Conax Florida Corp. v. United States, Civ. A. No. 85-3111.

• Decision Date: 23 December 1985
• Docket Number: Civ. A. No. 85-3111.
• Citation: 625 F. Supp. 1324
• Parties: CONAX FLORIDA CORPORATION, Plaintiff, v. The UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — District of Columbia

625 F. Supp. 1324

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.

December 23, 1985.

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

Rebecca L. Ross, Asst. U.S. Atty., R. Anthony McCann, Dept. of the Navy, Washington, D.C., Thomas J. Russial, Dept. of the Navy, China Lake, Cal., for defendants.

MEMORANDUM ORDER GRANTING PRELIMINARY INJUNCTION

BARRINGTON D. PARKER, District Judge.

In this action the plaintiff Conax Florida Corporation ("Conax") seeks relief against the Secretary of the Navy and other Department of the Navy officials, alleging they have improperly threatened to disclose its trade secrets. Specifically, the plaintiff seeks relief against announced action of the defendants to remove restrictive legends from drawings it developed under Navy contracts. Conax claims that the drawings, which it prepared, contain proprietary and confidential information and are not government property.¹ At the same time the plaintiff is prosecuting an appeal before the Armed Services Board of Contract Appeals ("ASBCA") from an adverse ruling of the Navy's contracting officer.

The pending complaint before this Court seeks (1) injunctive relief restraining the government from removing any of the plaintiff's legends from the documents pending resolution of its ongoing appeal before the ASBCA and any subsequent judicial review thereof; (2) a mandamus requiring the Navy to place restrictive legends on any drawings made from the documents involved; and (3) a declaratory judgment that the Navy has violated plaintiff's rights under the procurement contract between the parties.

A.

Several motions are now before the Court for final resolution. The plaintiff has filed an application for a preliminary injunction. The defendants have presented a motion to dismiss asserting lack of subject matter jurisdiction. Both parties seek summary judgment arguing that there are no contested material facts.

As to the motion to dismiss for lack of subject matter jurisdiction, the government contends that because the complaint as presently drafted does not assert or rely upon a violation of the Trade Secrets Act, 18 U.S.C. § 1905, but rather only asserts a cause of action in contract, thus jurisdiction is lacking.

Oral argument on the government's motion to dismiss and the plaintiff's motion for a preliminary injunction was considered on December 18, 1985. For the reasons set out below, the Court denies the motion to dismiss and grants the motion for a preliminary injunction.

B.

The verified complaint conspicuously alleges that "The Court has jurisdiction of this action under 18 USC 1905 (Trade Secrets Act); 5 USC 552 (Administrative Procedure Act) ... 28 USC 1346 (Contract with the United States)...." Complaint, ¶ 3, Jurisdiction. After alleging the statutory basis for jurisdiction, the complaint sets forth in the section entitled "Factual Background of the Controversy," a chronology of the underlying facts to the controversy, showing the creation of a confidential relationship between plaintiff and the government and culminating with the decision of the Navy contracting officer that he would direct the removal of those restrictive legends on certain of plaintiff's drawings which had been transmitted to the government.

Plaintiff's motion for preliminary injunction, including supporting memoranda, declarations and exhibits set forth in greater detail the history of the plaintiff's development, at its own expense, of the drawings and data previously submitted to the government under restrictive legend and accepted by the government on this basis.

Concluding the complaint, the plaintiff seeks relief in three separate equitable counts: injunction, mandamus and declaratory judgment, respectively. In each count, plaintiff alleges that "Once trade secrets are disseminated publicly ... it will absolutely destroy all proprietary rights of plaintiff in the data depicted on the drawings so disseminated." (Complaint, ¶¶ 41, 47 and 52).

The final prayer for relief requests injunctive relief pending the determination of the merits of the action by the Armed Services Board of Contract Appeals.

In moving to dismiss, the government relies heavily on plaintiff's pleading that the drawings were, in fact, provided to the government pursuant to a contract and that the action arose by virtue of a contracting officer's decision. The plaintiff contends, however, that simply because the dispute concerns drawings provided under a contract does not mean that the action arises under the contract.

Rule 8(f), Fed.R.Civ.P. provides that pleadings "shall be so construed as to do substantial justice." See, Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). "They should not raise barriers which prevent the achievement of fair and just settlements of controversies between litigants." Maty v. Grasselli Chemical Co., 303 U.S. 197, 200, 58 S.Ct. 507, 509, 82 L.Ed. 745 (1938).

The action, as it has been pleaded and argued, involves the substantially broader issue of whether the government has threatened to appropriate trade secrets, in violation of a duty of confidentiality, and in violation of the Trade Secrets Act. Our Court of Appeals has decided that, simply because an alleged trade secrets case requires some reference to or incorporation of a contract does not mean that the case is therefore "on the contract." Megapulse v. Lewis, ...