a question of constitutional standing. The
plaintiffs further assert that, in any event, they adequately
pleaded the elements of tortious interference with business
expectancy based on their previous course of performance of HEMP
work. The plaintiffs also contend that the court erred in
focusing on the existence of a business expectancy arising from
the subcontract when many of the claims were unrelated to the
subcontract. Finally, the plaintiffs submit that the
declaratory judgment claims in Counts 80 and 81 were ripe for
adjudication.
In response, Serco primarily contends that the plaintiffs
did not have the “personal stake” in their lawsuit necessary to
3 The district court also rejected the plaintiffs’ assertion
that they had standing to sue as assignees of the subcontract.
9
satisfy the Article III standing requirement, because they did
not have any rights or expectancies under the subcontract to
which they were neither parties nor assignees. Serco also
argues that the district court properly dismissed Counts 80 and
81 on ripeness grounds, because the plaintiffs did not identify
an immediate, “real” controversy.
We agree with the plaintiffs that the district court erred
in dismissing Counts 1 through 79 on jurisdictional grounds, but
conclude that the district court properly dismissed Counts 80
and 81 for lack of ripeness. We first address the issue of
standing for Counts 1 through 79.
We review de novo a district court’s dismissal of a
complaint under Rule 12(b)(1). In re KBR, Inc., Burn Pit
Litig., 744 F.3d 326, 333 (4th Cir. 2014). The doctrine of
constitutional standing arises from the case or controversy
requirement of Article III, and is a jurisdictional inquiry
regarding the power of the courts to adjudicate a litigant’s
claim. Lujan v. Defenders of Wildlife,
504 U.S. 555, 559-60
(1992); see also Spokeo, Inc. v. Robins,
136 S. Ct. 1540, 1547
(2016). The case or controversy requirement generally ensures
that “the conflicting contentions of the parties present a real,
substantial controversy between parties having adverse legal
interests, a dispute definite and concrete, not hypothetical or
10
abstract.” Miller v. Brown, 462 F.3d 312, 316 (4th Cir. 2006)
(citation and internal quotation marks omitted).
To establish Article III standing, a plaintiff invoking
federal jurisdiction bears the burden to show that he has a
“personal stake” in the outcome of the suit. Camreta v. Greene,
563 U.S. 692, 701 (2011). This requirement is satisfied if the
plaintiff has shown an actual or imminent injury in fact that is
concrete and particularized, a causal connection between the
injury and the conduct complained of, and a likelihood that the
injury would be redressed by a favorable decision. Id.;
Lujan,
504 U.S. at 560-61. An injury is “concrete” if it is “real,” as
opposed to “abstract,” Spokeo, 136 S. Ct. at 1548, and is
“particularized” if it “affect[s] the plaintiff in a personal
and individual way,” rather than as an undifferentiated,
collective grievance.
Id. (citing United States v. Richardson,
418 U.S. 166, 177 (1974));
Lujan, 504 U.S. at 560 n.1.
An examination of the district court’s analysis in the
present case reveals that the court, in accepting Serco’s
arguments, effectively conducted a merits-related evaluation of
the plausibility of the plaintiffs’ claims rather than a
jurisdictional inquiry under Article III. The court dismissed
the case for lack of standing based on its finding that the
plaintiffs were not parties to the subcontract, through which
11
the HEMP work previously flowed, and therefore had not shown
that they had a valid business expectancy.
The question whether the plaintiffs had a valid business
expectancy is relevant to the issue whether they satisfied an
element of their claim for tortious interference under Virginia
law. Priority Auto Grp. v. Ford Motor Co., 757 F.3d 137, 143
(4th Cir. 2014). Accordingly, the requirement that the
plaintiffs establish that they had such an expectancy, arising
either out of the subcontract or the parties’ course of conduct,
does not involve an issue of constitutional standing, but
presents the question whether the plaintiffs can establish the
substantive elements of their claim. See Katz v. Pershing, LLC,
672 F.3d 64, 72 (1st Cir. 2012) (by “alleg[ing] the existence of
a contract, express or implied, and a concomitant breach of that
contract, [the plaintiff’s] complaint adequately show[ed] an
injury to her rights” for purposes of standing, even though she
was not a party to the contracts in question and could not
survive a motion to dismiss under Rule 12(b)(6)); Curtis Lumber
Co., Inc. v. La. Pac. Corp.,
618 F.3d 762, 770-71 (8th Cir.
2010) (whether a plaintiff ultimately recovers the damages he
seeks “is a question better left to the applicable substantive
law” rather than a standing inquiry under Article III).
We acknowledge that the distinction between the “personal
stake” requirement for purposes of standing, and the sufficiency
12
of a plaintiff’s allegations of injury as an element of a claim,
often may be unclear. Nevertheless, in the present case, we
disagree with the district court’s conclusion that the
plaintiffs lacked a “personal stake” in the dispute because they
did not have a business expectancy arising from the subcontract.
Although the plaintiffs’ allegations of a business expectancy
inform our understanding of the claimed injury for purposes of
standing, the question whether the plaintiffs’ claims ultimately
lack merit does not resolve the issue whether the court had the
constitutional authority to adjudicate those claims. For
purposes of the present standing analysis, we must determine
only whether the plaintiffs sufficiently established at this
stage of the proceedings that they were injured by Serco in a
concrete and particularized manner redressable by the court. 4
See Camreta, 563 U.S. at 701. Thus, Serco’s parallel contention
that a business expectancy did not arise from the subcontract,
or from a separate course of conduct, is more appropriately
4The plaintiffs also argue that the district court
effectively analyzed whether the plaintiffs were the real
parties in interest under Federal Rule of Civil Procedure 17(a),
not whether the court had the power to adjudicate the dispute
under Article III. Based on our holding, we need not address
this issue.
13
addressed in an evaluation of the merits of the plaintiffs’
claims. 5
The plaintiffs have alleged financial injury in the amount
of $80,000,000 based on several theories of liability arising
from the same set of facts. In particular, the plaintiffs
claimed that, absent the fraudulent scheme between Serco and
Jaxon, Serco would have awarded certain specific task orders to
the plaintiffs. The plaintiffs further alleged that Serco’s
actions “assisting, financing, and vouching for Jaxon as a
viable HEMP-Testing operation” resulted in the plaintiffs being
denied “many millions of dollars in non-Serco HEMP-related
contracts that instead went to Jaxon.” These alleged injuries
are concrete and particularized to the plaintiffs, and are “not
conjectural or hypothetical.” Lujan, 504 U.S. at 560;
Miller,
462 F.3d at 316-17. The injuries also are traceable to Serco’s
challenged conduct and can be redressed by a favorable decision
of the Court.
Miller, 462 F.3d at 316. Accordingly, we
conclude that the plaintiffs have met their burden of
5In addition to their disagreement regarding the
plaintiffs’ rights under the subcontract, the parties also
dispute whether their course of conduct established a business
expectancy. For the reasons discussed above, the district court
may evaluate the parties’ course of conduct in considering a
motion under Rule 12(b)(6) or a motion for summary judgment.
14
demonstrating a “personal stake” in the dispute for purposes of
Article III standing.
Additionally, we observe that although the district court’s
standing analysis focused on the plaintiffs’ business expectancy
allegations, our conclusion applies equally to the plaintiffs’
other claims that are unrelated to the subcontract. The
plaintiffs generally alleged in each of their claims the same
injuries suffered by the same parties. None of the plaintiffs’
claims alleged a breach of the subcontract, and all of the
claims relied on the same series of tortious conduct allegedly
committed by Serco. To the extent that the plaintiffs are
unable to establish an element of any of these causes of action,
such a deficiency properly is addressed under Rule 12(b)(6) or
through entry of summary judgment.
In reaching this conclusion, we express no opinion whether
the plaintiffs’ allegations are sufficiently plausible to
survive a motion under Rule 12(b)(6), nor whether the evidence
ultimately will substantiate their claims. We hold only that
the plaintiffs have shown the concrete and particularized nature
of their alleged injury and, thus, that the district court has
the constitutional authority to adjudicate their claims. 6
6Because we vacate the district court’s judgment on the
basis that the plaintiffs have demonstrated Article III standing
at this stage of the proceedings, we do not reach the district
(Continued)
15
Finally, the plaintiffs argue that the district court erred
in dismissing for lack of ripeness Counts 80 and 81, which
sought declaratory judgment for breach of fiduciary duty and
misappropriation of trade secrets. The doctrine of ripeness,
also a component of the case or controversy requirement, asks
whether a controversy between the parties “is presented in
clean-cut and concrete form.” Scoggins v. Lee’s Crossing
Homeowners Ass’n, 718 F.3d 262, 270 (4th Cir. 2013);
Miller, 462
F.3d at 318-19 (citation and internal quotation marks omitted).
A case is ripe and “fit for judicial decision when the issues
are purely legal and when the action in controversy is final and
not dependent on future uncertainties.” Doe v. Va. Dep’t of
State Police,
713 F.3d 745, 758 (4th Cir. 2013) (quoting
Miller,
462 F.3d at 319). Accordingly, a claim should be dismissed for
lack of ripeness “if the plaintiff has not yet suffered injury
and any future impact remains wholly speculative.”
Id.
(citation and internal quotation marks omitted).
The plaintiffs alleged in Counts 80 and 81 that Serco
intends to use their confidential information to compete against
them for a future HEMP project currently being “contemplated” by
the Air Force. Thus, the plaintiffs’ injuries have not yet
court’s additional conclusion that the subcontract had not been
assigned to the plaintiffs.
16
occurred. The plaintiffs seek a broad declaration that “any
competition” against the plaintiffs for future HEMP work would
constitute a breach of Serco’s fiduciary duties and a
misappropriation of the plaintiffs’ trade secrets.
Based on the allegations in the complaint, it is entirely
speculative at this stage whether the plaintiffs or Serco might
bid on any future projects announced by the Air Force and, if
so, whether Serco will use the plaintiffs’ confidential
information improperly. Under these circumstances, we conclude
that the injuries alleged in the complaint are “wholly
speculative” and “dependent on future uncertainties.” Doe, 713
F.3d at 758 (citation omitted). We therefore affirm the
district court’s conclusion that Counts 80 and 81 are not ripe
for adjudication.
III.
For these reasons, we vacate the district court’s ruling
regarding standing, affirm the court’s dismissal of the
declaratory judgment claims, and remand this case for further
proceedings consistent with the principles expressed in this
opinion.
AFFIRMED IN PART,
VACATED IN PART,
AND REMANDED
17
