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Storms v. United States

United States District Court, E.D. New York

June 20, 2017

DERRICK STORMS, A1 PROCUREMENT, LLC, A1 PROCUREMENT JVH, A1 PROCUREMENT - TRANSPORTATION LEASING CORP., LLC, A1 PROCUREMENT, JVG, Plaintiffs,
v.
UNITED STATES OF AMERICA and the DEPARTMENT OF VETERANS AFFAIRS, Defendants.

          MEMORANDUM & ORDER

          MARGO K. BRODIE, UNITED STATES DISTRICT JUDGE:

         On December 20, 2015, Plaintiffs Derrick Storms, A1 Procurement, LLC (“A1”), A1 Procurement JVH, A1 Procurement - Transportation Leasing Corp., LLC and A1 Procurement, JVG filed a Third Amended Complaint (“TAC”) in the above-captioned action against Defendants the United States of America and the Department of Veterans Affairs (the “VA”).[1](TAC, Docket Entry No. 112.) Plaintiffs allege that Defendants arbitrarily denied reconsideration of Plaintiffs' application to renew A1's status as a “qualified Service-Disabled, Veteran-Owned Small Business” (“SDVOSB”), in violation of the Administrative Procedures Act, 5 U.S.C. § 701 et seq. (the “APA”) and Plaintiffs' due process rights under the Fifth Amendment of the U.S. Constitution. (Id. ¶ 1.)

         Defendants move to dismiss the Third Amended Complaint pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, arguing that all Plaintiffs, except for A1, lack standing to pursue their claims and that the TAC is moot and meritless. (Defs. Mot. to Dismiss, Docket Entry No. 126; Center for Verification and Evaluation Admin. Record (“R.”), Docket Entry No. 128; Defs. Mem. in Supp. of Defs. Mot. to Dismiss (“Defs. Mem.”), Docket Entry No. 129.) For the reasons discussed below, the Court grants Defendants' motion.

         I. Background

         Plaintiffs allege that Defendants unlawfully revoked A1's ability to obtain set-aside government contracts through the VA's SDVOSB program. The Court assumes the parties' familiarity with the underlying facts, which are described in greater detail in Storms v. United States, No. 13-CV-811, 2015 WL 1196592, at *1-4 (E.D.N.Y. Mar. 16, 2015), and repeats only the facts relevant to decide this motion.

         a. Statutory and regulatory framework

         Congress enacted the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the “Veterans Benefits Act”) to increase contracting opportunities for small businesses owned by service-disabled veterans. See 38 U.S.C. §§ 8127-8128. Congress conferred upon the VA the authority to set aside certain government contracts for SDVOSBs and to maintain a database of small businesses eligible for the set-aside contracts. Id. § 8127(f). As a result, the VA maintains an online database of eligible small businesses called the VetBiz Vendor Information Pages (“VIP”). 38 C.F.R. § 74.1. By statute, “[a] small business concern may be awarded a contract [set aside for SDVOSBs] only if the small business concern and the veteran owner of the business are listed in the database of veteran-owned businesses maintained by the Secretary [of the VA].” 38 U.S.C. § 8127(e).

         To be listed as an SDVOSB in the VIP, a business must file an application with the VA's Center for Verification and Evaluation (“CVE”), [2] which is charged with evaluating applications to determine whether a small business is “unconditionally owned and controlled by one or more eligible veterans, service-disabled veterans or surviving spouses.”[3] 38 C.F.R. §§ 74.1, 74.11, 74.2(a). According to VA regulations, “control means both the day-to-day management and long-term decision-making authority for the [business].” Id. § 74.4(a). The VA elaborates that “[a]n applicant or participant's management and daily business operations must be conducted by one or more veterans or service-disabled veterans, ” and that “[i]ndividuals managing the [business] must have managerial experience of the extent and complexity needed to run the [business].” Id. § 74.4(b). Among other requirements, “[o]ne or more veterans or service-disabled veteran owners . . . must devote full-time to the business during the normal working hours of firms in the same or similar line of business.” Id. § 74.4(c)(3). Separately, the VA notes that:

“[o]wners need not work full-time but must show sustained and significant time invested in the business. An owner engaged in employment or management outside the applicant [business] must submit a written statement supplemental to the application which demonstrates that such activities will not have a significant impact on the owner's ability to manage and control the [business].”

Id. § 74.4(c)(1).

         If the CVE determines that a business should be verified as an SDVOSB, the business will be listed in the VIP for two years. See Id. §§ 74.11(f), 74.15 (2012). A business whose application is denied may request reconsideration of the denial. Id. § 74.13(a).

         b. Factual background

         A1 is a limited-liability company founded by Plaintiff Storms in 2009. (Seconded Amended Complaint (“SAC”) ¶ 11, Docket Entry No. 47.) Plaintiffs A1 Procurement JVH (“A1 JVH”), A1 Procurement - Transportation Leasing Corp., LLC (“A1 Transportation”), and A1 Procurement, JVG (“A1 JVG”) are joint ventures of A1. (TAC ¶ 8.)

         In September of 2009, A1 filed an application with the CVE to be listed in the VIP. (R. 1.) The parties do not dispute that at the time of A1's application to the CVE, Storms had a fifty-one percent ownership interest in A1 and Adrian Batlle[4] had a forty-nine percent interest in A1. (See Id. ¶ 11; Defs. Mem. 3-4.) Storms is a service-disabled veteran, but Batlle is not. (TAC ¶ 7; Defs. Mem. 4.) The CVE conducted a review of A1's application and, on April 7, 2010, approved A1 for listing in the VIP. (R. 3-77.) CVE's approval of A1 indicated that A1 was “both owned and controlled by Mr. Storms, ” as required by the VA's regulations. (TAC ¶ 11.)

         On February 16, 2011, A1 filed an application to renew its SDVOSB status and inclusion in the VIP for the upcoming two years. (R. 153.) The CVE reviewed A1's tax returns, (R. 268- 325); Articles of Organization, (R. 263-64); the Operating Agreement between Storms and Batlle, (R. 265); business registration documents filed with Florida state agencies, (R. 187-88, 266-67); a lease agreement, (R. 326-28); payroll records, (R. 329); contracts, (R. 330-36); licenses, (R. 339-41); VIP profile, (R. 277-78); Storms' disability determination, (R. 342-43); Storms' resume, (R. 337-38); and publicly available documents from the internet, (R. 179-261). The CVE also reviewed Storms' statement that he “works [forty] hours per week for A1” as its Chief Executive Officer (“CEO”) and that his duties include “directing company operations, management oversight, directing marketing strategy, obtaining financing [and] creating the company culture.” (R. 262; Defs. Mem. 5.) Storms' statement noted that Batlle was the president of A1 and “manage[d] . . . day to day operations, contract bidding, contract management, book keeping and payroll.” (R. 262.) Storms' resume reflects that at the time, Storms was also serving as the managing partner of his law firm, Storms & Associates, P.C. (“Storms & Associates”), and as the president of Homeless Veterans of America, Inc. (“HVAI”). (R. 337-38.)

         i. CVE removal decision

         By decision dated August 9, 2011, the CVE denied A1's renewal application, citing Storms' failure to demonstrate that he satisfied the “control” requirements of 38 C.F.R. § 74.4 (the “CVE Removal Decision”). (R. 360-63.) The CVE noted that a service-disabled veteran must “devote full-time to the business during the normal working hours of firms in the same or similar line of business, ” and that “[e]ngagement in employment or management outside the applicant concern must not ‘have a significant impact on the owner's ability to manage and control the applicant concern.'” (R. 360-61 (quoting 38 C.F.R. § 74.4(c)(1)).) The CVE explained that because Storms' resume stated that he was currently the president of HVAI and the managing partner of Storms & Associates, and because Storms had failed to submit the required supplemental statement demonstrating that his outside activities would not significantly impact his ability to manage and control A1, the CVE could not conclude that Storms was devoting his full time to A1. (R. 361.) The CVE informed A1 that A1 could request reconsideration of the decision or file a new application for SDVOSB status, and “[t]he Director . . . will issue a written decision within [sixty] days, when practicable, of receipt of the applicant's request.” (R. 362-63 (quoting 38 C.F.R. § 74.13(b)).)

         Plaintiffs allege that the CVE Removal Decision was the result of “[a] personal feud” between Storms and a CVE employee, David Eckenrode. (TAC ¶¶ 12, 13.) On April 25, 2011, Storms criticized Eckenrode, and shortly thereafter, Eckenrode was appointed Deputy Director of the CVE. (Id. ¶ 14.) Plaintiffs allege that Eckenrode “abused his newly appointed position” by “unjustifiably removing A1 from the VIP database without good cause.” (Id. ¶ 15.)

         ii. Reconsideration Decision

         On August 23, 2011, A1 submitted a request for reconsideration of the CVE Removal Decision. (R. 505-663.) The CVE received the request for reconsideration on September 20, 2011, [5] and informed A1 that “[a]lthough CVE has [sixty] days to complete requests for reconsideration, we seek to complete the action as soon as possible”; accordingly, A1 could “expect to receive a decision no later than November 21, 2011.”[6] (R. 502, 504.) As part of its request for reconsideration, A1 included a statement from Storms explaining that he worked full- time at ¶ 1 from 7:00 AM to 6:00 PM, five-to-six days per week, worked at HVAI three-to-four hours per month by volunteering at a soup kitchen, and worked at Storms & Associates four-to-five hours per month, primarily servicing A1's legal needs. (R. 507.) Storms explained that he worked full-time as A1's CEO and that his other obligations were minimal and did not prevent him from controlling A1. (R. 507.) Storms also attached emails he had sent during normal working hours to contractors and subcontractors on behalf of A1 and noted that A1's official bylaws indicated that as CEO, he controlled long-term decision-making and day-to-day management, and that his signature was required for all official company documents. (R. 509.)

         The CVE did not decide A1's request for reconsideration within sixty days. While A1's request for reconsideration was pending, it was not permitted to bid on set-aside contracts with the VA. (See TAC ¶ 25; R. 498.) According to Plaintiffs, after A1 contacted Senator Rubio's office to complain about the CVE's delay in reconsidering A1's application, the VA “unlawfully” issued proposed debarment notices to Storms, Batlle and A1 advising them that the VA was initiating debarment proceedings against them for “allegedly misrepresenting A1's SDVOSB status” while submitting a bid for a government contract in November of 2011. (SAC ¶ 69.) The VA debarred A1 from May 2, 2012 until February 19, 2013, at which point the VA vacated A1's debarment. (See Defs. Mem. 8 n.5; SAC ¶¶ 69-89.)

         On August 9, 2013, the Court issued an order directing the CVE to issue a decision on A1's request for reconsideration no later than August 31, 2013. (See Order dated Aug. 9, 2013.) In a decision dated August 30, 2013 (the “Reconsideration Decision”), the CVE denied A1's request for reconsideration. (R. 684-95.) The CVE made three findings in the Reconsideration Decision, one of which addressed A1's failure to cure the initial defect that prompted the CVE Removal Decision and two of which raised additional concerns not previously addressed in the CVE Removal Decision. First, the CVE found that A1 had not “sufficiently corrected” the issue of control and management that prompted the CVE Removal Decision. (R. 684.) The CVE found that although Storms' work for HVAI did not preclude him from working full-time for A1, Storms' law firm work did preclude him from working full-time for A1. (R. 687.) Since “a law firm generally operates in the normal business hours of 9 am to 5 pm, ” the CVE concluded that Storms worked at his law firm “within the same hours as he would have to work at ¶ 1 in order to devote full time to A1.” (R. 687.) The CVE also held that it was not relevant, for purposes of 38 C.F.R. § 74.4(c)(3), that most of Storms & Associates' work catered to A1, since that work was performed by the law firm and not by A1.[7] (R. 687.) Finally, the CVE found that “what is not represented is the overall amount of time or hours required to perform all the services associated with the legal services provided to [A1] in conjunction with the [service-disabled veteran's (“SDV”)] other managerial responsibilities concerning the wide range of contract actions for this applicant.” (R. 687.)

         Second, the CVE found that Storms did not control A1 consistent with the provisions of 38 C.F.R. § 74.4(b) that require an SDV to possess the managerial skills necessary to run his or her business. (R. 688.) Having reviewed the contracts awarded to A1, the CVE noted that A1 had “[thirty-one] separately active Joint Ventures” and performed projects from ventilation and duct cleaning to mold remediation to paratransit bus leasing. (R. 688.) The CVE found that “none of [the] experience” listed in Storms' resume “reasonably supports the ability to manage such a wide disparity of enterprises and services.” (R. 692.) The CVE also found among A1's contracts and proposals submitted to the VA “a pattern” of “having only two employees and yet claiming the ability to provide a myriad of services in varying industries nationwide for which [A1] clearly solicits [non-SDVOSB] entities to perform 100 percent of the work with A1 receiving a minor 5-10% markup.” (R. 691 (emphasis in original).) The CVE provided examples of A1's arrangement with non-SDVOSB subcontractors who lent the technical and managerial expertise to perform each set-aside contract and described A1 as “a classic case in which a concern misuses the [SDVOSB] status in order to allow non-[SDVOSB] firms to take part” and thereby “take improper advantage of the SDVOSB set-aside program.” (R. 691.)

         Finally, the CVE found that A1 had made false statements to the VA in violation of 38 C.F.R. § 74.2(c). (R. 542.) The CVE noted that after A1's SDVOSB status expired and it was subsequently removed from the VIP, A1 nevertheless submitted bids to the VA that included an SDVOSB logo next to A1's logo and represented that A1 had SDVOSB status. (R. 692-94.) Consequently, the CVE concluded, A1 did not meet the eligibility requirements associated with good character under 38 C.F.R. § 74.2. (R. 694.) The CVE informed A1 that it was “immediately eligible to submit a new application” to be included in the VIP and that the CVE would “process the new application as it would an initial application.” (R. 695.) In reapplying, A1 was required to “establish through adequate evidentiary support that it has overcome the reasons for both the initial and final denial letters.” (R. 695.) A1 did not reapply.

         c. Procedural background

         Plaintiffs filed the Complaint and a motion for a preliminary injunction on February 13, 2013. (Compl., Docket Entry No. 1; Mot. for Prelim. Inj., Docket Entry No. 4.) On August 9, 2013, [8] the Court held a hearing on the motion for a preliminary injunction and on Defendants' anticipated motion to dismiss the Complaint. (See Min. Entry dated Aug. 9, 2013.) The Court denied Plaintiffs' motion for a preliminary injunction, ordered Defendants to rule on A1's pending request for reconsideration of the denial of its SDVOSB status by August 31, 2013, and set a briefing schedule for the motion to dismiss. (Id.) Defendants denied A1's reconsideration request on August 30, 2013. (R. 684-95.)

         On October 11, 2013, Plaintiffs filed the SAC, bringing claims pursuant to Bivens, [9] the Racketeer Influenced and Corrupt Organizations Act (“RICO”), the Federal Tort Claims Act (“FTCA”), the Declaratory Judgment Act and the APA. (SAC.) On February 28, 2014, Defendants filed a motion to dismiss the SAC, and on September 23, 2014, the Court heard oral argument on the motion. (See Minute Entry dated Sept. 23, 2014.) At oral argument, the Court granted Defendants' motion to dismiss Plaintiffs' RICO claim for failure to allege two racketeering acts. (See id.) In a decision dated March 16, 2015 (the “March 2015 Decision”), the Court granted Defendants' motion to dismiss the SAC and permitted Plaintiffs to amend the SAC as to their RICO claim and their claims under the Declaratory Judgment Act and the APA. See Storms, 2015 WL 1196592, at *1. On November 20, 2015, the Court denied reconsideration of the March 2015 Decision. (Mem. & Order dated Nov. 20, 2015, Docket Entry No. 111.) Plaintiffs filed the TAC on December 20, 2015.

         The TAC alleges that Defendants' Reconsideration Decision “improperly and unlawfully den[ied A1's] application for inclusion in the [VIP] database” in violation of the APA. (TAC ¶ 1.) Plaintiffs request that the Court “overturn and vacate the VA's unnoticed and improper Reconsideration Decision because the decision is contrary to the VA's mandatory policies and procedures” and because “the decision violates [] Plaintiffs' procedural and substantive Fifth Amendment rights.” (Id. ¶ 40.) Plaintiffs also seek a declaration, under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202, that Defendants “acted improperly and unlawfully in delaying the VA's Reconsideration Decision, that the Reconsideration Decision is improper and unlawful, and that A1 is an SDVOSB concern.” (Id. ¶ 44.)

         Defendants move to dismiss the TAC. Defendants argue that (1) Plaintiffs' claims are moot, (Defs. Mem. 12); (2) all Plaintiffs except A1 lack standing to challenge the Reconsideration Decision, (id. at 16); and (3) Plaintiffs fail to state a claim for relief because the CVE did not violate Plaintiffs' due process rights and the Reconsideration Decision was not arbitrary or capricious, (id. at 17-25).

         II. Discussion

         a. Standards of review

         i. Motion to dismiss for lack of jurisdiction

         A district court may dismiss an action for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure when the court “lacks the statutory or constitutional power to adjudicate it.” Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)); Shabaj v. Holder, 718 F.3d 48, 50 (2d Cir. 2013) (quoting Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005)); see also Chau v. S.E.C., 665 F. App'x 67, 70 (2d Cir. 2016). The plaintiff has the burden to prove that subject matter jurisdiction exists, and in evaluating whether the plaintiff has met that burden, “‘[t]he court must take all facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff, ' but ‘jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.'” Morrison v. Nat'l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (citations omitted), aff'd, 561 U.S. 247 (2010). A court may consider matters outside of the pleadings when determining whether subject matter jurisdiction exists. M.E.S., Inc. v. Snell, 712 F.3d 666, 671 (2d Cir. 2013); Romano v. Kazacos, 609 F.3d 512, 520 (2d Cir. 2010).

         ii. Motion to dismiss for failure to state a claim

         In reviewing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a court must construe the complaint liberally, “accepting all factual allegations in the complaint as true and drawing all reasonable inferences in the plaintiff's favor.” Concord Assoc's, L.P. v. Entm't Prop. Trust, 817 F.3d 46, 52 (2d Cir. 2016) (quoting Chambers v. Time Warner Inc., 282 F.3d 147, 152 (2d Cir. 2002)); see also Tsirelman v. Daines, 794 F.3d 310, 313 (2d Cir. 2015) (quoting Jaghory v. N.Y. State Dep't of Educ., 131 F.3d 326, 329 (2d Cir. 1997)). A complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Matson v. Bd. of Educ., 631 F.3d 57, 63 (2d Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); see also Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717-18 (2d Cir. 2013). Although all allegations contained in the complaint are assumed true, this principle is “inapplicable to legal conclusions” or “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Iqbal, 556 U.S. at 678.

         iii. Rule 12(b)(6) - documents considered

         “In determining the adequacy of a claim under Rule 12(b)(6), consideration is limited to facts stated on the face of the complaint, in documents appended to the complaint or incorporated in the complaint by reference, and to matters of which judicial notice may be taken.” Wilson v. Kellogg Co., 628 F. App'x 59, 60 (2d Cir. 2016) (quoting Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991)). In addition, courts may consider “documents that, although not incorporated by reference, are integral to the complaint.” L-7 Designs, Inc. v. Old Navy, LLC, 647 F.3d 419, 422 (2d Cir. 2011) (internal quotation marks omitted) (quoting Sira v. Morton, 380 F.3d 57, 67 (2d Cir. 2004)). A court need not consider other information outside the pleadings, but where a court does not exclude extraneous information, it must give notice to the parties and convert the motion to one for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 12(d); see also Parada v. Banco Indus. De Venezuela, C.A., 753 F.3d 62, 68 (2d Cir. 2014) (noting that before converting a motion to dismiss into a motion for summary judgment, the court should “give sufficient notice to an opposing party and an opportunity for that party to respond”); Nakahata v. N.Y.-Presbyterian Healthcare Sys., Inc., 723 F.3d 192, 202-03 (2d Cir. 2013) (“[T]he conversion of a Rule 12(b)(6) motion into one for summary judgment under Rule 56 when the court considers matters outside the pleadings is strictly enforce[d] and mandatory.”).

         iv. Summary judgment

         Summary judgment is proper only when, construing the evidence in the light most favorable to the non-movant, “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); Davis v. Shah, 821 F.3d 231, 243 (2d Cir. 2016); see also Cortes v. MTA NYC Transit, 802 F.3d 226, 230 (2d Cir. 2015). The role of the court “is not to resolve disputed questions of fact but only to determine whether, as to any material issue, a genuine factual dispute exists.” Rogoz v. City of Hartford, 796 F.3d 236, 245 (2d Cir. 2015) (first quoting Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010); and then citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)).

         “‘When a party seeks review of agency action under the APA, the district judge sits as an appellate tribunal' and ‘the entire case on review is a question of law.'” Brezler v. Mills, ___ F.Supp.3d. ___, ___, 2016 WL 7100597, at *13 (E.D.N.Y. Dec. 6, 2016) (quoting Am. Bioscience, Inc. v. Thompson, 269 F.3d 1077, 1083-84 (D.C. Cir. 2001)); see also Ass'n of Proprietary Colleges v. Duncan, 107 F.Supp.3d 332, 334 (S.D.N.Y. 2015) (quoting same). Thus, a summary judgment determination is “generally appropriate” in APA cases because “the question [of] whether an agency's decision is arbitrary and capricious . . . is a legal issue amenable to summary disposition.” Noroozi v. Napolitano, 905 F.Supp.2d 535, 541 (S.D.N.Y. 2012). “Generally, a court reviewing an agency decision is confined to the administrative record compiled by that agency when it made the decision.” Nat'l Audubon Soc'y v. Hoffman, 132 F.3d 7, 14 (2d Cir. 1997) (quoting Fla. Power & Light Co. v. Lorion, 470 U.S. 729, 743-44 (1985)); Camp v. Pitts, 411 U.S. 138, 142 (1973) (“[T]he focal point for judicial review should be the administrative record already in existence, not some new record made initially in the reviewing court.”). However:

extra-record investigation by the reviewing court may be appropriate when there has been a strong showing in support of a claim of bad faith or improper behavior on the part of agency decisionmakers or where the absence of formal administrative findings makes such investigation necessary in order to determine the reasons for the agency's choice.

Id. (citing Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971), overruled on other grounds by Califano v. Sanders, 430 U.S. 99, 105 (1977)). A court may also remand a case to the agency for additional fact-finding when there is insufficient evidence to support the decision. Id.

         b. The Court converts Defendants' Rule 12(b)(6) motion to a Rule 56 motion

         Defendants bring their motion pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. The parties include extra-record materials relevant to the portions of Defendants' 12(b)(6) motion involving due process. (See, e.g., Letter from U.S. House of Reps., annexed to Pls. Opp'n Mem. as Ex. 3; VIP Reconsideration Procedures, annexed to Pls. Opp'n Mem. as Ex. 7; Decl. of Thomas J. McGrath, Docket Entry No. 127; Court Filings, annexed as Exs. 1-4 to Decl. of Elliott M. Schachner, Docket Entry No. 127.) The Court gave the parties notice of its intent to convert Defendants' motion to dismiss to a summary judgment motion and permitted the parties to file supplemental briefs addressing the possible conversion of the motion. (See Order dated Apr. 26, 2017.) Plaintiffs timely objected to conversion, arguing that by converting the motion, the Court would be crediting Defendants' “post-hoc rationalizations” instead of confining itself to the administrative record. (See Pls. Objs. to Conversion, Docket Entry No. 136.)

         In converting a motion to dismiss, “[t]he essential inquiry is whether the [nonmoving party] should reasonably have recognized the possibility that the motion might be converted into one for summary judgment or was taken by surprise and deprived of a reasonable opportunity to meet facts outside the pleadings.” Sahu v. Union Carbide Corp., 548 F.3d 59 (2d Cir. 2008) (quoting In re G&A Books, Inc., 770 F.2d 288, 295 (2d Cir. 1985), cert. denied, 475 U.S. 1015 (1986)); see also Parado v. Banco Industrial De Venezuela, C.A., 753 F.3d 62 (2d Cir. 2014) “[A] district court acts properly in converting a motion . . . into a motion for summary judgment when the motion presents matters outside the pleadings” and the court gives “sufficient notice to an opposing party and an opportunity for that party to respond” (internal quotation marks omitted) (quoting Hernandez v. Coffey, 582 F.3d 303, 307 (2d Cir. 2009))); Galiotti v. Green, 475 F. App'x 403, 404 (2d Cir. 2012) (quoting same); Groden v. Random House, Inc., 61 F.3d 1045, 1052 (2d Cir. 1995) (noting that the party opposing the motion must be given “sufficient notice” and an opportunity to respond). A party cannot complain of a lack of reasonable opportunity to present all material relevant to a motion for summary judgment “when both parties have filed exhibits, affidavits, counter-affidavits, depositions, etc. in support of and in opposition to a motion to dismiss.” Id.; see also Hernandez, 582 F.3d at 307 (noting that formal notice is not required where a party “should reasonably have recognized the possibility that the motion might be converted into one for summary judgment [and] was [neither] taken by surprise [nor] deprived of a reasonable opportunity to meet facts outside the pleadings” (alterations in original) (quoting Villante v. Dep't of Corr., 786 F.2d 516, 521 (2d Cir. 1986))).

         Plaintiffs have requested consideration of numerous extra-record declarations and documents and have provided no meaningful objection to the Court's conversion of the motion. In addition, the Court “‘sits as an appellate tribunal' and ‘the entire [APA claim] on review is a question of law.'” Brezler, ___ F.Supp.3d. at ___, 2016 WL 7100597, at *13. Accordingly, the Court converts Defendants' motion to dismiss Plaintiffs' non-APA claims under Rule 12(b)(6) into a motion for summary judgment under Rule 56. As to Plaintiffs' APA claim, the Court constrains its review to the administrative record. See Nat'l Audubon Soc'y, 132 F.3d at 14 (“Generally, a court reviewing an agency decision is confined to the administrative record compiled by that agency when it made the decision.” (citing Fla. Power & Light, 470 U.S. at ...


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