Judge Braden Denies Pending Motions in Dept. of ED Debt Collection Matter

Yesterday Judge Susan G. Braden, Chief Judge of the U.S. Court of Federal Claims, issued a Response denying several pending motions, including the Government’s May 19, 2017 Motion to Vacate Preliminary Injunction, Alltran Education, Inc.’s (Alltran) June 9, 2017 Motion to Stay Pending Appeal, and Alltran’s July 24, 2017 Motion to Expedite Ruling on Pending Motion for Stay Pending Appeal.

The court also ordered the Government to advise the court whether ED’s proposed corrective action may render pending motions, as well as the underlying appeal, moot, prior to the December 8, 2017 oral argument.

A copy of the Order can be found here.

Background

On June 1, 2017 insideARM wrote about the issuance of the preliminary injunction. In that article, we noted that Judge Braden had referenced “three recent news articles” as part of the rationale for her order. We also two mentioned how unusual the order was; one, because it was issued sua sponte, which means the court took the action on its own motion, rather than at the request of one of the parties. Second, because Judge Braden was effectively taking judicial notice of news items, including an Op/Ed article. Finally, we noted that the order effectively precluded ED from placing any new accounts to PCA’s.

On June 15, 2017 insideARM wrote about two pleadings filed by Alltran: a Notice of Appeal of Judge Braden’s Preliminary Injunction, and a Motion to Stay the Preliminary Injunction (as to Alltran).

On August 24, 2017, insideARM reported that the Consumer Financial Protection Bureau (CFPB) filed an Amicus Curiae Brief in support of the Department of Education (ED) in the multiple consolidated appeals in the United States Court of Appeals for the Federal Circuit in the litigation surrounding the ED RFP awards and protests. A copy of the CFPB Amicus Brief can be found here.

The Court’s Response

The 45 page Response filed yesterday is largely a re-counting of every action that has taken place to date in the case of ED’s Solicitation No. ED-FSA-16-R-0009 for debt collection services. Thirteen pages recount the history of the matter. 29 pages include an Appendix listing the parties in the cases and their attorneys, and the docket history. Two pages offer a discussion of the current Response. 

On the matter of the Government’s May 19, 2017 Motion to Vacate Preliminary Injunction, Judge Braden said,

“On a motion for preliminary injunctive relief, the court must weigh four factors: “(1) immediate and irreparable injury to the movant; (2) the movant’s likelihood of success on the merits; (3) the public interest; and (4) the balance of hardship on all the parties.” U.S. Ass’n of Importers of Textiles & Apparel v. United States, 413 F.3d 1344, 1347–48 (Fed. Cir. 2005). “No one factor, taken individually, is necessarily dispositive . . . . [T]he weakness of the showing regarding one factor may be overborne by the strength of others.” FMC Corp. v. United States, 3 F.3d 424, 427 (Fed. Cir. 1993) (emphasis added). The reasons in the court’s May 2, 2017 Preliminary Injunction have been set forth herein and may be reviewed at ECF No. 87.

Nothing in the Government’s May 19, 2017 Motion To Vacate Preliminary Injunction presented “extraordinary circumstances” to “justif[y] relief” under RCFC 60(b)(6), since the Government previously filed on the same day a “[n]otice of awards and notices of termination” would issued by ED on or before August 25, 2017. ECF No. 122 at 9. This is true even more so today, in light of ED’s proposed corrective action that now appears to be imminent. ECF No. 199 (Oct. 27, 2017).”

On the matter of Alltran’s June 9, 2017 Motion to Stay the May 2, 2017 Preliminary Injunction (and its subsequent Motion To Expedite), Judge Braden said (citations omitted),

As a threshold matter, “[a] stay is not a matter of right, even if irreparable injury might otherwise result. . . . It is instead an exercise of judicial discretion, and the propriety of its issue is dependent upon the circumstances of the particular case. The fact that the issuance of a stay is left to the court’s discretion ‘does not mean that no legal standard governs that discretion . . . [Rather,] its judgment is to be guided by sound legal principles.’” 

In deciding whether to grant a stay pending appeal of a preliminary injunction, the court considers four factors: (1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and (4) where the public interest lies.

As to the first factor, to date the Government has not filed the Administrative Record in this case…Therefore, the court is not in a position to ascertain whether Alltran, the Government, or any other party would succeed on the merits of the underlying bid protest action.

But, in light of the Government’s representation, as of May 19, 2017, that ED would issue “[n]otice of awards and notices of termination issued” on or before August 25, 2017, neither Alltran’s June 9, 2017 Motion To Stay The Preliminary Injunction nor Alltran’s July 24, 2017 Motion To Expedite Ruling On Pending Motion For Stay Pending Appeal made a “strong showing of the likelihood of success.” In any event, if the most recent representations made to the court by the Government are true, Alltran’s entitlement to relief from the court’s May 2, 2017 Preliminary Injunction likely will be moot by ED’s corrective action.

As to the second and third factors, the Government is, and has been, in a position to eliminate any injury that the May 2, 2017 Preliminary Injunction imposed on ED and some of the parties, either by issuing short-term contracts, bridge contracts, or award-term extension (“ATE”) contracts—each of which ED advised the court is not a viable option—or by completing corrective action by August 25, 2017, as was represented to the court. Indeed, as the Government has advised the appellate court, on May 19, 2017, the court stated it was inclined to lift the preliminary injunction, if assurances could be made that ED would not assign any debt collection work to “dilute” work to which other parties may be entitled if they prevailed in this bid protest or otherwise be subject to corrective action...The Government declined to do so.

As to the fourth factor, the public interest lies in having ED administer student loan debt collection activities in compliance with applicable procurement law and regulations.

Finally, the May 2, 2017 Preliminary Injunction was issued to maintain the status quo, as of March 28, 2017—the date the bid protest in this case was filed when a stay was pending at the GAO—to allow ED to take corrective action in response to the GAO’s March 27, 2017 Decision.

The court’s stated purpose in issuing the May 2, 2017 Preliminary Injunction was “not to micromanage ED’s debt collection efforts, but to protect the interest of all parties and afford the Government an opportunity to reach a global solution of the aforementioned cases.”

Judge Braden then proceded to deny the Motions to Vacate, Stay, and Expedite, and ordered the Government to advise the court whether ED's proposed corrective action may render pending motions, as well as the underlying appeal, moot, prior to the December 8, 2017 oral argument.

insideARM Perspective

So. This is a lot to say... nothing really has happened. 90% of the Order is a summary of anything and everything that has been filed in the case. At the end, Judge Braden basically denied all of the motions before her. The Injunction stands. No placements. No direction.

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Editor’s Note:  insideARM has written extensively about the ED RFP and the litigation surrounding the RFP. See here for a link to a running history of our ED-related articles..