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Court to rule on veterans’ rights in business

The Supreme Court on Monday stepped into the years-long controversy over whether federal agencies are doing enough to assure that government contracts go to businesses run by military veterans, especially those who were wounded during their service.  The Justices accepted a case from a Maryland small business which has repeatedly protested that the Department of Veterans Affairs (“VA”) has not been doing its part.

The case of Kingdomware Technologies, Inc., v. United States was the only case in which the Court granted review in a new round of orders.  It will be argued and decided in the next Term.

Congress, frustrated by little success in getting federal agencies to give work to businesses owned by veterans, decided in 2006 to try to make the VA a model for other parts of the government to follow.  The new case before the Justices is a test of whether, under the 2006 law, the VA has a mandatory duty to set aside business for veterans’ firms, or has a wide measure of discretion whether to do so.

Raising that issue is Kingdomware, a firm based in a suburb of Washington, D.C., that provides government and private customers with a range of information technology services.  It is owned by Army veteran Timothy Barton, who is disabled from wounds suffered during Operation Desert Storm in 1991, when the U.S. military forced Iraq to back out of its invasion of neighboring Kuwait.

The firm has been carrying on a running legal battle with the VA, in protests over its claim that the VA is failing to carry out its obligations to veteran-owned contractors.  Kingdomware won a series of protests to the Government Accountability Office, but decided to sue the VA when the GAO rulings did not have the kind of impact that it believed the 2006 law required.

At the center of the legal dispute is the meaning of the word “shall” in a congressional mandate to VA to use a “rule of two” in deciding whether to award agency contracts to small businesses owned by veterans.  The law says that the VA “shall” award contracts to veteran-owned small businesses if at least two such firms bid for a contract at a fair price for the government.

Kingdomware argues that this gives the VA no discretion but to do market research to see if there are two such firms and then pick the one that can handle the job at a fair price.  The VA argues that its own regulations, interpreting the 2006 law, apply the word “shall” to the achievement of goals that VA sets to achieve awards to veteran-owned small businesses.   The VA also contends that this approach has allowed it to regularly meet its goals for small-business set-asides.

The U.S. Court of Appeals for the Federal Circuit upheld the VA’s view, leading Kingdomware to take the dispute on to the Court.  The Justice Department urged the Justices to deny review, contending that the Federal Circuit got it right.  The Court nevertheless granted review.

In another order issued Monday, the Court accepted the federal government’s suggestion that it bypass review of a case in which the software giant Google, Inc., is seeking to head off a patent infringement claim against it.  Both Google and a small Pasadena, California, software firm, Vederi LLC, have developed computerized methods of taking a virtual tour of a neighborhood to see what it looks like from ground level.  Vederi has four patents on the process, and has sued Google for illegally copying them.

In its petition to the Court, Google argued that Vederi narrowed the scope of its claimed invention when it modified its claims to satisfy an objection made by the Patent and Trademark Office.  The Federal Circuit rejected that claim, but left the issue of infringement to the trial court, the Court of Federal Claims.   The Justices made no comment as they denied a hearing to Google.

The Court also refused to grant review of other cases raising these claims:

** Whether investors who lost billions of dollars in their investment portfolios as a result of the “Ponzi scheme” run by broker Bernard Madoff had a legal right, through a federal trustee, to recover some of their losses from investors who had come out of the scandal without the same losses.  The case turned on the scope of the so-called “stockbroker defense” that applies normally in bankruptcy court, but also applies to attempts to recover losses to investors resulting from the collapse of a brokerage firm.  The denied cases were Securities Investor Protection Corp. v. Ida Fishman Revocable Trust and Picard v. Ida Fishman Revocable Trust.

** Whether Texas state officials who regulate river water flows were legally to blame  for the deaths of whooping cranes, an endangered species, during a drought in the winter of 2008-2009 in their habitat in Texas.  An environmental group contended that those officials allowed too much water to be taken out of Texas rivers, depleting the fresh waters where the cranes feed and make their winter nests.  The case was Aransas Project v. Shaw.

[Disclosure: Goldstein & Russell, P.C., whose attorneys contribute to this blog in various capacities, was among the counsel to the petitioner in Picard.  However, the author of this post is not affiliated with the law firm or its practice.]


Recommended Citation: Lyle Denniston, Court to rule on veterans’ rights in business, SCOTUSblog (Jun. 22, 2015, 1:55 PM),