Government’s request to consolidate two appeals of the agency’s claim for reimbursement of overpaid invoices is denied, where the appeals do not appear to present the type of complex litigation that requires consolidation to allow for the efficient development and presentation of facts, even though both appeals are based on identical task orders and similar contract modifications.
The Department of Education filed motions seeking to consolidate the appeal docketed as Transworld Systems Inc. v. Department of Education, CBCA 6049, with the appeal docketed as Collecto, Inc. d/b/a EOS CCA v. Department of Education, CBCA 6001. The department asserted that the task orders underlying both appeals are essentially the same and that the issues to be decided in the two appeals are the same.
The government filed claims with both appellants seeking reimbursement of amounts the department alleged were overpaid on certain invoices. Collecto and TSI were under contract with the Federal Student Aid office to perform student loan debt collection services. The agency explained that the overpayments occurred after it implemented a new debt management collection system, which disrupted the invoicing process. According to the agency, because of its problems with the DMCS transition, it was unable to generate the invoice data for a period of time and had to instruct TSI, Collecto, and other vendors to submit invoices using data generated from their own systems. In late 2013, the agency began working with its vendors on an invoice reconciliation process to ensure that amounts billed during the disruption period were accurate and that any overpayments or underpayments that had occurred were corrected.
At the conclusion of that process, the agency presented TSI and Collecto with proposed task order modifications identifying invoice reconciliation procedures that were effective for performance occurring from September 16, 2011, through August 31, 2013, the period during which ED contends its DMCS system had experienced problems. In an attachment, ED listed the amounts that each vendor should have been paid for each collection action taken during the period covered by the modification. The modifications identified the total amounts that TSI and Collecto were due for all of their work during the entire disruption period and the amounts the agency had already paid TSI and Collecto in response to their self-generated invoices. Based on these figures, the agency concluded it had underpaid both TSI and Collecto for the disruption period and that both TSI and Collecto were entitled to payment of additional monies. After executing the modifications, TSI and Collecto submitted invoices for the amounts that the modifications indicated were due, which the agency paid.
However, the agency alleged it later discovered that it had failed to account for previous payments to both vendors, and as a result, both TSI and Correcto had been overpaid. The government also alleged that both vendors knew, or should have known, about the errors in the contract modifications, but did not alert the agency prior to executing the modifications. The agency later filed claim against TSI and Collecto requesting repayment of the alleged overpayments. Both appealed and the government moved to consolidate, arguing that the two cases have common issues of law or fact.
CBCA identified several factors that supported consolidation: the fact that the contracts in both appeals are essentially the same, that the contract modifications that created the current disputes in both appeals contain identical language (but for different listed dollar amounts), that the legal theories that agency is pursuing and that the board will have to decide are the same, and that TSI and Collecto likely will seek at least some duplicative discovery.
In opposition, TSI and Collecto argued that the government might seek production of proprietary accounting records, which each appellant might want to keep from the other. While this concern might weigh against consolidation, the board concluded this concern was speculative and could be addressed with an appropriate protective order.
Nonetheless, the board concluded that consolidation was not needed to allow for the efficient development and presentation of these two appeals. The board explained that the matters before it did not seem to fall within the generally accepted definition of “complex litigation,” which often involves multiple related cases, extensive pretrial activity, extended trial times, difficult or novel issues, or post-judgment judicial supervision.
Currently, the board was presented with only two, rather than multiple, appellants, and the agency had not indicated that there are likely to be any more related appeals. The board noted that it seemed that the parties envision only minimal written discovery and depositions, even though the appellants apparently will seek to depose at least some of the same individuals. Further, the board found it possible that the issues could be resolved through dispositive motions rather than a hearing on the merits.
The board explained that consolidation might be warranted were there a multitude of vendors with identical task orders challenging the same type of refund demand. However, with only two appellants, in appeals in which only minimal discovery is anticipated, the board suggested it could easily coordinate the development of the appeals through discovery and briefing without the need to combine or consolidate them, given their current posture. If, after the conclusion of discovery, the parties decide that these appeals cannot be resolved by dispositive motion and will require resolution through a hearing, the board granted that the agency may renew its motion to consolidate or may propose other methods of case management if it believes that separate hearings in the appeals would require duplicative testimony and/or create a risk of inconsistent outcomes.
Collecto Inc. dba EOS CCA is represented by Joseph J. Petrillo and Karen D. Powell of Petrillo & Powell, PLLC. Transworld Systems Inc. is represented by Paul A.Debolt, Chelsea B. Knudson, and James Y. Boland of Venable LLP. The government is represented by Sara Falk, Office of the General Counsel, Department of Education.