Latest 3 Cases This Week: Authentic Apparel Geoup, LLC v. United States (Fed. Cir.), Creative Management Services, LLC v. United States (Fed. ...

Why the Supreme Court was Right Last Week to Deny Review of the Pennsylvania Supreme Court Decisions Handed Down Prior to the 2020 Election

VIKRAM DAVID AMAR, JASON MAZZONE

Illinois Law dean Vikram David Amar and professor Jason Mazzone argue that the U.S. Supreme Court correctly denied review last week of the Pennsylvania Supreme Court decisions handed down before the 2020 election. Dean Amar and Professor Mazzone explain why the majority denied review and point out that the dissenting opinions unwittingly demonstrate the rightness of the majority.

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Authentic Apparel Geoup, LLC v. United States

Court: US Court of Appeals for the Federal Circuit

Docket: 20-1412

Opinion Date: March 4, 2021

Judge: Alan David Lourie

Areas of Law: Contracts, Government Contracts, Intellectual Property, Trademark

In 2010, the Army granted Authentic a nonexclusive license to manufacture and sell clothing bearing the Army’s trademarks. The agreement required the Army’s advance written approval of any products and marketing materials bearing the Army’s trademarks and included exculpatory clauses that exempted the Army from liability for exercising its discretion to deny approval. In 2011-2014, Authentic submitted nearly 500 requests for approval; the Army disapproved 41 submissions. During that time, Authentic received several formal notices of material breach for claimed failures to timely submit royalty reports and pay royalties. Authentic eventually paid its royalties through 2013. Authentic’s counsel indicated that Authentic would not pay outstanding royalties for 2014. Authentic's ensuing breach of contract suit cited the Army’s denial of the right to exploit the goodwill associated with the Army’s trademarks, refusal to permit Authentic to advertise its contribution to Army recreation programs, delay of approval for a financing agreement, denial of approval for advertising, and breach of the implied duty of good faith and fair dealing by not approving the sale of certain garments. The Federal Circuit affirmed summary judgment in favor of the government. The license agreement stated in no uncertain terms that the Army had “sole and absolute discretion” regarding approval of Authentic’s proposed products and marketing materials; the exercise of that broad approval discretion is not inconsistent with principles of trademark law.

Creative Management Services, LLC v. United States

Court: US Court of Appeals for the Federal Circuit

Docket: 20-1449

Opinion Date: February 26, 2021

Judge: Stoll

Areas of Law: Civil Procedure, Government Contracts

In 2009, MC-2 was awarded Government Services Administration (GSA) task order to provide services for the annual GovEnergy Conference. MC-2 performed the Task Order in 2009, 2010, and 2011. GSA canceled the 2012 Conference before it began and requested that MC-2 return the entire Reserve Fund and an accounting for the Reserve Fund over the contract's life. MC-2 purportedly responded days later, arguing that GSA never before claimed that it was entitled to the difference between the Conference revenue and expenses, that MC-2 was entitled to any excess revenue, and that MC-2 had submitted a final accounting at the end of each contracting year. In 2012, MC-2 submitted a termination-for-convenience proposal. In November 2015, GSA sent MC-2 a letter providing the Contracting Officer’s final decision on MC-2’s proposal, which had sought $717,680.10, stating that the Government believed that MC-2 owed the government money. The decision stated that “GSA considers the Reserve Fund balance a contract debt. In January 2018, GSA sent a follow-up letter, demanding payment of $660,013.68. Because MC-2 had not appealed the November 2015 Final Decision, GSA deemed MC-2’s debt “final and conclusive,” 41 U.S.C. 7103(g)). In December 2018, MC-2 filed suit, arguing that the 2015 GSA letter was not a final decision because it failed to state a sum certain. The Federal Circuit affirmed the dismissal of the suit as untimely because it was not brought within 12 months of the 2015 decision, as required by 41 U.S.C. 7104(b)(3). GSA issued a valid claim under the Contract Disputes Act for the return of the Reserve Funds; GSA’s claim was the subject of a written decision by the GSA contracting officer; and MC-2 failed to file suit within 12 months of receiving the contracting officer’s final decision

Safeguard Base Operations, LLC v. United States

Court: US Court of Appeals for the Federal Circuit

Docket: 19-2261

Opinion Date: March 4, 2021

Judge: O'Malley

Areas of Law: Contracts, Government Contracts

In 2017, the Department of Homeland Security issued the Solicitation as a Request for Proposal for a potentially multi-year contract for dorm management services at the Federal Law Enforcement Training Center in Glynco, Georgia. During the evaluation process, the government eliminated Safeguard’s proposal from consideration because Safeguard omitted pricing information for 16 contract line item numbers totaling $6,121,228. The Claims Court and Federal Circuit upheld the award to another bidder. The Solicitation required offerors to submit the pricing information and provided notice that elimination was possible if that pricing information was omitted. Safeguard’s omissions were material and not subject to waiver or clarification. The court upheld the denial of Safeguard’s email request to supplement the administrative record through discovery and the denial of its motion to supplement the administrative record with affidavits. The Claims Court had jurisdiction over a claim that the government breached an implied-in-fact contract to fairly and honestly consider an offeror’s proposal in the procurement context under 28 U.S.C. 1491(b)(1).