UNITED STAT ES DIS TRICT COURT F OR THE D ISTRIC T OF CO LU M BIA CH RI S TOP HERJ . ALF , : : Plaintiff, : Civil Action No.: 09-0802 (RMU)

: v. : Re Docume nt No.: 3

: MI CHAEL

B. D ONL EY e t al

. , : : De fe nd ants . :

M EM OR

AN DU M OP IN ION G R A N TI N G TH E P LA INT IF F ’ S M OT I ON F OR A P RE L I M I NARY I NJ UNCT I ON I. IN TR OD UC TIO N This matter is befor e the c ourt on the plaintiff’s motion for a preliminary

injunction. The plaintiff is the forme r CEO of National Air Carg o, Inc. (“NAC”), a transportation business that contra cted with the De partment of D efe nse (“ DOD” ) to coordinate the deliver y of military
e qu ipm e nt, c omm e rc ia l g oo ds , me dic a l su pp lie s a nd oth e r f re ig ht f or the Ai r F or c e . A s a

re su lt of the e vents discussed below, the Air F orce debar red the plaintiff from doingbusiness with the g overnme nt in J uly

2008. In response , the plaintiff brought suit claiming that his debar ment violated the Administrative Proce dure A ct, 5 U.S.C. §§ 701 et seq. In addition, the plaintiff filed a motion for a pr eliminary injunction enjoining his deba rment. B eca

use the plaintiff ha s satisfied the cr iteria ne cessa

ry for the issuanc e of a

preliminary

injunction, the court g rants the plaintiff’ s motion.

II. F ACTUAL & P ROCEDURAL BACK GR OUND The plaintiff is the f

ounder a nd former CEO of NAC, “a

‘fr eig ht forwa

rder ’ that re lies onI t is undisputed th at the unk now n N AC em

ploy ee who m ade the false statem ent w as n ot the 1 plaintiff. See Pl.’s Mot. at 5. 2 a ne tw or k o f s hip pe rs , in c lud inga ir c arr ie rs and

tr uc kin gc omp anie s, to d e liv e r g oo ds on its be ha lf .” Pl. ’s Mo t. at 2. As of

May 20 08 , a pp ro ximate ly

nin e ty pe rc e nt o f N AC ’s sh ipm e nts
wer e made on behalf

of g overnme nt clients. Id. at 43 . In 1 99 7, NA C e nte re d into a c on tr a c t w ith the DOD to pr ovide fre ight f orwa rdingservice s for the D OD. Id. at 2-3; De fs.’ Opp’ n at 2. In 2005, an NAC e mploy ee f iled a qui tam complaint alleg ing that NAC had violated the Fa lse Claims Act, 31 U.S.C. §§ 3729 et seq. , by submitt ing inf

lated invoices to the D OD. De fs.’ Opp’n at 3. The DOD conducte d an investig ation into NAC’s shipping and billingprac tices and “uncove red c onsiderable evidenc e of imprope r conduc t” at NAC. Id. at 3- 4. NA C ul tim ate ly p l ea d edgu i l ty

t o a o n e- co un tIn fo rm at i o nch ar gi n g NA C wi thkn o wi n gl y an d wi l l fu l l y m ak i n g a materia l false state ment to the DOD. Id. Contemporaneously , NAC rea ched a g lobal settlement 1 of the qui tam suit in which it denied any wrong doing a side from the f alse stateme nt underlying the plea a g ree ment. Id. at 5. Followingthe guilty

plea a nd civil settlement, the Air F orce proposed that NA C, the plaintiff and f

our other N AC employ ees be debar red on Ma

y 21, 2008, pursuant to the F eder al Ac qu isi tio n Re g ula

tio ns (“ F AR ” ), wh ic h g ov e rn the de ba rm e nt o f f

e de ra l c on tr a c tor s. Pl. ’s Mo t. at 3; Def s.’ Opp’n at 5. The Air F orce ultimately chose not to deba

r NAC, but deba

rre d the plaintiff on J uly

30, 2008. Pl.’s Mot. at 3; Defs.’ Opp’ n at 5-6. The initial noti ce of debar ment (“the Initial Decision”) imposed a period of de barme nt of ten y ear s. Pl.’s Mot., Ex . 2 (“I nitial Dec ision”). In Fe bruar

y 2009, the plaintiff administratively appea led the Initial Decision. Pl.’s Mot. at 3-4; Def

s.’ Opp’n at 7. On April 17, 2009, the Air F orce issued a letter (“the AmendedThe Am ended D ecision was issued by

the sam e de barringofficial who issue d the I nitial 2 Decis ion. T he pl a i nt i f

f ’ s m ot i on at t a c he s an d r e f e r s to se ver a l ex hi bi t s al s o c on t a i ne d i n t he Admi ni s t r a t i ve 3 Reco rd. Se e ge ne ra ll y Pl. ’s Mot. The defend ants c ite to these exhibits as w ell. Se e ge ne ra ll y Defs. ’ O pp’n. N either p arty , h owe v er, cites d irectly to the A dm inistrativ e R ecord, des pite the fact tha t it w as filed before briefingw as co m plete – and , p resum ably , w as co m piled by the defend ants in

adv ance of that date. See N otice (May 19 , 2 009) (notingthe filing of the Adm inistrativ e R ecord); Pl.’s Rep ly ; D efs.’ Sur- Rep ly
. 3 Dec ision”) upholding the plaintiff’s deba rment, but reduc ing the period of de barme nt from ten y ear s to three year s. SeePl.’s Mot., Ex . 6 (“A m. Decision”)
. Followingthe issuance of the 2 Amended D ecision, the plaintiff c ommenced this ac tion and filed the instant motion. See ge ne ra lly Pl.’s Mot. The defe ndants opposed the motion on May 15, 2009, se e ge ne ra lly

Def s.’ Opp’n, a nd filed the Administrative Rec ord on May 19, 2009, seeNotice ( May 19, 2009). The

3 plaintiff filed a

reply in support of his motion on M ay 22, 2009, see ge nerally Pl.’s Reply , and with the plaintiff’s conse nt, the defe ndants filed a sur -re ply on J une 8, 2009, see ge nerally Def s.’ Sur-Reply . The c ourt turns now to the applica ble leg al standar ds and the pa rties’ a rguments.

III . A NA LY SIS A. Legal Standard f

or Injunctive Re lief This court may

issue interim injunctive relief only when the mova

nt demonstrates “ [1] that he is likely

to succe ed on the mer its, [ 2] t hat he is likely to suffer irrepa rable harm in the absenc e of pr eliminary

relief , [3] that the balanc e of e quities tips i n his favor, a nd [4] that an injunction is i n the public intere st.” W inter v. Natural Res. Def. Council, Inc. , 129 S. Ct . 365, 3 7 4 (2 0 0 8 ) ( ci t i n g Munaf v. Ge ren , 128 S. Ct . 2207, 2218-19 (2008) ). It is particularly important for the mova

nt to demonstrate a likelihood of suc cess on the me rits. Cf
. Benten v . Kessler , 5054

U. S. 1 08 4, 10 85 (1 99 2) (p e r c ur iam) . Ind e e d, a bs e nt a “ su bs tanti a l in dic atio n” of

lik e ly su c c e ss on the merits, “ther e would be no justification for the cour t’s intrusion into t he ordina ry proce sses of administration and judicial r eview.” Am. Banke rs Ass’n v. Nat’l Credit Union Admin. , 38 F. Supp. 2d 114, 140 (D.D .C. 1999) (interna l quotation omit ted). The other critica l fac tor in the injunctive relief analy sis is i rre para

ble injury . A movant
mus t “ de mon str ate that ir re pa ra ble inj ur y is likely in the absenc e of a n injunction.” W

inter , 129 S
. C t . at3 7 5 (c i t i n g Los Angeles v. Lyons , 4 61 U. S. 9 5, 10 3 ( 19 83 )) . Ind e e d, if a pa rt y fa ils to make a sufficie nt showing of

irrepa rable injury , the cour

t may deny the motion for injunctive relief without consideringthe other f actor s. CityFed Fin. Corp. v. Office of Thrift Supervision , 58 F.3d 738, 747 ( D.C. Cir. 1986). Pr ov ide d th e pla int if f d e mon str ate s a

lik e lih oo d o f s uc c e ss on the merits and of

irrepa rable injury , the cour

t “must balance the competingclaims of injury and must consider the eff ect on e ach pa

rty of the g rantingor withholding of the re quested re lief.” Am oc o Pro d. Co. v . G am be ll , 480 U.S. 531, 542 (1987). F inally , “cour ts of equity

should pay particula r re g ard f or the public c onsequenc es in employing the extraordinary reme dy of injunction.” W

e inb e rge r v . R om e ro -B arc e lo , 456 U.S. 305, 312 (1982). As an e x traordina

ry reme dy , courts should g rant such r elief spa ring ly
. Mazurek

v. Armstrong , 520 U.S. 968, 972 (1997). The Supreme Court has obse rved “ that a pre liminary injunction is an ex traordina ry and dra stic remedy , one that should not be g rante d unless the movant, by a cle ar showing , car ries the bur den of pe rsuasion.” Id. There fore , althoug h the trial court ha s the discre tion to is sue or de ny a pre liminary

injunction, it i s not a form of r elief grante d l i g h t l y. In addition, any

injunction that the court issues must be ca ref ully circ umscribed a

nd “tailore d to remedy

the har m shown.” Nat’l Tr easury Em ployee s Union v. Y

eutter , 918 F.2d 968,5

977 (D.C. Cir. 1990). B. Th e P laintif f Is Entitled to Injun ctive Relief 1. Lik elihood of

Success on the Me rits Th e APAe nti tle s “ a

pe rs on su ff e ri ngle g a l w ro ng

be c a us e of a g e nc y a c tio n, or

a dv e rs e ly aff ecte d or ag g rieve d by

ag ency action . . . to judicial re view ther eof.” 5 U.S.C. § 702. Under the APA, a r eviewingcourt must set aside a n ag ency action that is “a

rbitrar y , capr icious, an abuse of discretion, or othe rwise not in ac corda nce w ith law.” Id. § 7 06 ; Tourus Records, Inc. v

. Drug Enforcem ent Admin. , 2 59 F .3 d 7 31 , 7 36 (D .C. Cir . 2 00 1) . Co ur ts h ave int e rp re te d th is require ment to mean that the de cision must be upheld unless it was not supported by substantial evidenc e. See, e .g. , Kisser v. Cisneros , 1 4 F .3 d 6 15 , 6 19 (D .C. Cir . 1 99 4) . In ma kin gthi s inquiry , the re viewingcourt “ must consider whe ther the [ag ency ’s] decision was base d on a consideration of the rele vant fa ctors and whether there has bee n a cle ar e rror of judg ment.” Ma rsh v . O r. Natural R es. Cou nc il , 4 90 U. S. 3 60 , 3 78 (1 98 9) (i nte rn a l qu otatio ns omi tte d) . A t a minimum , the ag ency

must have consider ed re levant data and ar ticulated an e x planation establishing a

“rational connec tion between the fac ts found and the c hoice made .” Bowen v. Am

. Hosp. Ass’n , 4 76 U. S. 6 10 , 6 26 (1 98 6) ; Tourus Records , 259 F.3d at 736. As explained in the I nitial and Amended D ecisions, the plaintiff’ s debar ment was ba sed
on tw o r atio na le s. F ir st, the pla int if f “ wa s d e ba

rr e d b e c a us e his c on du c t a s N AC ’s CEO and so le share holder wa s of so serious or c ompelling a nature as to aff

ect his pre sent responsibility to be a Gover nment contra ctor or subc ontrac tor pursuant to F AR 9.406-2(c ).” Am. Decision at 7. Second, the de barr ing of

ficial c oncluded that “ [a] separ ate a nd independe nt basis for [the pla int if f’ s] de ba rm e nt r e st[e d] on

the imp utatio n o f N AC ’s c ri min a l, f ra ud ule nt, and se ri ou sly6

improper c onduct to [t he plaintiff]” under FAR 9.406-5( b). Id. For the re asons discussed be low, the cour t concludes that there is a likelihood that ea ch of the se rationales was f lawed. a. P rese nt Responsib ility The de barr ing of

ficial’s f irst rationale f

or the plaintiff’ s debar

ment was that the pla intiff’s “conduc t . . . was of so ser ious or compellinga natur e as to a ffe ct his prese nt responsibility to be
a G o v e r n m e n tc o n tr a c t o r

o r s u b c o n tr a c t o r

p ur s u an tt o F A R

9
. 4 0 6
- 2 ( c )
. ” A m . D e c i s i o nat7
. In support of this conclusion, the deba rringofficia l expl ained that “ [a] t a minimum, as NAC’s CEO and sole-sha

reholde r, [the plaintiff] failed to establish manag eria l, oversig ht and compliance capa biliti es such that une thical beha vior either w as not ca

ug ht or was pe rmitted.” Id. More specific ally , the deba

rringofficia l determined that NAC eng ag ed in a sc heme to def raud the g overnme nt by

deliveringfre ight late but billi ngthe DOD a s though the deliverie s had bee n made on time. Id. at 1-2. To support this deter mination in the I nitial Decision, the deba rring of fi c ia l st ate d th at th e DO D c on du c te d a “ re vie w o f N AC re c or ds pe rt a ini ngto a pp ro ximate ly 6800 shipments between Ma rch a nd J une 2001, and be tween January and Mar ch 2002,” which “re veale d that in approxim ately 2995 of those shipments, NAC delivere d the fre ight late ” but billed the DOD a s though the fre ight ha d been de livered on time. Initial Decision ¶ 16. In his administrative appea l, the plaintiff ar g ued that this determination re sted on a fla wed fac tual and leg al ana ly sis. Pl .’s Mot. at 22-34. He contende d that the data on which the debar ringofficia l relied to conc lude that 2,995 of 6,800 shipments wer e deliver ed late omitted information nec essar

y to determine whether

the shipments were , in fac t, delivere d late. Id. Namely , the DOD’ s analy sis of the majority of shipments failed to note whe ther the c arg o was tender ed af

ter 5:00 p.m., whethe r the de stination’s rece iving hour s closed bef ore 5:00 p.m.,7

whether the deliver

y took place ove r a w eeke nd or holiday and whe ther the shipment wa s oversized. Id. at 24 . B e c a us e a ll o f t

he se fa c tor s c ou ld e xten d th e de liv e ry de a dli ne purs ua

nt t o the applica

ble re gulations and leg al pre cede nt, the plaintiff ar g ued that the spre adshee t contained insufficient e vidence to conclude that the deliverie s were late. Id. In support of his administrative appe al, the plaintiff e nlisted the assistance of retire d Colonel Glen J oerg er, a

former Air F orce transportation ex ecutive, who conducte d an independe nt analy sis of the DOD’ s statisti cs. Pl.’s Mot., Ex . 11 (“Joerg er Pre sentation”). J oerg er c oncluded that the a dminist rative r ecor d contained suf ficient infor

mation to determine whether only forty -five of

the appr ox imately

6,800 shipments in the DOD sprea dsheet we re delivere d late. Id. at 3. Out of those f orty -five shipments, Joerg er de termined that for ty -four
wer e in fa ct deliver ed on time or e arly
. Id. at 9. The de barr ing of

ficial a cknowledg ed Joerg er’ s findings in the A mended De cision, but
rea ffirme d his determination that NAC had e ng ag ed in a pattern of de liveringshipments late. Am. Dec ision at 3, 5-6. First, the de barr ing of ficial a sserted that the 45 sh ipm e nts ana ly

zed in the [pos t- de ba

rm e nt] [s]u

bmi ssi on s p lay e d n o r ole in [hi s] debarment dec ision. T h e M emorandum [ in support of the Initial Decision] m ak es n o m en t i o no f th em , an d th es e s h i p m en t s h av e n o re l ev an ce t o [ h i s ] fi n d i n gs a s det a i l e d

i nth e M e m o r an d

u m . T h e M e m o r an d

u md o e s , h o w e v e r , s p e c i f i c a l ly mention the 2,995 out of 6,800 NAC s hipments
. . . that wer e deliver ed late . . . . T he [pos t- de ba

rm e nt] [s]u

bmi ssi on s d o n ot e ve n me nti on the se tho us and s o f s hip me nts . Id. at 5. As a re sult, the debarr ing of ficial c oncluded that the f orty -five shipments we re irr eleva nt to the decision to deba

r the plaintiff. Id. In the alter

native, “[a]ssuming for the sake of argument that the 45 shipments addre ssed in the [pl aintiff’s post-de barme nt] [s] ubmissions wer e somehow r eleva nt to the debar

mentI n f a c t , J oe r ger ’ s an a l ysi s co nc l ud e d t ha tal t ho ugh m i s t a kes af f e c t e d o nl y fo r t y- on e of

th e fo r t y- 4 fi v e sh ip m en ts , P l. ’s Mo t. , E x. 1 1 (“ Joe rg er P re se nt at io n” ) at

3 , f orty - fo ur o f th e sh ip m en ts w er e deliv ered on tim e or early , o r had “ex cusab le delay s,” id. at 9
.

8 decision,” the debar

ringofficia l “dec line[d] to draw th[e] inferenc e” that “bec ause at least 41 of [4] [the fo rt y -f ive ] shi pme nts we re on -t ime , N AC ’s ov e r- a ll o n- tim e de liv e ry re c or d w a s si mil arl y high.” Id. The de barr ing of ficial off ere d no explanation for his decision not to ext rapolate the forty -five shipments ac ross the 6,800 shipments in the DOD’s spr eadshe et, stating only that J oerg er’ s assessment wa s “flaw ed and inc omplete.” Id. The de barr ing of

ficial a lso concluded that the plaintiff had f ailed to “a dequate ly

support the ar g ument that shipments designated for w eekda y delivery to installations where fr eig ht
re c e ivi ngop e ratio ns c los e d p ri or to 5 p. m. a

uto matic a lly

e nti tle d N AC to a

n e xtra da y to deliver.” Id. The de barr ing of ficial c ited Allstates Air C argo, Inc. v . United States , 4 2 F e d. Cl. 11 8 ( 19 98 ), a

de c isi on in whic h th e c ourt

no te d th at th e c arr ie r w a s r e qu ir e d to pr ov ide no tic e to
rec eivingfac iliti es that closed be fore 5:00 p.m. Am. Decision at 5-6 n.4. The debar ringofficia l noted that “[t] he administrative r ecor d contain[ed] no evidence that NAC provided such notice ” to the DOD, a

nd conclude d that “[i] t [ was] possible to infer that, rather than try to meet the reque sted delivery

date, NA C unilaterally

g rante d itself extra time for these shipments.” Id. The plaintiff a

rgues that the de barr ing of ficial c ommitt ed leg al er

ror by ref using, in lig ht of Joer g e r’ s ana ly sis , to re c on sid e r h is i nit ia l de te rm inatio n th at N AC e ng a g e d in a patte rn of late deliverie s. Pl.’s Mot. at 25-26. The def endants do not addr ess J oerg er’ s analy sis specifica lly
. SeeDef s.’ Opp’n at 12 n.3 (dec lining to addr ess the plaintiff’ s arguments conce rningthe de ba rr ingof fi c ia l’ s c on sid e ratio n o f s pe c if ic e vid e nc e ). Ins te a d, the de fe nd ants a sse rt g e ne ra lly that “[a]fter re viewingthe administrative re cord in lig ht of Plaintiff’s post-deba rment9

submissi ons,” the de barr ing of ficial c oncluded that “ the independe nt bases for Plaintiff’s de ba rm e nt c on tin

ue d to e xist b y

a pr e po nd e ra

nc e of the e vid e nc e , th at Pla int if f f a ile d to demonstrate his pre sent responsibility for g overnme nt contrac ting, a s require d by the FA R, and that a deba

rment wa s still nece ssary

to protect the g overnme nt’s interests.” D efs.’ Opp’n at 7. Th e de fe nd ants ma int a in t hat th e de ba

rr ingof fi c ia l pr op e rl y

c on c lud e d th at th e pla int if f f a ile d to demonstrate his pre sent responsibility under F AR 9.406-2(c ) base d on the improper shippingand billing pra ctices that NAC admitted to in the globa l settlement of the qui tam su it a nd the F a lse Statements char g e. Id. at 12. Ba sed on the mate rials submitted and arguments proffe red at this st ag e of the proce eding s, it appear s that the dec ision to debar the plaintiff, a s ref lected in the I

nitial and Amended D ecisions, was log ically flawe d. As a pre liminary matter, the de barr ing of

ficial
a pp e ars to h ave mis c on str

ue d th e imp or

t of Joer g e r’ s a

na ly sis . T he fo rt

y -f ive sh ipm e nts addre ssed in that analy sis repre sented a subset of the 2,995 a lleg edly

late shipments listed in the DOD spre adshee t, rather

than a se parate g roup of shipments. Com pa rePl.’s Mot., Ex . 10 (listing a portion of the D OD spre adshee t) with Pl.’s Mot., Ex . 11 (ana ly zing the for

ty -five shipments for wh ic h c omp le te inf

or matio n w a s in c lud e d) . T hu s, by a sse rt ingthat th os e fo rt

y -f ive sh ipm e nts “played no role in [ his] debar ment decision” a

nd that the plaintiff “[did] not even me ntion [ the] thousands of shipments” re fer ence d in the Initial Decision, Am. Dec ision at 5, it appears that the debar ringofficia l failed to ade quately consider the plaintiff’s post-deba rment submissions. In a dd iti on , th e de ba

rr ingof fi c ia l pr ov ide d n o r e a so ne d e xplanatio n f or his re fu sa l to conclude that the forty -five shipments ana ly zed by J oerg er w ere repr esentative of all of the shipments refe renc ed in the DOD sprea dsheet. SeeAm
. De ci s i o nat5
. Fu rt h erm o re , al th o u gh10

the deba rringofficia l questions whether N AC provided notice to the f acilities that closed be fore 5:00 p.m., the Amended De cision fails to establish that NAC was oblig ated to provide such notice in orde r to be g rante d a one- day extension of the shipping dea dline. Id. at 5-6 n.4. Moreove r, the shipments that the plaintiff c ontends wer e miscate g orized as late a s a re sult of the fac t that the destination closed bef ore 5:00 p.m. ar e the only shipments addresse d in the Amended D ecision. See ge nerally Am. Dec ision. The Amended D ecision fa ils to address the other fa ctors g iving r ise to the plaintiff’s c ontention that the deadlines w ere miscalculate d: whether the ca rg o was tende red a fter 5:00 p.m., whe ther the de livery took place ove r a w eeke nd or holiday

and whe ther the de livery was other

wise subject to an “ excusable dela y .” Se e ge ne ra lly id. As a re sult, itis likely that the plaintiff will succe ssfully persua de the c ourt that the debar ringofficia l failed to “a

rticulate a rational c onnection betwe en the f acts found a

nd the choice made.” Kisser , 1 4 F. 3 d at6 1 9 (c i t i n g Bo wm an Tra ns p. v . A rk .-Be st F re igh t Sy s. , 419 U. S. 2 81 , 2 85 (1 97 4) ); see also Fe inerman v. Be rnardi , 558 F. Supp. 36, 50 (D.D .C. 2008); Canales v. Paulson , 2007 WL2071709, at *5-6 (D .D.C. J uly 16, 2007) (notingthat a deba rring officia l’s failure to addre ss miti g atingfac tors prese nted by the plaintiff re nders the de cision arbitra ry and ca pricious). The a lleg edly

late shipments wer e not the only basis for the de barme nt decision. See ge ne ra lly Initial Decision; Am. Dec ision. But this Ci rcuit has “ consistently held that when a

n ag ency relies on multiple g rounds for its dec ision, some of which ar e invalid,” the c ourt may sustain the decision only

if it concludes that the a g ency “would cle arly

have a cted on [a valid] g round eve n if the [invalid ground] wer e unava ilable.” Casino Airl ines, Inc. v . Nat’l Tr ansp.FA R 9.4 06- 5(b) e stablishes that “[t]he frau dulent, crim inal, or o ther se riously im prope r con duct 5 of a contracto r m ay be im puted to any

officer, directo r, sh arehold er, partner, em ploy ee, or o ther indiv idual associated

w ith the contracto r w ho participated in, k newof, or had reason to k nowof th e co ntra ct or ’s c on du ct . ” 4 8 C
. F
. R
. § 9
. 40 6- 5( b)
. 11 Safety Bd. , 439 F.3d 715, 717 ( D.C. Cir. 2006) (citations, quotations and alter ations omitt ed). B e c a us e the de ba

rr ingof fi c ia l di d n ot s pe c if

y wh at w e ig ht h e a ff

or de d th e a lle g e dly

late shipments, se e ge ne ra lly

Initial Decision; Am. Dec ision, the debarme nt decision will be subject to reve rsal if the c ourt ultimately conclude s that the deba

rringofficia l did not properly consider J oerg er’ s analy sis. See, e .g. , Int’l Union, United MineW orkers of Am. v . U.S. Dep’ t of Labor , 358 F.3d 40, 44- 45 (D.C. Cir. 2004) (notingthat “[t] wo of the thre e re asons [the ag ency] gave
. . . would not support its decision, and we do not know – nor are we f ree to gue ss – what the ag ency would have done ” had it not enter tained those rationales). b. Imputation of NAC’s Crim inal Con duct In support of a “ separ ate a nd independe nt” rationale for de barr ing the plaintiff, the debar ringofficia l concluded that, “[a]s the CEO and sole sha reholde r of NA C and as NAC’s point of contac t for g overnme nt business, NAC’s criminal, fr audulent, and se riously improper conduct [was] imput ed to [the plaintiff pursuant to FA R 9.406-5(b) ] because [the plaintiff] 5 pa rt ic ipate d in , k

ne w o f, or

ha d r e a so n to kn owof

NA C’ s c ri min a l, f

ra ud ule nt, and se ri ou sly improper c onduct.” Am. De cision at 7. Relying on this Circuit’s opinion in Novicki v . Cook , 946 F.2d 938 ( D.C. Cir. 1991), the plaintiff ar g ues that this determination wa s contrar y to law. Pl.’s Mot. at 18-22. The def endants maintain that the pla intiff was prope rly debar red unde r F AR 9.406-5(b) . Def

s.’ Opp’n at 13. The que stion before the Novickicourt wa s what state of mind was requir ed for

an12

individual to be debar

red unde r the “ rea son to know” prongof F AR 9.406-5(b). Novicki , 946 F
. 2 d at9 4 1
- 4 3
. T h e C i r c u i t

c o n c l u d e d

th at“ th e dr a f

t e r s o f s e c t i o n9
. 4 0 6
- 5 ( b ) i n t e n d e d [ t o a p p l y] . . . the ac cepte d common law def inition of ‘rea son to know,’” id. at 94 1 n .2 , whic h p ro vid e s th at a per son has re ason to know a f act if he “has infor

mation from w h i ch a person of ordinary intelligenc e, or of

the superior

i ntellige nce which such pe rson may have, would infer that the fac t in question exis ts or that there is suc h a substantial cha nce of its e xiste nc e that, i f e xer c isi ngre a so na ble c are wi th re fe re nc e to t he matte r i n qu e sti on , h is a c tio n w ou ld b e pr e dic ated upon the a ssumpt ion

of its po ssi ble exis tence .” Id. at9 4 1 (c i t i n g R E S TA TE ME NT (S EC OND ) O F A GE NC Y § 9 cmt. d). “The Restatement def inition of ‘r e a so n to kn ow ’ i mpo se s n o d uty of inq uir y ; it me re ly re qu ir e s th at a

pe rs on dr aw r e a so na

ble infere nces f

rom information alre ady

known to him.” Novicki , 946 F.2d at 941. Thus, the debar ringofficia l in Novicki

err ed by “cha rac teriz[ ing] the re levant inquiry as whe ther [the pla int if f] w a s in su c h a re sp on sib le re latio ns hip to t he mis c on du c t a s to have ha d th e po we r t o pr e ve nt t he mis c on du c t by

e xer c isi ngthe le ve l of

c are and e xer tio n th at so c ie ty

wo uld re a so na bly expect from someone in his posit ion” and c oncludingthat, “by virtue of [the plaintiff’s] status,” the plaintiff had “ rea son to know” about the misconduc t. Id. at 941-42 (c itations and alterations omitted). Be cause “re ason to know” of the misconduct could not be infe rre d based on the plaintiff’s position alone, and be cause there was no e vidence that the plaintiff had a ny i n fo rm at i o nfr o mwh i ch a r ea s o n ab l e p er s o nwo u l d h av e i n fe rr edth atm i s co n d u ctwa s o cc urr i n g, the Circuit conclude d that the plaintiff’s de barme nt was improper
. Id. at 942-43. I t appea rs likely that the deba

rringofficia l in this case committed the same e rror as the debar ringofficia l in Novicki . T he de ba rr ingof fi c ia l c on c lud e d th at, “ [a]s the CEO and so le sh are ho lde r o f N AC and

a s N AC ’s po int

of c on ta c t f or g ov e rn me nt b us ine ss, NA C’ s c ri min a l,13

fra udulent, and ser iously

improper c onduct [was] i mputed to [ the plaintiff pursua nt to FAR 9.406-5(b) ] because [the plaintiff] participate d in, knew of, or had re ason to know of NA C’s criminal, fr audulent, and se riously improper c onduct.” Am. De cision at 7. Yet the Initial Dec ision and the Amende d Dec ision fail to indicate that the deba rringofficia l concluded, ba sed
on sp e c if ic inf or matio n in the Ad min istra tiv e Re c or d, that th e pla int if f p e rs on a lly

pa rt ic ipate d in the misconduct, had a ctual knowledg e of the misconduct or had inf ormation from whic h a
rea sonable pe rson could infe r that misconduct occ urre d. Se e ge ne ra lly Init ia l D e c isi on ; A m. Dec ision. To the contrar

y , the deba

rringofficia l expl ained that he based his dete rmination on the plaintiff’s status “[a]s the CEO and sole share holder of NAC and as NA C’s point of contact f or g ov e rnme nt b us ine ss. ” Am . D e c isi on at 7. B e c a

us e the de ba

rr ingof fi c ia l f a ile d to po int

to information that was in the pla intiff’s possession from which he should have infe rre d that misconduct was oc curr ing, the debar ringofficia l’s deter

mination on this issue likely violated Novicki . 946 F.2d at 941-43. 2. Irre parable Harm In a dd iti on

to t he lik e lih oo d o f s uc c e ss o n th e me ri ts, a c e ntr a l c on sid e ra

tio n in deter mining whe ther to g rant injunctive re lief is the prospec t of irre para ble har m. See W

inter , 129 S. Ct . at 375. The pla intiff maintains that he fa ces irr epar able ha rm if his debar

ment is not
vacated bec ause his deba

rment re nders him unable to wor k for NA C or to find compara ble work. Pl.’s Mot. at 40-44. Moreover , the plaintiff ar g ues that althoug h lost income ty pically does not
c on sti tut e ir

re pa ra ble ha rm , th e e c on omi c ha

rm that he is i nc ur

ri ngis i rr e pa

ra ble be c a us e , e ve n if he pr e va ils on

the me ri ts o f t

his a c tio n, the de fe nd ants ’ s ov e re ig n immun ity wi ll p re ve nt h im from re cover ing da

mag es. Id. at 41. In addition, the plaintiff asser ts that the financia l injury14

NAC is incurring– signifie d by a fifty -five pe rce nt drop in total revenue duringlate 2008 – threatens the compa

ny ’s ver y exis tence . Id. at 41 -4 2. F ina lly , th e pla int if f c la ims that he is incurringirrepa

rable harm in the for

m of damag e to his future business pr ospects and profe ssional reputation. Id. at 42-43. The de fenda

nts dispute the plaintiff’s alleg ations conce rningthe har m that his debarment is causingto him and his company . First, they contend that a lthough the pla intiff’s deba rment preve nts him from owning or operating a

nother a ir ca

rrier or doingany

business with the g ov e rnme nt, “ a

wi de un ive rs e of

a lte rn ativ e e mpl oy

me nt a nd inv e stm e nt o pp or

tun iti e s r e ma in op e n to him .” De fs .’ Op p’ n at 16 . M or e ov e r, the de fe nd ants po int out th at th e pla int if

f a nd his wife r ece ntly

made a larg e philanthropic donation to the W omen and Children’ s Hospital of B uf fa lo, a fa c t th at, “ [w]hi le
. . . unq ue sti on a bly la ud ator y , . . . do e s n ot s ug g e st that Pla int if f i s on the brink of f

inancial r uin.” Id. at 17 n.4. In addition, the defe ndants observe that pursuant to an Administrative Agree ment that NAC enter ed into with the Air F orce to avoid debar ment, the plaintiff re moved himself from the company ’s day -to-day

operations and place d his stock in NAC into a voting trust for a ten-year period. Id. at 16. As a r esult, the plaintiff would not be a llowed to resume w orkingfor NA C even if his debarme nt were reve rsed. Id. Th e de fe nd ants ne xt co nte nd that N AC ’s dr op in
reve nue duringlate 2008 is more likely a re sult of the fac t that the company was propose d for debar ment betwee n May

and Jul y 2008, as opposed to beinga produc t of the plaintiff’s debar ment. Id. at 19 . F ur

the rm or e , th e de fe nd ants ma int a in t hat th e pla int if

f h a s p ro vid e d o nly speculation that NAC’s $10.4 mill ion loss in revenue thre atens its exis tence . Id. at 19-20. F ina lly , th e de fe nd ants argue that be c a us e re putatio na l ha

rm g e ne ra lly c ann ot g ive ri se to15

injunctive relief

, the cour t should not consider the alleg ed dama g e beingcause d to the plaintiff by the stigma

of his debar

ment. Id. at 20. Be cause the test for injunctive r elief is a f lexi ble one, a

court may

issue injunctive relief upon “a pa

rticularly stronglikelihood of succe ss on the merits even if there is a relatively

slight showing of irre para

ble injury .” CityFed Fin. Corp. , 58 F.3d at 747. Thus, in light of the fa ct that the pla int if

f h a s ma de a

str on gsh ow ingof

lik e lih oo d o f s uc c e ss o n th e me ri ts, he ne e d ma ke on ly
a re latively

small showing of

irrepa rable harm to be e ntitled to inj unctive re lief. As an initial matter, a f

ifty -five pe rce nt reduc tion in NAC’s revenue duringlate 2008 and the pla int if

f’ s p re dic tio n th at he “ may no t be a ble to k e e p N AC op e ra

tio na l if it c on tin ue s to sustain such larg e losses” a re not suff

icient to establish irrepa

rable harm. See W

is. Gas Co. v. Fed. Ene rgy Regulatory Comm’n , 7 58 F .2 d at 67 4 ( no tin gthat “ [b]are a lle g atio ns of wh at is likely to occur are of no value since the c ourt must decide whe ther the ha rm will in fact occ ur”)
. The doc ument filed in support of the de fenda nts’ sur-reply , which wa s filed under seal at NAC’s reque st, further unde rmines the plaintiff’ s claim that NAC’s ong oing via bility is imm inently

at risk. Turningnext t o the plaintiff’s a lleg ation of lost income as a result of his inability

to work for NA C or obtain compar able e mploy ment, the def

endants c orre ctly

observe that – as a r esult of the Ad min istrativ e Agre e me nt b e tw e e n N AC and the g ov e rnme nt –

the pla int if

f w ill be un a

ble to
resume w orkingfor NA C even if the c ourt g rants him injunctive relief
. SeePl.’s Mot., Ex . 17 (“Pl.’s Supplemental De cl.”) ¶ 6 (statingthat “[u] nder the terms of the A dminist rative Ag ree ement [sic] imposed by [t he deba rringofficia l] on NAC, [the plaintiff] cannot wor k forThe plaintiff posits that “[i]f this co urt find s that the d ebarm ent w as arb itrary and cap ricious, 6 then the co urt sh ould also e njoin enforcem ent o f the Adm inistrativ e A g reem ent an d the Voting Trust Ag reem ent, whic h h av e no justification ind epend ent o f the debarm ent.” Pl. ’s R eply at 2 0. As the d efendants argue in their sur- reply , th e plain tiff’s requ est – whic h w as fully articulate d fo r the first tim e in his rep ly

in supp ort of the p relim inary injunction – is problem atic be cause the Adm inistrativ e A g reem ent an d the VotingTrust A g reem ent w ere ex ecuted by N AC , which is no t a party to this ac tion. D efs.’ Sur- Rep ly at 3
- 5. In any

ev ent, the co urt ne ed n ot en tertain th e pl ai nt if f’ s re qu es t at thi s jun ct

ur e be caus e it s g rant

o f th e pl ai nt if

f’ s m ot io n fo r a pr el im in ar y inj unction

rests only

on a determ ination that it is li ke lyth at th e pl ai nt if

f w il l p re v ai l o n th e m er it s of h is claim , n ot that the debarm ent w as, in fact, arbitrary and cap ricious. 16 NA C or e ve n h ave c on ta c t w ithany of its e mpl oye e s” ). Th e pla int if f w ill , h ow e ve r, pr e suma

bly 6 be able to seek out other g overnme nt contrac ts if his debarment is lifted. And by virtue of the g overnme nt’s sovere ign immunity , the plaintiff will be unable to rec oup his lost i ncome if he
rema ins unable to obtain other g overnme nt contrac ts. Bo we n v . M as sa c hu se tts , 487 U.S. 879, 893-94 (1988) (noting that the APA does not wa ive the g overnme nt’s sovere ign immunity for
mon e y dama g e s) ; Feinerman , 5 58 F . Su pp . 2 d at 51 (n oti ngthat “ wh e re , a s h e re , th e pla int if f i n qu e s t i o nc an n o tr e c o v e r

d am a g e s f

r o mth e d e f

e n d an td u e t o th e d e f

e n d an t ' s s o v e r e i g ni m mun i ty . . . any loss of income suffe red by a plaintiff is irre para

ble pe r se ” ) ( c itatio ns omi tte d) ; c f. Sampson v. Murray , 415 U.S. 61, 90 (1974) (holdingthat “the tempor ary loss of income, ultimately to be rec overe d , does not usually constitute irrepa

rable injury ”) ( emphasis adde d). In a dd iti on , th e pla int if

f d e c lare s th at he is “ ra

pid ly los ingthe be ne fi t of

the bu sin e ss
c onne c tio ns [he ha s] bu ilt ov e r t he pa st twe nty

y e ars , a s th os e c onne c tio ns los e tr us t in [him ] beca use of the stig ma attac hed with [his] debar ment and ar e for ced to g ive their business to other shippers.” Pl.’s Supplemental De cl. ¶ 7. This dec laration provides an additional indication of irrepa rable harm. See, e .g. , 963 F. Supp. 1, 5 (D.D .C. 1997) (noting that the “plaintiffs ha ve demonstrated ir

repa rable harm in dama g e to their business re putation”); 11A F ED . P R AC . & P R OC . § 29 48 .1 (s tatin gthat “ [i]njury to r e putatio n o r g oo dw ill is n ot e a sil y me a sura ble inAs with m any requ ests fo r injunctiv e relief, the rem ainingtw o fac tors – the balancin g of the 7 equities and the p ublic interest – are inextricab ly

link ed to the plaintiff’s lik elihood of success on the m erits. See, e. g. , Se ro no L ab s. , I nc . v . S ha la la , 1 58 F.3 d 1 313, 13 26 (D. C. C ir. 1 998). The defend ants arg ue th at the public interest m ilitates ag ainst grantingthe plaintiff’s m otion becau se the g ov ernm ent m

ust b e ab le to ensure that o nly reputable c ontracto rs ob tain g ov ernm ent contracts. D efs.’ Opp ’n at 21- 23. B ecause the plaintiff h as d em onstrated a lik elihood

that he will p rev ail on

the m erits of his cla im , h owe v er, the g ov ernm ent’s arg um ent o n this po int carries little we ig ht. 17 monetary terms, and so ofte n is viewed a s irrepa rable ”). As a re su lt, the pla int if

f h a s p e rs ua de d th e c ourt

that hi s d e ba

rm e nt i s c a

us inghim so me deg ree of irre para

ble har m. I n combination with the likelihood that he will succee d on the merits, the irre para

ble injury prongof the a

naly sis entitles the plaintiff to injunctive relief. See Po pu lat ion In st. , 797 F.2d at 1078. 7

IV . C ON CL USI ON For the fore g oing r easons, the c ourt g rants the plaintiff’ s motion for a pre liminary injunction. An Order

consistent with this Memorandum Opinion is separate ly and contempora

neously issued this 29th day

of Oc tober, 2009.

RI CARDO M. URBI

NA Un i t edS t at es Di s tri ctJ u d ge