CANVS Corporation
Docket: ASBCA 57784, ASBCA 57987
Decision date: 2016-09-28

ARMED SERVICES BOARD OF CONTRACT APPEALS 
Appeals of --
CANVS Corporation 
Under Contract No. USZA22-03-C-0027 
APPEARANCE FOR THE APPELLANT: 
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APPEARANCES FOR THE GOVERNMENT: 
ASBCA Nos. 57784, 57987 
Joseph J. Zito, Esq. 
DNLZITO 
Washington, DC 
Jeffrey P. Hildebrant, Esq. 
Air Force Deputy Chief Trial Attorney 
Chun-I Chiang, Esq. 
Joel B. Lofgren, Esq. 
Trial Attorneys 
OPINION BY ADMINISTRATIVE JUDGE PEACOCK 
ON APPELLANT'S MOTION TO RECUSE 
Appellant has filed a "request" (hereinafter motion) for Administrative 
Judge Robert Peacock, the presiding judge assigned to these appeals, to recuse himself 
from further proceedings regarding these appeals. Appellant alleges 
that the Board has 
"prematurely judged" quantum as evidenced by statements made in post-trial ex parte 
settlement discussions, conducted with the parties with their permission to promote and 
encourage settlement. The government opposes the motion. We deny the motion. 
Appellant's allegations are unsupported and baseless. The scope of the trial encompassed 
solely entitlement and jurisdictional issues. The Board has not received any quantum 
evidence and perforce has formed no opinions on the details of appellant's quantum 
methodology. The so-called "quantum" discussions with appellant were generalized and 
focused broadly on the need for appellant to greatly reduce its $100 million claim 
demand for settlement purposes. Appellant also alleges that it was appellant's 
"understanding" that the Board 
gave the government "legal advice" regarding instigation 
of a fraud investigation related to appellant's claim computation during the Board's 
ex parte discussions with the government. The basis for this "understanding" is not 
indicated and also is unsupported by affidavit or other sworn statement. The government 
opposes the motion and has categorically denied that fraud was ever mentioned or 
discussed at any time between the Board and the four government representatives who 
participated in the settlement discussions with the Board. The charges lack any rational 
foundation. An intervening Air Force Office of Special Investigations investigation is 
based on an "in court" statement that has no relationship to appellant's quantification of 
its claim. 

Background and Procedural Summary 
Appellant's accusations that the Board has prematurely judged the case should be 
placed in the context of the posture of the case when the ex parte discussions with the 
parties occurred (and with their permission). Appellant's allegations regarding recusal 
were made in June 2016. The principal appeal (ASBCA No. 57784) was docketed in 
September 2011. In February 2012, the second appeal (ASBCA No. 57987) was 
docketed. Appellant sought $100 million in damages for alleged improper disclosure of 
its allegedly proprietary data. 
The judge who initially was assigned the appeals retired and, on 18 December 
2012, the appeals were reassigned to Judge Peacock. In a pre-trial order dated 28 January 
2013, the appeals were scheduled for trial on entitlement only, commencing 20 November 
2013. Quantum issues were bifurcated for possible future proceedings in the event that 
the Board sustained the appeal with respect to entitlement and further assuming that 
decision was upheld on any appeal. 
However, on 20 August 2013, the government filed a "Motion for Summary 
Judgment for Lack of Jurisdiction.'" On 20 September 2013, appellant filed Appellant 
CANVS Corporation's Memorandum of Law in Opposition to Respondent's Motion for 
Summary Judgment and a Motion to Compel Discovery or in the Alternative, Motion to 
Extend the Discovery Schedule and the Hearing Date (app. opp'n). On 23 October 2013, the 
government filed an opposition to Appellant's Motion to Compel discovery (resp. opp'n) 
seeking a protective order. 
On 25 October 2013, Judge Peacock convened a teleconference with parties and 
issued the following determinations and orders: 
1. The Board will reserve its rulings on "Respondent's 
Motion for Summary Judgment for Lack of Jurisdiction" and 
conduct a hearing on issues related to the Board's 
jurisdiction, as well as entitlement to recover. 
2. Appellant will be afforded the opportunity to 
review [resp. opp'n], dated 23 October 2013. Appellant shall 
file its response to the Resp.' s Opposition no later than 
20 November 2013. In addition, no later than 20 November 
2013, the government will file its response to [app. opp'n] 
dated 23 October 2013. 
3. The scope of discovery was limited to issues 
relating solely to jurisdiction and entitlement. Because 
quantum issues related to damages for alleged breaches of 
2 

appellant's intellectual property rights will not be addressed 
or decided pending the Board's decision on jurisdiction and 
entitlement, discovery relating to quantum issues will be 
deferred for later resolution if jurisdiction and entitlement are 
established. Accordingly, appellant's review of the Resp. 's 
Opposition and the government's review of appellant's 
Memorandum of Law in Opposition shall consider the 
delimited scope of discovery in their analyses. 
4. The hearing scheduled to commence on 
20 November 2013 was postponed. The parties will confer 
and propose revised date[ s] for the completion of discovery 
and accomplishment of the pre-trial activities set forth in the 
Board's PRETRIAL ORDER of 28 January 2013. In 
addition, the parties shall provide the Board with a separate 
schedule detailing the dates for accomplishment of any 
further discovery. 
With respect to discovery generally, the parties were 
encouraged to cooperate voluntarily in assessing and defining 
the scope of discovery and the parties' respective 
responsibilities related to appellant's electronic databases. 
Following completion of discovery, the Board issued a revised pre-trial order on 
16 September 2014, setting, inter alia, a new hearing date commencing 7 April 2015 
addressing solely jurisdictional issues and entitlement, not quantum. The hearing was 
scheduled to be conducted over four days based on the parties' estimates and preferences. 
The allotted four days proved insufficient for completion of the hearing. The Board and 
the parties agreed to continue the hearing and it was scheduled to recommence over a 
five-day period beginning 4 May 2015. As a consequence of various issues that arose 
during the second hearing session, it was deemed necessary to further continue the 
hearing an additional two days over the period 1 7-18 November 2015. The evidentiary 
record was eventually closed in the appeals on 18 November 2015, the final day of trial, 
awaiting solely the parties' post-trial briefing of the appeals. 
Following conclusion of the hearing and closing of the record, Judge Peacock 
concluded, based on his initial very tentative reactions to the voluminous record, that 
there were litigation risks and uncertainties for both parties and, consequently, urged 
them to consider settlement. To promote and facilitate possible settlement negotiations, 
Judge Peacock requested the parties' permission to engage in ex parte discussions 
separately with each party. Both parties gave their consent for the Board to engage in 
those discussions. Accordingly, the Board indicated it would not set a briefing schedule at 
that time and encouraged the parties to devote their resources to settlement negotiations. 
3 

Eventually, two ex parte settlement conferences were convened by Judge Peacock with 
each party. The first of these conferences occurred following the hearing in November 2015 
and the second conference occurred in mid-June 2016. The initial conference with appellant 
was conducted after 
conclusion of and on the final day of the hearing and the initial 
teleconference with the government was conducted on 24 November 2016. 
The Board prefaced its discussions with the parties by emphasizing that, given the 
extensive record as well as the complexities inherent in the case, any discussions would 
necessarily be generalized based only on some of the Board's initial, very tentative 
reactions to the case. The Board informed both parties that neither had a "sure winner" 
and that this uncertainty alone warranted a careful reassessment of their litigations risks. 
The parties were further advised that all final Board determinations manifestly must await 
detailed factual analyses and full consideration of the record and merits of the parties' 
positions by a panel of three (as a minimum) judges, not solely Judge Peacock. 
An initial period of communications between the parties failed to result in settlement. 
On 17 January 2016, appellant transmitted a letter to the Board expressing frustration with 
the pace of negotiations and requested that the Board order the government "to engage in 
good faith settlement discussions." On 20 January 2016, the government responded that it 
was "not adverse to resolving" the dispute via settlement but considered that "the monetary 
offer advanced by Appellant was inordinately high when compared to Respondent's own 
assessment" and further that the government could not meet certain unidentified 
"nonmonetary requests" by appellant "due to statutory and regulatory limitations." 
Given the lack of progress toward a settlement, Judge Peacock, on 19 January 
2016 issued a briefing order requiring the exchange of simultaneous initial and reply 
briefs. The initial briefs were to be filed on 31 March 2016 and reply briefs were due on 
30 June 2016. After granting of a one-week extension, the initial briefs were filed on 
7 April 2016. As a 
result of filings related to the recusal request that is the subject of this 
decision, the filing date for reply briefs was eventually extended indefinitely. 
A second round of agreed ex parte discussions was initiated by Judge Peacock 
essentially at appellant's urging based on its expressions of its dissatisfaction with the 
perceived lack of any substantive negotiations with the government and its burdensome and 
growing litigation expenses. Following filing of the initial briefs, Judge Peacock determined 
in early June 2016 that he would attempt to reestablish communication between the parties to 
encourage further settlement discussions based on the possibility that the parties may have 
reassessed their litigation risks as they were preparing their reply briefs and were more fully 
apprised of the strength of the opposing parties' positions on key factual and legal issues. 
To that end, Judge Peacock on 9 June 2016 convened a 
teleconference with both parties and 
again obtained their consent for Judge Peacock to conduct ex parte discussions with each 
party again to explore generally their litigation risks and promote settlement. 
4 

The second ex parte discussion with CANVS occurred immediately following the 
joint teleconference with both parties on 9 June 2016. During that ex parte conference 
with appellant the only "fraud-related" comment made by Judge Peacock to appellant 
was in the context of possible actual quantum phase proceedings potentially several years 
into the future. The Board merely observed that if no settlement was timely reached and, 
assuming arguendo, that the Board found that it had jurisdiction and sustained the 
appeals on entitlement, and further assuming that the Board's decision was upheld on 
appeal, that there would at that time be concentrated and particularized focus on the 
details of appellant's $100 million quantum methodology. Special care should be made 
to ensure that the claim was not exaggerated or inflated. See Daewoo Engineering and 
Construction Co. v. United States, 557 F.3d 1332 (Fed. Cir. 2009). The Board noted 
generally and without regard to the specifics of appellant's claim that during this entire 
"pre-quantum" period and throughout any future quantum phase proceedings, fraud 
investigations conceivably might preclude the contracting officer from engaging in 
settlement discussions whether ultimately warranted and justified or not. Judge Peacock 
also noted generally that, in the Board's own experience, the intervention of fraud 
investigations can preclude consummation of settlements. Judge Peacock encouraged 
appellant to move forward with the current negotiations and expressed his opinion that 
the government might favorably respond to substantially reduced offers to settle. 
After arranging a mutually agreeable date and time that fit the Board's schedule 
and that of the two government trial counsel, the contracting officer, and his command 
legal representative, the Board conducted its second ex parte teleconference with the four 
government representatives on 16 June 2016. The Board reiterated and reemphasized 
many of the points made in the initial November 2015 conference with the government 
and encouraged the government to "put an offer on the table." 
On 21 June 2016, appellant's counsel transmitted a letter to the Board that stated 
in pertinent part as follows: 
Subsequent to the 
telephone conference between the 
parties on June 9, 2016, counsel for CANVS again reached 
out three times to counsel for The Government to engage in 
discussions to resolve the above matter. Counsel for the 
Government stated that they would not discuss resolution due 
to a "hick-up" [sic] internal to the Government. 
Counsel for the Government would provide no details 
as to the nature of the "[hiccup]" the duration of the 
"[hiccup]" nor to explain why the "[hiccup]" is preventing 
discussions at this time. 
5 

As the Board has been made aware in letters from 
undersigned counsel, CANVS reached out to the Government 
beginning in November of2015, following the final day of 
hearings and offered to resolve this matter for a small 
fraction of its actual value. CANVS state[ d] in writing that 
CANVS was willing to be extremely flexible in its position. 
CANVS has attempted in good faith for six months to engage 
The Government in discussions with no response. 
To date, the Government has flatly refused to engage 
in any discussions whatsoever, has refused to make any offer 
of settlement has refused to respond to CANVS's written 
offer and is now continuing to refuse discussions, directly 
contrary to the Government's representations to the Board on 
several occasions. 
Counsel for CANVS demands to know the full details 
of the "[hiccup]" referenced by counsel for The Government. 
Government counsel responded by letter to the Board of the same date in pertinent 
part as follows: 
Relative to counsel for Appellant's letter to the Board, 
dated 21 June 2016, Respondent wishes to inform the Board, 
as we had so informed counsel during our telephone 
conversation of 20 June 2016, that the Government is 
presently unable to participate in any discussion directed to a 
resolution of this matter due to a pending AF OSI (Air Force 
Office of Special Investigations) investigation. See 41 U.S.C. 
§ 7103( c ). The undersigned specifically informed counsel 
about the existence of this AFOSI investigation after the 
initial comment regarding a "hiccup" in this attempt to 
resolve this appeal. The undersigned is only authorized to 
disclose the existence of this AF OSI investigation. 
At no time after either ex parte conference with appellant or prior to 27 June 2016 
did appellant allege that Judge Peacock 
had prejudged the merits of the appeals in any way. 
Sometime between the government's 21 June 2016 letter and 27 June 2016, 
appellant allegedly reached an "understanding" as to what transpired during 
Judge Peacock's second ex parte teleconference with the government. At no time prior 
to 27 June 2016 had appellant voiced any concerns about Judge Peacock's impartiality or 
6 

·'pre-Judgement" of issues in dispute whether during the trial or during the approximately 
five-year pre-trial processing of the appeals. 
On 27 June 2016 after receiving notice of the AFOSI investigation, 
appellant's counsel filed a three-page "ex parte communication" with the Board 
containing the instant "request" that Judge Peacock "recuse himself from this 
matter," based on Judge Peacock's alleged "pre-judgment of the damages aspect of this 
matter." The letter also asserted that it was appellant's "understanding that, during [the 
16 June 2016 ex parte conference with the government], your honor suggested that the 
U.S. Air Force open a fraud investigation against CANVS." In addition, appellant 
asserted, "Further, Your Honor has provided ex parte legal advice to The Government's 
counsel as to strategic legal decisions in advising or suggesting that the Air Force to open 
a fraud investigation against CANVS Corporation. Your Honor's participation as an 
advocate for The Government in these proceedings also independently warrants your 
recusal." Although the letter was written as an "ex parte communication" appellant 
stated "you are free to share it with counsel for The Government." 
The Board forwarded the letter/motion to government counsel under 
cover of letter 
dated 28 June 2016 requesting a response by 28 July 2016. On the latter date, the 
government responded in pertinent part as follows: 
During the Board's 9 June 2016 telephonic conversation 
with the undersigned, co-counsel..., USSOCOM contracting 
officer ... , and USSOCOM counsel..., there was no discussion 
regarding any fraud investigation concerning CANVS. 
The Board did not suggest the opening of such a fraud 
investigation, and the Government did not refer to any fraud 
investigation. During the Board's previous telephonic 
conversation with the same four Government representatives 
on 24 November 2015, there was no discussion regarding any 
fraud investigation concerning CANVS. Further, the four 
Government employees had no other contacts with the Board 
during which discussions took 
place regarding any fraud 
investigations concerning CANVS. 
As for counsel's statement in the first paragraph of 
Page 3 that "Your Honor has provided ex parte legal advice to 
the Government's counsel as to strategic legal decisions in 
advising or suggesting that the Air 
Force to open [sic] a fraud 
investigation against CANVS Corporation," it is also 
incorrect. As stated above, the Board provided no legal 
advice to the four Government representatives during the 
telephonic conversation of 16 June 2016, and, in particular, 
7 

provided no legal advice concerning any fraud investigation 
against CANVS. During the Board's previous telephonic 
conversation with the same four Government representatives 
on 24 November 2015, there was no discussion regarding any 
fraud investigation concerning CANVS. Further, the four 
Government employees had no other contacts with the Board 
during which discussions took place regarding any fraud 
investigations concerning CANVS. 
As indicated in counsel for Respondent's letter to the 
Board, dated 21 June 2016, the Government currently is 
unable to participate in any discussion directed to a resolution 
of this matter due to a pending AFOSI investigation. That 
investigation was prompted by in-court testimony. That 
investigation is not directed towards Appellant's initial 
damages assessment asserted in Paragraph 44 of its 
Complaint or the calculation of damages set forth in 
Appellant's letter to USSOCOM contracting officer dated 
25 July 2011. (R4, tab 14). 
Irrespective of the assertions set forth in counsel for 
Appellant's 27 June 2016 letter, Respondent holds the strong 
view that Appellant has presented no evidence to support 
recusal. More importantly, recusal predicated upon 
Appellant's baseless accusations would be detrimental to 
Respondent whether it results in a re-trial or encumbering 
other Board members to review the record without the benefit 
of any in-court assessment of witness credibility. 
There is no further evidence regarding the AFOSI investigation including when it 
was initiated. There is also no evidence as to whether the "in court" testimony which is 
the focus of the AF OSI investigation was given during the instant Board proceeding or a 
court proceeding where CANVS may currently have, or had, litigation 
pending. However, 
there is no known, relevant AFOSI investigation to date that is focused on appellant's 
calculation, quantification, and certification of the amount claimed in these appeals. 
On 29 July 2009, appellant requested, inter alia, that the Board direct "full 
disclosure" by the government of the details of the AFOSI investigation, without addressing 
the government's categorical denial of appellant's allegations and "understanding" of what 
transpired during Judge Peacock's ex parte discussions with the government. 
8 

On 3 August 2016, the Board requested that appellant provide its response to the 
government's letter of 28 July 2008 as relevant to recusal and/or advise of any 
withdrawal of its recusal request. The response was to be submitted by 11 August 2016. 
By letter of 11 August 2016, CANVS indicated that it declined to withdraw its request. 
DECISION 
Appellant has cited no statutory provisions, cases or other legal guidelines, 
standards or authorities for recusal in its three-page motion in support of its request. The 
Board has previously looked to standards, inter alia, established in 28 U.S.C. § 455(a) for 
guidance where a party seeks disqualification of the presiding administrative judge. 
Section 455(a) provides that "[a]ny justice, judge or magistrate judge of the United States 
shall disqualify himself in any proceeding in which his impartiality might reasonably be 
questioned." While strictly speaking the statute is inapplicable to administrative judges 
appointed pursuant to the Contract Disputes Act (CDA), 41 U.S.C. §§ 7101-7109, the 
Board has case law interpreting that provision to be useful guidance in deciding 
recusal motions in analogous circumstances. See, e.g., Johnson & Son Erector Co., 
ASBCA No. 23689, 86-2 BCA ~ 18,931 at 95,590; AEI Pacific, Inc., ASBCA No. 53806, 
04-2 BCA ~ 32,635 at 161,483; see also Liteky v. United States, 510 U.S. 540, 555-56 
(1994); Corners and Edges, Inc., ASBCA No. 55611 et al., 10-1BCA~34,326 at 
169,530; Environmental Safety Consultants, Inc., ASBCA No. 58343, 14-1 BCA 
~ 35,737. Here, however, extensive analysis of the case law is not warranted. The 
motion is baseless, unsupported by any persuasive evidence, and is without merit. The 
alleged bases and lack of evidentiary support for recusal offered by appellant wholly fail 
to reasonably bring into question Judge Peacock's impartiality. 
Appellant's motion is based on Judge Peacock's alleged "prematurely formed" 
opinions regarding the quantum of appellant's claim. It is founded almost exclusively on 
appellant's alleged, but wholly unsubstantiated, "understanding" that fraud related to the 
quantum of appellant's claim was discussed with the government during pre-approved, 
ex parte discussions* expressly authorized by each party to promote settlement. Appellant's 
allegations lack any foundation. As unequivocally stated by the government there was no 
mention of fraud in either of its two ex parte teleconferences with the Board or at any other 
time. There could have been no rational "understanding" to the contrary. Not only was 
there no mention of fraud by any participant, any such comments allegedly made by 
*It should be emphasized that both parties freely consented to Judge Peacock's 
conferring separately with each party in an effort to further the CDA's goals of 
"informal, expeditious and inexpensive" resolution of disputes. See Judicial 
Canon 3 .A( 4 )( d) which in part states: "A judge may with the consent of the 
parties confer separately with the parties and their counsel in an effort to mediate 
or settle pending matters." Appellant does not object to the conduct of such 
ex parte conferences, only their alleged content. 
9 

Judge Peacock would contravene the very purpose of conducting the ex parte conferences 
with the government, i.e., to encourage and promote post-trial settlement negotiations. The 
allegations that Judge Peacock or any government participant in the ex parte teleconferences 
discussed fraud have been categorically rejected by the government and are unsupported by 
affidavits as to how appellant reached its "understanding" regarding what allegedly 
transpired in ex parte discussions with the government. Even in the face of the government's 
categorical rejection of appellant's contentions, appellant failed to respond with any basis for 
its accusations. Any settlement discussions were not 
''curtailed" as a consequence of any 
ex parte comments. They ended because of the pending AFOSI investigation as to which the 
Board had no knowledge prior to the government's 21 June 2016 letter to the Board. 
All ex parte comments to both parties were made solely in the context of 
promoting settlement and from the perspective of litigation risks associated with 
entitlement and jurisdiction. As appellant emphasizes, quantum evidence was not 
presented at trial because it was confined to those jurisdictional and entitlement issues. 
The Board has received no quantum-related evidence and perforce has no opinions on the 
details and methodology of appellant's quantification of the amount claimed. The 
Board's entitlement decision will not encompass any such details. 
During both ex parte discussions of "quantum" with appellant, the remarks were 
simply generic and pragmatic observations that appellant should earnestly consider 
reducing significantly the $100 million amount claimed for serious settlement discussions 
to move forward at the entitlement stage of the litigation. The focus of the "quantum" 
discussions with appellant simply and generally was to promote reasonable settlement 
offers considerably below the $100 million claimed, particularly 
given the uncertainties 
and complexities of the jurisdictional and entitlement issues presented as well as the 
realistic length of time that would elapse before commencement of any actual quantum 
proceedings, assuming arguendo that such quantum proceedings ultimately occurred. 
It should also be noted that the alleged "premature" conclusions in its ex parte 
discussions with the parties were purportedly drawn after extensive motion practice, after 
11 days of trial and the closing of the voluminous record, and after filing of initial briefs, 
over 5 Yz years after the docketing of the principal appeal. Cf AEI Pacific, 04-2 BCA 
~ 32,635 at 161,486 (the Board deemed presiding judge's comments on testimony and 
record developed in the course of trial prior to its completion to be "normal in settlement 
negotiations" and that, "A reasonable and informed person would not infer, from the fact 
that the judge communicated her impressions as of a certain point in time, that she could 
not decide (or participate in deciding) the appeal after the record was complete"). All 
remarks by Judge Peacock were preliminary and tentative and prefaced by the express 
proviso that Judge Peacock reserved all final factual and legal determinations until the 
full chronology of critical events were thoroughly analyzed in context by the Board, after 
full briefing of the appeals. See Goya Foods, Inc. v. Unanue-Casal, 275 F.3d 124, 130 
(P1 Cir. 2001), cert denied, 532 U.S. 1022 (2002). 
10 

In short, there were (and are) no "prematurely formed" opinions on any issues in 
the appeals. Any Board decision will be based solely on the merits. 
The grounds for disqualification raised by appellant have no merit. It is well 
settled that "[ t ]here is as much obligation upon a judge not to recuse himself where 
there is no occasion as there is for him to do so when there is." Jn re Union Leader 
Corp., 292 F.2d 381, 391 (1st Cir. 1961); Hinman v. Rogers, 831F.2d937, 939 (10th Cir. 
1987); Brody v. President & Fellows of Harvard College, 664 F.2d 10, 12 (1 51 Cir. 1981), 
cert. denied, 455 U.S. 1027 (1982). 
The motion is denied. 
Dated: 28 September 2016 
I concur 
£~# MARKN. LE . 
Administrative Judge 
Acting Chairman 
Armed Services Board 
of Contract Appeals 
Administrative Judge 
Armed Services Board 
of Contract Appeals 
RICHARD SHACKLEFORD 
Administrative Judge 
Vice Chairman 
Armed Services Board 
of Contract Appeals 
I certify that the foregoing is a true copy of the Opinion and Decision of the 
Armed Services Board of Contract Appeals in ASBCA Nos. 57784, 57987, Appeals of 
CANVS Corporation, rendered in conformance with the Board's Charter. 
Dated: 
11 
JEFFREYD. GARDIN 
Recorder, Armed Services 
Board of Contract Appeals