Justia Aerospace/Defense Opinion Summaries

Yorktown Systems Group Inc. and Threat Tec LLC, both defense contractors, entered into a mentor-protégé relationship under the Small Business Administration’s program to jointly pursue government contracts. They formed a joint venture (JV) and were awarded a $165 million contract with the U.S. Army. The JV agreement allocated specific work shares to each company. However, the relationship soured, and Threat Tec attempted to terminate Yorktown’s subcontract, effectively cutting Yorktown out of its share of the contract.The United States District Court for the Northern District of Alabama granted Yorktown a preliminary injunction, preventing Threat Tec from terminating the subcontract and depriving Yorktown of its rights under the JV agreement. The court found that Yorktown had shown a substantial likelihood of success on its breach of contract and breach of fiduciary duty claims and faced irreparable harm. The court noted that Threat Tec’s CEO had made false statements and lacked candor, leading to the belief that Threat Tec’s motives were unethical.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court’s decision. The appellate court found no clear error in the district court’s factfindings and concluded that the district court acted within its discretion. The court held that Threat Tec, as the managing member of the JV, owed fiduciary duties of loyalty and care to Yorktown and likely breached those duties by attempting to cut Yorktown out of its contractually specified workshare. The court also agreed that Yorktown faced irreparable harm, including potential damage to its business reputation and the loss of highly skilled employees, which could not be remedied by monetary damages alone. View "Yorktown Systems Group Inc. v. Threat TEC LLC" on Justia Law

The United States Court of Appeals for the Fifth Circuit affirmed the decision of the United States District Court for the Northern District of Texas, which dismissed a False Claims Act (FCA) retaliation lawsuit brought by former employee Dana Johnson against his former employer, Raytheon Co.Johnson alleged that Raytheon retaliated against him for reporting fraudulent misrepresentations that the company made to the US Navy. However, the Court of Appeals ruled that the District Court correctly held that it lacked jurisdiction to review Johnson’s claims implicating the merits of the decision to revoke his security clearance, based on the Supreme Court’s ruling in Department of the Navy v. Egan. The court also affirmed that Johnson failed to present a prima facie case of retaliation for the remaining claim, which involved Johnson being instructed not to report problems to the Navy. The court found that such instructions by Raytheon would not have dissuaded a reasonable worker from reporting to the Navy and therefore did not constitute retaliation.The case centered around Johnson's work for Raytheon, a government defense contractor, on a Navy project which required top-secret security clearance. Johnson claimed that after he reported concerns to managers and supervisors about Raytheon making fraudulent misrepresentation to the Navy, Raytheon began to monitor him, made false accusations about him to the Navy, and ultimately fired him. The Navy found that Johnson had committed security violations, and his security clearance was revoked. Raytheon subsequently terminated Johnson's employment. Johnson filed a lawsuit claiming retaliation, which the District Court dismissed and the Court of Appeals affirmed. View "Johnson v. Raytheon" on Justia Law

The case involves Strategic Technology Institute, Inc. ("STI") and the National Labor Relations Board. STI had a contract to maintain engines and propellers for the U.S. Air Force from August 2017 until July 2020. During this time, STI's employees at a Little Rock facility began discussing unionizing. In response to this, Tyler Boyd of STI fired 17 employees — three on September 27, 2019, and fourteen on October 9, 2019. The administrative law judge and the Board found that these terminations violated subsections 8(a)(1) and (3) of the National Labor Relations Act, which prohibits employers from interfering with, restraining, or coercing employees in their right to engage in union activities and from discriminating in regard to hire or tenure of employment to encourage or discourage membership in any labor organization.STI petitioned for a review of the Board's order, and the United States Court of Appeals for the Eighth Circuit granted the petition, vacated the order, and remanded the case. The court found that there was no substantial evidence to support the Board's finding that the terminations were motivated by anti-union animus. The court noted that the only evidence of STI's knowledge of the union activities were two phone calls informing Tyler Boyd that the employees were considering unionizing and the timing of the firings. The court held that this was not sufficient to establish that STI acted with an anti-union motive when it terminated the employees. The court also found that the Board's reliance on the "small plant doctrine" to infer employer knowledge of union activity was not applicable in this case since there was no other evidence indicating a likelihood that Boyd knew of the union activities. Furthermore, the court held that the Board erred in finding that STI's reasons for the firings were pretextual because they were based on legitimate factors such as performance, attendance, and interpersonal skills. The court concluded that the General Counsel failed to meet its burden of providing substantial evidence that STI harbored anti-union animus and that the terminations were motivated by animus. Consequently, the court vacated the Board's order and remanded the case for proceedings consistent with its opinion. View "Strategic Technology Institute v. NLRB" on Justia Law

Stewart obtained his private pilot airman’s certificate in 1978. In 2013, he flew at altitudes and in weather conditions for which he was not authorized. The FAA notified Stewart that it planned to suspend his airman’s certificate. He could: surrender his certificate and begin the 180-day suspension; submit evidence that he had not violated the regulations; discuss the matter informally with an FAA attorney; or request an appeal to the NTSB. Stewart instead sent a letter stating that the agency lacked jurisdiction over private pilots. The FAA suspended Stewart’s certificate and assessed a $5,000 civil penalty for failure to turn in his certificate. Stewart kept flying. When he failed to properly deploy his plane’s landing gear, the FAA flagged his plane for inspection. Stewart did not comply. The FAA suspended the airworthiness certificate for his plane. Stewart kept flying and again landed his plane with the landing gear up. The FAA revoked Stewart’s airman’s certificate and again assessed a civil penalty. Stewart continued flying. The Sixth Circuit affirmed Stewart's convictions for knowingly and willfully serving as an airman without an airman’s certificate authorizing the individual to serve in that capacity, 49 U.S.C. 46306(b)(7), rejecting Stewart’s argument that he was not “without” a certificate because he still had physical possession of his. The statute required Stewart to have FAA permission to fly at the time of the flights in question. View "United States v. Stewart" on Justia Law

The Federal Service Labor-Management Relations Statute (FSLMRS) provides for collective bargaining between federal agencies and their employees’ unions and establishes the Federal Labor Relations Authority (FLRA) to investigate and adjudicate labor disputes, 5 U.S.C. 7101. The Union represents federal civil-service employees (dual-status technicians) who work for the Ohio National Guard. After their prior collective-bargaining agreement (CBA) expired, the Guard, the Ohio Adjutant General, and the Ohio Adjutant General’s Department (petitioners) asserted that they were not bound by the FSLMRS. The Union filed a complaint with the FLRA. An ALJ concluded that the FLRA had jurisdiction over the Guard; the dual-status technicians had collective bargaining rights under the FSLMRS; and repudiating the CBA violated the FSLMRS. The Sixth Circuit upheld the decision.The Supreme Court affirmed. A State National Guard acts as a federal agency for purposes of the FSLMRS when it hires and supervises dual-status technicians serving in their civilian roles. When the Guard employs dual-status technicians, it exercises the authority of the Department of Defense, an agency covered by the FSLMRS. The statutory authority permitting the Ohio Adjutant General to employ dual-status technicians as civilian employees in the federal civil service is found in 5 U.S.C. 2105(a)(1)(F). Dual-status technicians are ultimately employees of the Secretaries of the Army and the Air Force, and the petitioners are the Secretaries’ designees for purposes of dual-status technician employment. View "Ohio Adjutant General's Department v. Federal Labor Relations Authority" on Justia Law

For pressing projects, the government can issue “Undefinitized Contract Actions” (UCAs) to allow contractors to begin work before the parties have reached a final agreement on contract terms, like price. The Air Force entered into two UCAs with Lockheed for upgrades to F-16 aircraft. Both UCAs include “definitization” clauses that provide that if the parties are unable to reach agreements on price by a certain time, the Contracting Officer (CO) may determine a reasonable price. After years of negotiations, the Air Force and Lockheed were unable to agree on the price terms. The CO assigned to each UCA unilaterally definitized a price of about $1 billion.The Armed Services Board of Contract Appeals (ASBCA), acting under the Contract Disputes Act (CDA), dismissed appeals for lack of jurisdiction because Lockheed failed to submit a certified contractor claim to the COs requesting a final decision on its claims as required under the CDA. The Federal Circuit affirmed, rejecting Lockheed’s argument that the COs’ unilateral definitizations qualified as government claims under the CDA, which a contractor can directly appeal to the ASBCA without having to submit its own claim to the COs. The COs’ definitizations of the contract prices were not demands or assertions by the government seeking relief against Lockheed. View "Lockheed Martin Aeronautics Co. v. Secretary of the Air Force" on Justia Law

Raytheon has cost-reimbursement government contracts. Raytheon’s Government Relations Department engaged in information gathering, internal discussions on lobbying strategies, attending meals with contractors and Congresspeople or staff, meeting with internal Raytheon customers, attending political fundraisers, administering Raytheon’s Political Action Committee, interfacing with the legislative branch, responding to requests from Congressional staffers, and similar activities. Raytheon instructed employees to record all compensated time spent on lobbying activities. Accounting personnel withdrew costs associated with that time from Raytheon’s incurred-cost submissions. Raytheon’s employees considered time worked outside of regular hours part of their regular work duties, yet Raytheon’s policy instructed them not to report “[t]ime spent on lobby activity after the scheduled working day.” Raytheon’s Corporate Development Department worked with Raytheon’s business units, including internal investment, research and development, intellectual property licensing, partnerships, or acquisitions. Corporate Development had rules establishing when employees begin recording their time on acquisitions and divestitures.In 2007-2008, Raytheon charged the government for roughly half of the salary costs of its Government Relations and Corporate Development Departments. The Defense Contract Audit Agency audited both departments, determined that Raytheon’s incurred-cost submissions for those departments included unallowable costs, and demanded reimbursement and penalties. The Armed Services Board of Contract Appeals ruled in favor of Raytheon. The Federal Circuit reversed. The Board erred in interpreting Raytheon’s corporate practices and policies, which are inconsistent with the Federal Acquisition Regulation and led Raytheon to charge the government for unallowable costs. View "Secretary of Defense v. Raytheon Co." on Justia Law

In 2005, the Defense Logistics Agency (DLA) awarded Supreme a contract to provide food to U.S. forces in Afghanistan. During negotiations concerning deliveries to forward operating bases, Supreme submitted inflated cost proposals. Supreme threatened to withhold payments to subcontractors (potentially cutting off supplies to troops), The parties executed a Modification, including Supreme’s proposed rates, subject to verification. The Defense Contract Audit Agency concluded that Supreme’s documentation was not adequate and questioned more than $375 million of claimed costs. The contracting officer, in 2011, determined that DLA had overpaid Supreme by $567,267,940. DLA withheld $540 million from Supreme’s monthly payments. Supreme submitted unsuccessful “reverse image” claims. In 2014, Supreme pled guilty to fraud and entered into a civil settlement in a False Claims Act suit. During the investigations, with Supreme’s contract expiring, the parties entered into two extensions. In 2015, based on Supreme’s guilty plea, DLA demanded the return of all money paid under the contract. In 2020, the Armed Services Board of Contract Appeals concluded that Supreme’s contract claims against the government were barred by Supreme’s prior material breach.The Federal Circuit affirmed. The government did not waive its prior material breach defense. While DLA had some notice of Supreme’s fraudulent behavior in 2009, it had no “known right” until Supreme’s guilty plea, after which DLA never extended Supreme’s contract. Supreme cannot treat the bridge contracts as separate only to evade the government’s affirmative defenses. The parties treated the original contract and the extensions as inextricably intertwined; DLA’s prior material breach defense applies to those contracts. View "Supreme Foodservice GmbH v. Director of the Defense Logistics Agency" on Justia Law

Hekmati, a Marine Corps veteran, completed two tours of service in Iraq from 2001-2005 and worked as a military contractor between 2005-2011, stationed in Afghanistan. On his way back to the U.S., Hekmati went to Iran, purportedly to visit family. In 2011, the Iranian government arrested Hekmati. For four years, the Iranian government detained and tortured Hekmati. In 2016, the U.S. secured Hekmati’s release in a prisoner exchange. Hekmati sued the Iranian government under the Foreign Sovereign Immunities Act and obtained a default judgment ($63.5 million). Hekmati sought compensation from the Victims of State Sponsored Terrorism Fund, 34 U.S.C. 20144. The Fund's special master, Feinberg, approved Hekmati’s claim. Months passed. Hekmati received no money. The Fund’s interim special master informed Hekmati that the Department of Justice would seek reconsideration.Hekmati filed suit. Feinberg— whom the Department retained again to review Hekmati’s case—determined that Hekmati was not eligible for compensation because Hekmati’s application and accompanying documents contained material omissions and false statements. Feinberg determined that the primary purpose of Hekmati’s trip to Iran was “to sell classified U.S. national security information.” The Federal Circuit affirmed the Claims Court’s decision that it lacked subject-matter jurisdiction over Hekmati’s claim; 34 U.S.C. 20144 precludes judicial review of the special master’s reconsideration decision. View "Hekmati v. United States" on Justia Law

The Federal Communications Commission approved a request by Space Exploration Holdings, LLC to fly its satellites at a lower altitude.The D.C. Circuit rejected the merits of a competitor's claim that the FCC did not adequately consider the risk of signal interference. The D.C. Circuit also declined to review a claim brought by another competitor and an environmental group because the competitor's asserted injury did not fall within the zone of interests protected by the NEPA and the environmental group lacked standing. View "Viasat, Inc. v. FCC" on Justia Law