Dresser Industries, Inc. v. U.S.
| Decision Date | 13 June 1979 |
| Docket Number | Nos. 78-1942,78-2212,s. 78-1942 |
| Citation | 596 F.2d 1231 |
| Parties | Fed. Sec. L. Rep. P 96,925 DRESSER INDUSTRIES, INC., a corporation, on its own behalf and on behalf of certain Dresser employees, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Baker & McKenzie, Francis D. Morrissey, Thomas F. Bridgman, Thomas M. Haderlein, Chicago, Ill., George T. Barrow, Houston, Tex., David R. Macdonald, Chicago, Ill., for plaintiffs-appellants in No. 78-1942.
Baker & McKenzie, Francis D. Morrissey, Thomas F. Bridgman, William J. Linklater, Norman J. Barry, David R. Macdonald, Chicago, Ill., for plaintiffs-appellants in No. 78-2212.
Richard S. Stolker, Dept. of Justice, Washington, D. C., J. A. Canales, U. S. Atty., Richard Parker, Jr., Asst. U. S. Atty., Houston, Tex., John P. Sweeney, James H. Schropp, Arthur M. Schwartzstein, Paul Gonson, Assoc. Gen. Counsel, SEC, Washington, D. C., for defendant-appellee.
Appeals from the United States District Court for the Southern District of Texas.
Before COLEMAN, GODBOLD, and INGRAHAM, Circuit Judges.
This case represents some of the efforts of Dresser Industries, Inc., the plaintiff-appellant, to forestall disclosure of the details of certain transactions which are now commonly referred to as "questionable foreign payments". Dresser filed this suit in the Southern District of Texas seeking, Inter alia, declaratory and injunctive relief against the Department of Justice and the Securities and Exchange Commission. Both defendants moved to dismiss under Fed.R.Civ.P. 12(b)(1) and (b)(6). The District Judge granted the motions but did not specifically state the grounds for the decision. We affirm.
Dresser's complaint traces the recent history of its dealings with the SEC and the Justice Department concerning these "questionable foreign payments". As early as January 1976, Dresser personnel met with members of the SEC staff and voluntarily agreed to conduct an inquiry to determine the nature and amount of any such payments made by its employees. At this meeting Dresser indicated its deep concern for maintaining the confidentiality of any documents that might be examined by the SEC staff with reference to the payments. A key allegation of the complaint is that:
In response to Dresser's concern for the protection of the confidentiality of such documents, the then Director of the SEC's Division of Corporation Finance expressed the SEC's intention to preserve the confidentiality of Dresser's investigatory documentation reflecting the identities and locations of certain Dresser employees located overseas. In addition, one of the counsel for the SEC did in fact, subsequent to said meeting, make specific representations as to the procedures which would be followed in the event the staff deemed a review of documents underlying Dresser's special inquiry necessary. Such procedures included a commitment that, if it was necessary to examine documents at all, the examination of documents would be conducted off the SEC premises without making copies of any examined documentation and without taking any notes.
Dresser then conducted an inquiry into these matters, questioning numerous employees and examining countless corporate records. It found no domestic payments of a questionable nature, but it did uncover evidence of some "questionable foreign payments". These payments allegedly amounted to less than one-tenth of one percent (0.1%) of Dresser's sales in any year, and the aggregate business related to such payments was, according to Dresser, "immaterial". Certain of these payments had been made because of extortionate threats by foreign nationals against Dresser employees abroad.
In December 1976, the SEC began to make demands for certain of Dresser's files relating to the special inquiry, although when the complaint was filed no formal demand, as by subpoena, had been served upon Dresser. In the meantime, the Department of Justice had also requested, again on an informal basis prior to the filing of the complaint, certain of Dresser's files. The complaint states that both the SEC and the Department of Justice had represented to Dresser that the agencies were unaware of any violations of United States law committed by Dresser. Dresser also alleges that it is unaware of any violations of the law committed by any of its employees connected with these "questionable foreign payments."
Dresser further alleges that the SEC has turned over its files to the Justice Department Task Force and will continue to turn over to the Task force any and all further information collected relative to these questionable payments, "without regard to the concern of Dresser that the release of such information jeopardizes the safety of certain of its employees." The complaint also charged that a subpoena for the documents sought by the Justice Department "may well be imminently issued." Finally, Dresser asserted that there are outstanding Freedom of Information Act requests for all documents that it might supply to the Department of Justice and that the Department "has refused or been unable to assure" Dresser that any information turned over to the Department would not be disclosed pursuant to these standing FOIA requests.
In addition to the basic facts, as thus related, the complaint mentioned several legal theories in support of Dresser's claims for relief, which included prayers for: an injunction, a declaratory judgment, the perpetuation of certain evidence and testimony, and a protective order. More specifically, Dresser asked the Court to enjoin the defendant
from taking any further action in connection with its investigation of Dresser, including but not limited to, issuance of orders of investigation or Grand Jury subpoenas or the assessment of civil or criminal penalties, for plaintiff's failure to produce that confidential information requested or subpoenaed by the (Department of Justice) or SEC and pertaining to the special inquiry conducted by Dresser.
In addition, Dresser asked that the SEC be enjoined from delaying its approval of registration statements or proxy statements filed by Dresser.
Dresser also sought a declaratory judgment that the collection of information by either of these agencies with respect to the identities of foreign persons and countries involved in these questionable payments violated the Privacy Act of 1974, 5 U.S.C. § 552a. A declaratory judgment was likewise sought that the agencies abused their discretion in failing to assure Dresser that such matters are exempt from disclosure under the Freedom of Information Act, 5 U.S.C. § 552, and that the agencies would not release such material, such abuses being within the scope of the Administrative Procedure Act, 5 U.S.C. §§ 701-706.
In the event that the court found the requested injunctive and declaratory relief inappropriate, Dresser requested, in extremely detailed form, a protective order and the perpetuation of certain evidence. In essence, Dresser desired to deposit all of its records, deposition testimony, and other evidence relating to such payments with the court, which would then control access to the evidence under strictly limited conditions. In Dresser's view, court control would guarantee the confidentiality of the evidence and protect its employees from the reprisals which might occur if the information became public.
Although the District Court did not specify whether the dismissal of the complaint was predicated upon a lack of subject matter jurisdiction or for failure to state a claim upon which relief could be granted, we are of the opinion that the complaint was properly dismissed, for the reasons set forth below.
In reaching this conclusion we are mindful that a complaint should not be dismissed under Rule 12(b)(6) "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); Cook & Nichol, Inc. v. Plimsoll Club, 5 Cir. 1971, 451 F.2d 505, 506-507.
We affirm, with one exception, the dismissal of Counts I, II, and III as to both the SEC and the Justice Department on the grounds that these allegations are not ripe for decision. The exception is that the dismissal of Count I as to the Justice Department is affirmed for failure to state a claim. Count I, broadly construed and interpreted on this 12(b)(6) motion, alleges the existence of a contract between the SEC and Dresser, under which Dresser agreed to undertake an investigation of itself and the SEC agreed, among other things, "to preserve the confidentiality of Dresser's investigatory documentation reflecting the identities and locations of certain Dresser employees located overseas." Count II alleges that the SEC has exceeded its statutory authority to order an investigation of Dresser. 1 Count III asserts that the agencies' demands for the production of certain evidence indicate that "the defendant seeks to summarily deprive plaintiffs and its employees of their rights to equal protection and due process secured to them by the Fifth Amendment", and also constitute an invasion of rights to privacy secured by the Fourth Amendment.
In our opinion, Dresser has failed to present issues that are ripe for judicial review under the criteria spelled out in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967). Most basically, the ripeness doctrine requires courts to "evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Among the factors to be considered are: (1) whether the issues are purely legal; (2) whether the issues are based on final agency action; (3) whether the controversy has a...
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