Hartley Pen Co. v. UNITED STATES DISTRICT COURT, ETC.

• Citation: 287 F.2d 324
• Decision Date: 10 February 1961
• Docket Number: No. 17096.,17096.
• Parties: HARTLEY PEN COMPANY, a California corporation, dba the Hartley Company, Petitioner, v. UNITED STATES DISTRICT COURT for the SOUTHERN DISTRICT OF CALIFORNIA, CENTRAL DIVISION, Respondent, The Honorable Benjamin Harrison, Respondent, E. I. du Pont de Nemours & Company, etc., Respondent, and Formulabs, Inc., etc., Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

287 F.2d 324 (1961)

HARTLEY PEN COMPANY, a California corporation, dba the Hartley Company, Petitioner, v. UNITED STATES DISTRICT COURT for the SOUTHERN DISTRICT OF CALIFORNIA, CENTRAL DIVISION, Respondent, The Honorable Benjamin Harrison, Respondent,

E. I. du Pont de Nemours & Company, etc., Respondent, and

Formulabs, Inc., etc., Respondent.

No. 17096.

United States Court of Appeals Ninth Circuit.

February 10, 1961.

Owen A. Bartlett, A. V. Falcone, Los Angeles, Cal., for petitioner.

Lawler, Felix & Hall, John M. Hall, Los Angeles, Cal., for respondent, du Pont.

William D. Sellers, Pasadena, Cal., for respondent, Formulabs, Inc.

Before STEPHENS, BARNES and JERTBERG, Circuit Judges.

JERTBERG, Circuit Judge.

We granted leave to Hartley Pen Company petitioner herein to file its petition for writ of prohibition and for writ of mandate, either or both in the alternative, and for other relief, and issued an order to show cause directed to the United States District Court for the Southern District of California, Central Division, certain Judges of that Court, E. I. du Pont de Nemours & Company, and Formulabs, Inc., respondents. At the hearing on the order to show cause, the respondents E. I. du Pont de Nemours & Company hereinafter referred to as du Pont and Formulabs, Inc. hereinafter referred to as Formulabs appeared in response to the order to show cause.

Basically, the petition seeks to have set aside by this Court certain orders made by one of the Judges of the United States District Court for the Southern District of California, Central Division, which were made in connection with pre-trial discovery proceedings arising out of a suit for damages for breach of warranty instituted by the petitioner against du Pont and pending in the United States District Court for the Southern District of California, Central Division.

In order to place the parties in proper posture and to place in proper focus the questions presented by these proceedings, it is necessary to review prior proceedings in the court below and in this Court.

The petitioner filed a complaint in the state court against du Pont, alleging breach of warranty. The action was transferred to the United States District Court by reason of diversity of citizenship, the amount in controversy exceeding the sum of $10,000 exclusive of interest and costs.

The petitioner manufactures ball point pens containing cartridges filled with ink made under a secret formula comprising a trade secret belonging to Formulabs. The use of the secret formula by petitioner was under the terms of a written license agreement with Formulabs.¹

The ink manufactured by petitioner and placed in the cartridges incorporated a dye purchased by petitioner from du Pont. In August 1953 du Pont sold to petitioner lots 36 and 37 of blue B dyes. The complaint alleges that the inks made by petitioner using dye lots 36 and 37 proved to be defective and unmerchantable. Petitioner claimed that it suffered general and special damages in large amounts as the proximate result of the alleged defective and unmarketable dye.

As part of its discovery proceedings, du Pont, through interrogatories propounded to petitioner under Rule 33, Federal Rules of Civil Procedure, 28 U.S. C.A., and a motion under Rule 34, sought to learn Formulabs' secret formula used by petitioner in the formulation of the alleged defective ink using the alleged defective dye, lots 36 and 37, as well as certain of Formulabs' secret test procedures which had been disclosed to petitioner. Over the objections of petitioner, the district court ordered petitioner to answer the interrogatories, and granted du Pont the right to inspect and copy documents relating to said trade secrets in petitioner's possession or under its control.² It is conceded that compliance by petitioner with said orders would disclose the secret formula and secret test procedures.

The minute order of the district court requiring disclosure was entered on December 16, 1957. On February 5, 1958, Formulabs moved the district court to intervene in the action on the ground that the property affected belonged to it, and that its right to ownership would be seriously injured or destroyed by disclosure of the trade secrets. In its proposed cross complaint Formulabs alleged that the secret formula and secret test procedures are of great value and disclosure of them would do great and irreparable damage to Formulabs' business. The cross complaint prayed that petitioner be enjoined from disclosing such trade secrets. Petitioner also moved the district court to set aside the disclosure order. After hearing, the district court stated that Formulabs was a stranger to the main action, had no standing therein, and on June 2, 1958 the district court entered a final judgment, pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, denying Formulabs' petition for intervention. Formulabs appealed from such judgment. This Court held that under the plain language of Rule 24(a) (3) of the Federal Rules of Civil Procedure Formulabs had a right to intervene in the action between petitioner and du Pont, and the order of the district court denying intervention was reversed on February 15, 1960. Formulabs v. Hartley Pen Company, 9 Cir., 1960, 275 F.2d 52, certiorari denied 363 U.S. 830, 80 S.Ct. 1600, 4 L.Ed.2d 1524.

The petitioner has not answered the interrogatories proposed by du Pont or permitted du Pont to inspect and copy documents. No steps for the enforcement of the orders of the trial court requiring disclosure have been taken in the district court. The record is clear from many statements made by the district judge during the protracted discovery proceedings that petitioner must disclose the secret formula and secret test procedures before it would be permitted to further prosecute its suit for damages against du Pont.

In the present proceedings petitioner prays that the United States District Court for the Southern District of California, Central Division, be ordered: (1) to vacate orders made in discovery proceedings, ordering petitioner to answer respondents' interrogatories, requiring production of the secret formula and the secret test procedures; (2) to vacate all orders overruling petitioner's objections to producing said formulae on the grounds that they are trade secrets, not relevant to the issues in the main case, and that du Pont made no showing of good cause for discovering them; (3) to make an affirmative order sustaining petitioner's objections to producing the formulae, and to further order that petitioner be not required to produce the formulae in response to any kind of motion by du Pont; (4) to prohibit any district judge to whom the main case has been or will be assigned following the death of Judge Harrison from in any way enforcing Judge Harrison's orders to produce the secret formulae, and from affecting petitioner's main action as a result of non-compliance with Judge Harrison's orders; and (5) to enjoin such district judges from ordering or requiring petitioner to disclose the trade secrets.

Petitioner predicates jurisdiction in this Court to grant the relief sought in the petition under the All Writs Act, 28 U.S.C.A. § 1651, which provides:

"(a) The Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law.

"(b) * * *"

Admittedly the orders complained of are interlocutory and not appealable. Apex Hosiery Co. v. Leader, 3 Cir., 1939, 102 F.2d 702; Zalatuka v. Metropolitan Life Insurance Co., 7 Cir., 1939, 108 F.2d 405. This Circuit has held that an order relating to discovery under Rule 30(b) of the Federal Rules of Civil Procedure is interlocutory and not appealable. Fred Benioff Co. v. McCulloch, 9 Cir., 1943, 133 F.2d 900. Clearly the propriety of these orders is reviewable by this Court on appeal from a final judgment, Title 28 U.S.C.A. §§ 1291 and 1294. Petitioner and Formulabs earnestly urge that the remedy afforded by appeal is completely inadequate since, even though this Court should hold on appeal by petitioner from a final judgment that the trial court erred in the entry of such orders, the disclosure of the trade secrets once made is irrevocably made and the secrets irrevocably lost, to the great damage of petitioner and Formulabs.

It should be borne in mind that these proceedings involve no question of the jurisdiction of the district court. Its jurisdiction of the parties and the subject matter of the main action is not questioned, nor does the main action involve a refusal by the district court to adjudicate the issues properly presented to it, nor any contention that in making such orders the district court acted in excess of its jurisdiction or abdicated its functions. The sole contention of petitioner is that the orders constitute an abuse of discretion on the part of the district judge.

The parties to these proceedings appear to agree that this Court has power to grant the extraordinary remedy sought, even though the orders involved are interlocutory and non-appealable, provided that there are present extraordinary and exceptional circumstances which require the grant of the extraordinary remedy to prevent a grave miscarriage of justice which might otherwise result were the only remedy afforded an appeal from a final judgment or an appeal from some appealable order or judgment made under Rule 37 of the Federal Rules of Civil Procedure. Such appears to be the law. Roche v. Evaporated Milk Assn., 1943, 319 U.S. 21, 63 S.Ct. 938, 87 L.Ed. 1185; Bankers Life & Casualty Co. v. Holland, 1953, 346 U.S. 379, 74 S.Ct. 145, 98 L.Ed. 106; Ex parte Fahey, 1947, 332 U.S. 258, 67 S.Ct. 1558, 91 L.Ed. 2041; Parr v. United States, 1956, 351 U.S. 513, 76 S.Ct. 912, 100 L.Ed. 1377. The problem before us, therefore, is the propriety of granting the remedy in the light of the facts and...