March 10, 2017

WILLIAM FINLEY v. UNITED STATES POSTAL SERVICE

PSBCA No. 6606

APPEARANCE FOR APPELLANT:
Danielle B. Obiorah
Obiorah Fields, LLC

APPEARANCE FOR RESPONDENT:
Joseph B. Fray
United States Postal Service Law Department

OPINION OF THE BOARD

William Finley and three other contractors provided transportation services to the Postal Service in and out of Monroe, Louisiana.  In 2014, as part of a larger, regional consolidation program, the Postal Service decided to consolidate the routes in Monroe, which resulted in a decision not to renew Mr. Finley’s contract.  The consolidated contract was awarded to one of the other contractors.  Mr. Finley now seeks monetary damages, alleging that the nonrenewal decision was made in bad faith and constituted an abuse of discretion. 

The Postal Service has moved to dismiss the appeal for lack of jurisdiction, or in the alternative, for summary judgment.  Mr. Finley opposes the motion.  We deny the motion to dismiss for lack of jurisdiction, but grant the motion for summary judgment.

FINDINGS OF FACT

1. Mr. Finley had a contract (HCR 71270) with the Postal Service for mail transportation services between Monroe, Louisiana, and Jones, Louisiana.  In July 2010, the parties signed a bilateral modification, extending the term of the contract to June 30, 2014.  (Statement of Uncontested Facts,¹ ¶ 1).
2. The contract incorporated Clause B-78, Renewal Clause (February 2010) by reference.  That clause provided that the “contract may be renewed by mutual agreement of the parties.”  (Uncontested Facts, ¶ 2).  The contract also provided that if the contracting officer chose not to renew the contract, Mr. Finley could have that decision reviewed by the next higher level contracting authority (Uncontested Facts, ¶17; AF 1 at 16, ¶ 2.2.2).
3. In addition to Mr. Finley, three other contractors provided mail transportation services to the Postal Service in Monroe, Louisiana.  Mr. Finley and two of the other contractors are African American, while the other contractor, J. Harvey, is Caucasian.  (William Finley Dep. at 26–27).  Mr. Harvey’s contracts covered all but three of the approximately 20 routes in Monroe.  Mr. Finley and the other African American contractors each held one of the remaining routes.  (Finley Dep. at 17, 35–36).
4. In early 2014, the Postal Service decided to consolidate the number of transportation contracts in the southern United States from approximately 445 contracts to approximately 60 contracts.  The Postal Service wanted to increase efficiencies and reduce contract administration costs.  (Uncontested Facts, ¶ 3).
5. As part of the route consolidation plan, the contracting officer selected Mr. Finley’s contract and seven other contracts in Monroe, Louisiana for consolidation (Uncontested Facts, ¶ 7).²
6. On April 17, 2014, the contracting officer notified Mr. Finley that his contract would be allowed to expire at the end of June 2014 (Uncontested Facts, ¶ 6).  The contracting officer also told Mr. Finley that he could appeal the nonrenewal decision to the next higher contracting authority (AF 2).
7. On April 21, 2014, the Postal Service invited Mr. Finley and the three other contractors affected by the consolidation to submit a proposal for the new, consolidated contract.  The proposals were due three days later, on April 24, 2014.  (Uncontested Facts, ¶ 7–8).
8. Only Mr. Harvey submitted a proposal, and he was awarded the consolidated contract on April 29, 2014 (AF 5). 
9. The day before the award of the consolidated contract, Mr. Finley appealed the Postal Service’s nonrenewal decision to the next higher contracting authority.  Mr. Finley argued that the consolidation would (1) result in a loss of jobs for minority small business owners, (2) result in enormous costs to maintain, (3) potentially increase costs to minority small business owners, and (4) potentially delay delivery of the mail.  Mr. Finley also claimed that he had faithfully honored and maintained his contract for 15 years without receiving any deficiency reports or disciplinary actions against his drivers.  (AF 6).  The appeal was denied on June 30, 2014, by the Acting Manager, Surface Transportation Category Management Center.  The Acting Manager stated that Mr. Finley’s contract was not renewed because of reductions in mail volume and significant network changes.  (AF 7).
10. Mr. Finley filed a certified claim for $309,370.32 based on the Postal Service’s discriminatory and illegal nonrenewal of the contract (AF 14).  The Postal Service denied the claim in a final decision dated April 24, 2015 (AF 15).  This appeal followed (AF 16).

DECISION
Motion to Dismiss for Lack of Jurisdiction

The Postal Service has moved to dismiss the appeal for lack of jurisdiction, asserting that Mr. Finley’s claim is really a bid protest relating to the award of the consolidated contract.  In response, Mr. Finley argues that his claim is based on the decision not to renew his contract, and thus the Board should follow its earlier precedent finding jurisdiction in similar circumstances. 

The Board’s jurisdiction in this case derives from the Contract Disputes Act, which provides that the Board may hear an appeal from a contracting officer’s decision issued relative to a Postal Service contract.  See 41 U.S.C. § 7105(e)(1)(C).  As it relates to the nonrenewal of a contract, the Board only has jurisdiction if a contractor files a monetary claim for damages caused by the nonrenewal decision.  Once the contracting officer issues a final decision—or alternatively, fails to issue a final decision within the timelines established by the Contract Disputes Act—a contractor may file an appeal with the Board.  See 41 U.S.C. § 7103.  In the absence of a monetary claim, however, the Board, does not have jurisdiction over an appeal that challenges only the nonrenewal decision.  See Franklin Wilborn, PSBCA Nos. 6260, 6314, 10-2 BCA ¶ 34,608 (dismissing PSBCA No. 6260 because the contractor had not filed a monetary claim, while retaining jurisdiction over PSBCA No. 6314 because the contractor had filed a monetary claim).  Moreover, the monetary claim must relate either to a breach of contract or an implied-in-fact contract.  See Associated Transfer and Storage, PSBCA No. 1058, 83-1 BCA ¶ 16,138.  The Board does not, however, have jurisdiction over procurement protests.  See Frank Baiamonte, PSBCA No. 5332, 08-1 BCA ¶ 33,796.  Thus, a claim based on the breach of an implied obligation to give fair and honest consideration to an offer must be dismissed for lack of jurisdiction.  See Coastal Corp. v. United States, 713 F.2d 728 (Fed. Cir. 1983).

Here, Mr. Finley has filed a certified monetary claim alleging that the Postal Service did not renew his contract based on racial discrimination.  Although many of the facts raised in the filings involve award of the consolidated contract, the claim itself references and relates to the nonrenewal decision and alleges a valid basis for relief under our established precedent.  We thus hold that the claim satisfies the legal requirement for the Board’s jurisdiction to decide the appeal.  See Wilborn, 10-2 BCA ¶ 34,608.

Motion for Summary Judgment

The Board will grant a motion for summary judgment if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.  Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).  A material fact is one that may affect the outcome of the decision.  Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986).

The Postal Service’s motion for summary judgment asserts that Mr. Finley has failed to establish the existence of an essential element of his case.  When a motion for summary judgment presents such an argument, the Board may grant summary judgment if, after adequate time for discovery, the non-moving party “fails to make a showing sufficient to establish the existence of an essential element to [his] case, and on which [he] will bear the burden of proof at trial.”  See Zafer Taahhut Insaat ve Ticaret v. United States, 833 F.3d 1356, 1362–63 (Fed. Cir. 2016)(citing Celotex Corp., 477 U.S. at 322).  In the context of opposing a motion for summary judgment, however, Mr. Finley may rely on the types of documents mentioned in Rule 56(c) of the Federal Rules of Civil Procedure to defeat the motion.³ See Celotex, 477 U.S. at 324.

The Postal Service has the initial responsibility of describing the basis for its motion and identifying those parts of the record demonstrating the absence of a genuine issue of material fact.  See id. at 323.  Here, the Postal Service has met that initial responsibility by showing that Mr. Finley’s claim, which alleges bad faith or abuse of discretion, is not supported by admissible evidence.  The Postal Service points specifically to Mr. Finley’s deposition and his interrogatory responses, arguing that there is no admissible evidence in either the deposition or interrogatory responses supporting the claim.  In the absence of such admissible evidence, the Postal Service argues that it is entitled to judgment as a matter of law.   

The contract provided for renewal by mutual agreement, and the Postal Service had wide discretion in deciding whether to do so, or to allow the contract to expire.  See Wilborn, 10-2 BCA ¶ 34,608 at 170,578.  Here, the Postal Service exercised that discretion when it decided not to renew Mr. Finley’s contract and instead consolidated the routes held by the four contractors in Monroe.  Because of the wide discretion available to the Postal Service when it made the nonrenewal decision, Mr. Finley is not entitled to damages unless he can prove bad faith or an abuse of discretion.  See id. at 170,577.  To show bad faith, Mr. Finley must show by clear and convincing evidence that the Postal Service had some specific intent to harm him.  See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1240 (Fed. Cir. 2002); Temple Contract Station LC, PSBCA No. 6430, 14 BCA ¶ 35,669 at 172,602.

Mr. Finley bases his allegations of bad faith and abuse of discretion on racial discrimination.  More specifically, he contends that there are genuine issues of material fact as to the following allegations, which he believes could establish bad faith after a trial:

• The Postal Service gave Mr. Harvey advance notice of its plan to consolidate the routes in Monroe, thereby giving him more time to prepare a proposal for the consolidated contract;
• The Postal Service did not give Mr. Finley adequate time to prepare a proposal for the consolidated contract;
• The Postal Service’s contracting officials had a personal relationship with Mr. Harvey;
• The Postal Service based its nonrenewal decision on decreased mail volume, despite no actual decrease in mail volume; and
• The Postal Service paid Mr. Harvey more under the consolidated contract than it would have paid Mr. Finley under his renewed contract.

As discussed below, none of these alleged facts are sufficient to defeat the Postal Service’s motion for summary judgment.

Relying solely on his own deposition testimony, Mr. Finley argues that he has shown that there is a genuine factual dispute as to whether Mr. Harvey had advance knowledge of the consolidation plan (Resp. to Mot. for Summ. J. at 4).  Mr. Finley alleges that this advance knowledge gave Mr. Harvey an unfair advantage as he and the other potential contractors vied to secure the consolidated contract.  However, even if we accept Mr. Finley’s testimony regarding advance notice as true, the testimony does not relate to a material fact.  The allegation instead relates to the Postal Service’s actions in awarding the consolidated contract, not to the nonrenewal decision at issue in this appeal.  Because this allegation relates to the award decision, Mr. Finley could have raised this concern in a procurement protest.⁴  For purposes of this decision, however, the allegation is not material.⁵

Next, Mr. Finley alleges that the Postal Service did not give him (or the other minority contractors) sufficient time to prepare a proposal for the consolidated contract.  The Postal Service gave the four contractors in Monroe the solicitation for the consolidated contract on April 21, and their proposals were due on April 24, 2014.  While we agree that this seems like a short time to prepare a proposal, Mr. Finley has not alleged that the three-day period to prepare and submit a proposal violated any Postal Service regulation or otherwise violated the law.  Mr. Finley merely alleges that he could not prepare a proposal in this short time.  As with the previous issue, if Mr. Finley believed the three-day period for submitting proposals violated the law or was intended to discriminate against him, he could have filed a procurement protest.  Nothing in the record, however, ties the three-day period to the earlier nonrenewal decision at issue in this appeal.  As such, the Postal Service’s decision to give potential offerors three days to submit proposals for the consolidated contract is not material to our decision.

Although not directly addressed in his reply to the motion, Mr. Finley’s deposition testimony also implies that Mr. Harvey’s personal relationship with the Postal Service’s contracting officials led to favorable treatment for Mr. Harvey (Finley Dep. at 34, 42, 50).   Here again, Mr. Finley’s testimony on this issue was based on hearsay, speculation, and conjecture.  He conceded that he did not know the names of the Postal Service officials involved, that he was speculating about this allegation, that he did not have personal knowledge of the alleged relationship, and that his knowledge was based on what he had gathered from his conversations with Mr. Harvey.  We conclude that such an allegation is not sufficient to create a genuine dispute as to a material fact sufficient to defeat the Postal Service’s motion.  See Am-Pro, 281 F.3d at 1241 (holding that an uncorroborated affidavit cannot create a genuine dispute of material fact when the non-moving party has the burden to prove an element of its claim by clear and convincing evidence); Wilborn, 10-2 BCA ¶ 34,608 at 170,578 (holding that conclusory statements and bare assertions of discrimination are not sufficient to create a genuine issue of material fact (citing Pure Gold, Inc. v. Syntex (U.S.A.), Inc., 739 F.2d 624, 626–27 (Fed. Cir. 1984)).

Mr. Finley’s response to the motion also disputes the Postal Service’s claim that the decision to consolidate the contracts was based on reduced mail volume or significant network changes (Finding 9).  In essence, Mr. Finley contends that these stated reasons were merely pretexts to hide the real reason for the nonrenewal decision: racial discrimination.  In his deposition, Mr. Finley claimed that Mr. Harvey runs the same route on the same schedule that Mr. Finley had run under his contract, thereby establishing that there was no real decrease in mail volume.  Mr. Finley also stated in his deposition that the Postal Service was paying Mr. Harvey two or three times what it had previously paid him for the same work.  According to Mr. Finley, the Board should deny the Postal Service’s motion and conduct a hearing to decide these disputed issues.

We disagree.  Mr. Finley has failed to support his allegations with anything other than speculation.  See Wilborn, 10-2 BCA ¶ 34,608 at 170,578.  Although he had a full chance to conduct discovery, Mr. Finley has not introduced any evidence regarding the mail volume under either his expired contract or the consolidated contract.  Further, the fact that Mr. Harvey is running the same route on the same schedule under the consolidated contract does not matter for the purpose of deciding this motion.  That fact merely shows that Mr. Harvey is now performing the route that Mr. Finley had performed.  It does not, however, support an assertion that the nonrenewal was made in bad faith.  Resting as it does on nothing more than Mr. Finley’s bare assertion in his deposition, this allegation cannot defeat the Postal Service’s motion.  See Am-Pro, 281 F.3d at 1241; Pure Gold, 739 F.2d at 626–27. 

We apply the same analysis to the allegation that Mr. Harvey is being paid two or three times more than Mr. Finley was being paid under his contract.  While Mr. Finley presumably knows how much he was paid, nothing suggests that he has any personal knowledge about the rates Mr. Harvey is receiving for the same work under the consolidated contract.  In the absence of either testimony based on personal knowledge or documentary evidence showing the amount of money being paid to Mr. Harvey, we cannot find there is a genuine dispute over this alleged material fact.  See Pure Gold, 739 F.2d at 626–27; see also Zafer Taahhut, 833 F.3d at 1365 (holding that broad and unsubstantiated allegations are insufficient to survive a motion for summary judgment).

Our analysis thus far has focused on Mr. Finley’s allegations of bad faith.  We now turn to Mr. Finley’s assertion that the Postal Service abused its discretion when it did not renew his contract.  As noted above, the Postal Service has broad discretion over its decision to renew a contract, and we will not second-guess the Postal Service’s business judgment.  See Wilborn, 10-2 BCA ¶ 34,608 at 170,578.  That discretion is not absolute, however. 

In deciding whether government officials abused their discretion, the Board may consider (1) evidence of whether government officials acted with subjective bad faith; (2) whether the officials had a reasonable, contract-related basis for their decisions; (3) the amount of discretion given to the officials; and (4) whether the officials violated a statute or regulation.  See Campbell Plastics Eng'g & Mfg., Inc. v. Brownlee, 389 F.3d 1243, 1250 (Fed. Cir. 2004)(citing McDonnell Douglas Corp. v. United States, 182 F.3d 1319, 1326 (Fed. Cir. 1999) and United States Fid. & Guar. Co. v. United States, 676 F.2d 622, 630 (Ct. Cl. 1982)).

In this appeal, the second and third factors both strongly favor the Postal Service’s position.  As to the second factor, the undisputed facts establish that the contract itself provided only for renewal by mutual agreement.  The Postal Service was under no contractual obligation to renew the contract.  This fact leads naturally to the conclusion that, as to the third factor, the contracting officer had broad discretion in deciding whether to renew the contract.  The fourth factor is not an issue in this appeal.  Although Mr. Finley alleges that the Postal Service violated the law by discriminating against him, as discussed above, he has not produced evidence to support that conclusion.

Mr. Finley is thus left to the first factor—subjective bad faith—to establish sufficient facts to demonstrate an abuse of discretion.  Here again, Mr. Finley has failed to show that there is a genuine dispute as to any material fact supporting his allegation of bad faith that could be proved at trial.  We therefore find that the Postal Service did not abuse its discretion when it decided not to renew Mr. Finley’s contract.

ORDER

The Postal Service’s motion to dismiss for lack of jurisdiction is denied.  As to the motion for summary judgment, the Postal Service has shown that there is no genuine dispute as to any material fact and that it is entitled to judgment as a matter of law.  Accordingly, the Postal Service’s motion for summary judgment is granted, and the appeal is denied.

Alan R. Caramella
Administrative Judge
Vice Chairman

I concur:
Gary E. Shapiro
Administrative Judge
Chairman

I concur:
Diane M. Mego
Administrative Judge
Board Member