Conax Florida Corp. v. United States

• Decision Date: 30 July 1986
• Docket Number: Civ. A. No. 85-3111.
• Citation: 641 F. Supp. 408
• Parties: CONAX FLORIDA CORPORATION, Plaintiff, v. The UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — District of Columbia

641 F. Supp. 408

CONAX FLORIDA CORPORATION, Plaintiff, v. The UNITED STATES of America, et al., Defendants.

Civ. A. No. 85-3111.

United States District Court, District of Columbia.

July 30, 1986.

Richard C. Spitzer, Ebert & Bowytz, Barry E. Bretschneider, Washington, D.C., for plaintiff.

Rebecca L. Ross, Asst. U.S. Atty., R. Anthony McCann and Kevin J. Murphy, Office of Litigation, Dept. of Navy, Washington, D.C., for defendants.

MEMORANDUM OPINION

BARRINGTON D. PARKER, Senior District Judge:

In September 1985, plaintiff Conax Florida Corporation ("Conax") filed a complaint and motion for preliminary injunction against the Secretary of the Navy and several Department of Navy officials, alleging that they had threatened to improperly remove from drawings Conax submitted pursuant to a contract certain restrictive "rights-in-data" legends. Those legends prohibited defendants from reproducing or otherwise disseminating the drawings or information contained therein without plaintiffs consent. The Court found the possibility that defendants' threatened actions would irreparably harm plaintiff significant enough to warrant entry of a preliminary injunction and entered an order enjoining such reproduction or dissemination. See Memorandum Order of December 23, 1985. 625 F.Supp. 1324.

On January 2, 1986, defendants moved the Court to reconsider its grant of injunctive relief. Plaintiff was then directed to respond to defendants' motion and to support its asserted position that discovery was warranted to augment the administrative record. Defendants were further directed to file a supplemental memorandum in support of their motion for summary judgment, filed initially in response to plaintiff's motion for preliminary injunction, to which plaintiff responded.

After full review and consideration of the pleadings that followed, the Court finds that no further evidentiary proceedings are required in this matter and that defendants properly submitted their case on the administrative record. Further, although plaintiff made a strong showing that it was entitled to injunctive relief in order to prevent defendants' actions from rendering the case moot, a closer review of the record reveals that plaintiff's position on the merits is not well supported. Accordingly, for the reasons set forth below, the Court grants defendants' motion for reconsideration as well as their motion for summary judgment. Plaintiff's complaint is thus dismissed.

BACKGROUND

In late 1978, plaintiff submitted to the Navy an unsolicited proposal for the development of a Salt Water Actuated Release System ("SEAWARS") that would cause the life vests of downed navy pilots to inflate automatically upon contact with sea water. Approximately one year later, plaintiff entered into a contract with the Navy to deliver ten test units for evaluation. Sometime later, in April 1981, plaintiff and the Navy entered into a second contract, Contract No. N00123-81-C-0391 ("Contract '0391" or "Long Beach contract"), for further development of the device. Work ordered under the contract was divided into three phases, corresponding roughly to the design, development and testing, and manufacture and delivery of the device. The contract contained a clause that afforded the government only limited rights in drawings submitted under a certain caption, "Data Item AOOF." The Contract Data Requirement List ("CDRL") attached to the contract provided that Item AOOF covered drawings and other information regarding the actual salt water-activated switch. Delivery of drawings under Item AOOF was completed, apparently, on June 1, 1981, when Conax tendered a shipment invoice indicating that that shipment completed Phase I of the contract and delivery under Item AOOF.¹

The CDRL provided that changes to the basic design of the device were to be reflected in drawings submitted under Data Item AOOA. Beginning on September 18, 1981, after delivery of Item AOOF was accepted, and Conax submitted what were apparently revised drawings referencing Item AOOF. The drawings did not bear the designation "AOOA."

On June 2, 1983, Conax and the Navy entered into a third contract, Contract No. N60530-83-C-0043 ("Contract '0043" or "China Lake contract"). That contract was a fixed-price supply contract, which did not call for further research or development of the SEAWARS system. Rather, the "baseline" for the system was to be that developed at the conclusion of the Long Beach contract. Drawings submitted pursuant to the contract were to be delivered under Data Item AOO8.

It was and is the position of Conax that drawings delivered under Item AOO8 continue to benefit from the protections afforded drawings submitted under Item AOOF of the Long Beach contract. Beginning in March of 1984, however, the Navy challenged the propriety of the restrictive legends attached by Conax to the drawings that it submitted under Item AOO8. After a series of meetings between the parties and after plaintiff's submission of a formal claim, supported by legal argument, the Navy issued its decision rejecting plaintiff's position, on August 16, 1985. By letter of September 6, 1985 the Navy asserted that, while it had commenced reproducing the drawings in question, no drawings would be made available to the public until the process was complete, an estimated 90 days later.

Fearing that the Navy would begin disclosing the drawings as soon as possible,² plaintiff initiated this suit and sought entry of a preliminary injunction. Plaintiff's design was for this Court to enter an injunction to preserve the status quo, while it pursued either an administrative appeal before the Armed Services Board of Contract Appeals ("ASBCA") or a claim in the U.S. Court of Claims. Defendants cogently argued in response that this Court would be without jurisdiction to grant preliminary relief incident to the prosecution of a claim in another forum, citing Telecommunications Research & Action Center v. Federal Communications Commission, 750 F.2d 70, 77-79 (D.C.Cir.1984). Accordingly, the Court's December 1985 Memorandum Order provided that entry of a preliminary injunction was premised upon plaintiff's dismissal of its then-pending ASBCA appeal. Jurisdiction in this Court was predicated upon defendants' alleged violation of the Trade Secrets Act, 18 U.S.C. § 1905 (1982). See Chrysler Corp. v. Brown, 441 U.S. 281, 318, 99 S.Ct. 1705, 1725, 60 L.Ed.2d 208 (1979); Megapulse, Inc. v. Lewis, 672 F.2d 959, 964-70 (D.C.Cir.1982). Plaintiff dismissed its agency appeal and now relies on this Court to adjudicate the merits of its claim.

ANALYSIS

A. Defendants' Motion for Reconsideration

1. Entry of the preliminary injunction

Defendants' motion for reconsideration of the entry of the preliminary injunction was occasioned at least in part by the unusual procedural posture of the case. In arguing the necessity of preliminary relief, plaintiff stressed that it would likely prevail on the merits of its case as presented to the ASBCA. Although plaintiff also asserted that this Court would similarly find its claim meritorious, the issue was never fully addressed before the injunction was entered. Accordingly, the Court directed defendants to renew their motion for summary judgment.

While defendants have filed supplemental points and authorities in support of their motion for summary judgment on the merits, they also rely upon certain procedural arguments briefed in their motion for reconsideration. First, they maintain that the preliminary injunction should never have issued in the first instance, because plaintiff never fully briefed the merits of its claim so as to demonstrate a substantial likelihood of success in this forum, as required by Washington Area Metropolitan Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C.Cir.1977). Second, they assert that plaintiff's contention that de novo review is warranted, review that would preclude summary judgment, is groundless.

The Court recognizes that the procedural posture of this case may have caused some confusion. Nevertheless, since the parties have now fully briefed the merits, it is unnecessary now to consider the effect of any failure of plaintiff fully to address the merits previously. Moreover, because the Court now grants defendants' motion for summary judgment, it at the same time vacates the preliminary injunction.

2. Scope of review

The second prong of defendants' motion for reconsideration merits further examination. Defendants, of course, would like any review of the merits of plaintiff's claim to be undertaken solely upon the record as developed at the agency level. Plaintiff, on the other hand, vigorously asserts that additional discovery is necessary to augment the record. While it is true that in exceptional cases de novo review, which would contemplate the taking of additional discovery, may be had by a party challenging agency action, Camp v. Pitts, 411 U.S. 138, 142, 93 S.Ct. 1241, 1244, 36 L.Ed.2d 106 (1973); Environmental Defense Fund, Inc. v. Costle, 657 F.2d 275, 284-85 (D.C. Cir.1981), the general rule remains that "the focal point for judicial review should be the administrative record already in existence, not some new record completed initially in the reviewing court." Environmental Defense Fund, Inc. v. Costle, 657 F.2d at 284 (citing Camp v. Pitts, 411 U.S. at 142, 93 S.Ct. at 1244). By and large, the situations in which de novo review is warranted are limited to those in which "the agency action is adjudicatory in nature and the fact finding procedures are inadequate" or in which "issues that were not before the agency are raised in a proceeding to enforce nonadjudicatory agency action." Id. at 285 (citing Camp v. Pitts, 411 U.S. at 142, 93 S.Ct. at 1244). The second category of cases is certainly inapposite; upon closer scrutiny, the first category gives plaintiff no more comfort.

Assuming that action on plaintiff's contract claim is a type of...