1315 Steven Chu, SECRETARY OF ENERGY v. THE BOEING COMPANY (Successor-in-Interest of Rockwell International Corporation)

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# United States Court of Appeals for the Federal Circuit 2009-1290, -1315

Steven Chu, SECRETARY OF ENERGY,

Appellant,
V.
THE BOEING COMPANY
(Successor-in-Interest of Rockwell International Corporation),

Appellee.

THE BOEING COMPANY
(Successor-in-Interest of Rockwell International Corporation),
Appellant,
v.

Steven Chu, SECRETARY OF ENERGY,

Appellee.

Appeals from the Civilian Board of Contract Appeals in case nos. 337, 338, 339, and
978, Administrative Judge R. Anthony McCann.

ON MOTION

Before GAJARSA, PROST, and MOORE, Circuit Judges.
MOORE, Circuit Judge.

## ORDER

The Boeing Company (Successor-in-Interest of Rockwell International
Corporation) moves to dismiss the above-captioned appeals for lack of jurisdiction and
moves for costs. The Secretary of Energy opposes. Boeing replies.

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Rockwell International Corporation entered into a contract with the Department of
Energy (DOE) for the management, operation, and maintenance of the Rocky Flats
Nuclear Weapons Plant. The contract provides that DOE will reimburse Rockwell for
costs incurred in defending certain lawsuits. However, the contract further provides in
clause 54(e)(32) that "[c]osts incurred in defense of any civil or criminal fraud
proceeding or similar proceeding (including the filing of any false certification) brought
by the Government where the Contractor . . . is found liable . . . to a charge of fraud or
similar proceeding" are not allowable.

In July 1989, James Stone brought an action against Rockwell under the False
Claims Act (FCA), alleging that Rockwell had misrepresented or failed to disclose
certain environmental matters at Rocky Flats. The United States initially declined to
intervene in the litigation. However, on November 14, 1995, the United States moved
for leave to intervene. The United States' motion was granted, and the United States
and Mr. Stone filed an amended complaint alleging violations of the FCA, common law
fraud, breach of contract, payment by mistake, and unjust enrichment. Rockwell
prevailed on all counts except for the FCA claims. A jury found Rockwell liable on three
of the ten claims asserting FCA violations and found Rockwell not liable on all remaining
claims.

DOE reimbursed Rockwell for all defense costs that Rockwell incurred up to the
date that the United States filed its motion for leave to intervene, and deemed
unallowable all defense costs incurred after that date. In May 2005, Boeing, Rockwell's
successor, requested a contracting officer's decision on its claim in the amount of
$11,344,081.14 for unreimbursed costs that Rockwell incurred in defending itself in the

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Stone litigation. The contracting officer denied Boeing's claim in its entirety and
determined that the United States has a claim against Boeing for $4,060,669.03 in
previously reimbursed defense costs plus interest of $2,522,746.50. Boeing appealed.

On cross motions for summary relief concerning the meaning of contract clause
54(e)(32), the Civilian Board of Contract Appeals (CBCA) ruled that Boeing is entitled to
recover the costs of defending itself in the Stone litigation on those counts and claims
where it prevailed, but cannot recover the costs of defending itself against the FCA
claims on which it was found liable. The CBCA requested and obtained briefing on
whether Boeing is entitled to "common costs"-i.e., those costs that may be attributable
to both claims where Boeing prevailed and claims where it was found liable. The
CBCA's decision did not address these so-called "common costs." DOE appeals the
CBCA's ruling, and Boeing cross-appeals.

Boeing argues that its claim for unreimbursed costs and DOE's claim for
reimbursement of costs and interest constitute a single claim and that because the
contracting officer decided both entitlement and quantum but the CBCA decided only
entitlement, the CBCA's decision is not final and the appeals are premature. Boeing
further argues that, even if its claim and DOE's claim are considered separate claims,
the CBCA has not fully decided all issues relating to entitlement. Specifically, Boeing
maintains that the CBCA failed to decide entitlement to common costs. Boeing also
points to a footnote in the CBCA decision that states: "The issue in this case is the
meaning of clause (e)(32). Other clauses in the contract may be applicable to the
allowability of some or all of the claimed costs."

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DOE responds that there were three separate claims involved in the contracting
officer's decision: Boeing's claim, DOE's claim for reimbursement, and DOE's claim for
interest. DOE further responds that the CBCA's decision is final because the
contracting officer decided only entitlement with respect to Boeing's claim and the
CBCA fully decided all issues relating to entitlement on that claim. DOE also contends
that because the CBCA declined to adopt language proposed by Boeing that would
have granted entitlement to common costs, we should read the CBCA's decision as
rejecting Boeing's entitlement to such costs.

We have jurisdiction to review only final orders of agency boards of contract
appeals. 28 U.S.C. § 1295(a)(10). Whether a board of contract appeals decision is
appealable depends on "the scope and extent of the contracting officer's decision."
Teller Envtl. Sys. Inc. v. United States, 802 F.2d 1385, 1389 (Fed. Cir. 1986).

In this case, the parties dispute whether the case involves a single claim or three
separate claims. We need not decide whether the case involves a single claim or
multiple claims, however, because even if there are multiple claims, the CBCA's
decision on Boeing's claim did not fully decide entitlement. The contracting officer ruled
that Boeing was not entitled to prevail on any part of its claim for $11,344.081.14 in
unreimbursed costs that Rockwell incurred in defending itself in the Stone litigation.
The CBCA disagreed, deciding that contract clause 54(e)(32) allows Boeing to recover
costs of defending against claims on which it prevailed but not on which it was found
liable. Importantly, the CBCA did not decide whether contract clause 54(e)(32) allows
Boeing to recover common costs-i.e., costs incurred defending against both claims
where it prevailed and claims where it was found liable. Under these circumstances, we

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determine that the CBCA has not fully decided Boeing's entitlement to its claimed costs
and thus that the CBCA's decision is not final.

With respect to Boeing's request for costs incurred for this appeal, although we
determine that the CBCA has not issued a final decision, DOE had an arguable basis
for suggesting otherwise. Thus, an award of costs is not warranted.

Accordingly,
IT IS ORDERED THAT:

(1)
The motion to dismiss is granted.

(2)
The motion for costs is denied. Each side shall bear its own costs.

FOR THE COURT

MAR 22 2010

Date

/s/ Jan Horbaly
Jan Horbaly
Clerk

cc:
Domenique Kirchner, Esq.
Richard J. Ney, Esq.

$17

FILED
U.S. COURT OF APPEALS FOR
THE FEDERAL CIRCUIT
MAR 2 2 2010

ISSUED AS A MANDATE:

MAR 22 2010

JAN HORBALY
CLERK

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