Friday, March 22, 2013

Blame game: DAI, USAID, Alan Gross

DAI is at 7600 Wisconsin Ave., Bethesda, Md. Photo: Google StreetView
Maryland contractor DAI argues that it had "little authority" over American development worker Alan Gross while he carried out a perilous democracy project in Cuba.
Gross's lawyers say DAI is simply trying to evade its responsibility. In a motion filed this month in U.S. District Court, they state:
...DAI professes deep concern over Plaintiff Alan Gross’s incarceration in Cuba, while simultaneously seeking to avoid any responsibility for the fact that it put him there. In doing so, DAI seeks to cloak itself with immunities and other protections that have no applicability to DAI as a private company, and that, indeed, have no place in this case at all. Seemingly lost on DAI is a very basic tort concept: DAI repeatedly sent someone to do a job for which DAI knew he was ill-prepared, without even the most basic education, training, or warnings. Ultimately, DAI’s Motion rests on erroneous factual and legal premises, and thus the Motion should be denied.
Gross and his wife, Judy, sued DAI for $60 million in November 2012. The contractor has asked Judge James E. Boasberg to dismiss the case.
On March 15, Gross's lawyers - Barry I. Buchman, Scott D. Gilbert, Natalie Baughman and Emily P. Grim - filed a 57-page motion asking Boasberg to throw out DAI's motion.

Among the points of disagreement include just how much authority DAI had over Gross.
The contractor, based in Bethesda, Md., contends that the U.S. Agency for International Development was calling the shots.
In fact, Gross's lawyers say, DAI had key responsibility for the operation while USAID oversaw it from a distance. They state:
Defendant DAI, which makes millions of dollars from Defendant United States each year by providing “innovation” and “fresh thinking” in the implementation of international development projects like the one at issue, cannot now seek to avoid liability for its negligent conduct by recasting itself as a mere puppet of the U.S. government.
Additional excerpts of the lawyers' court documents are below:

From the 57-page motion:

This case is not about either (a) the legality or wisdom of the Helms-Burton Act or the Cuba Democracy & Contingency Planning Program, or (b) efforts of Defendant United States of America (“United States”) to obtain Mr. Gross’s release. Instead, this case is about the Defendants’ negligence, and DAI’s gross negligence, in failing to take basic precautionary measures and to follow clear standards. Far from being inconsistent with federal interests, many of these standards, which relate to basic issues such as training, education, and warnings, exist in government manuals and directives, and in the very agreements at issue between DAI and the United States Agency for International Development (“USAID”). DAI violated these standards not only by failing to provide Mr. Gross with any education, training, or warnings, but also in refusing to address concerns when he raised them and instead leading him to believe that he would be safe.

All of DAI’s arguments suffer from a common flaw: DAI asks the Court to accept its numerous factual assertions and evidentiary submissions, including the affidavit of John McCarthy, at the initial pleadings stage, before any discovery. Yet, those assertions are contradicted by documentary evidence already in the record, and by additional evidence submitted with this opposition, including the respective affidavits of Alan and Judy Gross, and by George M. Guess, Ph.D., a former DAI employee. This conflicting evidence creates factual issues that must be resolved after discovery and development of an adequate record.

The Prime Contract was an Indefinite Quantity Contract (“IQC”). IQCs are contracts between the U.S. government and government contractors that provide an overall framework for the granting of more specific contracts, often referred to as “task orders,” for particular projects.

Under the Prime Contract, DAI had several significant responsibilities, including management and implementation of task orders under the Prime Contract:

  • DAI was “required to conduct conflict and fragility assessments, which includes review of risk factors relevant to specific countries or regions, development of work plans, completion of research, fieldwork and reports, planning and implementation of meetings, workshops and conferences to consider follow-up on assessment findings and recommendations.” Compl. ¶ 39 (citing Prime Contract at 15);
  • DAI was “required to participate in or be responsible for the development of training syllabi, implementation of the training programs and monitoring of the application of training lessons by the participants.” Id. (citing Prime Contract at 19);
  • DAI could be “asked to participate in or be responsible for the design and implementation of monitoring and evaluation efforts for [USAID] on specific conflict issues.” Id. (citing Prime Contract at 22).
Upon information and belief, Defendant United States provided DAI access to confidential information to enable DAI to perform these and other functions. Pursuant to the Prime Contract, in order to be considered for a classified task order like the one at issue here, DAI maintained a “Facility Clearance” at the “secret” level. Compl. ¶ 40 (citing Prime Contract at 37, 38).

Pursuant to the Prime Contract, Defendant United States requested that DAI submit a task order proposal for providing support to various groups within the Cuban population (the “Cuba Project”). Id. ¶ 43. DAI quickly proposed a $28 million task order (See Task Order No. DFD-I- 00-5-00250-00 (“Cuba Task Order”), which was approved by USAID on August 14, 2008.

Like the Prime Contract, the Cuba Task Order charged DAI with significant responsibility, including day-to-day management and implementation of the Cuba Project:
  • DAI “shall have the primary responsibility for ensuring that activities conducted under [the Cuba Program] contribute to USAID’s assistance strategy for Cuba and achieve the anticipated results.” Id. ¶ 45 (quoting Task Order at C.2.K);
  • DAI was empowered to deploy to Cuba and “establish operations supporting the creation of a USAID Mission.” Id. (quoting Task Order at C.2.D);
  •  In consultation with USAID officials, DAI was to “identify areas of program management responsibility and hire staff to assist with specific tasks to support USAID’s Cuba program . . . .” Id. (quoting Task Order at C.2.F).
As with the Prime Contract, Defendant United States gave DAI access to classified information in connection with the Cuba Task Order. Under the Cuba Task Order, DAI’s performance was considered “classified” in accordance with USAID’s advanced directives, and was possible only due to the “secret” level security clearance DAI obtained pursuant to the Prime Contract. Compl. ¶ 46 (citing Task Order at C.2.M).

As noted above, in addition to traditional common law standards, the two operative agreements between USAID and DAI spell out clearly the respective duties of both DAI in implementing the Cuba Project and of USAID in overseeing it. Further, a number of mandatory government directives, some of which are confidential, dictate standards for ensuring the safety of participants on USAID-funded projects. Specifically, a network of electronic inter-agency manuals, known as the Automated Directives System (“ADS”), requires the following:
  • USAID must (1) educate USAID personnel regarding foreign threats, and (2) follow strict procedures for reporting by personnel who learn of, among other things, “attempted or actual espionage, subversion, sabotage, terrorism or extremist activities directed against USAID and its personnel, facilities, resources, and activities.” Compl. ¶ 31 (citing ADS Ch. 569, Counterintelligence Program (“ADS Counterintelligence Manual”), at 3 (available at
  • USAID must adjust counterintelligence education and training for personnel based on the threat level of the country to which they are traveling. Id. ¶ 32. Both the country’s threat level and accompanying counterintelligence education and training requirements are confidential:
"Post threat levels are listed in the Security Environment Threat List (SETL) which is a classified document published by [Department of State] on a semi-annual basis that defines the [counterintelligence] program requirements at post. Id." (citing ADS Counterintelligence Manual at 14).
Similarly, the website for USAID’s Office of Security states that USAID personnel “can be the target of foreign intelligence services,” and thus mandates the following procedures:
  • USAID personnel “must be made aware of the techniques used by [such] organizations. . . so that they can properly protect . . . themselves . . . .” Compl. ¶ 24 (quoting USAID website, available at office-security (last visited March 15, 2013).
  • USAID’s Office of Security is charged with “1) educating employees on the threat posed by foreign intelligence to USAID domestic and international operations; 2) developing and conducting travel related pre-briefings and debriefings and 3) conducting counterintelligence training for new and existing employees.” Id. ¶ 25.
As noted, not only did USAID have access to the confidential material referenced in these directives, USAID also gave Defendant DAI access to that information. Id. ¶ 35. Unlike USAID and DAI, Mr. Gross never was provided with any security clearance in connection with the Cuba Project, and thus he never had access to the information that DAI and USAID had about potential risks. Gross Aff. ¶ 62.

On October 31, 2008, DAI submitted a “Request for Proposal” (“RFP”) to Mr. Gross, a 59-year-old Jewish American businessman who did not speak Spanish and who had been to Cuba only once before, for less than a week.

At DAI’s request, Mr. Gross met with DAI representatives to discuss the details of DAI’s RFP at DAI headquarters on November 6, 2008. Id. ¶ 59. There, he met with Mr. John McCarthy, Chief of Party (project director) for the Cuba Project. Id. ¶ 65. No USAID representatives were present at that meeting. Id. Mr. Gross did not interact with any USAID representative at any point during his ICT Project, except for a presentation that he gave regarding his project between his fourth and fifth trips to Cuba at USAID headquarters in Washington, D.C. Id. ¶¶ 121, 124.

At the meeting, Mr. Gross discussed with DAI representatives potential devices that could increase media access in Cuba, which communities might be best to assist with increased media access, how best to enable those communities to use the devices, and other aspects of his proposal. Id. ¶ 66. As part of his response to DAI’s inquiries, Mr. Gross made clear that he had visited Cuba only once and that he did not speak Spanish. Id. ¶ 68.

The following day, Mr. Gross submitted a detailed response to DAI’s Request for Proposal. See November 7, 2008 Letter from A. Gross to J. Herzog (attached as Exs. 4 & 5 to 9 the Buchman Decl.). Mr. Gross’s proposal contemplated training the Jewish community in Cuba on the use and maintenance of information and communication technologies (“ICTs”) through, among other things, mobile phones, wireless technologies, personal computers and other Internet-access devices (the “ICT Project”). Id.; Gross Aff. ¶ 69; Compl. ¶ 57.

After Mr. Gross submitted his response to DAI’s RFP on November 7, 2008, DAI responded with a counter-proposal that, among other things, changed the number of sites in Cuba in which Mr. Gross would expand media access. Gross Aff. ¶ 76. Over the next several weeks, DAI and Mr. Gross continued negotiations, and ultimately reached agreement over various aspects of the planned project, such the price of the project, the number, duration, and itinerary of Mr. Gross’s planned trips to Cuba, which Jewish community sites would receive equipment, and the precise equipment to be used. Id. ¶ 77. As part of these discussions, DAI made clear to Mr. Gross that, regardless of whether he involved other people in the project, DAI wanted him personally to make the planned trips to Cuba because of his technology expertise. Id. ¶ 79.

USAID representatives did not participate in these discussions, and at no time did DAI indicate to Mr. Gross that DAI was seeking changes to his proposal at the request of, or based on input from, USAID. Id. ¶ 81. Rather, DAI appeared to be negotiating on its own behalf. Id.

During these negotiations, the parties agreed that DAI would release payments to Mr. Gross 15 days after he submitted his deliverables and invoices to DAI, regardless of whether USAID had approved, or was expected to approve, those invoices. Id. ¶ 87.

On February 10, 2009, Mr. Gross, via JBDC LLC, his single-member LLC, entered into a subcontract with DAI (the “Subcontract”). Gross Aff. ¶¶ 85, 88; Compl. ¶ 63. Because Mr. Gross was the sole employee and member of JBDC, he executed the DAI Subcontract and all of its amendments. Gross Aff. ¶ 88. As JBDC’s only member, Mr. Gross controlled all aspects of JBDC’s business. Id. ¶ 24. The IRS also treated JBDC as a sole proprietorship under the federal tax code. Id. ¶ 25.

Consistent with the Subcontract, Mr. Gross worked only with DAI management regarding the logistics and operations of the ICT Project. For example:
  • On March 1, 2009, preceding his first trip to Cuba, Mr. Gross submitted a final “Work Plan” and “Performance Monitoring and Evaluation Plan” to DAI outlining how he intended to accomplish the goals of the Project. Id. ¶ 69.
  • Mr. Gross discussed the timing, duration, equipment, and itinerary for his trips to Cuba only with DAI. Gross Aff. ¶ 77.
  • DAI dictated to Mr. Gross how he should proceed with his work. Id. ¶ 125.
  • DAI appointed a Risk Monitoring and Evaluation (“M&E”) Representative to evaluate the project. Id. ¶ 122.
  • DAI also hired an external consultant to travel to Cuba to meet with Mr. Gross and to evaluate the Project during his fifth trip. DAI later cancelled this meeting. DAI never indicated that USAID was involved in these decisions. Id. ¶¶ 126-30.3
Despite these responsibilities, DAI ignored Mr. Gross’s repeated inquiries and expressions of concern during the ICT Project. For example, DAI never identified or discussed other subcontractors working on the Cuba Project, despite Mr. Gross’s inquiries on the subject. Gross Aff. ¶ 116. When Mr. Gross raised concerns regarding the safety of his Cuban contacts in several reports he submitted to DAI after each of his trips to Cuba, DAI failed to take action or even respond meaningfully to the issues Mr. Gross raised. Gross Aff. ¶¶ 108-09; Compl. ¶¶ 78-107. After one such report, DAI responded only by inquiring as to Mr. Gross’s contingency plans for completing the project if he was unable to remain in Cuba. Gross Aff. ¶ 110. Further, when Mr. Gross exercised caution by not bringing a large piece of equipment to a site for fear that it would be damaged, stolen, or confiscated during airline transit, DAI docked Mr. Gross’s invoice for that trip by 50 percent. Id. ¶ 111.

In August or September of 2009, Mr. McCarthy asked Mr. Gross to submit a proposal for follow-on activities for the ICT Project. Gross Aff. ¶ 112. Mr. McCarthy told Mr. Gross that he was DAI’s biggest subcontractor on the Cuba Project, and that DAI wanted Mr. Gross to expand his work to include new groups and new locations in Cuba to receive delivery of equipment. Id. ¶¶ 113-14. Mr. Gross complied with Mr. McCarthy’s request, submitting what he considered to be an appropriate response. Id. ¶ 117. As with the original Subcontract, Mr. Gross negotiated the follow-on contract only with DAI, including whether the pricing of the contract should be task-specific and dependent on completion of each task, or a fixed price for all proposed follow-on activities. Id. ¶¶ 118-20.

After Mr. Gross negotiated with DAI regarding these activities, DAI submitted a proposal to USAID for these follow-on activities on September 17, 2009. Compl. ¶ 108. USAID consented to these follow-on activities on October 8, 2009. Id. IV.

Mr. Gross’s Arrest and Detention

On December 3, 2009, the evening before Mr. Gross was to return to the United States from his fifth trip to Cuba, Mr. Gross was arrested by Cuban authorities due entirely to the work he was performing for DAI and USAID.

Following Mr. Gross’s detention, DAI filed a claim for benefits under the DBA based on Plaintiffs’ losses arising from Mr. Gross’s imprisonment. On August 9, 2011, DAI’s DBA insurer, Continental Assurance Company (“CNA”), denied DBA benefits to Mr. Gross because he “did not suffer an injury that prevented his employment.” See Letter from L. Kroll, CNA Claims Consultant (August 9, 2011) (attached as Ex. 6 to the Buchman Decl.). CNA also stated that “it is not clear that Mr. Gross was engaged in employment in connection with any of the six enumerated categories specified in 42 U.S.C. § 1651(a),” or “that JBDC was an insured under the Policy issued to DAI.” Id. Instead, CNA recommended that Mr. Gross seek detention benefits under the War Hazards Compensation Act (“WHCA”). Id.

Before Plaintiffs sought WHCA benefits, on June 20, 2012, the Department of Labor formally determined that Mr. Gross was not entitled to DBA benefits, ruling that, “[t]here is no medical evidence available to support that the claimant is disabled on account of this incident. As such, there is no entitlement to benefits.” See Findings of Fact by the U.S. Department of Labor (June 20, 2012) (attached as Ex. 7 to the Buchman Decl.).

Pursuant to CNA’s recommendation, Plaintiffs filed a claim under the WHCA. The Department of Labor denied this claim as well, finding that, because Cuba was not “engaged in a war or armed conflict against the United States,” Mr. Gross was not detained by a “hostile force or person” as required by the WHCA. See Letter from D. Woods, Supervisory Claims Examiner for the Department of Labor (July 20, 2012) (attached as Ex. 8 to the Buchman Decl.).

Contrary to DAI’s arguments, this case does not require this Court to make foreign “policy choices” or “value determinations.” See Japan Whaling Ass’n v. Am. Cetacean Soc’y, 478 U.S. 221, 230 (1986). Plaintiffs’ claims do not call into question either the Helms-Burton Act or the Cuba Democracy & Contingency Planning Program (“Cuba Program”), the Cuban government’s decision to detain Mr. Gross, or the U.S. government’s strategy in negotiating Mr. Gross’s release. Far from being “inextricable” from this case, see Baker, 369 U.S. at 217, these value judgments are irrelevant to the case.

Instead, this case poses a very basic tort law question: whether DAI was negligent in selecting and then repeatedly sending someone to do a job for which DAI knew he was ill prepared, without even attempting to provide him with education, training, or warnings. In evaluating this issue, the Court, and ultimately a jury, will evaluate whether DAI breached standards of care that exist not only in the common law, but also in the contracts between USAID and DAI and between DAI and Mr. Gross, as well as in federal government manuals and directives.

Although Mr. Gross contracted with DAI through his single-member Limited Liability Company (“LLC”), that entity operated as, and was treated by DAI and the government as, a sole proprietorship indistinguishable from its owner. DAI’s effort to hide behind Mr. Gross’s LLC to avoid legal responsibility, at the same time that DAI argues that Mr. Gross was DAI’s employee for DBA purposes, is shameful. It also is futile: DAI owed duties to Mr. Gross even if he was not DAI’s employee.

From a 26-page motion

Plaintiffs Alan and Judith Gross have brought this case against Defendant United States for damages that it caused by violating basic tort principles that apply equally to both public and private entities. Specifically, Plaintiffs seek to hold Defendant United States accountable for its negligence in repeatedly sending Mr. Gross to do a job for which Defendant United States knew he was ill-prepared, without providing him with even the most basic education, training or warnings.

The Federal Tort Claims Act (“FTCA”) covers exactly this type of case. With only specifically-enumerated and narrow exceptions, the FTCA imposes liability on the United States “in the same manner and to the same extent as a private [entity] under like circumstances.” 28 U.S.C. § 2674 (2006).

Defendant United States, specifically the United States Agency for International Development (“USAID”), does not dispute, at least for purposes of its Motion, that Plaintiffs’ claims fall within the remedial purview of the statute.

Defendant United States nonetheless moves to dismiss Plaintiffs’ claims pursuant to Federal Rule of Civil Procedure 12(b)(1) on the basis of one of the enumerated exceptions to the FTCA’s waiver of immunity. Specifically, although courts have made clear that FTCA exceptions are to be construed narrowly, consistent with the statute’s broad remedial purpose, Defendant United States moves to dismiss based on the so-called “foreign country” exception.

No court, however, has ever applied the foreign country exception in a case like this one, and this Court should decline the government’s invitation to become the first to do so.

Here, unlike in Sosa v. Alvarez-Machain, 542 U.S. 692 (2004), Defendant United States purposefully injected Mr. Gross, a U.S. citizen, into a foreign country to carry out U.S. government objectives, knowing that doing so would put him in grave danger in that foreign country. Far from taking hostile actions against U.S. government agents in a foreign country and then suing the government based on his resulting arrest by the United States in that foreign country, as the plaintiff in Sosa did, Mr. Gross was arrested by the Cuban government solely as a result of his work on a U.S. government project, which Defendant United States funded and oversaw entirely from Washington, D.C.

And, here, unlike in Sosa, foreign law will not govern the tort issues in this case. As codefendant Development Alternatives, Inc. (“DAI”) itself notes, “although [Mr. Gross’s] injury occurred in Cuba, applying Cuban law is not supported by a governmental-interest analysis.”

See DAI Mem. of Points and Authorities in Supp. of Its Mot. to Dismiss (“DAI Motion”) at 39 n.25. Thus, this case does not implicate what the Supreme Court noted is the sole purpose of the foreign country exception: relieving federal courts from having to apply the tort law of foreign countries. See Sosa, 542 U.S. at 707 (2004) (citing Bills to Provide for the Adjustment of Certain Tort Claims Against the United States: Hearing before the H. Comm. on the Judiciary on H.R. 5373, 77th Cong. 35 (1942)).

Further, even if the foreign country exception otherwise applied here as a matter of statutory construction, it would be unconstitutional as applied.

Both Plaintiffs Alan Gross and Judy Gross are United States citizens who have rights to equal protection under the Fourteenth Amendment, as applied to the federal government through the Fifth Amendment. Applying the foreign country exception here would violate those rights by preventing Plaintiffs from seeking redress against the United States, while other U.S. citizens whose injuries occurred solely on U.S. soil are permitted to sue the government for those injuries. Moreover, doing so would create out of whole cloth a new sweeping immunity of the United States for any harm befalling U.S. citizens outside the United States.

Clearly, the United States government could not, consistent with the Constitution, have waived immunity in the FTCA only for white U.S. citizens or male U.S. citizens. Such differential treatment of U.S. citizens based on race or gender would not pass strict scrutiny or even intermediate scrutiny, respectively, under the Equal Protection Clause.

And yet, through the foreign country exception, Defendant United States seeks to preclude Plaintiffs from having access to the courts to redress their injuries, based solely on the  happenstance that Mr. Gross’s injuries arose in a foreign county. Although this differential treatment of Plaintiffs is not based on race or gender, and thus would be constitutional if there existed a rational basis for it, there is no such rational basis here, when the whole reason for the exception – avoiding application of foreign law to the United States – is inapplicable. Thus, the United States’ Motion should be denied.

Rather than burdening the Court with another recitation of the facts set forth in the opposition to the DAI Motion, Plaintiffs focus here on the three sets of facts that drive the legal analysis under the FTCA.

First, Plaintiffs’ injuries arise from Mr. Gross’s work on a U.S. government project over which Defendant United States, and specifically USAID, had the right of ultimate oversight and control.

Second, Defendant United States, specifically USAID, exercised that oversight, including its supervision of DAI, exclusively from Washington, D.C. Notably, there is no evidence in the record (and none alleged by either defendant) to suggest that any oversight, control or participation by Defendant United States or DAI occurred in Cuba – in fact, the gravamen of Plaintiffs’ claims is the defendants’ failures to properly warn, prepare and train Mr. Gross in light of the dangers awaiting him in Cuba, a country in which USAID has no presence and with which the U.S. has no formal bilateral diplomatic relations.

Third, Plaintiffs are U.S. citizens, and they also have been residents of the District of Columbia since May 2010, shortly after Mr. Gross’s detention in December 2009. Thus, Plaintiffs’ ongoing injuries have occurred almost entirely while they have been District of Columbia residents. Indeed, although Mr. Gross remains incarcerated in Cuba, his economic injuries, including the destruction of his business and his professional reputation, have occurred in the United States and in the District of Columbia.

The FTCA was designed to remove the sovereign immunity of the United States and, with certain exceptions, impose liability on the United States “in the same manner and to the same extent as a private individual under like circumstances.”

The FTCA authorizes suit “for . . . personal injury . . . caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under the circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.”

Applying the foreign country exception in this case thus would extend the exception beyond its intended reach, and provide blanket immunity to Defendant United States anytime it purposefully injects a U.S. citizen into a foreign country to accomplish U.S. government objectives in what the United States knows to be a dangerous fashion. In sum, applying the foreign country exception in such a circumstance, even where, as here, the purpose of the exception is not implicated, would be contrary to the broad, remedial purposes of the FTCA.

Here, by definition, an evaluation of whether the foreign country exception can apply constitutionally depends on whether Cuban law will apply, because only if Cuban law will apply to the United States is there a rational basis for applying the exception.
Without such a finding, the sole stated basis, i.e., the only rational basis, for applying the exception, does not exist. Because Defendant United States has not even argued, much less demonstrated, that Cuban law will apply, there is no rational basis for applying the foreign country exception in this case. And, because there is no rational basis for applying the exception, the exception cannot be applied without violating Plaintiffs’ constitutional rights.

April 18, 2011: "DAI Selected as Top Innovator in Global Poll of International Development Professionals".

Note: This article was shared with the Center for Democracy in the Americas as part of a six-month collaborative project with non-profit group. See more about our collaboration here.

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