Kentucky v. United States Ex Rel. Hangel

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit I.O.P. 32.1(b)

File Name: 14a0156p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

_________________

COMMONWEALTH OF KENTUCKY, EDUCATION AND ┐

WORKFORCE DEVELOPMENT CABINET, OFFICE FOR │

THE BLIND, │

│ No. 12-6610

Plaintiff-Appellant,

│

>

│

v.

│

│

UNITED STATES OF AMERICA, by and through the │

Honorable Chuck Hagel, Secretary of Defense, and │

the Honorable John McHugh, Secretary of the │

Army, │

Defendant-Appellee. │

┘

Appeal from the United States District Court

for the Western District of Kentucky at Paducah

No. 5:12-cv-00132—Thomas B. Russell, District Judge.

Decided and Filed: July 21, 2014

Before: MOORE, WHITE, and DONALD, Circuit Judges.

_________________

COUNSEL

ON BRIEF: Patrick B. Shirley, COMMONWEALTH OF KENTUCKY, Frankfort, Kentucky,

for Appellant. Candace G. Hill, UNITED STATES ATTORNEY’S OFFICE, Louisville,

Kentucky, for Appellee.

_________________

OPINION

_________________

KAREN NELSON MOORE, Circuit Judge. The Randolph-Sheppard Act (“the Act”),

ch. 638, 49 Stat. 1559 (1936) (codified at 20 U.S.C. §§ 107–107e), gives blind persons a priority

in winning contracts to operate vending facilities on federal properties. One of these properties

1

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is Fort Campbell in Kentucky, which operates a cafeteria for its soldiers. For at least the last two

decades, Kentucky’s Office for the Blind (“OFB”) has helped blind vendors apply for and win

the base’s contracts for various services. In 2012, the United States Army (“the Army”), the

federal entity that operates Fort Campbell, published a solicitation, asking for bids to provide

dining-facility-attendant services. Rather than doing so under the Act, as it had before, the Army

issued this solicitation as a set aside for Small Business Administration Historically

Underutilized Business Zones (“HUBZones”). OFB disagreed with this change in classification

and, representing its blind vendor, filed for arbitration under the Act. OFB also sought a

temporary restraining order (“TRO”) and a preliminary injunction in the district court, requesting

that the court stay the awarding of a new contract pending arbitration. The district court denied

the requests, finding that it lacked jurisdiction to consider a request for a preliminary injunction.

OFB appealed to this court. We now hold that OFB’s failure to seek and complete arbitration

does not deprive the federal courts of jurisdiction. The district court erred to the extent that it

found differently. Therefore, we VACATE the district court’s judgment and REMAND for

reconsideration.

I. BACKGROUND

A. Randolph-Sheppard Act

In 1936, Congress passed the Randolph-Sheppard Act to “enlarge[e] the economic

opportunities of the blind” by giving them priority in the bidding of contracts to operate vending

facilities on federal properties. 20 U.S.C. § 107(a). “[V]ending facilit[ies]” include cafeterias

and snack bars on military bases, such as Fort Campbell. § 107e(7).

When everything runs smoothly, the priority works as follows: the Secretary of

Education (“the Secretary”) designates a “licensing agency” for each state. § 107a(a)(5). These

state licensing agencies then provide the blind with training, equipment, certification, and—if

necessary—legal representation. See §§ 107b(2), (6); 107d-4; 107a(b); 34 C.F.R. § 395.33.

When a federal agency, such as the Army, solicits vending-facility services, it must invite the

state licensing agency to bid on the contract. 34 C.F.R. § 395.33(b). The state licensing agency

will then select a blind vendor and submit a bid if the vendor can “provide food service at

comparable cost and of comparable high quality . . . .” Id. If the state licensing agency’s

No. 12-6610 Commonwealth of Ky. v. United States Page 3

proposal, according to neutral, pre-published criteria, is within “a competitive range” and the

Department of Education (“DOE”) agrees with the state licensing agency’s assessment of the

vendor’s qualifications, the blind vendor will be awarded the contract. § 395.33(a), (b). When a

vending-facility-services contract nears expiration, the federal agency may directly negotiate

with the state licensing agency to renew the contract, or it can open bidding to the general public,

triggering the same procedure outlined above. § 395.33(d).

In the event that disputes arise, the Act and DOE’s regulations provide for arbitration

between the state licensing agency and the federal agency soliciting vending-facility services.

See 20 U.S.C. § 107d-1; 34 C.F.R. §§ 395.33(b), 395.37. The DOE and the parties will select

and convene an arbitration panel, which then conducts a hearing and issues a decision.

20 U.S.C. § 107d-2(b); 34 C.F.R. § 395.37(b), (c), (f). The panel’s decision is considered to be

the final agency action and to be binding upon the parties. 20 U.S.C. § 107d-1(b); 34 C.F.R.

§ 395.37(b). If the federal agency is found to be non-compliant, the regulations provide that “the

head of any such department, agency, or instrumentality . . . shall cause such acts or practices to

be terminated promptly and shall take such other action as may be necessary to carry out the

decision of the panel.” § 395.37(d). The regulations then provide for judicial review of the

panel’s decision. Id.; see also 5 U.S.C. §§ 701–706.

B. Facts and Procedural History

In Kentucky, OFB is the state licensing agency. In this role, it licenses and trains blind

vendors. It also submits bids on their behalf for vending-facility-services contracts on federal

properties. In 1995, the OFB appointed James E. Hardin as its blind licensed vendor and

submitted a bid for the contract with the Army to perform full-food and dining-facility-attendant

services1 in Fort Campbell’s cafeteria. R. 1 at 5 (Compl. at ¶ 10) (Page ID #5). DOE and the

Army adjudged OFB’s bid sufficiently competitive, and OFB received the contract. Id. Hardin

formed a joint venture, First Choice Food Services (“First Choice”), and went about performing

the contract. R. 1-1 at 3–4 (Pl. Mem. for TRO) (Page ID #21–22).

1

Dining-facility-attendant services include cleaning and janitorial services. Full-food services also include

preparing and serving meals. See Appellant Br. at 4 n.1.

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In 2000, OFB contacted the Army regarding direct negotiations for the extension of the

Fort Campbell contract. R. 1-5 at 5 (2002 Arbitration Decision) (Page ID #49). The Army

declined the invitation and posted a new solicitation for dining-facility-attendant services. Id. at

6 (Page ID #50). The Army eventually declared that “[t]he new solicitation [would be]

administered as a SBA . . . set aside procurement and not as a Randolph-Shep[p]ard

procurement.” Id. at 7 (Page ID #51). OFB filed for arbitration pursuant to 34 C.F.R.

§ 395.33(b). The arbitration panel found in 2002 that the Act covers dining-facility-attendant

services and ordered the Army to negotiate with the OFB regarding the continuation of the

contract. R. 1-5 at 13 (Page ID #57).

In 2007, the Army solicited bids for the performance of full-food and dining-facility-

attendant services. Again, DOE and the Army adjudged OFB’s bid competitive, and OFB

received the contract. R. 1 at 5 (Compl. at ¶ 10) (Page ID #5). First Choice2 performed the

contract.

In August 2012, the Army decided to rely once again upon its own cooks for meal

preparation and service. See R. 1-4 at 1 (Brinly Letter) (Page ID #41). It also solicited bids for

dining-facility-attendant services, a solicitation that the Army classified as a set aside for SBA

HUBZones. See R. 1-2 at 1 (Solicitation) (Page ID #36). OFB objected to the SBA HUBZones

classification. R. 1-4 at 1–3 (Brinly Letter) (Page ID #41–43). In a letter, OFB cited the 2002

arbitration decision, which held that dining-facility-attendant services were covered by the Act.

Id. at 2–3 (Page ID #42–43). The Army replied, stating that its “interpretation of the [Act] is that

it applies only when contracting for the operation of military dining facilities,” meaning full-food

services. R. 1-6 at 1 (Fletcher-Schiewe Letter) (Page ID #59).

As a result of being rebuffed, OFB demanded arbitration with the DOE on September 14,

2012. R. 1-7 at 17 (Arbitration Compl.) (Page ID #78). The arbitration complaint asked DOE to

convene an arbitration panel, to find the Army in violation of the Act, and to order the Army to

comply with the terms of the Act. Id. at 16–17 (Page ID #77–78). Three days later, OFB filed a

self-styled “Motion and Complaint for Temporary Restraining Order and Preliminary Injunction”

2

At some point between 2007 and 2012, Faye Autry replaced Hardin as the blind licensed vendor and

continued to operate First Choice. See R. 1 at 5 n.1 (Compl. ¶ 10) (Page ID #5).

No. 12-6610 Commonwealth of Ky. v. United States Page 5

in federal district court. R. 1 at 1 (Compl.) (Page ID #1). This filing requested that the district

court hold an expedited hearing and issue a TRO or preliminary injunction “prohibiting the

Army from either conducting the procurement and/or making award to an offeror pursuant to

[the solicitation] until such time as the arbitration proceeding required by 20 [U.S.C.] § 107d-

1(b) is concluded.” Id. at 14 (Page ID #14). The Army replied, arguing that OFB could not meet

the standard for injunctive relief on the merits. R. 7 at 5–11 (Def. Resp. in Opp’n) (Page ID

#109–15). In the alternative, the Army argued that the district court lacked jurisdiction to

entertain the motion because OFB had not exhausted its administrative remedies, namely that

OFB had not completed arbitration. Id. at 11–16 (Page ID #115–120). OFB disagreed. R. 8 at

1–16 (Pl. Reply) (Page ID #374–389).

On October 9, 2012, the district court held a hearing on the preliminary injunction. It

issued its decision two weeks later on October 23, denying the injunction and dismissing the

action without prejudice. See R. 11 at 11 (D. Ct. Op.) (Page ID #420). The district court found

that it lacked jurisdiction to consider OFB’s request because OFB had not exhausted its

administrative remedies. Id. at 9–10 (Page ID #418–19). In the alternative, the district court

stated that “even if [it] were to find it had jurisdiction to issue a preliminary injunction, [OFB]

has not shown that such an ‘extraordinary remedy’ is warranted in this case. . . . [I]n light of the

DOE’s evolving views on the applicability of the [Act] to [dining-facility-attendant]-only

contracts, it is not clear that the [OFB] will prevail on the merits.” Id. at 11 (Page ID #420). The

Army alerted the district court to the fact that the blind licensed vendor’s contract would expire

on March 31, 2013 and that Federal Acquisition Regulation § 52.217-8 barred the Army from

extending the contract further while arbitration was pending. R. 13 at 1 (Def. Mot. for

Correction) (Page ID #422); see also R. 10 at 2 (Def. Supp. Resp.) (Page ID #406). The district

court reaffirmed its finding that it lacked jurisdiction. R. 18 at 1 (D. Ct. Oct. 30, 2012 Order)

(Page ID #437).

On November 2, 2012, OFB filed a Motion to Alter or Amend pursuant to Federal Rule

of Civil Procedure 59. R. 19 at 1–11 (Pl. Mot. to Alter) (Page ID #438–448). OFB requested

that the district court reconsider its finding that OFB had not shown that it would suffer

irreparable harm absent a preliminary injunction because the Army alerted the district court that

No. 12-6610 Commonwealth of Ky. v. United States Page 6

the solicitation would close on November 9, 2012 and that the blind licensed vendor’s contract

would expire March 31, 2013. Id. at 1–2 (Page ID #438–39). The district court denied the

motion. See R. 22 (D. Ct. Dec. 4, 2012 Order) (Page ID #463). The district court reaffirmed that

it “denied OFB’s request for a preliminary injunction based on its finding that it lacked

jurisdiction.” Id. at 2 (Page ID #464). It also stated that its “discussion of irreparable harm was

limited to two sentences in the opinion’s final paragraph, which discussed in dicta that a

preliminary injunction may not have been warranted ‘even if [the district court] were to find it

had jurisdiction.’” Id. (quoting R. 11 at 11 (D. Ct. Op.) (Page ID #420)).

OFB appealed the district court’s rejection of its Rule 59 motion to this court on

December 20, 2012. R. 23 at 1 (Notice of Appeal) (Page ID #467). While its appeal was

pending, on January 31, 2013, OFB filed in this court a Motion for Injunction Pending Appeal

pursuant to Federal Rule of Appellate Procedure 8. In its motion, OFB recited the arguments it

raised in district court and requested that this court enjoin the Army from awarding the dining-

facility-attendant contract until arbitration was completed. In response, the Army argued that

this court had jurisdiction to consider only whether the district court erred in finding that it did

not have jurisdiction to rule on the merits of OFB’s claims. Additionally, the Army filed a

Motion to Dismiss Appeal, asserting that OFB’s appeal is moot because the Army had already

awarded the contract.

We denied both motions on March 28, 2013. Kentucky Educ. & Workforce Dev. Cabinet

Office for the Blind v. United States, No. 12-6610, at *3 (6th Cir. Mar. 28, 2013) (unpublished

order) (“Office for the Blind”). We held that this situation was “‘capable of repetition, yet

evading review’” and, thus, not moot. Id. at *2 (quoting In re Search of Fair Fin., 692 F.3d 424,

428 (6th Cir. 2012)). Furthermore, we also held that “[t]he district court did not abuse its

discretion in denying the preliminary injunction” and noted that “[n]umerous courts, including

this court, have required exhaustion under similar circumstances.” Id. (citing Fillinger v.

Cleveland Soc’y for the Blind, 587 F.2d 336, 338 (6th Cir. 1978) (“Fillinger I”)). Three days

later, on March 31, the blind licensed vendor’s contract expired with the Army, and the next day,

the winner of the solicitation started providing dining-facility-attendant services.

No. 12-6610 Commonwealth of Ky. v. United States Page 7

Arbitration continued between the Army and OFB, and on February 14, 2014, the

arbitration panel issued a divided decision, siding with OFB. The arbitration panel concluded

that the Act covers the dining-facility-attendant services at Fort Campbell and that the Army

violated the Act by soliciting bids as a HUBZones set aside. Arb. Dec. at 26, 27. Accordingly,

the panel ordered the Army to terminate its contract with its current vendor on March 31, 2014

and to commence negotiations with OFB immediately for a new contract to take effect on April

1, 2014. Id. at 28. OFB has continued its appeal, and we asked the parties to supply letter

briefing regarding whether the appeal is now moot.

II. ANALYSIS

In its briefing before this court, OFB asks us to hold that the district court erred in finding

that it lacked jurisdiction to issue a preliminary injunction, which could have stayed the awarding

and implementation of the contract pending arbitration. At this point in time, the Army has

already awarded the contract, arbitration has already been completed, and OFB has filed another

suit in district court, seeking to enforce the arbitration panel’s decision. Therefore, two questions

arise: (1) is OFB’s appeal moot; and (2) if not, did the district court err in its jurisdictional

finding? We answer the first question in the negative and the second one in the affirmative.

A. Mootness

“Under Article III of the Constitution, federal courts may adjudicate only actual, ongoing

cases or controversies.” Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990) (citing Deakins v.

Monaghan, 484 U.S. 193, 199 (1988); Preiser v. Newkirk, 422 U.S. 395, 401 (1975)). “When—

for whatever reason—the dispute discontinues or we are no longer able to grant meaningful relief

to the prevailing party, the action is moot, and we must dismiss for lack of jurisdiction.” United

States v. Blewett, 746 F.3d 647, 661 (6th Cir. 2013) (Moore, J., concurring) (citing Knox v. Serv.

Emp. Int’l Union, 132 S. Ct. 2277, 2287 (2012)); accord Chafin v. Chafin, 133 S. Ct. 1017, 1023

(2013). “‘[I]t is not enough that a dispute was very much alive when suit was filed.’” FEC v.

Wisconsin Right to Life, Inc., 551 U.S. 449, 461 (2007) (quoting Lewis, 494 U.S. at 477). There

must be a live controversy “at every stage of the litigation” for us to have Article III jurisdiction.

Lawrence v. Blackwell, 430 F.3d 368, 370–71 (6th Cir. 2005).

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This doctrine, however, is not without its exceptions. “[A] case will not be considered

moot if the challenged activity is capable of repetition, yet evading review.” Id. at 371; see also

Murphy v. Hunt, 455 U.S. 478, 482 (1982); Weinstein v. Bradford, 423 U.S 147, 149 (1975).

“The exception applies where ‘(1) the challenged action is in its duration too short to be fully

litigated prior to cessation or expiration, and (2) there is a reasonable expectation that the same

complaining party will be subject to the same action again.’”3 Wisconsin Right to Life, 551 U.S.

at 462 (quoting Spencer v. Kemna, 523 U.S. 1, 17 (1998)). In our March 28, 2013 order, we held

that OFB’s suit challenging the Army’s solicitation of bids outside the Act’s requirements fit

within this exception. The same is true today.

The time between when the Army publishes its solicitation of bids and when the new

vendor’s contract goes into effect is exceptionally short. In this case, the Army posted its

solicitation on August 28, 2012 and established a closing date of September 19, 2012. R. 1 at 7

(Compl. at ¶¶ 15, 17) (Page ID #7). OFB’s contract was set to expire December 31, 2012,

though the Army extended it three months. See R. 10 at 2 (Def. Supp. Resp.) (Page ID #406).

However, the Army claims that regulations prevented it from extending it further. See Appellee

Br. at 10 & n.4 (citing FAR § 52.217-8). The district court ruled quickly on October 23, 2012,

R. 11 at 11 (D. Ct. Op.) (Page ID #420), but the case did not reach us until December 21, 2012,

with the appellant’s brief not due until February 4, 2013. Absent an extension from the Army,

3

In several recent cases, the Supreme Court has reaffirmed that “a federal court’s obligation to hear and

decide cases within its jurisdiction is virtually unflagging.” Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334,

2347 (2014) (internal quotation marks omitted); Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct.

1377, 1386 (2014) (same). In doing so, the Court has placed the continuing vitality of the prudential aspects of

standing and ripeness, doctrines that sound in Article III and are closely related to mootness, in doubt. See

Driehaus, 134 S. Ct. at 2347 (ripeness); Lexmark, 134 S. Ct. at 1386–88 (standing).

As with standing and ripeness, there are constitutional and prudential aspects to the mootness doctrine as

well, Allen v. Wright, 468 U.S. 737, 750 (1984) (citing Vander Jagt v. O’Neill, 699 F.2d 1166, 1178–79 (D.C. Cir.

1983) (Bork, J., concurring)), but it is not always easy to distinguish the constitutional aspects of mootness,

grounded in Article III, from the prudential ones, grounded in policy, see, e.g., United States Parole

Comm’n v. Geraghty, 445 U.S. 388, 420 n.15 (1980) (Powell, J., dissenting) (accusing the majority of conflating the

two arms of the doctrine). The “capable of repetition yet evading review” exception itself straddles the

constitutional/prudential divide. At least one member of the Court has interpreted “the probability of recurrence

between the same parties” portion of the exception to be “essential to [federal-court] jurisdiction,” see Honig v. Doe,

484 U.S. 305, 341 (1988) (Scalia, J., dissenting); the same Justice, who recently penned Lexmark, also considers the

“evading review” portion of the exception to be prudential, see Honig, 484 U.S. at 341. We interpret the exception’s

test, as stated above and applied, to focus upon the constitutional aspects of mootness and to be grounded in Article

III, as both prongs focus upon whether an actual controversy exists between the parties. See id. Therefore, although

in the future the Supreme Court may reexamine the mootness doctrine, the doctrine as it exists today compels us to

exercise jurisdiction over this claim if OFB can demonstrate that the “capable of repetition, yet evading review”

exception applies.

No. 12-6610 Commonwealth of Ky. v. United States Page 9

the case arguably could have been moot ten days after reaching us. Even with the extension,

there would be little time for us to consider OFB’s reply brief, originally due March 24, 2013,

before the new contract took effect. Accordingly, we hold that the facts of this case demonstrate

that the controversy expires too quickly for OFB to litigate the matter before the contract goes

into effect. See Turner v. Rogers, 131 S. Ct. 2507, 2515 (2011) (noting that 12-month, 18-

month, and two-year time periods qualified as too short in duration to be litigated sufficiently).

Additionally, the history of these parties demonstrates that this scenario will likely play

out again between them in the future. At roughly five-year intervals, the Army solicits bids for

dining-facility-attendant services. See R. 1 at 5–6 (Compl. at ¶¶ 10–12) (Page ID #5–6). On at

least two prior occasions, OFB has challenged the Army’s decision that a solicitation is not

governed by the Act. See R. 1-4 at 1–3 (Brinly Letter) (Page ID #41–43) (citing other cases and

disputes); see also Kentucky, Educ. Cabinet, Dep’t for the Blind v. United States, 424 F.3d 1222

(Fed. Cir. 2005) (“Dep’t for the Blind”); Kentucky v. United States, 62 Fed. Cl. 445 (2004). It

does not appear likely that the Army will stop needing dining-facility-attendant services, nor

does it appear likely that OFB will stop asserting that the Act applies to these contracts. Thus,

there is a reasonable expectation that a district court, in the not so distant future, will face a

request that it issue an injunction to stay the awarding of a contract pending arbitration involving

these parties. Cf. Turner, 131 S. Ct. at 2515 (holding that a defendant’s frequent failure to make

child-support payments in the past created a reasonable expectation that the dispute would arise

again between the same parties). As a result of these two determinations, we hold that OFB’s

appeal fits within “the capable of repetition, yet evading review” exception and is, therefore, not

moot.

B. Jurisdiction

The district court denied OFB’s application for a preliminary injunction because OFB

had not exhausted its administrative remedies, namely arbitration. In doing so, the district court

found that it lacked jurisdiction to decide the case. In self-described “dicta,” see R. 22 at 2

(D. Ct. Dec. 4, 2012 Order) (Page ID #464), the district court also found that OFB’s application

lacked merit because “it [was] not clear that [OFB] [would] prevail on the merits,” R. 11 at 11

(D. Ct. Op.) (Page ID #420). We stated, in our March 28, 2013 order, that “[t]he district court

No. 12-6610 Commonwealth of Ky. v. United States Page 10

did not abuse its discretion in denying the preliminary injunction.” Office for the Blind, No. 12-

6610, at *2. The parties, however, do not read our order as disposing of their case, and

admittedly, the order is not a model of clarity. As a result, we address the parties’ concerns

below, and we hold that exhaustion is not a jurisdictional prerequisite and that OFB has

demonstrated that it meets an exception to the Act’s statutory exhaustion requirements.

1. Completing Arbitration Is Not a Jurisdictional Prerequisite

In recent years, the Supreme Court has recognized that jurisdiction ‘“is a word of many,

too many, meanings’” used far too loosely by federal courts. Steel Co. v. Citizens for a Better

Env’t, 523 U.S. 83, 90 (1998) (quoting United States v. Vanness, 85 F.3d 661, 663 n.2 (D.C. Cir.

1996)). Too often, the Court has observed, federal courts “dismiss[] ‘for lack of jurisdiction’

when some threshold fact has not been established, without explicitly considering whether the

dismissal should be for lack of subject matter jurisdiction or for failure to state a claim.”

Arbaugh v. Y & H Corp., 546 U.S. 500, 511 (2006) (internal quotation marks omitted). The

Court has acknowledged that “the distinction between jurisdictional conditions and claim-

processing rules can be confusing in practice.” Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154,

161 (2010). However, in an effort to avoid “drive-by jurisdictional rulings,” Steel Co., 523 U.S.

at 91, the Court has instituted a clear-statement rule requiring Congress to “state[] [clearly] that a

threshold limitation on a statute’s scope shall count as jurisdictional . . . .” Arbaugh, 546 U.S. at

515.

Under this rule, the Act’s exhaustion requirement is not jurisdictional. Section 107d-1(b)

provides that

Whenever any [s]tate licensing agency determines that any department, agency, or

instrumentality of the United States that has control of the maintenance,

operation, and protection of Federal property is failing to comply with the

provisions of [the Act] or any regulations issued thereunder . . . such licensing

agency may file a complaint with the Secretary who shall convene a panel to

arbitrate the dispute pursuant to section 107d-2 of this title, and the decision of

such panel shall be final and binding on the parties except as otherwise provided

in this chapter.

This language does not rise to the level of a clear statement. Section 107d-1 is simply not

phrased in jurisdictional terms. Our decision in Allen v. Highlands Hospital Corp., 545 F.3d 387

No. 12-6610 Commonwealth of Ky. v. United States Page 11

(6th Cir. 2008), is helpful here. In that case, we held that an exhaustion requirement in the Age

Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621–634, did not meet Arbaugh’s

stringent test. The ADEA provides that “[n]o civil action may be commenced by an individual

under this section until 60 days after a charge alleging unlawful discrimination has been filed

with the Equal Employment Opportunity Commission [(‘EEOC’)].” 29 U.S.C. § 626(d). In

Allen, we found it important that this provision does not reference the jurisdiction of federal

courts. Moreover, we said that § 626(d)’s language stating that “no civil action may be

commenced” until an EEOC charge has been filed “does not suffice to show that Congress

intended for the requirement to be jurisdictional in nature.” Allen, 545 F.3d at 402. Similarly,

here § 107d-1 of the Act does not reference the jurisdiction of federal courts, nor does it contain

language remotely close to 29 U.S.C. § 626(d)’s “no civil action” bar. Thus, given Allen’s

treatment of the ADEA and Arbaugh’s caution against “drive-by jurisdictional rulings,” we hold

that 20 U.S.C. § 107d-1 does not create a jurisdictional prerequisite.

The Army cites a variety of cases and argues that they hold otherwise. We are

unconvinced. First, most of the cases predate the Supreme Court’s decisions in Arbaugh and

Muchnick, which altered how we interpret exhaustion requirements. See, e.g., Emswiler v. CSX

Transp., Inc., 691 F.3d 782, 789 (6th Cir. 2012) (collecting cases in which we revisited prior

holdings after Arbaugh); Hoogerheide v. IRS, 637 F.3d 634, 636 (6th Cir. 2011) (same). Second,

the Army appears to confuse a mandatory exhaustion requirement with a jurisdictional one.

There is a subtle, but important, difference. The ADEA’s requirement that a plaintiff file a

complaint with the EEOC before commencing a civil action in district court is certainly not

optional. Allen, 545 F.3d at 401. Federal courts, however, can craft prudential exceptions to

non-jurisdictional exhaustion requirements and grant relief in extraordinary cases, as explained

below. See McCarthy v. Madigan, 503 U.S. 140, 146–49 (1992) (noting various exceptions to

exhaustion requirements). On the other hand, if a jurisdictional requirement is not met, then a

federal court must dismiss the suit, regardless of any special considerations or circumstances.

See Bowles v. Russell, 551 U.S. 205, 213 (2007) (noting that forfeiture and waiver arguments

could not cure failure to comply with jurisdictional time limitations). The bar for establishing a

jurisdictional requirement is quite high and not to be inferred lightly. For the reasons stated

above, we do not believe the Act contains statements sufficient to clear this hurdle and impose a

No. 12-6610 Commonwealth of Ky. v. United States Page 12

limit on the jurisdiction of federal courts. Thus, we hold that the Act’s exhaustion requirement is

not jurisdictional.

2. OFB Meets an Exception to the Act’s Jurisprudential Exhaustion Requirement

Even though the Act’s exhaustion requirement is not jurisdictional, it has bite. See, e.g.,

Dep’t for the Blind, 424 F.3d at 1228; Randolph-Sheppard Vendors of Am. v. Weinberger,

795 F.2d 90, 104 (D.C. Cir. 1986); Alabama Dep’t of Rehab. Servs. v. U.S. Dep’t of Veterans

Affairs, 165 F. Supp. 2d 1262, 1270 (M.D. Ala. 2001). In most cases, a failure to exhaust

administrative remedies is fatal to a suit in federal court. See, e.g., Hoogerheide, 637 F.3d at 634

(collecting cases). Exhaustion requirements, like this one, “serve[] the twin purposes of

protecting administrative agency authority and promoting judicial efficiency.” McCarthy,

503 U.S. at 145. “[E]xhaustion principles apply with special force when ‘frequent and deliberate

flouting of administrative processes’ could weaken an agency’s effectiveness by encouraging

disregard of its procedures.” Id. (quoting McKart v. United States, 395 U.S. 185, 195 (1969)).

That said, exhaustion is an area of law in which “sound judicial discretion governs” “where

Congress has not clearly required exhaustion [as a jurisdictional matter].” Id. at 144 (citing

McGee v. United States, 402 U.S. 479, 483, n.6 (1971)). In accordance with that discretion, the

federal courts have recognized at least three prudential exceptions to exhaustion requirements.

Exhaustion may be excused if a litigant can show: (1) that requiring exhaustion will result in

irreparable harm; (2) that the administrative remedy is wholly inadequate; or (3) that the

administrative body is biased, making recourse to the agency futile. Id. at 146–48; Randolph-

Sheppard Vendors, 795 F.2d at 104–108.

In this case, we conclude that exhaustion should have been excused because requiring the

completion of arbitration prior to filing in federal court for a preliminary injunction would likely

result in irreparable harm. Under OFB’s conception of the Act and its accompanying

regulations, the Army must negotiate exclusively with OFB for the successor dining-facility-

attendant-services contract, see 34 C.F.R. § 395.33(d), or the Army must give OFB a priority in

the bidding process, see § 395.33(a)–(b). Under either scenario, Ms. Autry and First Choice

would continue to provide the dining-facility-attendant services so long as the cost and quality of

the services remained competitive. See § 395.33(b). However, because the Army chose to issue

No. 12-6610 Commonwealth of Ky. v. United States Page 13

the solicitation as a HUBZones set aside, the successor contract went to another firm, and Ms.

Autry and First Choice were ousted as incumbents and had to close up shop. Although a mere

loss of profits generally will not qualify as irreparable harm, see Manakee Prof’l Med. Transfer

Serv., Inc. v. Shalala, 71 F.3d 574, 581 (6th Cir. 1995) (“[M]onetary damages do not generally

constitute irreparable harm.”), here the public policy in favor of economic stability and

opportunities for the blind was also implicated, and additionally, OFB and the Army agree that

sovereign immunity bars the arbitration panel (or a federal court) from granting OFB damages in

the event that the Army is found to have violated the Act, see Appellant Letter Br. at 7–9;

Appellee Letter Br. at 9–10; see also Lane v. Pena, 518 U.S. 187, 192 (1996) (“A waiver of the

Federal Government’s sovereign immunity must be unequivocally expressed in statutory text.”);

but see Tennessee Dep’t of Human Servs. v. U.S. Dep’t of Educ., 979 F.2d 1162, 1167 (6th Cir.

1992) (finding that a DOE arbitration panel’s award of damages against a state does not offend

the Eleventh Amendment). As a result, we conclude that requiring OFB to complete arbitration

before challenging the Army’s decision not to apply the Act would result in a loss for which

there is no remedy, an irreparable harm. Therefore, OFB meets the irreparable-harm exception,

and the district court could have—and should have—considered OFB’s claim.

C. Merits and Remedy

Having settled that the district court had jurisdiction to consider OFB’s request for an

injunction, we turn to the district court’s alternative conclusion, denying the application on the

merits. In reviewing a district court’s decision to deny a preliminary injunction, we evaluate the

same four factors that the district court does: “(1) whether the movant has a strong likelihood of

success on the merits; (2) whether the movant would suffer irreparable injury without the

injunction; (3) whether issuance of the injunction would cause substantial harm to others; and

(4) whether the public interest would be served by issuance of the injunction.” City of Pontiac

Retired Emps. Ass’n v. Schimmel, 751 F.3d 427, 430 (6th Cir. 2014) (en banc) (internal quotation

marks omitted). “Whether the movant is likely to succeed on the merits is a question of law we

review de novo.” Id. (citing NAACP v. City of Mansfield, 866 F.2d 162, 169 (6th Cir. 1989)).

“We review ‘for abuse of discretion, however, the district court’s ultimate determination as to

whether the four preliminary injunction factors weigh in favor of granting or denying

No. 12-6610 Commonwealth of Ky. v. United States Page 14

preliminary injunctive relief.’” Id. (quoting Tumblebus Inc. v. Cranmer, 399 F.3d 754, 760 (6th

Cir. 2005)). “This standard is deferential, but [we] may reverse the district court if it improperly

applied the governing law, used an erroneous legal standard, or relied upon clearly erroneous

findings of fact.” Id. (citing NAACP, 866 F.2d at 166–67). In addition, we must remember that

“[t]he party seeking a preliminary injunction bears a burden of justifying such relief, including

showing irreparable harm and likelihood of success.” Michigan Catholic Conf. & Catholic

Family Servs. v. Burwell, --- F.3d ---, 2014 WL 2596753, at *5 (6th Cir. 2014) (internal

quotation marks omitted).

The district court denied OFB’s request for a preliminary injunction because it found—in

two, rather conclusory sentences—that OFB had not shown that it was likely to succeed on the

merits. R. 11 at 11 (D. Ct. Op.) (Page ID #420). Since the district court rendered its decision,

however, a DOE arbitration panel has ruled that the Act applies to the dining-facility-attendant-

services contract. Given this change in circumstances and the unusual posture of this case, we

think it best to allow the district court to consider whether any injunctive relief is available or

appropriate at this time. See City of Pontiac, 751 F.3d at 432–33. Therefore, we vacate the

district court’s decision and remand for further proceedings consistent with this opinion.

III. CONCLUSION

In summary, OFB’s application for a preliminary injunction is not moot. Even though

the contract it wished the district court to stay went into effect, the alleged wrong is capable of

repetition, yet evading review, and thus meets an exception to the mootness doctrine. In

addition, OFB’s failure to exhaust its administrative remedies did not deprive the district court of

jurisdiction to hear this case. Given that the arbitration panel has rendered its decision and

another suit between the parties has commenced since the district court’s decision, we VACATE

the district court’s judgment and REMAND for reconsideration consistent with this opinion.