International Engineering Co., Div. of A-T-O, Inc. v. Richardson, A-T-

• Citation: 167 U.S.App.D.C. 396,512 F.2d 573
• Decision Date: 19 June 1975
• Docket Number: No. 74-1192,INC,A-T-,74-1192
• Parties: INTERNATIONAL ENGINEERING COMPANY, DIVISION OFv. Elliott L. RICHARDSON, Secretary of Defense, et al., Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 573

512 F.2d 573

167 U.S.App.D.C. 396

INTERNATIONAL ENGINEERING COMPANY, DIVISION OF A-T-O, INC. v. Elliott L. RICHARDSON, Secretary of Defense, et al., Appellants.

No. 74-1192.

United States Court of Appeals, District of Columbia Circuit.

Argued Feb. 24, 1975.

Decided May 2, 1975.

Rehearing and Rehearing En Banc Denied June 19, 1975.

David M. Cohen, Atty., Dept. of Justice, with whom Carla A. Hills, Asst. Atty. Gen., Earl J. Silbert, U. S. Atty., and Stephen F. Eilperin, Atty., Dept. of Justice, were on the brief for appellants. Robert M. Werdig, Jr., Asst. U. S. Atty., also entered an appearance for appellants.

Robert H. Turtle, Washington, D. C., with whom James M. McHale, Washington, D. C., was on the brief for appellee.

Opinion for the Court filed by Circuit Judge TAMM.

Before TAMM and LEVENTHAL, Circuit Judges, and MILLER, ^* Judge, United States Court of Customs and Patent Appeals.

TAMM, Circuit Judge:

Appellant challenges the propriety of the district court's issuance of a preliminary injunction against the United States enjoining it from distributing certain test reports submitted pursuant to a government contract because of the likelihood that the Air Force erroneously failed to recognize appellee International Engineering Company's (IEC) proprietary interest in certain data contained in the reports. For the reasons stated below, we hold that the injunction was improper as the district court lacked subject-matter jurisdiction and order the injunction vacated and the case dismissed.

I

In February, 1968, appellee IEC submitted to the United States Air Force an unsolicited proposal concerning its privately developed long-range navigation (LORAN C/D) bomb/missile guidance system. On July 7, 1969, the parties contracted for construction of a breadboard model of the LORAN C/D system (referred to by the parties as "Unit A"), performance of certain laboratory and helicopter flight tests, and delivery to the Air Force of a final report on the tests. Specifically incorporated by reference as contract clauses were forty-four contract provisions set forth in the Armed Services Procurement Regulations (ASPR), 32 C.F.R. pts. 1-30 (1974), including the "Rights in Technical Data" Clause (ASPR 7-104.9(a)) and the standard "disputes clause" (ASPR 7-103.12), establishing mechanisms for resolving contract disputes.

By the spring of 1970, IEC had developed a more compact LORAN C/D system. Thereafter, on October 27, 1970, the parties modified the contract to test the system with the new developments. IEC again agreed to construct a breadboard model of the new subsystem (referred to by the parties as "Unit B") and to submit test reports.

In late March, 1971, the Air Force directed IEC to provide further information concerning the components and processes to help it evaluate the test results. IEC submitted the data, in an interim report, 71-05, and in its contractually-mandated Final Report 70-06-4. Both reports were marked with notice of "limited rights," restricting the Air Force's distribution rights to the Unit B data.

By letter of April 19, 1971, the Air Force contracting officer questioned the propriety of the restrictive legend (limited rights) on Final Report 70-06-4, referred appellee to the "Rights in Technical Data" clause of the contract, and requested a prompt response "to why the Government does not have the right to remove the legends in question." A. 46. IEC responded on June 15, 1971 that Unit B had been "developed and built at contractor expense, and(had) been made available for this effort on a no charge loan basis." IEC maintained that its contractual obligation to submit a final report "could have been met without inclusion of proprietary information" and that "(i)f the Air Force requires unlimited rights" in the report, IEC would revise the report by deleting the data. A. 48-49.

On June 30, 1971, the parties again negotiated a contract modification which required IEC to conduct further tests and submit test reports; on July 7th, the Air Force accepted Report 70-06-4. ¹ On October 15, 1971, appellee submitted Interim Report 71-07 and then on December 10, 1971, Report 71-09 as the concluding report under its contractual obligations; both reports contained limited rights notices covering the same information submitted in Report 70-06-4.

By letter on December 28, 1971, the contracting officer, again referring to the "Rights in Data" clause, notified IEC that Report 71-09, "even if found to be technically correct", would not be accepted until appellee either removed or substantiated all proprietary markings. A. 50. Expressing surprise that the issue had resurfaced, IEC on January 5, 1972, reviewed the history of the parties' course of dealing, asserted that Report 70-06-4 had been accepted with proprietary restrictions, offered to delete the data, and reiterated its belief that the restrictions were appropriate. A. 51-52.

The next official exchange occurred on June 5, 1972, when the Air Force again informed IEC that it had failed to substantiate its limited rights notices and that the Air Force intended to strike them and use the data with unlimited rights. A. 53-54. On June 26, 1972, representatives of both parties participated in a two-hour meeting on the matter; IEC was asked to provide further detail and written documentation so that its claim could be forwarded to higher headquarters. The Air Force agreed to treat the data with limited rights during the pendency of the dispute. Soon thereafter final payment was made on the contract.

Not having received any additional documentation by October, 1972, the contracting officer again notified IEC of the Air Force's intention to utilize the data with unlimited rights. IEC immediately protested the report's imminent release to the Director of the Defense Documentation Center and the Secretary of the Air Force. In December, 1972 IEC received assurances that the material would not be released until a decision was made on the "limited rights" question.

In January, 1973, the contracting officer's technical and legal advisors briefed headquarters personnel of the Air Force Systems Command (AFSC) and United States Air Force (USAF). IEC's counsel met with Counsel to the Secretary of the Air Force and representatives of AFSC and USAF. At the Secretary's Counsel's request, IEC submitted further written materials on February 8, 1973. A. 58-60. On March 16, 1973, the Air Force Chief of Staff authorized AFSC to make a final decision on the dispute after considering IEC's February 8th submission. AFSC returned the matter to the contracting officer for final decision. That officer's technical advisor concluded that the letter of February 8th contained no information relevant to the issue and recommended striking the limited rights notice. On May 9, 1973, IEC was so informed.

On May 10, 1973, IEC filed suit in district court for declaratory and injunctive relief and a temporary restraining order. IEC sought review of the contracting officer's decision to strike the proprietary notice, characterizing it as agency action reviewable under section 10 of the Administrative Procedure Act (APA), 5 U.S.C. § 702 (1970). The Air Force contended that the dispute arose under the contract; that the officer's decision did not constitute agency action; that the proper forum for the claim was either before the Armed Services Board of Contract Appeals or the Court of Claims; and that thus the district court lacked subject matter jurisdiction or the suit was barred by sovereign immunity.

In a Memorandum and Order filed July 10, 1973, the district court held that the decision of a contracting officer, acting pursuant to an ASPR provision incorporated into a contract, constituted agency action and that the APA served as a waiver of sovereign immunity. International Engineering Co. v. Richardson, 361 F.Supp. 818, 821-22 (D.D.C.1973). However, the judge believed that the record of the officer's reasoning was insufficient to permit judicial review of the decision to strike the restrictive notice and remanded the case to the officer for a fuller exposition. Id. at 823-25. After receiving that statement, ² on October 24, 1973, the district court entered a preliminary injunction. ³ International Engineering Co. v. Richardson, 367 F.Supp. 640 (D.D.C.1973). This appeal followed.

II

This suit raises the special problems of jurisdiction and sovereign immunity because in essence the United States is the defendant here. The general rule of sovereign immunity is that the United States cannot be sued without its consent. E. g., United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). The sovereign may waive its immunity by statute, and such consent, if given, may be subject to any conditions which Congress sees fit to require. See, e. g., Sherwood v. United States, supra; Best Bearings Co. v. United States, 463 F.2d 1177, 1179 (7th Cir. 1972) On the one hand, for contract actions against the United States, Congress, through passage of the Tucker Act, 28 U.S.C. §§ 1346(a), 1491 (1970), has consented to suit. For claims under $10,000, the Court of Claims and the district courts have concurrent jurisdiction; the Court of Claims has exclusive jurisdiction for claims over $10,000. Congress has, however, imposed conditions on its waiver of sovereign immunity. The Court of Claims has jurisdiction only to award damages, Glidden v. Zdanok, 370 U.S. 530, 577, 82 S.Ct. 1459, 8 L.Ed.2d 671 (1962); it may neither grant declaratory, United States v. King, 395 U.S. 1, 89 S.Ct. 1501, 23 L.Ed.2d 52 (1969), nor injunctive relief, Glidden v. Zdanok, supra. ⁴

On the other hand, we have held that Congress, in enacting the APA, made a more general waiver of sovereign immunity in section 702 ⁵ whenever that section is applicable. Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970). The district court, relying in large part on Scanwell, found...