Xp Vehicles, Inc. v. U.S. Department of Energy , 156 F. Supp. 3d 185 ( 2016 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
)
XP VEHICLES, INC., et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 13-cv-37 (KBJ)
)
THE UNITED STATES DEPARTMENT )
OF ENERGY, et al., )
)
Defendants. )
)
MEMORANDUM OPINION AND ORDER
On July 14, 2015, this Court dismissed the majority of the claims in this matter
but permitted certain Administrative Procedure Act (“APA”), 5 U.S.C. §§ 701 –06,
claims to proceed. Subsequently, Defendants filed a motion for voluntary remand. (See
Defs.’ Mot. for Voluntary Remand (“Defs.’ Mot.”), ECF No. 44; Defs.’ Mem.
Supporting Defs.’ Mot. (“Defs.’ Mem.”), ECF No. 44 -1.) That motion is now ripe, and
it be will GRANTED for the reasons explained below.
I. BACKGROUND
This Court’s Memorandum Opinion regarding Defendants’ motions to dismiss
the complaint (issued July 14, 2015) recounts the factual background of this case in
detail. See generally XP Vehicles, Inc. v. Dep’t of Energy, No. 13-cv-37, 2015 WL
4249167 (D.D.C. July 14, 2015). For present purposes, only the following facts are
relevant. In 2009, Plaintiffs XP Vehicles, Inc. (“XPV”) and Limnia, Inc. (“Limnia”)
submitted applications for loan assistance under two United Sta tes Department of
Energy (“DOE”) programs. Those programs—the Advanced Technology Vehicle
Manufacturing (“ATVM”) Loan Program and the Section 1703 Loan Guarantee
Program (“LG Program”)—permit the DOE to offer loans and “direct financial support
to the manufacturers of clean energy vehicles and related components.” Id. at *1. After
the DOE denied Plaintiffs’ applications, Plaintiffs sued the DOE, its Secretary in his
official capacity, and two former high-level DOE administrators in their individual
capacities, claiming that the DOE violated several constitutional provisions and the
APA because the denials had been based on impermissible political cronyism rather
than impartial review. See id.As mentioned, this Court dismissed the majority of Plaintiffs’ claims for a
variety of reasons not pertinent here; however, it also concluded that the claims
Plaintiff Limnia had brought under the APA stemming from the DOE’s allegedly
arbitrary and capricious denial of its ATVM and LG Program applications survived the
government’s motion to dismiss for failure to state a claim. See id. at *25–27.
Defendants subsequently filed an answer to Limnia’s surviving claims, and then filed
the motion for voluntary remand of the case to the agency due to changed circumstances
and considerations of judicial efficiency that is before this Court at present. (See Defs.’
Mem. at 5.) 1 Limnia filed a brief in opposition to Defendants’ motion for a voluntary
remand, asserting that Defendants failed to admit fault or point to intervening events in
support of the remand request, and that remanding the matter to the agency under the
circumstances presented here would deprive Limnia of benefits to which it might be
entitled if the Court permitted the case to proceed and ultimately ruled in Limnia’s
1
Page-number citations to the documents the parties have filed refer to the page numbers that the
Court’s electronic filing system automatically assigns.
2
favor. (See Pl.’s Mem. in Opp’n to Defs.’ Mot. (“Pl.’s Opp’n”), ECF No. 45, at 1.)
Defendants filed a reply brief (see Defs.’ Reply in Supp. of Defs.’ Mot. (“Defs.’
Reply”), ECF No. 47), and this Court held a hearing on Defendants’ ripe remand motion
on December 15, 2015.
II. APPLICABLE LEGAL STANDARDS
When a plaintiff files a complaint challenging agency action, a federal court has
the discretion to grant the agency’s motion for a voluntary remand of the matter in
order to permit the agency to reconsider its decision, even before any judicial
consideration of the merits. See Code v. McHugh, No. 15-cv-31, 2015 WL 6154381, at
*3 (D.D.C. Oct. 19, 2015). Agencies typically seek to justify such remand requests by
expressing doubt about the propriety of their initial action—for example, agencies
sometimes point to “new evidence [that became] available after an agency’s original
decision was rendered” or highlight “intervening events outside of the agency’s control
[that] may affect the validity of an agency’s actions.” Carpenters Indus. Council v.
Salazar, 734 F. Supp. 2d 126, 132 (D.D.C. 2010) (internal quotation marks and
citations omitted). But it is also well established that, “[e]ven in the absence of new
evidence or an intervening event, . . . courts retain the discretion to remand an agency
decision when an agency has raised substantial and legitimate concerns in support of
remand.” Id. (internal quotation marks and citation omitted); see also SKF USA Inc. v.
United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001) (observing that “even if there are
no intervening events, the agency may request a remand (without confessing error) in
order to reconsider its previous position”); Code, 2015 WL 6154381, at *3 (same).
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Judges in this district have deployed a three-pronged framework to guide the
exercise of their discretion in this circumstance; this inquiry asks: (1) whether
defendants have “identified substantial and legitimate concerns in support of a
voluntary remand,” (2) whether voluntary remand “would conserve the Court’s and the
parties’ time and resources,” and (3) whether voluntary remand would cause “undue
prejudice to [plaintiff.]” FBME Bank Ltd. v. Lew, No. 15-cv-1270, 2015 WL 6854416,
at *2 (D.D.C. Nov. 6, 2015) (internal quotation marks and citations omitted). These
factors lead the court to assess various aspects of the agency’s explanation for the
remand request and the impact that granting such a request would have on the plaintiff
and the judicial process—considerations that go beyond whether or not the defendant
“directly confess[es] error[.]” Id. at *2; see, e.g., id. (finding that remanding to permit
the agency to address the potential inadequacies in its notice-and-comment process,
among other things, promotes “judicial economy”); id. at *4 (rejecting plaintiffs’
argument that voluntary remand would prejudice them because it would deprive them of
a claimed “entitle[ment] to vacatur” associated with a victory on the merits). Thus,
even when an agency refuses to admit fault, cases in this district hold that it is entirely
appropriate for the court to grant the agency’s voluntary remand request. See Code,
2015 WL 6154381, at *3 (citing SKF USA, 254 F.3d at 1029).
III. DISCUSSION
In requesting that this matter be remanded to the DOE for reconsideration,
Defendants have not conceded any error, nor have they identified new evidence or other
intervening events that bear on the remand inquiry. Instead, Defendants say that a
voluntary remand is justified due to changed circumstances and the need to preserve
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scarce judicial resources. (See Defs.’ Mem. at 5 (“[I]n light of the passage of time
since the filing of this Complaint, and the fact that Limnia remains free to submit new
applications to the agency at any time, Defendants believe that it would constitute a
waste of judicial and party resources to litigate the merits of [Limnia’s] two remaining
claims.”).) Defendants emphasize that it has been six years since Limnia first
submitted its application materials for agency review, and that new agency officials are
currently ready, willing, and able to perform an unbiased review of Limnia’s ATVM
and LG applications (which will necessarily include updated information regarding
Limnia’s technology), and Defendants argue that, indeed, such a result is all that
Limnia would be entitled to if it prevailed in the instant action. Limnia disagrees; in
essence, it asserts that an admission of fault or a recognition that the agency’s prior
determination might have been politically motivated is the price the agency must pay
for having the case remanded to it, and, in any event, the agency has not provided (and
cannot provide) any assurance that the proposed new application review will be
unbiased. (See Pl.’s Opp’n at 3–4.) Limnia also maintains that returning the case to the
agency without judicial review would effectively deprive Limnia of the opportunity to
receive a condemnatory statement from the Court regarding the agency’s prior review
of its applications—a result that, according to Limnia, it would be entitled to as the
victor in this action. (See id. at 6–7.)
Boiled to bare essence, it is clear that the parties’ dispute with respect to
Defendants’ motion to remand is over whether Defendants’ reasons for requesting
remand are substantial and legitimate and whether voluntary remand would prejudice
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Limnia. All things considered, and for the following reasons, this Court believes
Defendants have the better of the argument.
A. Substantial And Legitimate Reasons Support Voluntary Remand
The DOE has provided several good reasons for requesting that this case be
remanded. First among them is the fact that Limnia’s technology has likely “advanced”
over the past six years (which is, in and of itself, a relevant changed circumstance) and
that remanding the case to the agency “will afford Limnia the opportunity to reapply to
DOE’s loan programs and update its loan applications with any new information about
its project.” (Defs.’ Mem. at 6.) In this regard, it is significant that the DOE
“continues to operate the ATVM Loan Program” at present (id. at 7), and that the
instant motion for remand commits the agency to finishing the initial eligibility phase
with respect to any substantially complete application that Limnia submits after remand
“within 90 days of receipt of Limnia’s submission” (id. at 13), compared to the
“months, if not years, of th[e] Court’s and the parties’ time and resources” that would
be spent if the Court does not remand the matter—resources that will be consumed by
“litigation [that] will continue through summary judgment, decision, and potential
appeals” (id.). Furthermore, and perhaps most important, Defendants make a
convincing argument that the costly and time-consuming litigation pathway and the
requested voluntary remand route both lead to the same result under the circumstances
presented here: that is, if Limnia is victorious at the end of the day with respect to the
instant lawsuit, “the Court would remand the case to DOE for its reconsideratio n of the
application[s,]” which is “the same relief that [Limnia] could obtain sooner if voluntary
remand were granted.” (Id.; see also id. at 5 (“Defendants believe that it would
constitute a waste of judicial and party resources to litigate the merits o f the two
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remaining claims.”).) It appears that such considerations have factored into the court’s
analysis in other recent cases decided in this district, see, e.g., FBME Bank, 2015 WL
6854416, at *2, and this Court finds them to be significant concerns with respect to the
motion for voluntary remand in this case as well.
Undaunted, Limnia insists that voluntary remand is authorized “only” in three
circumstances—to wit: when “new evidence becomes available after an agency’s
original decision was rendered” or “intervening events outside of the agency’s control
may affect the validity of the agency’s actions” or “an agency has raised substantial and
legitimate concerns in support of remand” (Pl.’s Opp’n at 2–3 (internal quotation marks
and citation omitted))—and it is crystal clear that Limnia believes that, in the absence
of new evidence or intervening events, the only legitimate basis for voluntary remand is
the agency’s acknowledgment of past error, or in this case, impermissible favoritism
(see id. at 4 (“Absent a merits decision or an admission of error and favoritism, the
government’s arguments should fail and this case should move forward.”) ). But there is
nothing in this Circuit’s precedent that establishes that the agency must confess error in
order to have the opportunity to revisit its prior determination . Indeed, as explained
above, while it is common for an agency to cast doubt on the challenged act in order to
support its request for remand, courts have found remand appropriate where the agency
stops short of falling on its sword in this manner. See, e.g., Am. Forest Res. Council v.
Ashe, 946 F. Supp. 2d 1, 40 (D.D.C. 2013); see also Code, 2015 WL 6154381, at *3
(observing that “voluntary remand may be appropriate where an ‘agency requests a
remand (without confessing error) in order to reconsider its previous position ’”
(quoting SKF USA, 254 F.3d at 1029)).
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This is apparently so because, at bottom, what really matters when an agency
requests a voluntary remand of a case in order “to reconsider its previous position” is
whether the agency is genuinely willing to revisit the challenged determination. See
SKF USA, 254 F.3d at 1029 (explaining that a voluntary remand request without a
confession of error “may be refused if the agency’s request is frivolous or in bad
faith”). To be sure, an agency can provide such assurance directly—e.g., by admitting
that its prior determination was erroneous or by pointing to new evidence or intervening
events that could cause the agency to change its mind about its prior course of action—
but indicia of the agency’s intention to conduct a good-faith ‘do over’ with respect to
its prior determination can come in many forms, which is undoubtedly why granting a
remand motion is a discretionary judgment call by the court and also why courts have
not required agencies to make any particular showing in order to justify a request for a
voluntary remand. Indeed, when an agency asks for a matter to be remanded, far from
persisting in an unabated march to the merits, courts have long preferred that agencies
be “allow[ed] . . . to cure their own mistakes rather than wasting the courts’ and the
parties’ resources[,]” Ethyl Corp. v. Browner, 989 F.2d 522, 524 (D.C. Cir. 1993), and
an agency’s refusal to admit the error of its (prior) ways poses no obstacle to its
reaching the right result when the matter is returned for its review. See, e.g., FBME
Bank, 2015 WL 6854416, at *2 (observing that, under the circumstances presented,
“[t]he Court—and the parties . . . have no way of knowing whether [the agency] will
ultimately reach the same result on remand”). Thus, it would seem that unless the
agency’s request for a voluntary remand without a confession of error is a litigation
8
tactic employed to avoid judicial review and/or that the requested remand would be an
exercise in futility, the requested remand should be permitted.
This Court discerns nothing inappropriate about the reasons that the DOE
provides for the voluntary remand that is being requested here. As noted, Defendants
maintain that considerations of efficiency and the conservation of resources support
remanding this matter to permit the DOE to conduct proceedings that will provide
Limnia with the unbiased review of its application materials that Limnia claims was not
provided when the agency undertook to consider its application in 2009. The agency
points out that the reviewing officials whose prior lenses were allegedly tainted by
impermissible political cronyism have left the DOE, and this Court sees no obvious
reason to believe that the DOE would not provide Limnia with a good-faith
reconsideration of its renewed and updated application materials, performed “consistent
with correct legal standards[,]” FBME Bank, 2015 WL 6854416, at *2 (internal
quotation marks and citation omitted), notwithstanding the agency’s present
unwillingness to admit that the prior review was improper. See CTIA-The Wireless
Ass’n v. FCC, 530 F.3d 984, 989 (D.C. Cir. 2008) (noting that there is a legal
presumption that agency officials “discharge their duties in good faith” (citation
omitted)). It also makes eminent sense to try to avoid a situation in which these parties
could spend considerable time and money litigating the issue of whether or not
Limnia’s initial loan applications received an unbiased review, when, in any event,
Limnia’s remedy, if it were successful, would be to require the agency to review the
applications again in an unbiased fashion—i.e., precisely what is being offered by the
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agency now. Thus, in this Court’s view and taken as a whole, Defendants have
articulated substantial and legitimate reasons to support the remand request.
B. A Remand Would Conserve Judicial And Party Resources Without
Prejudicing Plaintiffs
It cannot seriously be disputed that the resources of the parties and this Court
would be conserved if this matter was remanded to the agency in lieu of starting down
the path of litigation on the question of whether impermissible political cronyism was at
work when Limnia’s loan applications were reviewed nearly six years ago. See FBME
Bank, 2015 WL 6854416, at *2. Moreover, because voluntary remand will not
prejudice Limnia, as explained momentarily, consuming litigation resources on these
matters makes even less sense.
On the prejudice question, it must be remembered that Limnia cannot get
monetary damages from the agency defendants even if it prevails on the remaining APA
claims. See Emory v. United Air Lines, Inc., 720 F.3d 915, 921 (D.C. Cir. 2013).
Furthermore, in APA cases, a district court “act[s] as an appellate tribunal[,]” Flaherty
v. Pritzker, 17 F. Supp. 3d 52, 57 (D.D.C. 2014) (internal quotation marks and citation
omitted), and is thus only (with narrow exceptions not argued or relevant here)
authorized to “set aside” the challenged agency conduct and remand the matter to the
agency, see 5 U.S.C. § 706(2), which then decides how best to proceed. See Bennett v.
Donovan, 703 F.3d 582, 589 (D.C. Cir. 2013) (observing that when a party prevails on a
request that a court “set aside an unlawful agency action , . . . it is the prerogative of the
agency to decide in the first instance how best to provide relief” (citation omitted)).
This means that plaintiffs who bring APA actions are typically requesting that the court
nullify the agency’s wrongful decision or act, and while a court might make
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condemnatory statements in the service of explaining its order setting aside an agency’s
determination or conduct if the plaintiff is successful, it is the “set aside” order itself
that is the plaintiff’s remedy, not the Court’s explanation of it .
This follows from the well-understood distinction between a district court’s
order entering judgment and the memorandum opinion that provides the court’s
justification for the order. See Sea-Land Serv., Inc. v. Dep’t of Transp., 137 F.3d 640,
647 (D.C. Cir. 1998) (“Appellate courts ‘review[] judgments, not statements in
opinions[,]’” (quoting California v. Rooney, 483 U.S. 307, 311 (1987) (first alteration
in original))). If this case proceeded and Limnia won a judgment setting aside the
challenged decision, it could not appeal “simply to challenge [this] [C]ourt’s
reasoning[,]” id. (citation omitted), and this reality fatally undermines Limnia’s
contention that it is prejudiced if it loses the chance to obtain a stern rebuke from this
Court in the form of a harsh opinion. Moreover, this Court discerns no difference
between the unbiased review of Limnia’s loan applications that the Court would order
to remedy the established APA violation if Limnia prevailed in this lawsuit, on the one
hand, and the review that the agency is offering pursuant to its request for voluntary
remand, on the other (see Defs.’ Mem. at 6 (pledging to “reconsider” Limnia’s
applications on voluntary remand)), and this is especially so given that, either way, “[i]t
is the prerogative of the agency to decide in the first instance how best to provide
relief.” Bennett, 703 F.3d at 589 (citation omitted). Thus, Limnia is mistaken to insist
that remanding this case to the DOE to permit the agency to conduct the promised
unbiased review of Limnia’s loan applications “would short -circuit Limnia’s statutory
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remedies under the [APA]” (see Pl.’s Opp’n at 1) or otherwise “violate[] Limnia’s
statutory rights” (id. at 6).
The Court is also unmoved by Limnia’s repeated suggestion that the Court has
the statutory authority to fashion a more expansive remedy than a mere set-aside order
in certain APA cases and thus that granting voluntary remand here would “curtail or
eviscerate Limnia’s right to full relief under the APA[.]” (Id. at 1.) It appears that
Limnia reads the statutes and case law to establish that the Court can go beyond setting
aside the agency’s decision and remanding the case to the agency when a plaintiff
successfully proves that the challenged agency determination was tainted by
“inappropriate political interference in discretionary decision -making” (id. at 6
(citations omitted)); under these circumstances, Limnia says, the Court can issue a
special remand order in which, in addition to setting aside the agency’s decision, it also
“instruct[s] for a determination on the merits by a disinterested decision -maker[,]” (id.;
see also id. at 7 (emphasizing that “when politics infects a decision, the remedy is
remand to an unbiased appeals board or administrative law judge” (emphasis added)).
There are at least two problems with the argument that a voluntary remand of the
instant matter to the DOE would deprive Limnia of this benefit. First, the cases do not
support the contention that a prevailing plaintiff in this type of APA case is entitled to
some sort of special “detailed” order. Of course, it is not surprising that a court that
finds that an agency has violated the APA by rendering a politically tainted decision
might note, in the course of explaining its remand, that the agency should comply with
the APA by “render[ing] a politically untainted decision.” Aera Energy LLC v. Salazar,
642 F.3d 212, 224 (D.C. Cir. 2011). But, as just noted, the explanation of an order
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must be distinguished from the order itself; at any rate, such language simply evinces
the application of a broad “follow the law” principle to the unique facts of a case where
the deviation from that principle was a politically tainted decision . See id. (declining
“to stand in the agency’s shoes and take over its decision making function” and instead
“direct[ing] the agency to use the traditional administrati ve tools at its disposal to
render a politically untainted decision” in a case involving political impropriety).
Second, and largely for the reasons just noted, Limnia fails utterly to explain
how it would possibly be prejudiced by the DOE’s offer to use the tools at its disposal
to conduct such an unbiased review now, voluntarily and of its own accord. It is not at
all obvious that receiving a scolding opinion regarding the sins of reviewing officers
who have since left the agency (under circumstances in which monetary damages for
the alleged past transgressions are not permitted) has any independent value to Limnia,
nor would such an opinion necessarily guide the agency’s course in the future, as it only
involves the unremarkable truism that political pressure may not “shape[], in whole or
in part, the judgment of the ultimate agency decisionmaker.” Id. at 220. And if what
Limnia is actually trying to express with its prejudice argument is its concern that a
voluntary remand will “prevent[] this [C]ourt from ensuring that the Defendants carry
out their statutory responsibilities” with respect to any future review of Limnia’s
materials (Pl.’s Opp’n at 7 (emphasis added)), that problem is easily solved: this Court
can—and will—exercise its discretion to remand the matter to the agency while
retaining jurisdiction over this matter, in order to ensure that the remand proceedings
will be conducted in accordance with the law. See, e.g., FBME Bank, 2015 WL
6854416, at *3–4; see infra Part III.C.
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In short, Limnia has not provided any fully formed reason why a voluntary
remand of this matter to the DOE would harm it in any way, and this Court perceives
none. 2 Therefore, the prejudice factor, too, weighs in favor of voluntary remand. 3
C. This Court Will Stay The Instant Matter And Retain Jurisdiction
Over It
As noted, district courts have the authority to stay court proceedings and retain
jurisdiction over cases even when an agency’s request for a voluntary remand is
granted. See FBME Bank, 2015 WL 6854416, at *4; Code, 2015 WL 6154381, at *1, 5.
While this is not always done, courts have exercised their discretion to do so when, for
example, the court wishes to ensure that a voluntary remand will not, in fact, prejudice
the non-movant, see FBME Bank, 2015 WL 6854416, at *3–4, or when the interest in an
expeditious and compact resolution of the matter is particularly weighty, cf. Castañeda-
Castillo v. Holder, 638 F.3d 354, 363–64, 367 (1st Cir. 2011) (observing need for an
“expeditious and final resolution” of claims that had been “ping-ponging around for
over eighteen years”).
This Court finds that retaining jurisdiction over Limnia’s APA claims is
appropriate here in light of the allegations Limnia has made and the agency’s
2
To the extent that Limnia maintains that it would be prejudiced because it would not be entitled to
attorneys’ fees if the case is voluntarily remanded ( see Pl.’s Opp’n at 7; see also id. at 2), this argument
is cursory and entirely undeveloped, and it is well established that “perfunctory and undeveloped
arguments, and arguments that are unsupported by pertinent authority, are deemed waived[,]” Johnson
v. Panetta, 953 F. Supp. 2d 244, 250 (D.D.C. 2013) (citation s omitted). Thus, this Court expresses no
opinion regarding the merits of Limnia’s bald attorn eys’ fees contention.
3
Indeed, far from being prejudiced, it is at least conceivable that Limnia will get more of a benefit
from the Court’s grant of the pending motion to remand than it would if this case proceeded through the
litigation process, because the DOE has represented that, on remand, it will employ its “best efforts” to
complete the first round of determinations associated with Limnia’s applications within ninety days of
receipt of a complete application (see Decl. of Dong Kim, ECF No. 44 -2, ¶¶ 2–3), and it is not at all
clear that such favorable circumstances would necessarily arise as a result of a court order at the
conclusion of a full round of litigation.
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representations about its intended conduct on remand. Furthermore, as addressed
below, this Court intends to exercise its authority to maintain a supervisory role by
ordering the parties to provide periodic status reports in this matter.
IV. ORDER
Although Defendants do not admit that the DOE’s prior review of Limnia’s loan
applications was faulty, they have identified “substantial and legitimate” concerns that
support voluntary remand—namely, the fact that the parties and this Court would
otherwise consume scarce resources to litigate issues regarding the propriety of the
agency’s prior review of Limnia’s loan applications , when, given the change of
reviewing officials, the intervention of time, and any updated information that Limnia
can provide, a good-faith and unbiased reconsideration of Limnia’s application is
possible at present, if the case is remanded to the agency. There is nothing in the
record that suggests that the DOE’s request is a litigation tactic made in bad faith;
moreover, it appears that remanding this case to the agency would not prejudice Limnia,
whose remedy under the APA is the same unbiased review of Limnia’s loan application
packages that the government is offering to undertake if the case is remanded.
Therefore, and for all these reasons, it is hereby
ORDERED that Defendants’ [44] Motion for Voluntary Remand of this matter
to the agency is GRANTED. The agency shall review Limnia’s renewed loan
applications, if Limnia chooses to submit any, in accordance with the represe ntations
made in its motion. It is
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FURTHER ORDERED that the instant case will be STAYED pending
completion of the agency’s proceedings on remand, and that the parties shall submit
joint status reports to the Court every 90 days from the date of this Order until
completion of the remand proceedings.
DATE: January 15, 2016 Ketanji Brown Jackson
KETANJI BROWN JACKSON
United States District Judge
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