Opinion
Case No. 22-cv-60938-COOKE/HUNT
2022-10-06
PURPOSE BUILT FAMILIES FOUNDATION, INC., Plaintiff, v. UNITED STATES of America, et al., Defendants.
Alan Grayson, Pro Hac Vice, GL CTR PC, Orlando, FL, Ira Marcus, Fort Lauderdale, FL, Patrice Paldino, Legal Aid Service of Broward County, Inc., Plantation, FL, for Plaintiff. Zakarij Neil Laux, US Attorney's Office, Civil Division, Miami, FL, for Defendants.
Alan Grayson, Pro Hac Vice, GL CTR PC, Orlando, FL, Ira Marcus, Fort Lauderdale, FL, Patrice Paldino, Legal Aid Service of Broward County, Inc., Plantation, FL, for Plaintiff. Zakarij Neil Laux, US Attorney's Office, Civil Division, Miami, FL, for Defendants. ORDER ON MOTION TO DISMISS ROBIN L. ROSENBERG, UNITED STATES DISTRICT JUDGE for Marcia G. Cooke, United States District Judge
THIS MATTER is before the Court on Defendants' motion to dismiss. ECF No. 37. Plaintiff has opposed the motion. ECF No. 46. Having considered the parties' arguments, the record, and the relevant legal authorities the Court GRANTS Defendants' motion for the reasons stated below.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. The government's audits of Plaintiff's GPD and SSVF grants
This case concerns a dispute between Plaintiff Purpose Built Families Foundation, Inc. ("Plaintiff" or "PBF") and Defendants the United States of America and the Secretary of Veteran Affairs (collectively, "Defendants" or "the government"). PBF is a non-profit corporation operating in Broward County. ECF No. 1 ¶ 2 (complaint). PBF receives grants from the government, which it uses to provide services to veterans. Id. ¶ 6. At some point in 2021, the government began auditing PBF in connection with these grants.
On May 11, 2022, the government issued two letters to PBF. The first letter notified PBF that the government would be immediately withholding certain payments under two grants issued through the Grant and Per Diem program ("GPD"), pending the completion of the government's audit of those grants. See ECF No. 12-2 at 1 (copy of GPD letter). The second letter notified PBF that the government would be terminating three of PBF's grants received through the Supportive Services for Veterans Families ("SSVF") program "upon 7-days receipt of this notice." See ECF No. 12-1 at 1 (copy of SSVF letter).
II. The instant lawsuit and the government's withdrawal of the May 11 letters
PBF filed this lawsuit on May 17, 2022, raising two claims under the Administrative Procedure Act, 5 U.S.C. § 701 et seq. ("APA"), and alleging the government's May 11, 2022, letters constituted arbitrary and capricious agency action. See ECF No. 1 ¶¶ 1, 30. PBF further moved for injunctive relief, to keep the government from terminating these grants. ECF No. 5.
The Court set a hearing on Plaintiff's motion for May 18, 2022, but Plaintiff's counsel notified the Court that it would be unable to make it to the courthouse in time for the hearing. ECF No. 9. Accordingly, to preserve the status quo, the Court granted in part Plaintiff's motion, entered a temporary restraining order to expire the morning of May 19, 2022, and reset the hearing for that same day. Id.
At the May 19 hearing, the parties agreed to extend the temporary restraining order for 14 days, and the Court subsequently referred this matter to Magistrate Judge Patrick Hunt. ECF No. 11. The Court asked Judge Hunt to determine whether the temporary restraining order should be dissolved, extended, or converted into a preliminary injunction, and ordered briefing from the parties on this issue. Id.
Also on May 19, 2022, the government issued an additional letter to Plaintiff concerning the three SSVF grants. The letter stated that the government would "withdraw[ ] its May 11, 2022 notice to the extent it states that SSVF grants will terminate as of May 18, 2022." ECF No. 27-2 at 1 (copy of letter). The letter stated that instead Plaintiff would have until June 19, 2022, to submit a written response to the government's audit. Id. The letter also stated that at some point after receiving PBF's written response the government would "issue a final decision and . . . notify PBF of that decision writing." Id. at 2.
On May 25, 2022, the government issued a similar letter to PBF concerning the two GPD grants. The letter stated that the government would "withdraw[ ] its May 11, 2022 notice of withhold of payments and admissions and notice of intent to suspend." ECF No. 27-3 at 1. The letter stated that an audit of the GPD grants was ongoing, that the government would provide PBF with a copy of the final audit report upon completion, "and advise as to corrective action, if any, that may be required." Id.
III. The preliminary injunction hearing and the instant motion to dismiss
In early June 2022, Judge Hunt held a hearing, and the parties agreed to extend the temporary restraining order until the Court ruled on Plaintiff's motion for a preliminary injunction. ECF No. 33. Judge Hunt subsequently issued a report and recommendation, recommending the Court dissolve the temporary restraining order and deny the motion for a preliminary injunction. ECF No. 38.
Days before Judge Hunt issued his report and recommendation, Defendants filed a motion to dismiss. ECF No. 37. The government argues that the Court lacks subject matter jurisdiction because this case presents no final agency action by a government agency for the Court to review. Id. at 10. According to the government, the May 11, 2022, letters were not final agency action within the meaning of the APA. Id. at 8. Further, the government argues that even if these letters were final agency action, the May 19, 2022, and May 25, 2022, letters withdrew these earlier government decisions, thereby rendering this case moot. Id. at 9. Thus, the government asks the Court to dismiss this case.
PBF opposed the motion to dismiss on three main grounds. See ECF No. 46. First, PBF argues that the Court should assess jurisdiction on the facts as they stood at the filing of the complaint. Id. at 4. Second, PBF argues that the government's actions after this suit was filed do not render the matter moot under the doctrine of voluntary cessation. Id. at 5. Finally, PBF argues that even if there is no final agency action, the APA authorizes the Court to hear this case and issue injunctive relief. Id. at 12.
Neither party has notified the Court of a final decision to terminate GPD or the SSVF grants. The government states in briefing that a final decision is still pending, and the audits of the SSVF and GPD grants are ongoing. ECF No. 37 at 9. PBF does not dispute this.
LEGAL STANDARD
I. Motion to dismiss and mootness
On a motion to dismiss, the Court "accept[s] the factual allegations supporting a claim as true and draw[s] all reasonable inferences in favor of the nonmovant." Newton v. Duke Energy Fla., LLC, 895 F.3d 1270, 1275 (11th Cir. 2018). However, under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss a case for lack of subject matter jurisdiction based on a "factual attack" concerning some extrinsic fact not in the plaintiff's complaint. See Kennedy v. Floridian Hotel, Inc., 998 F.3d 1221, 1230 (11th Cir. 2021). In such circumstances, the Court may consider "extrinsic evidence" not contained in the pleadings. Id.
The main extrinsic evidence presented here are the May 19 and May 25 letters issued by the government. See ECF Nos. 27-2 and 27-3. Plaintiff does not dispute that these letters are properly before the Court on a factual attack. Similarly, the Court considers the May 11 letters, which were not filed with the complaint, but which were filed in connection with the preliminary injunction briefing. See ECF Nos. 12-1 and 12-2. Neither party disputes that these letters are also properly before the Court.
"Mootness arises when an issue presented in a case is no longer live or the parties lack a legally cognizable interest in the outcome [of the case]." Keohane v. Fla. Dep't of Corr. Sec'y, 952 F.3d 1257, 1267 (11th Cir. 2020) (cleaned up). Mootness is a jurisdictional question, and where events subsequent to the filing of a lawsuit deprive the court of the ability to give the plaintiff meaningful relief, the court must dismiss the case. Id.
Courts recognize an exception to mootness where a defendant voluntarily ceases certain conduct to manipulate jurisdiction. Harrell v. The Fla. Bar, 608 F.3d 1241, 1266 (11th Cir. 2010). To determine whether the voluntary cessation exception applies, courts examine several factors and assess whether there is a reasonable expectation that a government defendant will reverse course, notably whether: "(i) the change in conduct resulted from substantial deliberation or is merely an attempt to manipulate jurisdiction; (ii) the government's decision to terminate the challenged conduct was unambiguous, i.e., permanent and complete; and (iii) the government has consistently maintained its commitment to the new policy or legislative scheme." Djadju v. Vega, 32 F.4th 1102, 1109 (11th Cir. 2022). These considerations are not exclusive, and no factor is dispositive, but rather courts should assess these factors under the totality of circumstances. Id. Government entities and officials are "treated with more solicitude [than private parties] by the courts" in a voluntary cessation analysis. Seay Outdoor Advert., Inc. v. City of Mary Esther, Fla., 397 F.3d 943, 947 (11th Cir. 2005) (quotation omitted).
II. The APA and final agency action
"[T]o bring suit under the APA, plaintiffs must demonstrate that the decision at issue was 'final agency action.' " Canal A Media Holding, LLC v. United States Citizenship & Immigr. Servs., 964 F.3d 1250, 1255 (11th Cir. 2020) (quoting 5 U.S.C. § 704). "Absent a final action . . . courts are to exercise restraint so that the administrative agency may correct any errors by conducting its own internal appeals and by applying its own institutional expertise." LabMD, Inc. v. F.T.C., 776 F.3d 1275, 1278 (11th Cir. 2015).
The Supreme Court has adopted a two-part test for finality: (1) "the action must mark the consummation of the agency's decisionmaking process—it must not be of a merely tentative or interlocutory nature," and (2) "the action must be one by which rights or obligations have been determined, or from which legal consequences will flow." U.S. Army Corps of Engineers v. Hawkes Co., 578 U.S. 590, 597, 136 S.Ct. 1807, 195 L.Ed.2d 77 (2016) (quoting Bennett v. Spear, 520 U.S. 154, 177-78, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997)). In assessing finality, courts must as consider the pragmatic question of "whether judicial review at the time will disrupt the administrative process." Riverkeeper v. U.S. E.P.A., 806 F.3d 1079, 1083 (11th Cir. 2015) (quoting Bell v. New Jersey, 461 U.S. 773, 779, 103 S.Ct. 2187, 76 L.Ed.2d 312 (1983)). In this circuit, a challenge to the finality of agency action is considered an attack on the subject-matter jurisdiction of the court. See e.g, Canal A Media, 964 F.3d at 1255; LabMD, 776 F.3d at 1278; Mejia Rodriguez v. U.S. Dep't of Homeland Sec., 562 F.3d 1137, 1142 (11th Cir. 2009).
DISCUSSION
The Court proceeds in three parts. First, the Court determines whether the May 11, 2022, GPD and SSVF letters issued to PBF are final agency action within the meaning of the APA. Second—because the Court finds that the SSVF letter is final agency action—the Court determines whether the government's subsequent withdrawal of the SSVF letter renders that agency action nonfinal. Finding that the government's withdrawal does render the SSVF letter nonfinal, and this action moot, the Court evaluates PBF's argument that 5 U.S.C. § 705 allows PBF to seek injunctive relief, even if agency action is nonfinal. Ultimately, the Court finds PBF's argument unpersuasive and therefore GRANTS the government's motion to dismiss this action, for the reasons stated below.
I. Whether the May 11, 2022 GPD and SSVF letters are final agency action.
a. The May 11, 2022 GPD letter is not final agency action.
The Court begins with an analysis of the May 11, 2022 GPD letter. See ECF No. 12-2. The letter states that the government will withhold certain payments "pending results of the [government's] review of GPD grant activities," and that the government will carry out an "on-site review" of PBF's facility. Id. at 1. The letter further states that the government intends to suspend "all GPD grant activity . . . unless results of the [government] audit indicate that the GPD grant(s) are compliant with Federal requirements and that Federal assets are adequately safeguarded." Id. The letter adds that "preliminary findings" by the government demonstrate PBF "is in danger of materially failing to comply" with the terms and conditions of the GPD grants. Id. at 3. Furthermore, the letter adds that as the government's "review continues" the government will engage with PBF "to ensure efficient resolution." Id. Upon completion of the review process, the government states it will determine whether "the grant(s) will be continued, terminated, modified or other action will be taken as appropriate." Id.
The letter further cites several regulatory provisions, which outline the government's review procedures for the GPD grants, including 38 C.F.R. § 61.61. Two provisions of § 61.61 are particularly relevant: Section 61.61(c) provides that the government may "deobligate all or parts of funds" where a grant recipient "fails to comply" with certain project requirements. Section 61.61(d) provides:
Deobligation procedure. Before deobligating funds under this section, [the government] will issue a notice of intent to terminate payments. The recipient will have 30 days to submit documentation demonstrating why payments should not be terminated. After review of any such documentation, [the government] will issue a final decision concerning termination of payment.Id. (emphasis added).
Here, the Court finds the GPD May 11, 2022, letter is not final agency action because it does not meet the first prong of the Bennett test, requiring the consummation of the government's decisionmaking process. See MediNatura, Inc. v. Food & Drug Admin., 998 F.3d 931, 938-39 (D.C. Cir. 2021) (holding both Bennett prongs must be met, and that even where the second prong was met but agency procedures were still ongoing, there was no final agency action). While the letter does suspend certain payments to PBF, the letter and 38 C.F.R. § 61.61 make clear that this is a preliminary measure, pending completion of the government's audit. PBF will have the opportunity to "engage" with the government through an administrative process before a final disposition on the future of the GPD grants. ECF No. 12-2 at 3. Under Bennett, the Court finds this is a tentative agency decision, pending further review. Accordingly, the Court concludes that at the time this case was filed, the government's administrative process was ongoing as to the GPD grants, and no final agency action existed as to these grants.
Furthermore, for the same reasons stated below with respect to the May SSVF 11 letter, the Court finds the government has withdrawn the May GPD 11 letter, therefore making judicial review here premature. The government has emphasized in its briefing that these audits are still ongoing, ECF No. 37 at 9, and PBF does not dispute this.
b. The May 11, 2022 SSVF letter is final agency action.
In contrast to the GPD letter, the May 11, 2022, SSVF letter meets both Bennett prongs. As to the first prong, nothing in the letter or the regulations cited therein suggests that the SSVF letter is part of an ongoing administrative process. Instead, the letter states that the agency has decided to terminate the three SSVF grants and will do so within 7 days of the notice, in accordance with 38 C.F.R. § 62.80(b). ECF No. 12-1 at 1. Section 62.80(b) provides that when a grantee fails to comply with the terms of an SSVF, "on 7-days notice to the grantee" the government may terminate an SSVF grant. Unlike the administrative procedures described in the GPD letter, nothing in the SSVF letter suggests that there will be further agency procedures or audits prior to a final decision on the termination of the SSVF grants. Compare ECF No. 12-2 at 1 and 38 C.F.R. § 61.61(d) (describing a notice issued prior to a final decision and stating further proceedings will ensue) with ECF No. 12-1 and 38 C.F.R. § 62.80(b) (describing termination occurring after the 7-days' notice, without additional proceedings).
The SSVF letter also meets the second Bennett prong. The letter states that the government "will terminate the above-referenced grants 7 days from receipt of this letter." ECF No. 12-1 at 1. The letter further states that the government "will engage with [PBF] to ensure the seamless transition of Veteran service to another SSVF grantee." Id. at 3. The letter makes clear that legal consequences will follow from the letter, affecting PBF's rights to receive funds under the SSVF grants. The letter does not state or even suggest that any further proceedings will take place prior to termination. Accordingly, because the SSVF May 11, 2022 letter meets both Bennett prongs, the Court finds it is final agency action.
The government states in a footnote that even if there were final agency action, any termination decision would be subject to an agency appeals process. ECF No. 37 at 11 n.6. Neither party has detailed what this process entails, or argued that there has not been an exhaustion of agency remedies prior to filing suit. Accordingly, the Court sees no reason to address these arguments further here.
II. Whether the subsequent withdrawal of the May 11, 2022, SSVF letter renders it a nonfinal agency action, and this case moot.
The government argues that even if the May 11 SSVF letter were final agency action, on May 19, 2022 it withdrew that letter—therefore rendering the government's action nonfinal, and this case moot. See ECF No. 37 at 9. At a minimum, argues the government, the initial complaint in this action should be dismissed as a practical matter because in it PBF challenges a government decision (the May 11 SSVF letter) that has been subsequently withdrawn. Id. at 15-16. In opposing the government's motion, PBF first argues that the Court should only evaluate whether jurisdiction existed at the time this suit was filed. ECF No. 46 at 4. Additionally, PBF argues that the subsequent May 19 SSVF letter amounts to a voluntary cessation exception to the mootness doctrine, and as such should not prevent the Court from issuing relief. Id. at 10. The Court finds PBF's arguments unpersuasive.
First, PBF does not cite a single authority for the proposition that in a case concerning an APA action like the one at issue here, the Court may not consider government action following the filing of a lawsuit to evaluate jurisdiction. Instead, the authorities cited by PBF all pertain to cases of diversity jurisdiction. See ECF No. 47 at 4. This issue does not appear to have been litigated extensively in this circuit in the APA context. However, the Court notes that it has been raised in other circuits, and courts have regularly found that, in APA cases like this one, they may consider government action after the filing of a case in assessing jurisdiction and finality. See e.g., Friends of Animals v. Bernhardt, 961 F.3d 1197, 1203 (D.C. Cir. 2020) (holding that where plaintiff challenged certain government findings which were subsequently withdrawn, challenge became moot); Akiachak Native Cmty. v. United States Dep't of Interior, 827 F.3d 100, 105-06 (D.C. Cir. 2016) (holding action became moot where plaintiff challenged a regulation which the government subsequently withdrew); Colorado River Cutthroat Trout v. Salazar, 898 F. Supp. 2d 191, 211 (D.D.C. 2012) (finding action was moot where plaintiff challenged a memorandum subsequently withdrawn by the government). The Court finds these cases are persuasive authority and sees no bar to considering the May 19 withdrawal of the May 11 SSVF letter here.
Second, the Court also finds PBF's arguments concerning voluntary cessation fall short. The Court sees nothing in the record suggesting that the government's actions are "an attempt to manipulate jurisdiction." Djadju, 32 F.4th at 1109. On the contrary, the May 19 letter states that the prior termination notice has been vacated, and that PBF will have an opportunity "to provide information and documentation demonstrating why PBF has not materially failed to comply with the terms and conditions of its SSVF grants[.]" ECF No. 27-2 at 1. "Upon receipt and review of the materials provided by PBF, [the] SSVF [program] will issue a final decision and will notify PBF of that decision writing." Id. at 2. Similarly, insofar as the conduct that PBF challenges is the termination of the SSVF grants in the May 11 letter, it is "unambiguous" that the government has withdrawn that letter. Djadju, 32 F.4th at 1109. While the government might arrive at a similar decision in the future, the government states it has reopened the SSVF audit and will review additional materials provided by PBF before arriving at a decision. It may be too soon to determine if the government is committed to revising its findings in light of additional evidence, but the Court will give these representations some deference. See City of Mary Esther, 397 F.3d at 947. Thus, based on a totality of circumstances, the Court finds no voluntary cessation exception to the mootness doctrine. On the contrary, the Court finds that the May 11 SSVF letter has been withdrawn by the government seemingly in good faith, that there is no final agency action for the Court to review, and PBF's challenge to the May 11 SSVF letter has been rendered moot.
As stated above, the Court finds this analysis consistent with that of courts in other circuits. See Bernhardt, 961 F.3d at 1203; Akiachak, 827 F.3d at 105-06; Colorado River, 898 F. Supp. 2d at 211. The Court also agrees with the government that PBF's complaint, as worded, presents a moot case. See ECF No. 37 at 15-16. The relief PBF seeks is "injunctive and declaratory relief against the VA [May 11] notices to PBF, and the effects thereof on PBF, PBF's staff and its clients[.]" ECF No. 1 at 18. However, these notices have already been withdrawn, and they have no effect on PBF at present.
The Court finds its conclusion consistent with "pragmatic concerns" that weigh against engaging in judicial review that will "disrupt the administrative process." Clayton Cnty., Georgia v. Fed. Aviation Admin., 887 F.3d 1262, 1269 (11th Cir. 2018) (quoting Riverkeeper, 806 F.3d at 1083). Here, the government has made clear the administrative process is ongoing, and it will reconsider its termination decision in light of additional evidence submitted by PBF. Although PBF may still object to the outcome of the SSVF audit and a future termination decision, the Court finds it appropriate to allow that administrative process to conclude before weighing in on this dispute.
III. Whether PBF may challenge nonfinal agency action through 5 U.S.C. § 705.
Finally, the Court addresses PBF's contention that it may challenge nonfinal agency action and obtain an injunction under the APA, 5 U.S.C. §§ 704 and 705. See ECF No. 46 at 12; ECF No. 31 at 2-9. PBF's argument proceeds as follows: Section 704 of the APA allows review of "[a]gency action made reviewable by statute and final agency action[.]" (emphasis added). Section 705 of the APA is a "statute" that makes nonfinal agency action reviewable in a court and allows for preliminary relief pending final agency action. Accordingly, argues PBF, the Court may exercise jurisdiction here over nonfinal agency action, and issue injunctive relief.
As the government points out in its brief, ECF No. 37 at 14-15, PBF has not identified a single case that did not involve: (1) final agency action or (2) agency action made reviewable by a statute other than the APA, and which adopted PBF's reading of the APA. In the Nishihata v. Blinken case, the district court was ultimately "not persuaded that § 705 provides the authority for the Court to order the relief Plaintiffs seek[.]" No. CV 21-2173 (CKK), 2021 WL 4476750, at *6 (D.D.C. Sept. 30, 2021). And as Nishihata points out, Rai v. Biden, 567 F. Supp. 3d 180 (D.D.C. 2021) and Gomez v. Trump, 485 F. Supp. 3d 145 (D.D.C. 2020)—which PBF also cites—were challenges to "overarching Executive policies," which were considered final agency action. Nishihata, 2021 WL 4476750, at *5 (emphasis in original). In its complaint PBF has challenged no overarching policies—only the May 11 notices.
The government disputes PBF's reading of the APA and argues that "reviewable by statute" here refers only to other substantive statutes, and not the APA itself. ECF No. 37 at 11-12 (citing Lujan v. Nat'l Wildlife Federation, 497 U.S. 871, 882, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990)). The government argues that its reading makes sense because the APA was "not intended to limit judicial review that was already provided for by some other [substantive] act of Congress," even where other congressional statutes allowed review of nonfinal agency action. Id. at 12. By contrast, argues the government, PBF's reading of the statute is nonsensical, and renders the finality requirement of § 704 meaningless. Id. According to the government, if PBF's reading is correct, then a plaintiff wishing to challenge any nonfinal agency action could simply do so under § 705, and all nonfinal agency actions could be challenged this way.
The Court agrees with the government. Both Supreme Court precedent and Eleventh Circuit precedent read "reviewable by statute" in § 704 to refer to a substantive statute other than the APA. See Lujan, 497 U.S. at 882, 110 S.Ct. 3177 (distinguishing between review "pursuant to specific authorization in the substantive statute" and "the general review provisions of the APA"); Fanin v. U.S. Dep't of Veterans Affs., 572 F.3d 868, 877 (11th Cir. 2009) (distinguishing between a challenge based on statutes other than the APA, and an action filed pursuant to the APA, which must be "final agency action"); Canal A Media, 964 F.3d at 1254-55 (same). Moreover, the Court agrees that if it were to adopt PBF's reading of the APA, then any nonfinal agency action would be subject to judicial review, therefore reading the finality requirement out of § 704. PBF provides no limiting principle to its reading of 5 U.S.C. §§ 704 and 705 on response, see ECF No. 46 at 11-13, and the Court sees no such limit to this proposed reading. Accordingly, the Court finds it has no authority under the APA to review nonfinal agency action here, as PBF proposes.
CONCLUSION
For the foregoing reasons, it is hereby ORDERED AND ADJUDGED as follows:
1. The Court GRANTS the government's motion to dismiss, ECF No. 37, and DISMISSES Plaintiff's complaint.
2. The Clerk shall CLOSE this case.
3. Any pending motions are DENIED as moot.
DONE and ORDERED in Chambers in West Palm Beach, Florida, this 6th day of October 2022.