Kaiser Aluminum & Chemical Corp. v. United States

• Decision Date: 15 January 1958
• Docket Number: No. 102-54.,102-54.
• Parties: KAISER ALUMINUM & CHEMICAL CORPORATION v. UNITED STATES.
• Court: U.S. Claims Court

157 F. Supp. 939

KAISER ALUMINUM & CHEMICAL CORPORATION v. UNITED STATES.

No. 102-54.

United States Court of Claims.

January 15, 1958.

James H. McGlothlin, Washington, D. C., for plaintiff. Gerhard A. Gesell and John W. Douglas, Washington, D. C., were on the brief.

Kendall M. Barnes, Washington, D. C., with whom was Asst. Atty. Gen., George Cochran Doub, for defendant. S. R. Gamer, Washington, D. C., was on the brief.

REED, Justice (Retired), sitting by designation.

Plaintiff, Kaiser Aluminum & Chemical Corporation, formerly named The Permanente Metals Corporation, filed a petition pending motion for call, pursuant to Rule 13 of this court, 28 U.S. C.A. The pertinent part of the Rule is set out below.¹ This petition was accompanied by a Motion for Call in accord with 28 U.S.C. (Supp. III, 1952 ed.) § 2507 and this court's Rule 27.² Before action was taken on the motion an amended and amplified petition was filed, and at the same time a motion for withdrawal of the call without prejudice. This was allowed.

The plaintiff seeks damages and contract reformation for alleged breach of a contract between Kaiser and the United States, the latter acting through the Liquidator of War Assets, General Services Administration, for sale to Kaiser of three specified plants producing together fabricated aluminum products from beauxite ore.

Plaintiff alleges that one provision of that contract agreed to July 27, 1949, reads as follows:

"It is understood that the War Assets will not offer the same type of plants to Reynolds Metals or others on a more favorable basis. In the event that circumstances now unforeseen result in a more favorable disposal of such plants Permanente shall receive corresponding treatment and the disposal documents and obligations and rights therein contained for these three plants (Baton Rouge, Mead, and Trentwood) will be modified and adjusted accordingly."

Plants of the same type were sold thereafter by the United States through the same agency to Reynolds Aluminum Company, a subsidiary of Reynolds Metals Company.

Kaiser charges breach of this most favored purchaser clause by use of methods for calculating costs of the plants and rentals more favorable to Reynolds than to Kaiser; by the seller's assumption of costs of Reynolds fume control and damage therefrom, omitted from the Kaiser contract; by selling Kaiser a plant with deficient carbon furnaces and to Reynolds without such deficiency and by giving Reynolds more favorable treatment on rehabilitation costs for future operations.

Kaiser alleged in its petition pending call that the documents in its hands, which included the complete Reynolds contract, were "wholly inadequate to enable Kaiser to state with appropriate particularity the precise scope of its claim," and the damages. The amended petition was filed over seven months later. The additional time had enabled Kaiser to secure more information but "right to renew any and all demands" of the Motion for Call was reserved. On November 22, 1955, after denial by the Government of plaintiff's request for access, a Motion for Production of Documents for Inspection was filed under Court of Claims Discovery Rule 26, instead of Call Rule 27, the basis of the Motion for Call. This was allowed on January 4, 1956.³

Kaiser sought from the General Services Administration certain documents, not otherwise available to Kaiser or its representatives, or not generally available to the public in printed form, relating to these Kaiser and Reynolds sales. The request was in the broadest form. As it was ultimately fully complied with except as to one specific document, it suffices to say that the request included all internal GSA reports, memoranda, or other documents concerning these sales to Kaiser and Reynolds prepared by all employees or agents of the Administration for intra-agency use, particularly prior drafts of the Kaiser contract with Agency interpretation and justification thereof and similar papers in connection with that claim. There was also sought the like intra-agency reports and comparisons concerning the Reynolds contract.

The record indicates compliance with that order covering many papers and documents including some of the general type of the paper involved in the present motion. Kaiser was advised by Government counsel that the General Services Administrator declined to produce one document, within the coverage of the order on the ground that it was "contrary to the national interest." Thereupon a motion was promptly filed for a specific order to produce the omitted document. Plaintiff objected that while the document was covered by the court's order, the claim of privilege had not been made by the head of the department after actual personal consideration, citing United States v. Reynolds, 345 U.S. 1, 7, 73 S.Ct. 528, 97 L.Ed. 727. Plaintiff asserted that the court must make the determination of the privilege and that no basis for the claim had been shown.

The Government thereupon filed a letter dated June 11, 1957, of the agency head, the Administrator of the General Services Administration, set out below, declining to produce the document.⁴ The Government took the position "that this court should not review the claim of privilege asserted by a witness or an agency head by requiring the witness to testify or the agency to produce documents, so that the court may itself reach a conclusion as to whether or not such information could be disclosed without risk to the public interest." This court on consideration of "the claim of privilege lodged by the General Services Administrator" ordered production "before the commissioner of this court * * * for the sole purpose of enabling said commissioner to make a determination as to whether said document is privileged as that term is understood in the law of evidence. * * * The commissioner will then report his determination to the court."

The Government, through Assistant Attorney General Doub, in response to that order declined to produce the document in these words, addressed to the Clerk of this court:

"We have been informed by the Administrator that, after careful consideration of the Court's order, he must respectfully decline to produce the document in question. The Administrator has requested us to communicate his position to the Court. In so doing, we wish to make clear that this action is not intended to suggest any lack of authority in the Court to pass on any question of production or admissibility as a matter of evidence. Rather, the position taken rests on the claim of executive privilege, substantive in nature, and in this Court expressed in statutory form, 28 U.S.C. § 2507.

"As previously explained, the document involved is a memorandum that was written by a Special Assistant to the War Assets Liquidator. His duties, at least so far as the contracts here involved are concerned, were confined to recommendations and advice on program policy. He played no part in the operative events involved in this case and had no relations or discussions with plaintiff or its competitor. His use by the Liquidator on the matters here in question was in the nature of a confidential assistant."

Kaiser, by memorandum, asked for sanctions on the Government's failure to discover on the following grounds:

"5. Defendant has asserted no colorable claim of privilege. It is not claiming attorney client, national secrets or any other privilege recognized in the law of evidence. Its refusal is instead based on grounds which have never been recognized by the courts as privileged — the theory that disclosure of a subordinate's `advisory' reports would adversely affect agency operations."

This court, on recommendation of the commissioner, ordered the production of the document and in default thereof, for the commissioner

"* * * pursuant to Rule 36 (b) (2) (ii) to refuse to permit the defendant to introduce any evidence in defense of this action, permitting, however, the defendant to cross-examine witnesses who may testify on behalf of the plaintiff."

Defendant filed a motion for reconsideration and oral argument before the court which was granted and the argument heard. We now proceed to the determination of the issues presented.

Two legal issues emerge. First, does the United States possess a privilege to refuse to produce a document that contains opinions rendered the Liquidator by a member of his staff concerning a sale?⁵

Second, can a head of an agency of the Government determine the privilege for himself?

I

As to the privilege. The Administrator's claim of privilege, footnote 4 supra, is susceptible of being read to claim that the document contains data, in addition to advisory "opinions". However, we read the uncontradicted refusal to produce of the Administration through Assistant Attorney General Doub to allege that the document is "confined to recommendations and advice on program policy." See letter, page 5, supra. If the Special Assistant played a part in the operative events, e. g., determination of costs or values, representations to Kaiser or Reynolds or survey of the plants, a different situation might exist. We therefore consider this case on the basis of a refusal by the Administrator to produce an advisory opinion on intra-office policy in relation to the sales to Kaiser and Reynolds. Cf. Hickman v. Taylor, 329 U.S. 495, 501, 505-506, 67 S.Ct. 385, 91 L.Ed. 451.

Under Benson v. United States, 130 F.Supp. 347, 133 Ct.Cl. 11, this court held the words in Rule 26, "not privileged," relate to privilege as known and understood in the law of evidence. There was no actual claim of privilege considered in that case. The decision establishes that if a plaintiff proceeds under our Call Rule 27 he may be refused discovery if the head of the department or agency deems compliance "injurious to the public interest" under 28 U.S.C. § 2507(a), footnote 2, supra. On the other hand, if a plaintiff, as here, proceeds under our Rule 26, the...