Court Opinion

ID: 9948054
Source: CourtListenerOpinion
Date Created: 2024-03-06 15:01:03.257803+00
Date Added: 2024-06-11T14:29:05.968721
License: Public Domain

Case: 22-1784   Document: 45     Page: 1   Filed: 03/06/2024

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

      AVUE TECHNOLOGIES CORPORATION,
                 Appellant

                            v.

     SECRETARY OF HEALTH AND HUMAN
  SERVICES, ADMINISTRATOR OF THE GENERAL
         SERVICES ADMINISTRATION,
                     Appellees
              ______________________

                       2022-1784
                 ______________________

     Appeal from the Civilian Board of Contract Appeals in
 Nos. 6360, 6627, Administrative Judge Kyle E. Chadwick,
 Administrative Judge Kathleen J. O’Rourke, Administra-
 tive Judge Patricia J. Sheridan.
                  ______________________

                 Decided: March 6, 2024
                 ______________________

    MICHAEL BHARGAVA, Nichols Liu LLP, Washington,
 DC, argued for appellant. Also represented by ANDY LIU,
 ROBERT NICHOLS, MADISON PLUMMER.

     DANIEL B. VOLK, Commercial Litigation Branch, Civil
 Division, United States Department of Justice, Washing-
 ton, DC, argued for appellees. Also represented by BRIAN
 M. BOYNTON, PATRICIA M. MCCARTHY, CORINNE ANNE
 NIOSI.
Case: 22-1784     Document: 45     Page: 2    Filed: 03/06/2024

 2                    AVUE TECHNOLOGIES CORPORATION v. HHS

                   ______________________

     Before STOLL, CUNNINGHAM, and STARK, Circuit Judges.
 STARK, Circuit Judge.
      Avue Technologies Corporation (“Avue”) appeals a de-
 cision by the Civilian Board of Contract Appeals (“Board”),
 which dismissed for lack of jurisdiction Avue’s appeal of a
 claim under the Contract Disputes Act (“CDA”). Avue non-
 frivolously alleged that it is party to a procurement con-
 tract with the Food and Drug Administration (“FDA”) via
 incorporation of Avue’s end-user licensing agreement
 (“EULA”) into an FDA task order, which is governed by a
 Federal Supply Schedule (“FSS”) contract between a third-
 party and the General Services Administration (“GSA”).
 Such an allegation is adequate to establish the Board’s ju-
 risdiction over Avue’s CDA claim. Whether Avue actually
 is a “contractor” for purposes of pressing the CDA claim is
 a matter (among others) on which Avue will have to prevail
 on the merits. We vacate the Board’s dismissal and re-
 mand with instructions that the Board provide Avue with
 an opportunity to prove its claim.
                               I
      Avue develops software that it sells to private and gov-
 ernment entities, allowing them to automate administra-
 tive tasks while complying with statutory, regulatory, and
 policy requirements. Avue does not sell licenses to its soft-
 ware directly to federal agencies. Instead, it sells annual
 subscriptions – to what it calls Avue Digital Services
 (“ADS”) – through third party Carahsoft Technology Cor-
 poration (“Carahsoft”), an authorized reseller which is it-
 self party to an FSS contract with GSA. Avue attempts to
 govern its relationship with end users of its software via an
Case: 22-1784    Document: 45      Page: 3    Filed: 03/06/2024

 AVUE TECHNOLOGIES CORPORATION v. HHS                       3

 EULA, which Avue calls a master subscription agreement
 (“MSA”). 1
     In 2012, Carahsoft and GSA amended the FSS contract
 to which they were both parties to include reference to
 Avue’s ADS. The form effectuating this modification pro-
 vided, among other things, that the “GSA approved EULA
 rider [is] hereby incorporated into this contract.”
 J.A. 2836. An attachment to the modification form in-
 cluded an unsigned, undated template version of Avue’s
 MSA, containing the words “[CLIENT NAME]” on the title
 page. The attached version of the MSA states, just above
 the empty signature blocks, “in the event this agreement is
 incorporated into a governmental contract award, execu-
 tion by the parties is not necessary.” J.A. 3001 (capitaliza-
 tion altered). The MSA further states that, “[f]or federal
 government Subscribers, the Subscribed Services are com-
 mercial items under [48 C.F.R. §] 2.101 and this standard
 commercial license to the Subscribed Services shall be in-
 corporated into and attached to the applicable contract.”
 J.A. 2993.
     In September 2015, the FDA placed a task order under
 the FSS contract for a subscription to Avue’s ADS (“Task
 Order”). The Task Order was for one base year and four
 option years. Sometime in mid-September 2016, Avue
 learned through “an anonymous text message” that the
 FDA “did not intend to renew its Avue subscription,” which

     1   The parties use the terms “MSA” and “EULA” in-
 terchangeably. See, e.g., Opening Br. at 8 n.1; Oral Arg.
 1:58-2:05,      available        at       https://oralargu-
 ments.cafc.uscourts.gov/default.aspx?fl=22-1784_1005202
 3.mp3 (Avue counsel stating EULA and MSA are inter-
 changeable terms). We do so here as well. Both terms refer
 to the “GSA approved EULA rider [that was] []incorporated
 into [the amended FSS] contract” in 2012. J.A. 2836.
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 4                   AVUE TECHNOLOGIES CORPORATION v. HHS

 was due to expire on September 29, 2016. J.A. 5789; see
 also J.A. 5288. Avue also “immediately conducted an anal-
 ysis of the account activity and use of FDA account hold-
 ers.” Id. On September 18, 2016, Avue accused the FDA
 of taking “acts in violation of Avue’s end user terms and
 conditions, intellectual property rights, and the Trade Se-
 crets Act.” Id. On September 29, 2016, when the FDA
 chose not to exercise its option, the Task Order terminated.
      Over the ensuing months, Avue sent a “Cease and De-
 sist Letter” and a claim letter to the FDA’s contracting of-
 ficer. J.A. 6040-41 (cease and desist letter); J.A. 6069-86
 (claim letter). Then, in a series of communications back to
 Avue in 2017 and 2018, the contracting officer denied
 Avue’s allegations, pointing out that the FDA’s contract
 was with Carahsoft, not Avue. J.A. 6067-68 (FDA’s re-
 sponse to cease and desist letter in October 2017);
 J.A. 6099 (FDA’s response to claim letter in August 2018).
 The contracting officer also noted that “[i]f Avue wishes to
 pursue its ‘claim,’ it can do so by having Carahsoft assert a
 pass-through claim against the FDA on Avue’s behalf.”
 J.A. 6099.
     On January 22, 2019, Avue filed an appeal at the Board
 of the contracting officer’s denial of its claim. 2 Carahsoft

     2   The government argues that Avue’s Board appeal
 was untimely under 41 U.S.C. § 7104. Section 7104 re-
 quires a party to file an appeal with the Board “within 90
 days from the date of receipt of a contracting officer’s deci-
 sion under [41 U.S.C. §] 7103.” The government concedes
 it did not raise this issue with the Board. In any event, the
 FDA’s August 17, 2018 letter did not start the clock gov-
 erning Avue’s appeal since it failed to adequately “inform
 the contractor of the contractor’s rights,” 41 U.S.C.
 § 7103(e); see also Pathman Constr. Co. v. United States,
 817 F.2d 1573, 1578 (Fed. Cir. 1987), and the letter did not
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 AVUE TECHNOLOGIES CORPORATION v. HHS                        5

 did not sponsor Avue’s claim. Avue asserted to the Board
 that it was appealing from a “deemed denial” of its claim.
 The United States Department of Health and Human Ser-
 vices (HHS), of which the FDA is a part, moved to dismiss
 Avue’s appeal for lack of subject matter jurisdiction, argu-
 ing that Avue is not a “contractor” within the meaning of
 the CDA. The Board denied the HHS motion. After Avue
 filed a “protective” claim with GSA, the Board consolidated
 the appeal of the GSA claim with the ongoing appeal of the
 HHS claim.
      Following discovery, the agencies and Avue cross-
 moved for summary judgment. Before ruling on the par-
 ties’ motions, the Board sua sponte ordered supplemental
 briefing addressing whether a software license is a procure-
 ment contract subject to the CDA. After receiving the sup-
 plemental briefs, the Board dismissed Avue’s appeal for
 lack of jurisdiction. The Board’s opinion stated that it was
 not deciding whether Avue’s “MSA establishes privity of
 contract between Avue and the Government.” J.A. 4-5. Ra-
 ther, the Board was dismissing because it agreed with the
 government’s view that “even if the Board were to find that
 the . . . MSA establishes an independent contract between
 the Government and Avue as Avue alleges, [the Board]
 lack[ed] jurisdiction to decide the case because the MSA is
 not a procurement contract within the meaning of the
 CDA.” J.A. 4 (internal quotation marks omitted). In the
 Board’s view, “the MSA standing alone lack[ed] core

 indicate that it was the contracting officer’s final decision,
 see J.A. 6099 (contracting officer stating “FDA will continue
 to research the allegations presented in Avue’s ‘claim’”)
 (emphasis added); see also 48 C.F.R. § 33.211 (requiring
 contracting officer’s written decision to include “para-
 graphs substantially as follows: ‘This is the final decision
 of the Contracting Officer . . . .’”).
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 6                   AVUE TECHNOLOGIES CORPORATION v. HHS

 aspects of a CDA procurement contract.” J.A. 5. The Board
 did not evaluate whether the FSS contract or the Task Or-
 der, which incorporated the MSA, constituted a procure-
 ment contract.
     Avue timely appealed the Board’s dismissal. We have
 jurisdiction under 28 U.S.C. § 1295(a)(10). We review the
 Board’s decision on questions of law de novo. See 41 U.S.C.
 § 7107(b). In particular, whether a tribunal “has jurisdic-
 tion over a claim presents a question of law we review de
 novo.” Lee’s Ford Dock, Inc. v. Sec’y of the Army, 865 F.3d
 1361, 1369 (Fed. Cir. 2017).
                               II
     The Board’s jurisdiction over an appeal of a CDA claim
 is derived from 41 U.S.C. § 7105(e)(1)(B), which confers “ju-
 risdiction to decide any appeal from a decision of a contract-
 ing officer . . . relative to a contract made by that agency.”
 Under 41 U.S.C. § 7103(a)(1) & (2), the contracting officer’s
 decision that gives rise to a Board appeal must be with re-
 spect to a claim by a “contractor.” The term “contractor” is
 expressly defined in 41 U.S.C. § 7101(7) as “a party to a
 Federal Government contract other than the Federal Gov-
 ernment.” Accordingly, “the CDA does not permit appeals
 by anyone who is not a party to a Government contract.”
 Winter v. FloorPro, Inc., 570 F.3d 1367, 1371 (Fed. Cir.
 2009) (internal quotation marks omitted); see also id. at
 1370 (“[T]he provisions of the CDA apply only to ‘contrac-
 tors,’ i.e., ‘part[ies] to a Government contract other than
 the Government.’”) (quoting 41 U.S.C. § 601(4)).
     In some circumstances, however, we have held that cer-
 tain third parties that are in privity with the federal gov-
 ernment may “become a ‘contractor’ within the meaning of
 the CDA” and, hence, press a claim under the CDA. Lum-
 bermens Mut. Cas. Co. v. United States, 654 F.3d 1305,
 1321 (Fed. Cir. 2011); see also Admiralty Constr. By Nat’l
 Am. Ins. Co. v. Dalton, 156 F.3d 1217, 1222 (Fed. Cir. 1998)
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 AVUE TECHNOLOGIES CORPORATION v. HHS                         7

 (“Because National is neither a contractor nor an entity in
 privity with the Navy, National alone is not eligible to ap-
 peal to the Board under the CDA.”); Erickson Air Crane Co.
 of Washington, Inc. v. United States, 731 F.2d 810, 813
 (Fed. Circ. 1984) (“The government consents to be sued
 only by those with whom it has privity of contract . . . .”).
     “[A] plaintiff need only allege” – that is, it need not
 prove – “the existence of a contract” to which it is a party
 “to establish the Board’s jurisdiction under the CDA ‘rela-
 tive to’ an express or implied contract with an executive
 agency.” Engage Learning, Inc. v. Salazar, 660 F.3d 1346,
 1353 (Fed. Cir. 2011) (emphasis added). Notwithstanding
 our clear holding in Engage Learning, the government ar-
 gues that if a “motion denies or controverts the pleader’s
 allegations of jurisdiction . . . , the movant is deemed to be
 challenging the factual basis for the court’s subject matter
 jurisdiction,” and at that point “[a]llegations alone will not
 suffice.” Gov. Br. at 29 (citing Cedars-Sinai Med. Ctr. v.
 Watkins, 11 F.3d 1573, 1583 (Fed. Cir. 1993)). According
 to the government, then, establishing the Board’s jurisdic-
 tion requires that “Avue must convince this [c]ourt that
 there is a genuine issue of material fact for trial as to that
 issue,” i.e., that the record contains sufficient evidence
 from which a reasonable factfinder could find that Avue is
 party to a contract with the federal government. Gov. Br.
 at 31.
      The government’s position is contrary to our precedent.
 In Engage Learning, we held that “the determination of
 whether or not a contract in fact exists is not jurisdictional;
 it is a decision on the merits.” 660 F.3d. at 1355 (emphasis
 added). It follows, then, that to establish the Board’s juris-
 diction over a CDA claim, a party need only allege, non-
 frivolously, that it has a contract (express or implied) with
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 8                   AVUE TECHNOLOGIES CORPORATION v. HHS

 the federal government. 3 The obligation to actually prove
 the existence of such a contract does not arise until the case
 proceeds to the merits, at which point the claimant can only
 prevail on its claim if it proves (among other things) that it
 has rights under a “procurement contract.” 4
     None of the cases on which the government relies for
 its contention that a claimant, in order to establish the
 Board’s jurisdiction, must produce sufficient evidence of a
 contract to at least create a genuine dispute of fact, see
 Govt. Br. at 29, actually involves a CDA claim or the Board.
 See McNutt v. Gen. Motors Acceptance Corp. of Ind., 298
 U.S. 178, 189 (1936) (discussing diversity jurisdiction in
 district court); Cedars-Sinai, 11 F.3d at 1583 (applying
 Federal Rule of Civil Procedure 12(b)(1) in district court ac-
 tion); Reynolds v. Army & Air Force Exch. Serv., 846 F.2d
 746, 747 (Fed. Cir. 1988) (same). In contrast, Engage
 Learning is directly on point, as it involved a CDA claim
 before the Board – and, again, Engage Learning expressly

     3  That is, the party must allege, in substance, that
 there was “a mutual intent to contract including an offer,
 an acceptance, and consideration” and that “the Govern-
 ment representative who entered or ratified the agreement
 had actual authority to bind the United States.” Trauma
 Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir.
 1997).
     4   The government correctly notes that “the same
 question may resolve both the merits and a jurisdictional
 issue.” Gov. Br. at 30 (citing Brownback v. King, 141 S. Ct.
 740, 749 (2021)). Such potential overlap, however, does not
 make it any less important to distinguish between jurisdic-
 tion, which need only be alleged (to survive a motion to dis-
 miss), and the merits, which must be proven.
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 AVUE TECHNOLOGIES CORPORATION v. HHS                      9

 held that nonfrivolous allegations are adequate to estab-
 lish jurisdiction and avoid dismissal.
     Avue has made the requisite non-frivolous allegations
 to establish the Board’s jurisdiction. Indeed, this was the
 conclusion the Board itself reached early in the case when
 it denied the initial motions to dismiss. See J.A. 198
 (Board: “Avue is not pursuing its claim as a subcontractor.
 Avue alleges that it is a contractor. More than this, Avue
 points to a specific writing (the EULA, allegedly ‘incorpo-
 rated’ in the FSS contract) that it considers a government
 contract.”). At that stage, the Board correctly explained
 that Avue’s “allegations of the existence of a contract suf-
 fice to take the claim out of the realm of subcontractor
 claims and into the world of claims within our CDA juris-
 diction.” J.A. 198 (citing Engage Learning, 660 F.3d at
 1353 and Gould, Inc. v. United States, 67 F.3d 925, 929
 (Fed. Cir. 1995)).
     After the parties filed their motions for summary judg-
 ment and supplemental briefs, however, the Board found it
 lacked jurisdiction, for a new reason. At that point, the
 Board held that the MSA, standing alone, is not a “procure-
 ment contract” within the meaning of the CDA. J.A. 4.
 Central to the Board’s rationale was that “the Government
 did not acquire anything directly from Avue under a pro-
 curement contract with Avue.” J.A. 6.
     Whether or not the MSA, all by itself, is a “procurement
 contract” is not a question we need to decide. The pertinent
 question, instead, is whether Carahsoft’s FSS contract
 with GSA or the Task Order placed by the FDA, each of
 which incorporates the MSA, constitutes a “procurement
 contract” giving rise to rights enforceable by Avue. See
 Opening Br. at 28 (“The Board’s fundamental error was to
 improperly disaggregate the Carahsoft Schedule Contract
 from its incorporated parts . . . .”). While Avue, confus-
 ingly, urged the Board to treat the MSA as a standalone
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 10                   AVUE TECHNOLOGIES CORPORATION v. HHS

 contract, see J.A. 170-71 (“MSA [i]s a [f]reestanding [c]on-
 tract [b]etween Avue and FDA.”); see also J.A. 4 (“[E]ven if
 the Board were to find that the . . . MSA establishes an in-
 dependent contract between the Government and Avue, as
 Avue alleges . . . .”) (emphasis added), Avue also suffi-
 ciently, and alternatively, made the more comprehensive
 allegation that its rights arise from the combination of the
 MSA with the FSS contract or with the Task Order, see
 J.A. 737 (“[T]here is no question that the MSA is incorpo-
 rated by reference into FDA’s FSS order, and so, whether
 or not it is a CDA contract standing alone, CDA jurisdiction
 attaches to a claim based on its breach.”). The government
 agrees that Avue made this broader allegation to the
 Board, see Oral Arg. at 14:44-15:09 (government acknowl-
 edging that “[b]oth arguments will probably show up in
 [Avue’s] briefs including from below”) and that “the MSA
 was not a stand-alone contract,” Gov. Br. at 51.
      Importantly, the government further concedes that if,
 as we are requiring on remand, the MSA is to be considered
 part of a larger contract (i.e., in conjunction with the FSS
 contract or the Task Order), that larger contract is a pro-
 curement contract. See Gov. Br. at 52 (“Unquestionably,
 Carahsoft’s contracts with GSA and the FDA were procure-
 ment contracts.”); Oral Arg. at 24:19-34 (government coun-
 sel stating “[i]t is not a question of whether there is or isn’t
 a procurement contract. There was. It was with Carah-
 soft.”).
      Under these circumstances, in which the Board found
 it lacked jurisdiction without considering a basis for juris-
 diction that all parties to this appeal agree was fairly pre-
 sented to the Board, we will not affirm the Board’s
 dismissal of Avue’s claim. Instead, we conclude that Avue’s
 allegation that it is a party to a procurement contract (i.e.,
 the FSS contract or the Task Order) with the federal gov-
 ernment that incorporates its MSA is nonfrivolous and,
 therefore, sufficient to establish the Board’s jurisdiction
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 AVUE TECHNOLOGIES CORPORATION v. HHS                      11

 under the Engage Learning standard, which we reaffirm is
 applicable here.
      On remand, the Board must proceed to consider the
 merits, treating as a merits issue the matter of whether
 Avue is a party to – or otherwise has enforceable rights
 pursuant to, for example by being in privity with Carahsoft
 – the conceded procurement contract (i.e., the MSA plus
 the FSS or the Task Order). We decline the parties’ invita-
 tion, see e.g., Opening Br. at 50; Oral Arg. at 17:53-18:32,
 to resolve merits issues (including privity) ourselves in the
 first instance. Instead, we will benefit from the Board’s
 considerable “expertise on questions of government con-
 tracts” and its considered views on these issues. R.B.
 Wright Constr. Co. Through Rembrant v. United States,
 919 F.2d 1569, 1571 (Fed. Cir. 1990).
                              III
     We have considered the government’s remaining argu-
 ments and find they are unpersuasive and do not warrant
 further discussion. Thus, for the reasons stated above, we
 vacate the Board’s dismissal for lack of jurisdiction and re-
 mand for further proceedings on the merits consistent with
 this opinion.
                VACATED AND REMANDED
                            COSTS
 No costs