Renegotiation Board v. Bannercraft Clothing Company, Inc 8212 822
| Decision Date | 19 February 1974 |
| Docket Number | No. 72,72 |
| Citation | 94 S.Ct. 1028,415 U.S. 1,39 L.Ed.2d 123 |
| Parties | The RENEGOTIATION BOARD, Petitioner, v. BANNERCRAFT CLOTHING COMPANY, INC., et al. —822 |
| Court | U.S. Supreme Court |
(1) Respondents, whose profits on defense contracts are undergoing renegotiation pursuant to the Renegotiation Act of 1951, sued in the District Court under the Freedom of Information Act (FOIA) to enjoin petitioner Board from withholding documents that respondents had requested and from conducting any further renegotiation proceedings until the documents were produced. The District Court in each case granted injunctive relief. The cases were consolidated on appeal and the Court of Appeals affirmed, holding that the District Court had jurisdiction under the FOIA to enjoin administrative proceedings before petitioner and to order production of the documents. Though noting that the FOIA nowhere authorizes injunctions of agency proceedings, the court concluded that Congress intended to confer broad equitable jurisdiction upon the district courts and that 'temporary stays of pending administrative procedures may be necessary on occasion to enforce (FOIA) policy.' The court also concluded that contractors had to exhaust their administrative remedies only under the FOIA but not under the Renegotiation Act before they were able to request injunctive relief against renegotiation proceedings and that contractors' remedies before petitioner and de novo proceedings in the Court of Claims as provided under the Renegotiation Act were inadequate to prevent irreparable harm. Petitioner contends that the Act's provision in 5 U.S.C. § 552(a)(3) for enjoining an agency from withholding its records and ordering the production of records improperly withheld from a complainant is the sole method of judicial enforcement. Held:
1. The FOIA does not limit the inherent powers of an equity court to grant relief, as is manifest from the broad statutory language that Congress used, with its emphasis on disclosure, its carefully delineated exemptions, and the fact that § 552(a) vests equitable jurisdiction in the district courts. Pp. 16—20.
2. In a renegotiation case a contractor must pursue its administrative remedy under the Renegotiation Act and cannot through resort to preliminary litigation over an FOIA claim obtain judicial interference with the procedures set forth in the Renegotiation Act. Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, 67 S.Ct. 1493, 91 L.Ed. 1796; Lichter v. United States, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694; Macauley v. Waterman S.S. Corp., 327 U.S. 540, 66 S.Ct. 712, 90 L.Ed. 839. Pp. 20—25.
(a) It would contravene the Act's legislative purpose if judicial review by way of injunctive relief under FOIA were allowed to interrupt the process of bargaining that inheres in the statutory renegotiation scheme and would delay the Government's recovery of excessive profits. Pp. 20—25.
(b) The contractor through a de novo proceeding in the Court of Claims, where discovery procedures are available, is not limited in exercising its normal litigation rights. Pp. 23—24.
151 U.S.App.D.C. 174, 466 F.2d 345, reversed and remanded.
Harriet S. Shapiro, for petitioner.
Robert L. Ackerly and Burton A. Schwalb, Washington, D.C., for respondents.
Three cases, consolidated for hearing in the court below, raise the issue of the effect of the Freedom of Information Act (FOIA), 5 U.S.C. § 552, upon proceedings pending under the Renegotiation Act of 1951, c. 15, 65 Stat. 7, as amended, 50 U.S.C. App. § 1211 et seq. In particular, they concern the jurisdiction of a federal district court to enjoin the renegotiation process until an FOIA claim is resolved.
The three respondents, Bannercraft Clothing Company, Inc., Astro Communication Laboratory, a division of Aiken Industries, Inc., and David B. Lilly Co., Inc., successor to Delaware Fastener Corporation, all possessed national defense contracts with a 'Department' of the United States, as defined in § 103(a) of the Renegotiation Act, 50 U.S.C. App. § 1213(a). These agreements, therefore, under § 102 of that Act, 50 U.S.C. App. § 1212, were subject to renegotiation.
A. Bannercraft. In 1966 and 1967, this respondent manufactured uniforms at a plant in Philadelphia. its fiscal year was the calendar year. Because most of its production was subject to renegotiation, the company, for each of the two years, timely filed with the Renegotiation Board the financial statement required under § 105(e)(1) of the Act, 50 U.S.C. App. § 1215(e)(1). Representatives of the Eastern Regional Renegotiation Board then reviewed Bannercraft's operations and conferred with its president. On February 20, 1970, the Regional Board, by letter, advised the contractor that it was recommending that Bannercraft in 1967 had realized excessive profits in the amount of $1,400,000, subject to the usual adjustment for state taxes measured by income and for any tax credit to which the contractor was entitled under § 1481 of the Internal Revenue Code of 1954, 26 U.S.C. § 1481.1
Bannercraft promptly requested that it be furnished, pursuant to 32 CFR § 1477.3 (1970),2 with a 'written summary of the facts and reasons' upon which the determination was based. It asserted, however, that 'it is not possible to state (as the Regulation's proviso required) whether all relevant evidence has been submitted since we have never had in writting the basis upon which you made this determination.' The Regional Board replied that because 'the statement required by the regulation' was not submitted, 'your request for a summary is defective.'
Bannercraft's response was that it had 'submitted all of the evidence which it believes to be relevant to the renegotiation proceedings,' but that this was 'without prejudice to an opportunity to offer evidence on the issues disclosed by the (Regional Board's) Summary of Facts and Reasons' and that the required statement was 'somewhat meaningless when we do not have a written statement of the issue upon which you have made your finding.'
On March 16, Bannercraft, pursuant to the FOIA, made a written request of the Renegotiation Board that six categories of documents be produced.3 No response to this request was forthcoming.
In late April, the Board, by letters, notified Bannercraft of its determinations that the contractor had realized excessive profits in the amount of $75,000 for 1966 (the same figure determined by the Regional Board) and $1,450,000 for 1967 (an increase of $50,000 over the Regional Board's determination).
Bannercraft then went to court. On May 1, it filed a complaint against the Board in the United States District Court for the District of Columbia, praying that the Board be enjoined from withholding the documents requested and from conducting any further renegotiation proceedings with Bannercraft for 1966 and 1967 until the documents were produced. The Board opposed the application for temporary relief and moved to dismiss. Judge Smith issued a temporary restraining order and, thereafter, a preliminary injunction, each without opinion, and stayed further Board proceedings.
In May, the Board issued a Statement of Facts and Reasons for Bannercraft's years 1966 and 1967. Bannercraft then made a further request for documents related to the factual basis for the Board's conclusions reflected in the Statement. In July, the Board responded. It produced some documents and, with respect to others, claimed exemption under 5 U.S.C. § 552(b)4 or asserted that the information sought was not covered by the Act.5 On August 4, the Board moved to dissolve the preliminary injunction. It took the position that its response to Bannercraft's requests fulfilled its obligations under the FOIA. The District Court denied the motion. The Board then appealed.
B. Astro. This respondent's factual case is essentially the same as Bannercraft's. The year at issue is the fiscal year ended September 30, 1967. Astro, pursuant to the FOIA, requested production by the Board of five categories of material.6 At a conference held on May 12, 1970, Astro was advised that the Board had made a tentative determination of excessive profits for the year in the amount of $225,000. In July, the Board denied Astro's FOIA request.
On August 12, Astro filed its complaint against the Board in the United States District Court for the District of Columbia. It prayed for relief similar to that sought by Bannercraft. Judge Pratt enjoined the Board from continuing renegotiation proceedings with Astro. The court also ordered the Board to allow Astro, within 30 days, to inspect and obtain copies of all documents requested by Astro that the Board had no objection to turning over, and to submit to the court, in camera, all documents the Board objected to producing, with a statement of reasons for each objection. The Board appealed.
C. Lilly. This respondent's case is similar to the other two. In June 1970, Lilly and its predecessor in interest, Delaware Fastener Corporation, were advised by their renegotiator that he had made determinations of excessive profits for 1967 for Lilly in the amount of $200,000 and for Fastener in the amount of $500,000.7 On June 29, the two corporations asked the Board to furnish certain categories of information.8
No response was immediately forthcoming from the Board. On July 9, Lilly filed its complaint against the Board in the United States District Court for the Dis- trict of Columbia, praying for an order compelling the Board to produce the documents demanded and restraining the Board from acting and, in particular, from requiring the contractors to elect a procedure until the documents had been produced and the contractors had been given a reasonable time to study them. Thereafter, the Board denied the request for information.
On July 31, Judge Jones issued an order temporarily restraining the Board from continuing...
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