International Exports, Inc. et al v. Hagel et al

MOTION for Summary Judgment

D.D.C.September 8, 2016

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA INTERNATIONAL EXPORTS, INC., : ET AL., : Plaintiffs, : : v. : Civ. No.: 14-cv-2064 (RBW) : ASHTON CARTER, ET AL., : Defendants. : DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT Pursuant to Fed. R. Civ. P. 56, Defendants respectfully move for summary judgment in this Administrative Procedure Act (APA) case. In support of the said Motion, Defendants respectfully refer the Court to the attached Memorandum Points and Authorities and the certified Administrative Record (ECF No. 33). September 8, 2016 Respectfully submitted, CHANNING D. PHILLIPS D.C. Bar #415793 United States Attorney DANIEL F. VAN HORN D.C. BAR # 924092 Chief, Civil Division By: ______//s______________ JOHN C. TRUONG D.C. BAR #465901 Assistant United States Attorney 555 4th Street, N.W. Washington, D.C. 20530 Tel: (202) 252-2524 Fax: (202) 252-2599 E-mail: John.Truong@usdoj.gov Counsel for Defendants OF COUNSEL: FRANK D. HOLLIFIELD, Lt Col, USAF Defense Logistics Agency Office of General Counsel Case 1:14-cv-02064-RBW Document 36 Filed 09/08/16 Page 1 of 2 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA INTERNATIONAL EXPORTS, INC., : ET AL., : Plaintiffs, : : v. : Civ. No.: 14-cv-2064 (RBW) : ASHTON CARTER, ET AL., : Defendants. : [PROPOSED] ORDER Upon consideration of Defendants’ Motion for Summary Judgment, Plaintiffs’ Opposition thereto and the entire record herein, it is this ______ day of ______, 2016, ORDERED that Defendants’ Motion for Summary Judgment be and is hereby GRANTED; and it is FURTHER ORDERED that the above-captioned actions be and is hereby DISMISSED with prejudice. SO ORDERED. ________________________ United States District Judge Case 1:14-cv-02064-RBW Document 36 Filed 09/08/16 Page 2 of 2 1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA INTERNATIONAL EXPORTS, INC., : ET AL., : Plaintiffs, : : v. : Civ. No.: 14-cv-2064 (RBW) : ASHTON CARTER, ET AL., : Defendants. : MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT I. INTRODUCTION The Defense Logistics Agency (DLA), a component within the Department of Defense (DOD),1 debarred Plaintiffs International Exports, Inc., Suzanne Itani, and Ziad Itani2 because of their affiliation to S&S Itani (a company controlled by Samir Itani - who pled guilty and was sentenced for felony fraud in relation to Government contracts for goods and services in support of military operations in the Middle East). Plaintiff Suzanne Itani is the wife of Samir and she is also the owner of Plaintiff International Exports, Inc. Plaintiff Ziad Itani is Samir’s brother. Plaintiffs filed this lawsuit under the Administrative Procedure Act, 5 U.S.C. §§ 701 et seq., claiming that the debarment was arbitrary, capricious and in violation of law. See Complaint (“Compl.”) ¶¶ 1-6. Contrary to Plaintiffs’ allegations, Defendants’ debarment 1 The Defendants in this case are the Department of Defense, the Defense Logistics Agency (DLA), Secretary Ashton Carter, Vice Admiral Mark D. Harnitchek (Director of DLA), and Fred Pribble (Special Assistant of Contracting Integrity). The listed individuals are sued in their official capacity. 2 The Plaintiffs in this case are International Expert Inc., Suzanne Itani (owner of International Export, Inc., and wife of Samir Itani); and Ziad Itani (brother of Samir Itani). Given that these individuals share a common surname, for ease of references and purposes of this Motion, Defendants shall refer to them by their “first” name. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 1 of 26 2 decision and the 15-year debarment term are supported by the Administrative Record (“AR”). See ECF No. 33 (certified Administrative Record). Therefore, the Court should grant the Defendants’ Motion for Summary Judgment and dismiss this case with prejudice. II. SUMMARY JUDGMENT STANDARD In Lewis v. Secretary of the Navy, this Court set forth the summary judgment standard of review in APA cases as follows: A moving party is entitled to summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). In the APA context, summary judgment is the mechanism for deciding whether as a matter of law an agency action is supported by the administrative record and is otherwise consistent with the APA standard of review. See, e.g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971). The APA “sets forth the full extent of judicial authority to review executive agency action for procedural correctness.” FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). It requires courts to “hold unlawful and set aside agency action, findings, and conclusions” that are “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). However, “the scope of review under the ‘arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency.” Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Nonetheless, “the agency must examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’” Id. (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962)). “Courts ‘will uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.’” Pub. Citizen, Inc. v. FAA, 988 F.2d 186, 197 (D.C.Cir.1993) (quoting Bowman Transp., Inc. v. Arkansas–Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974)). No. 10-0842, -- F. Supp. 3d --, 2016 WL 3659882, *4 (D.D.C. July 1, 2016) (Walton, J.). Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 2 of 26 3 III. BACKGROUND A. Procedural and Factual Background On August 26, 2005, a former employee of Samir and Suzanne Itani and the Itani Enterprises, filed a qui tam suit against Samir Itani, American Grocers, Ltd., American Grocers, Inc., and International Grocers, Inc., under the Federal False Claims Act. See AR 132 – 50; See Compl. at ¶¶ 33 – 343 The qui tam suit alleged that Samir, Suzanne and their various companies conspired to (i) buy and sell expired or possibly contaminated food that had a short shelf-life to the U.S. military serving in the Middle East; (ii) buy and sell out-of-date food products and the change of the product’s expiration dates; (iii) forge U.S. Department of Agriculture Health/Export Certificates and Halal certificates (Islamic Slaughter Certification); and (iv) sell food “possibly infected with such contaminants as Mad Cow Disease.” See Compl., ¶¶ 33 – 40. Consequently, in October 2010, Samir, Suzanne, Ziad, S&S Itani, and other companies (owned by or affiliated to Samir and Suzanne) paid the federal government $15 million to resolve the qui tam case. AR 228-243. Samir and Suzanne signed the Settlement Agreement. See generally AR 243. As a result of the qui tam action, a criminal investigation followed and led to Samir’s indictment on July 23, 2007, on two counts of Conspiracy to Defraud the Government, in violation of 18 U.S.C. § 286, and 44 counts of False Claims, in violation of 18 U.S.C. § 287. See AR 81 – 93. As a result of the criminal indictment, on July 27 , 2007, Defendants suspended Samir, Suzanne, S&S Itani, Inc. (d/b/a American Grocers), and American Grocers, Ltd., from government contacting. See AR, pp. 56 – 73. Approximately two years later, on July 21, 2009, 3 The initial qui tam complaint was later amended on June 1, 2009. AR 182-213. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 3 of 26 4 Samir pled guilty to a “Superseding Criminal Information”4 for Conspiracy to Defraud the federal government. See AR, pp. 94 - 116. Specifically, Samir pled guilty to submitting “bogus” costs and “fabricated” invoices to the federal government for payment. AR 81-93 (Superseding Criminal Information). On December 3, 2010, a federal district court in Houston, Texas, sentenced Samir to 24 months of incarceration, followed by three years of supervised release. See AR 129. As a result of Samir’s conviction, on March 11, 2011, Defendants proposed to debar a number of individuals and companies affiliated with Samir. See AR 386-401. Relevant here, Defendants proposed to debar Plaintiff Suzanne because of her affiliation to S&S Itani. AR 401. Suzanne is Samir’s wife. AR 563 (¶ 2). On June 3, 2011, Defendants proposed to debar Plaintiff Ziad because of his affiliation with S&S Itani (d/b/a American Grocers). See AR 456 – 58. Ziad is Samir’s brother and his right-hand man. AR 135 (¶11). And, on June 16, 2011, Defendants proposed to debar Plaintiff International Exports, Inc., due to its affiliation with S&S Itani (d/b/a American Grocers). See AR 479 – 81. Suzanne formed and owned Plaintiff International Export after Samir’s criminal conviction. AR 565 (¶ 7). There is an interlocking familial and business relationship between Samir (a convicted felon) and the three Plaintiffs in this case. S&S Itani (d/b/a American Grocers) was a Texas company, formed and operated by Samir. AR 187 (¶187). Samir was “the forefront” and CEO of at least three companies, including S&S Intani. Compl. ¶ 27. Suzanne (Samir’s wife) 4 The “Superseding Criminal Information” indicated that Samir and his wife, Suzanne, controlled and operated “American Grocers, Inc.” See AR 80. S&S Itani began doing business as “American Grocers” in January 2004. Compl. ¶ 28, see also AR 563 (¶ 1). In a circuitous corporate shell-game, at the time of the Superseding Criminal Information, both Samir and Suzanne controlled S&S Itani. Compl. ¶ 28, AR 563 (¶ 1) (stating that Suzanne was the president and CEO of S&S Itani). As explained in the September 2011 Debarment Notice, Suzanne and the co-plaintiffs here were debarred because of their affiliation with S&S Itanai. See Pl. Exh. 1 Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 4 of 26 5 served as S&S Itani’s president and CEO. Compl. ¶ 24 (stating that Samir and Suzanne are husband and wife); AR 563 (¶2) (stating that Suzanne is president and CEO of S&S Itani). Suzanne, however, took over a number of Samir’s companies, including S&S Itani, after Samir was embroiled in criminal proceedings. AR 563 (¶2). “It was S&S Itani dba American Grocers that carried out the actions that were at issue in the criminal proceeding involving Mr. Itani.” AR 414. Ziad (Samir’s brother) worked for American Grocers. AR 549 (¶ 4); Compl. ¶ 29. After Samir’s criminal conviction, Suzanne formed International Export Inc. (one of three plaintiffs in this case). AR 565 (¶ 7); Compl. ¶ 30. All three Plaintiffs responded to Defendant’s Notice of Proposed Debarment (NPD). See AR 532-535 (Suzanne’s response); AR 536-553 (Ziad’s response); and AR 599-610 (International Export’s response). Ultimately, on September 23, 2011, among other things, based on the facts adduced from the qui tam action, criminal indictment, and Samir’s guilty plea, Defendants debarred all three Plaintiffs for a period of 15 years. See AR 662 (International Export’s debarment notice), 668 (Suzanne’s debarment notice), 669 (Ziad’s debarment notice) and Plaintiffs’ Exhibit 1 (containing the Memorandum of Decision) (ECF No. 1-1). B. Agency Debarment Process On March 11, 2011, Defendants proposed to debar Suzanne based on her affiliation with S&S Itani, a company controlled by Samir Itani (a convicted felon). See AR 401-03. S&S Itani was a holding company for the enterprise American Grocers (American Grocers, American Grocers, Inc., American Grocers, Ltd).5 See AR 414-19. As mentioned above, it was the 5 American Grocer was created in November 1999 by Samir. In October 2003, Samir created S&S Itani, Inc., to carry out his export business and registered S&S Itani as a “dba American Grocers” to restore the name under which it had been operating. AR 414. In short, S&S Itani was “doing business as” American Grocers during the time when the criminal acts occurred that led to the criminal proceedings against Mr. Itani. See AR 414. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 5 of 26 6 conduct of “S&S Itani dba American Grocers” that formed the bases for the criminal proceeding against Samir Itani. AR 414. Ziad (Samir’s brother) was proposed for debarment based on his affiliation with S&S Itani (d/b/a American Grocers). Ziad responded to the proposal. He described his duties in the warehouse where the mislabeling of food for troops occurred, to include “coordinating and overseeing the persons who handled the delivery and unloading of products arriving at the plant by truck, seeing that they were inventoried and organized, making sure that products were processed according to the orders and requirements of our customers; seeing to it that the product containers and cartons were marked, making sure the product cartons were properly packed on crates for shipping, and then moving the completed orders out of the plant onto trucks for shipping to their destination.” AR 550 (¶¶9-10). Ziad’s response also represented that he would sit in with Suzanne Itani in meetings with Middle Eastern clients. AR 632 (¶20). Defendants proposed to debar International Export because of its affiliation with S&S Itani (d/b/a American Grocers). See AR, pp. 479 – 81. International Export’s response to the proposed debarment described its incestuous relationship with Samir and S&S Itani. Specifically, it admitted that it “was founded in 2010 by Suzanne Itani” and explained that Suzanne “had taken over running S&S Itani, Inc., dba American Grocers (‘S&S Itani’) after her husband resigned as S&S Itani’s senior executive amidst a criminal investigation of and a qui S&S Itani (to which Suzanne served as president and CEO) was an over-arching corporate structure that controlled the businesses that were the subject of the criminal investigation and proceedings. S&S Itani admitted that Samir served as its director and first chief executive officer until his indictment. “S&S Itani removed Mr. Itani from his management position and replaced him with his wife, Suzanne Itani. They also retained criminal and government contracts counsel to advise them regarding the issues against Mr. Itani in the criminal proceedings and against Mr. Itani, S&S Itani, and others in a separate False Claims Act action.” See AR, p. 440. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 6 of 26 7 tam lawsuit regarding his activities while leading that company.” AR 599. Ironically, this response re-affirms that International Export was affiliated with the parties who were “key figures” in the criminal investigation and proceedings, and who were eventually debarred. C. Agency September 2011 Debarment Decision After reviewing the responses from all three Plaintiffs, on September 23, 2011, Defendants issued a “Memorandum of Decision” debarring the Plaintiffs for 15 years. See generally Plaintiff Exh. 1 (ECF No. 1-1). Defendants debarred Suzanne due to “her position in the companies [affiliated with Samir Itani] and her ownership interest in them.” Pl. Exh. 1 at p. 5. The Memorandum explained that “[t]he superseding indictment to which Samir Itani plead guilty, stated that Samir Itani, along with his wife, owned, controlled and operated American Grocers Inc (AGI), a closely held Texas corporation in the business of exporting food products to countries in the Middle East. Ms. Itani is an affiliate of Itani by virtue of her position in the companies and her ownership interest in them. These were all small closely held family businesses.” Id. (emphasis added). After considering Ziad’s response to the notice of proposed debarment (“NPD”), Defendant debarred him based on his ties to Samir and because he was an employee for debarred businesses. The Memorandum elaborated that Ziad “was and is an employee and family member in these family-run businesses and this supports the finding of affiliation.” Pl. Ex. 1 at 6. Finally, Defendants debarred International Exports because it was formed and owned by Suzanne (Samir’s wife). In fact, Suzanne established International Exports after Samir’s conviction and, thus, International Exports was a business entity organized following the debarment, suspension, or proposed debarment of Samir (a convicted felon) and Suzanne. See 9.403. In short, in reaching the debarment decision, Defendants considered the information Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 7 of 26 8 submitted in support of the recommendation to debar as well as the information that Plaintiffs submitted in opposition to the debarment recommendation. Pl. Exh. 1 (Memorandum Decision). IV. ARGUMENT A. The Debarment Decision Was Supported by the Record and Was Not Arbitrary, Capricious, or Violation of the Law (Count I) (1) APA Standard of Review Plaintiffs allege that the debarment decision was arbitrary, capricious, an abuse of discretion, not in accordance with law, and not supported by substantial evidence. See generally Complaint. Under the APA, Defendants’ decision is reviewed under the more deferential “arbitrary and capricious” standard, based on the Administrative Record. See 5 U.S.C. § 706(2)(A). When the court is reviewing an agency action under the APA, the scope of the court’s review should properly be limited to the administrative record that was before the agency at the time the agency made its decision. See Pharm. Research & Mfrs. Of Am. v. FTC, 44 F. Supp. 2d 95, 111 (D.D.C. 2004). This Court has explained that “[u]nder the APA, courts are required to ‘hold unlawful and set aside agency action, findings, and conclusions’ that are ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’” Mott Thoroughbred Stables, Inc. v. Rodriguez, 87 F. Supp. 3d 237, 244 (D.D.C.) (Walton, J.) (quoting 5 U.S.C. § 706(2)(A)). The Court, however, emphasized that “[t]he scope of review under the ‘arbitrary and capricious' standard is narrow and a court is not to substitute its judgment for that of the agency.” Id. (citing Motor Vehicle Mfrs. Ass'n of U.S., Inc., 463 U.S. at 43. “The standard of review is a highly deferential standard which presumes agency action to be valid, forbids a court’s substituting its judgment for that of the agency, and requires affirmance if a rational basis exists for the agency’s decision.” Sierra Club v. Andrus, 487 F. Supp. 443, 448, 450 (D.D.C. 1980), aff’d, Sierra Club Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 8 of 26 9 v. Watt, 659 F.2d 203 (D.C. Cir. 1981); Angelina Holly Corp. v. Clark, 587 F. Supp. 1152, 1154 (D.C. Cir. 1984). A plaintiff challenging an agency’s action bears the burden of proof to show otherwise. Wilmina Shipping AS v. U.S. Dept. of Homeland Sec., 2014 U.S. Dist. LEXIS 166596, *5 (D.D.C. Dec. 2, 2014). The D.C. Circuit has noted that the application of the arbitrary and capricious standard has been substantively equated with the inquiry as to whether there was “substantial evidence” to debar a party. Textor v. Cheney, 757 F. Supp. 51, 56 (D.C. Cir. 1991). “The ‘substantial evidence’ standard requires more than a scintilla, but can be satisfied by something less than a preponderance of the evidence.” Feinerman v. Bernardi, 558 F. Supp. 2d 36, 45 (D.D.C. 2008) (Walton, J.) (quoting FPL Energy Me. Hydro, LLC v. FERC, 287 F.3d 1151, 1160 D.C.Cir.2002)). The standard of review is not whether the Court would have acted differently in a given situation, but it is whether the decision made was a rational one, based the consideration of all relevant factors. Id.; citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971). (2) Plaintiffs Are Affiliates Of A Company That Carried Out The Criminal Conduct And Thus Are Appropriately Debarred. Defendants debarred all three Plaintiffs in this case because of their affiliation with S&S Itani (dba American Grocers), a company that confessed to criminal conduct. See Pl. Exh. 1 (Memorandum Decision). Indeed, S&S Itani admitted that it “functioned as the corporate entity that, while under the leadership of [Samir] Itani, made the various acquisitions and sales that became the subject of [Samir] Itani’s criminal conviction.” AR440-41. Thus, Plaintiffs’ debarment as affiliates to S&S Itani is supported by the record. The Federal Acquisition Regulation (FAR) provides that “[i]t is the debarring official’s responsibility to determine whether debarment is within the Government’s interest.” 48 C.F.R. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 9 of 26 10 (“FAR”) § 9.406-1(a). The debarring official may, in the public interest, debar a contractor for any of the causes in FAR § 9.406-2, using the procedures in FAR § 9.406-3. The causes for debarment, as listed in FAR § 9.406-2(a)(1), provide that “[a] debarring official may debar a (a) contractor for a conviction of or civil judgment for (1) commission of fraud or a criminal offense in connection with – obtaining, attempting to obtain or performing to a public contract or subcontract.” See FAR § 9.406-2(a)(1). The Debarring Official “may extend the debarment decision to include any affiliates of the contractor if they are (1) specifically named; and (2) given written notice of the proposed debarment and an opportunity to respond (see 9.406-3(c)).” See FAR 9.406-1(b) (italics added).6 The definition of “affiliate” is defined as “Business concerns, organizations, or individuals are affiliates of each other if, directly or indirectly, (1) either one controls or has the power to control the other, or (2) a third party controls or has the power to control both.” FAR § 9.403.7; see also Steven D. Gordon, “Suspension and Debarment From Federal Programs,” 23 Pub. Cont. L.J. 573, 588 (1994). FAR 9.403 also elaborates that “[i]ndicia of control include . . . 6 Within DLA, the Special Assistant for Contracting Integrity serves as the Suspension and Debarment Official (SDO). 7 FAR 9.403 defines “Affiliates” as: Business concerns, organizations, or individuals are affiliates of each other if, directly or indirectly, (1) either one controls or has the power to control the other, or (2) a third party controls or has the power to control both. Indicia of control include, but are not limited to, interlocking management or ownership, identity of interests among family members, shared facilities and equipment, common use of employees, or a business entity organized following the debarment, suspension, or proposed debarment of a contractor which has the same or similar management, ownership, or principal employees as the contractor that was debarred, suspended, or proposed for debarment. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 10 of 26 11 identity of interests among family member.”8 Recently, the Eleventh Circuit examined the scope of debarment under FAR § 906(b)(1) and held that “[i]f the prosecution of a government contractor results in a conviction, for example, then that conviction can serve as the basis to debar the contractor. The agency may also debar an affiliate of that contractor based solely on its affiliate status.” Agility Defense & Gov’t Serv. v. U.S. Dep’t of Defense, 739 F. 3d 586, 590 (11th Cir. 2013) (citing FAR 9.406–1(b)) (italics added). The Eleventh Circuit further elaborated that “[l]ike suspensions, an agency can debar an affiliate even if the affiliate has not engaged in wrongdoing.” Id. (citing same). In this case, Defendants debarred Plaintiffs because of their affiliation with S&S Itani, a company controlled by Samir (a convicted felon). The records show that Suzanne was an “affiliate” within FAR § 9.406-1. Defendants do not dispute that there is no proof that Suzanne committed any wrongdoing; however, given her familial relationship and interlocking business interest with Samir (the forefront of S&S Itani), she is considered an “affiliate” of S&S Itani for debarment purposes. See Agility Defense, 739 F. 3d at 590. Specifically, Defendants debarred Suzanne because she is (was) Samir’s wife during the time when he committed the criminal conduct that resulted in his conviction. Compl. ¶¶ 24, 25. More importantly, Suzanne attested, “under penalty of perjury,” that she served as president and CEO of S&S Itani. AR 563 (¶ 1). She also explained that she held “officer and director positions in S&S Itani.” Id. More pointedly, “[i] was S&S Itani dba American Grocer that carried out the actions that were at issue in the criminal proceedings involving [Samir] Itani.” AR 414. In fact, Samir pled guilty to a 8 As far back as 1988, 28 departments and agencies (including DoD, GSA, and NASA) unanimously explained during the “Notice and Comment” procedure for the non-procurement analogue for suspensions and debarments that the “[e]xtension of a debarment to affiliates, regardless of necessity, is necessary to prevent a debarred person from participating in covered transaction through or under the guise of other entities that such person controls.” 53 Fed. Reg. 19161, 19169 (May 26, 1988) (emphasis added). Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 11 of 26 12 criminal Superseding Criminal Information that indicated that he and his wife (Suzanne) as owners of American Grocers Inc., a company that was used to defraud the government. See AR, 80-93 (Superseding Criminal Information) and AR 94-116 (plea agreement). After Samir became embroiled in criminal proceedings, Suzanne took control of S&S Itani and closed it down. AR 564 (¶3). At base, Suzanne had deep and expansive control over closely-held family businesses. Given the familial and business relationships between Suzanne and Samir, the facts support a finding that Suzanne is “affiliate” of S&S Itani. Based on these records, Defendants’ Memorandum Decision found that Suzanne intended to resume her “business career in the commercial export business, the very same business that Samir Mahmoud Itani was involved in the criminal fraud.” Pl. Exh. 1 at 5. The Decision further found that “Suzanne was at all time an officer of the culpable business” and that she failed to present evidence rebutting role and “power to control S&S Itani.” Id. at 6. The Decision concluded that “[t]he public interest to be served is the protection of the government from non-responsible contractors” like Suzanne. Id. Under these circumstances, Suzanne’s debarment under FAR § 9.406-2(c) is entirely appropriate here. See FAR § 9.406-2(c) (stating that “a contractor or subcontractor” may be debarred “based on any other cause of so serious or compelling a nature that it affects the present responsibility of the contractor or subcontractor”). Defendants debarred Ziad due to his affiliation to S&S Itani. Zaid (Samir’s “brother and right hand man”) (AR 135) was a highly-involved individual in both past and present businesses (essentially both a Sales Manager and Warehouse Manager). According to the qui tam complaint, Ziad was part of a “close cadre of family members” that were “directly involved” in conduct that “directly harms American military men and women serving overseas.” AR 135-36 (¶ 11). In fact, Ziad was part the very corporate operations that were the root cause of the Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 12 of 26 13 criminal investigation and prosecution and the qui tam litigation. See AR 549-50 (¶¶ 8-11). He worked for American Grocers (AR 549 ¶ 4) and was named as one of the defendants in the qui tam Settlement Agreement (AR 228). Ziad had reason to know about Samir’s illegal activities sufficient to impute the misconduct to him, and his status as an employee is enough to make him an affiliate for the purposes of debarment. Specifically, Ziad worked for “American Grocers” - the business under which name S& Itani conducted its illegal activities. See AR 414 (noting that “S&S Itani dba American Grocers[’]” actions that formed the bases for criminal proceedings against Samir Itani); AR 440-41 (S&S Itani admitting that it made illegal acquisitions and sales that led to Samir Itani’s criminal conviction). The debarment decision found that “[a]lthough counsel offered the explanation that Ziad Itani thought he was labeling the food in order to comply with Arabic dating convention, there was no adequate explanation of the misdating to extend the products shelf life.” Pl. Exh. 1 at 9. Based on these and other factors, Defendant properly debarred Ziad as an affiliate of S&S Itani. Plaintiff International Export was formed and owned by Suzanne (the president and CEO of S&S Itani). AR 564-65 (¶4-7). Suzanne created International Exports after Samir’s indictment and conviction. Id. More importantly, Suzanne created International Exports in March 2010 (Compl. ¶ 30), three years after she was suspended in July 2007 (AR 71-73). As such, the rules governing debarment contemplate the debarment of International Exports as an affiliate. See Pl. Exh. 1 at 11. At base, the facts support a finding that all three Plaintiffs are affiliates of S&S Itani and they were properly debarred as affiliates of a company controlled by a convicted felon. See Agility Defense, 739 F.3d at 590 (holding that “the agency may also debar an affiliate based solely on its affiliate status.”) Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 13 of 26 14 (3). Plaintiffs Failed To Demonstrate That Their Debarment Was Arbitrary, Capricious, or Otherwise Not In Accordance With Law Plaintiffs allege that their case “arises out of DLA’s arbitrary and capricious application of a guilt-by-association standards of debarment.” Compl. ¶ 1; see also Count I. Plaintiffs further claim that the debarment “was not based on substantial evidence in the record, was arbitrary and capricious, and was done without a legal basis, without due process of law, and not in accordance with the law and applicable regulations, including, but not limited to, [FAR] §§ 9.402(b), 9.406-1, 9.406-2, 9.406-3, 9.406-4, and 9.406-5.” Compl. ¶ 1. On the debarment of affiliates, FAR § 9.406-2(b) does not provide for anything other than consideration of the matters presented. As noted in the Complaint, Defendants named and provided notice to each of the Plaintiffs and later gave them the opportunity to respond to the proposed debarment. Compl. ¶¶ 94, 123 -24, 145-46. This is undisputed by the parties. Significantly, the Complaint conveniently neglects to explain that all three Plaintiffs were given notices of their proposed debarment and they responded to the notices via counsel. See AR 442- 53 (Suzanne’s initial response to debarment proposal); AR 532-35 (Suzanne’s supplemental response );9 AR 536-553 (Ziad’s response to debarment proposal); and AR 599- 616 (International Export’s response to debarment proposal). The Administrative Record, including Plaintiffs’ submissions, was “carefully considered” by Defendant. See Pl. Exh. 1 at p.4- 10. And the record supported the debarment of the Plaintiffs as affiliates to S&S Itani “based on the conviction of Samir Itani and the affiliation and imputation of the wrongdoing to his companies.” Id. The debarment process of the Plaintiffs, as challenged here, met the procedural requirements under FAR Subpart 9.4. There can be no serious dispute that Defendants faithfully 9 The agency supplemented the Administrative Record on May 27, 2011, and Suzanne provided her supplemental response to address the supplemented record. AR 532. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 14 of 26 15 followed the process – namely, Defendants provided notices to Plaintiffs and they responded to those notices. See AR 442-53 (Suzanne’s initial response to debarment proposal); AR 532-35 (Suzanne’s supplemental response ); AR 536-553 (Ziads’ response to debarment proposal); and AR 599- 616 (International Export’s response to debarment proposal). Essentially, the remaining question is whether a factual basis existed for the debarments. As discussed above, the undisputed facts in the records support debarment of Plaintiffs because of their affiliation to S&S. More particularly, it is not disputed (1) that Samir was convicted of fraud and, (2) that this fraud conviction formed the basis of his debarment. AR 667. And, the debarment of the Plaintiffs, as affiliates to S&S Itani ( company controlled by Samir), was pursuant to FAR § 9.406-1(b). See Pl. Exh. 1 at 11 (noting that “[u]nder FAR 9.406-1(b), debarment may be extended to affiliates of a contractor.”). The Memorandum of Decision considered Plaintiffs’ responses to the Notices of Proposed Debarment, discussed the evidence supporting and militating against the decision to debar the Plaintiffs, and explained the justification for the decision to debar each of the Plaintiffs as “affiliates” or “associates.” See Pl. Exh. 1 (ECF No. 1-1). Given the “highly deferential” standard afforded the agency, the Court should not substitute its judgment for that of the agency in the matter, where there is a rational basis for the agency’s decision. (4) Plaintiffs Impermissibly Seek De Novo Review of the Debarment Decision Plaintiffs allege that Defendant’s debarment was improper because the decision relied upon hearsay evidence. Compl. ¶¶ 51-52, 102, 107, 143, 163 & 197. Plaintiffs further challenge certain provisions of FAR subpart 9.4 as “void for vagueness.” Compl. ¶¶ 69, 70, 266-72 & 312. With these allegations, Plaintiffs in essence attempt to seek de novo review of the debarment decision. To be clear, Plaintiff failed to raise these concerns at the administrative level when they Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 15 of 26 16 responded to their respective debarment notices and disputed that debarment was warranted. Thus, Plaintiffs’ current attempt to seek de novo review is impermissible under the law. “Although the APA contains a de novo review provision, 5 U.S.C. s 706(2)(F), its applicability is strictly limited to two circumstances[]: First, such de novo review is authorized when the action is adjudicatory in nature and the agency factfinding procedures are inadequate. And, there may be independent judicial factfinding when issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action.” Cabinet Mt. Wilderness/Scotchman's Peak Grizzly Bears v. Peterson, 685 F.2d 678, 685–86 (D.C. Cir. 1982) (citing Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415 (1971)). Neither of these two circumstances is found in the present case. Indeed, the D.C. Circuit has observed that district courts cannot conduct a de novo review of an agency action under the APA, except for the narrow exception where the record is so bare as to preclude an effective judicial review. See Weaver v. Motor Carrier Safety Admin., 744 F.3d 142, 147 (D.C. Cir. 2014). The D.C. Circuit furtehr emphasized that the APA’s “arbitrary and capricious standard” governs judicial review of agency decisions, unless the procedure were seriously defective that compel the trial court to conduct de novo review of agency records. Zevallo v. Obama, 793 F.3d 106, 112 (D.C. Cir. 2015) (holding that “[w]e have never applied de novo review in an APA case and have stated in dicta that ‘procedures must be seriously defective before a court proceeding under the APA can substitute de novo review for the agency’s record.’”). In this case, there is no evidence that the “record is so bare” or that the procedure employed was wholly defective. The Administrative Record before the Court is ample, totaling 683 pages. Furthermore, as explained above, each of the three Plaintiffs received proposed debarment notices and, with counsel’s assistance, responded to those notices. In fact, Suzanne Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 16 of 26 17 even was afforded an opportunity to supplement her response after the agency supplemented the Administrative Record. AR 532. The agency considered the arguments advanced by all three Plaintiffs and debarred them based on the evidence in the record. The Court should reject Plaintiffs’ attempt to substitute the APA’s “arbitrary and capricious standard” with the de novo review standard. Moreover, as explained above, the agency’s debarment was not arbitrary, but was grounded on Plaintiffs’ affiliation with S&S Itani, a company engaged in criminal conduct and controlled by Samir (a convicted felon). B. Plaintiffs Received Adequate Notice For Debarment (Count II) (1) Plaintiffs Had Sufficient Notice Plaintiffs claim that Defendants failed to provide them with adequate notice. See Compl. 273-288 (Count II). Adequate notice, under APA proceedings, is a fundamental due process element and only in the rarest of circumstances will an adjudicative process be acceptable without it. Bass v. City of Albany, 968 F.2d 1067, 1069 (11th Cir. 1992). Indeed, the D.C. Circuit has found that “the Due Process Clause does not require notice where those claiming an entitlement to notice already knew of the matter of which they might be notified.” Moreau v. FERC, 982 F.2d 556, 569 (D.C. Cir. 1993). Along the same “vein,” due process notice requires notice reasonably calculated to apprise interested parties of actions affecting their interests. Scott v. U.S., 950 F. Supp. 381, 387 (D.D.C. 1996). The notice provided by the Government may be brief and need not necessarily be detailed to an extent desired, beyond providing for an adequate response. See Lightfoot v. Dist. of Columbia, 2007 U.S. Dist. LEXIS 2858, 35-37 (D.D.C., Jan. 16, 2007). That the party had actual knowledge that the information would be used may eliminate the requirement of prior notice of adverse information. Riggins v. Bd. of Regents of Univ. of Nebraska, 790 F.2d 707, 711 (8th Cir. 1986); see also Fatemi v. Long, 2013 U.S. Dist. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 17 of 26 18 LEXIS 86852, 27 – 8 (E.D. Ark., Jun. 20, 2013); DeMarco v. Cuyahoga Dept. of Human Servs., 12 F. Supp. 2d 715, 720 (N.D. Ohio 1998). The provisions at FAR § 9.406-3(b) provide that “the debarment hearing must be held in a way ‘consistent with the principles of fundamental fairness.’” Textor, 757 F. Supp. at 59. Where the agency, as a part of the debarment process, provides for the chance for a hearing or to submit matters (absent a request for a face-to-face hearing) and allows the individual facing debarment to confer with counsel on the matter, the agency has conducted the process fairly and in a manner consistent with due process. Id. This process does not need to have been conducted solely to meet the individual proposed for debarment’s convenience in order to be fair and consistent with the principles of due process. Id. The court has previously held that the process, that comports with the requirements noted above, results in a decision to debar that comports with the principals of fundamental fairness and the due process requirements of the Fifth Amendment. Id. Here, Defendants sent to all three Plaintiffs the agency’s Notice of Proposed Debarment. AR 401 (Suzanne); AR 456 (Ziad); and AR 479 (International Exports). Plaintiffs had the opportunity to present a response and, in fact, provided lengthy letters from counsel arguing against debarment. See AR 442-53 (Suzanne’s initial response to debarment proposal); AR 532- 35 (Suzanne’s supplemental response ); AR 536-553 (Ziads’ response to debarment proposal); and AR 599- 616 (International Export’s response to debarment proposal). The Memorandum Decision considered Plaintiffs’ responses in concluding that they should be debarred. Under these facts, Plaintiffs had notice of their respective debarments. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 18 of 26 19 (2) Plaintiffs’ Procedural and Substantive Due Process Was Not Violated. Plaintiffs allege that FAR 9.406-2(c) was unconstitutionally vague and thus violates their Due Process as applied to debar them. Compl. ¶¶ 266-272. “To establish a violation of the Due Process Clause of the Fifth Amendment, the affiliates must prove that they have a constitutionally protected interest in liberty or property, that the government deprived them of that interest, and that the procedures accompanying that deprivation are constitutionally inadequate.” See Agility Defense, 739 F.3d at 591 (citing Bank of Jackson Cnty. v. Cherry, 980 F.2d 1362, 1366 (11th Cir.1993)) (italics added). “A contractor possesses no property interest in doing business with the United States.” Id. Therefore, relevant here, to establish a violation of procedural due process, these three Plaintiffs (as affiliates) must show that they had a property interest and, assuming they possessed a protected interest, that they were deprived of the interest without due process of law. Badgett v. Dist. of Columbia, 925 F.Supp. 2d 23, 30 (D.D.C. 2013). In order to substantiate a claim for violation of substantive due process, a Plaintiff must demonstrate that they have been deprived of a fundamental right or liberty or property interest based in the Constitution, and the Government deprived such right arbitrarily, deliberately, or in such a manner that shocks the conscience. Jeffries v. Dist. of Columbia, 917 F.Supp. 2d 52, 10 (D.D.C. 2013). The Supreme Court had “repeatedly emphasized that only the most egregious conduct can be said to be ‘arbitrary in the constitutional sense.’” Id. (quoting Collins v. Harker Heights, 503 U.S. 115, 129 (1992)). Here, Plaintiffs have not alleged that they had a liberty or property interest that was unconstitutionally violated by Defendants. Even if they had alleged such a constitutional interest, their claim lacks merit. It is uncontested that, among other factors, one of the bases of the debarment of Plaintiff is the criminal conviction of Samir Itani. Compl. ¶ 3, Pl. Exh. 1. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 19 of 26 20 Samir pled guilty and was sentenced for defrauding the federal government. Compl. ¶ 3; AR 129. The record shows that Samir and his wife (Suzanne) later settled the qui tam case, where they agreed to pay $15 million dollars. AR 243. Both the convictions and the settlement, among other things, formed the basis for Samir’s debarment under the provisions of FAR § 9.406-2(a) (stating debarment is appropriate due to “a conviction … [for] commission of a fraud … in connection with – performing a public contract or subcontract.”). See FAR § 9.406-2(a). It was S&S Itani’s actions that formed the bases for criminal proceedings against Samir. In that vein, it was S&S Itani’s and Samir’s debarment and conviction that formed the bases for the subsequent debarments of Suzanne (wife), Ziad (brother), and International Exports (owned by Suzanne) as affiliates of S&S Itani. Furthermore, there is no dispute that Plaintiffs, as affiliates, were named and given written notice of the proposed debarment and an opportunity to respond. See FAR 9.406-1(b). Plaintiffs, however, ignore or “under play” this issue in their Complaint. Indeed, the undisputed fact is that all three Plaintiffs did respond through counsel. Their submissions were considered by the agency in deciding on the debarments. In addition, as noted above, the primary purpose of the debarment process is not punishment but to protect the Government’s interests by limiting its exposure to individuals and corporate interests who pose a risk, as contemplated in FAR § 9.406-1(b), where they are affiliates of a debarred contractor or any individuals debarred under FAR § 9.406, et seq. As such, Defendants followed the prescribed process, gave the Plaintiffs sufficient notice under the rules, and rendered a decision within that process that considered the Government’s interests. Under these circumstances, neither Plaintiffs’ procedural nor substantive due process was violated. C. A Fifteen-Year Debarment Is Supported By Law (Count III). Plaintiffs allege that the 15-year debarment was punitive in nature and was not supported by the facts in this case. See Compl. ¶¶294-318 (Count III). Debarment regulations Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 20 of 26 21 do not limit a debarment to three years. Coccia v. DLA, Civ. No. 89-6544, 1992 WL 345106 (E.D. Pa. Nov. 12, 1992) (Court affirmed debarment for 15 years, where contractor was convicted of crimes related to receipt of kickbacks in exchange for Government contracts). Nothing in the regulations prohibits a debarment for more than three years. The regulations only provide that debarments will not generally exceed three years. See FAR 906-4(a)(1). Debarment, by its own procedural rules, may not be imposed for punishment, but only to protect the government in its dealings with contractors. U.S. v. Hatfield, 108 F.3d 67, 68 (4th Cir. 1997); see also U.S. v. Glymph, 96 F.3d 722, 725 (4th Cir. 2003) (debarment serves the important nonpunitive goals of preventing the further dissipation of public funds and protecting DOD programs-including, potentially, protecting public safety-by preventing the supply of substandard or defective parts). The remedial purpose of debarment is linked to specific conduct that relates to the protection of the government from fraud, neglect, nonperformance, or other conduct lacking integrity, with a focus on the "present responsibility" of the contractor. Hatfield, 108 F.3d at 69 ( citing FAR § 9.406-2); see also United States v. Bizzell, 921 F.2d 263, 267 (10th Cir. 1990) ("debarment constitutes the rough remedial justice permissible as a prophylactic governmental action" (internal quotation marks omitted)). In this case, Plaintiffs assert that the 15-year debarment violated the FAR. This claim lacks merit. FAR § 9.406-4(a)(1) provides that “[g]enerally, debarments should not exceed three years.” FAR § 9.406-4(b) provides that “the Debarment Official may extend the debarment for an additional period of time, if that official determines that it is necessary to protect the Government’s interests.” Under the FAR, the facts and circumstances dictate the appropriate length of the debarment period. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 21 of 26 22 As an initial matter, it ironic that Plaintiffs are now challenging the 15-year debarment period when they vehemently disavowed ever wanting to do business with the federal government. At the agency level, when resisting debarment, all three Plaintiffs argued that they had no interest in seeking government contracts. See AR 444 (Suzanne), 547-48 (Ziad), 603 (International Export). Suzanne specifically stated that she “is not engaged in and has no intention of engaging in government contracting, and has committed not to do business with the U.S. Government in the future.” See AR 444. Likewise, Ziad explained that given that Suzanne “has no intention of doing business with the United States Government, it follows that [he] is not going to do so.” AR 546-47. He emphasized that “has never engaged in nor has intention of engaging work for the government” See AR 548. In the same vein, International Exports represents that it “has never engaged in any business with the United States Government, and has no plans to do so in the future.” See AR 599, 603 (stating it “has no intention to engage in work for the government”). Plaintiffs’ Complaint maintains that they do not intend and will not contract with the federal government. Specifically, the Complaint uniformly claims Plaintiffs have “never conducted any business with nor was reasonably expected to conduct business with the U.S. Government on behalf of a contractor as defined by FAR” See Compl. ¶ 118 (Suzanne); ¶ 140 (International Export); and ¶ 159 (Ziad). Even though Plaintiff disavow that they sought governments contract in the past and would not seek such contracts in the future, they nevertheless claim that the 15-year debarment term is too harsh. Plaintiffs cannot take inconsistent positions and yet accuse Defendants of acting arbitrarily or capriciously when imposing the 15-year debarment. Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 22 of 26 23 In any event, given the egregious criminal conduct here, this is one of those cases that warranted a 15-year debarment period for his affiliates. The Memorandum of Decision specifically states, “[i]n addition to the factors discussed, I note several serious aggravating factors in this case that were not addressed by the supplemental information.” See Pl. Exh. 1 at p. 9. The records show that Samir and his companies, where Suzanne (wife) was an officer and Ziad (“his brother and right hand man”)10 was an employee, profited from the war in Iraq. Specifically, Samir took advantage of our men and women in uniform serving in Iraq as a part of Operation Iraqi Freedom by directing the alteration of dates on food that resulted in the shipment of expired food to troops at a considerable profit to the Itani enterprise. AR 182-213 (Amended Qui Tam Complaint). Personnel in the Itani enterprise also falsified Halal Certificates and Kosher Certificates which resulted in troops unknowingly violating religious dietary restrictions. Id. Itani personnel used acetone to erase the inked date on food packages. Id. These facts were left unrebutted by Plaintiffs during the debarment process, and Plaintiffs have therefore failed to show any reason why the decision to debar Plaintiffs, at least to the extent that it includes these facts, should be reconsidered. In addition, Samir was indicted on 44 separate counts of conspiracy and false claims for, among other things, submitting falsified invoices to obtain payment. AR 11-24 (Indictment). More particularly, the Indictment indicated that “Samir Mahmoud Itani, along with his wife, owned, controlled, and operated American Grocers, Inc.” AR 25 (Indictment at ¶ 1). American Grocers, Inc. was a party to government contracts related to the 2003 invasion and occupation of Iraq. AR 25 (Indictment at ¶ 2). The Indictment charged that Samir and his co-conspirators submitted “bogus trucking costs” of more than $1.9 million. AR 28 (¶ 14). Indeed, from 10 See AR 135 (¶ 11). Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 23 of 26 24 February 2004 through March 2005, they submitted 24 false claims for payment. AR, pp. 30-31. From July 2005 to September 2006, they submitted another 21 false claims for payment. AR, pp. 34-35. They profited handsomely through these false claims. Ultimately, Samir pled guilty to one count of conspiracy to defraud the federal government. AR 80-93 (Superseding Criminal Information); AR 94-115 (Plea Agreement). This type of criminal conduct has been held as sufficient to warrant a 15-year debarment. See Coccia, 1992 WL 345106, * 4-6 (finding an indictment charging defendant for “creating and running a criminal enterprise which extracted bribes and payoffs . . . in return for Government contracts” support a 15-year debarment) Id. at *6. Indeed, “[i]t was S&S Itani dba American Grocers that carried out the actions that were at issue in the criminal proceedings involving [Samir] Itani.” AR 414. Plaintiffs were debarred as affiliates to S&S Itani. See Pl. Exh. 1. Given the facts and the records here, a 15-year debarment was warranted and necessary to protect the government interests. D. “Hearsay” Does Not Limit Consideration of Evidence in APA Decision- Making. Plaintiffs allege that Defendants improperly relied on “hearsay evidence” to form its decision. Compl. ¶¶ 51 et seq. Under the APA, hearsay is admissible in ADA-governed adjudicative administrative proceedings. See Robinson v. D.C. Hous. Auth., 660 F.Supp. 2d 6, 14 (D.D.C. 2009). It is a fundamental notion within Administrative Law that the rules of evidence do not necessarily apply to administrative adjudications, even formal hearings. Id.; citing Hoska v. U.S. Dept. of the Army, 677 F.2d 131, 138 (D.C. Cir., 1982). The APA provides: “[a]ny oral or documentary evidence may be received, but every agency shall as a matter of policy provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence.” 5 U.S.C. § 556(d). Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 24 of 26 25 Plaintiffs claim that Defendants should not have considered information contained in the qui tam suit. Plaintiffs were informed that the qui tam information would be added to the Administrative Record in this case. AR 244- 334. Suzanne (AR 532 -35) and Ziad (AR 536 – 53) addressed the qui tam issue in their respective responses. In making the debarment decision and formulating the period of debarment, the agency considered all the information in the Administrative Record, including the qui tam information and objections to the inclusion of the qui tam information. In sum, the debarment decision was based on all material in the Administrative Record. V. CONCLUSION. The decision to debar the Plaintiffs was supported by the law and was not otherwise arbitrary, capricious, or violation of the law. All three Plaintiffs were specifically and properly named as “affiliates” to S&S Itani, a company controlled by a convicted felon (Samir). Plaintiffs were given the opportunity to respond to their proposed debarment and, through counsel, they responded arguing that debarment was unwarranted. After considering Plaintiffs’ responses and the records, the agency then rendered a well-considered decision. This decision was based on the facts provided and was within the agency’s discretion to make. Furthermore, Plaintiffs failed to show any violation of their due process rights, any deprivation of proper notice, or that the 15- year term of debarment was not supported by the law. For these reasons, the Court should grant Defendant’s Motion and dismiss the Complaint with prejudice. September 8, 2016 Respectfully submitted, CHANNING D. PHILLIPS D.C. Bar #415793 United States Attorney Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 25 of 26 26 DANIEL F. VAN HORN D.C. BAR # 924092 Chief, Civil Division By: ______//s______________ JOHN C. TRUONG D.C. BAR #465901 Assistant United States Attorney 555 4th Street, N.W. Washington, D.C. 20530 Tel: (202) 252-2524 Fax: (202) 252-2599 E-mail: John.Truong@usdoj.gov Counsel for Defendants OF COUNSEL: FRANK D. HOLLIFIELD, Lt Col, USAF Defense Logistics Agency Office of General Counsel 8725 John J. Kingman Road Ft. Belvoir, VA 22060 Case 1:14-cv-02064-RBW Document 36-1 Filed 09/08/16 Page 26 of 26