Warner v. Cox

• Decision Date: 11 January 1974
• Docket Number: 73-2275.,No. 73-1627,73-1627
• Citation: 487 F.2d 1301
• Parties: John W. WARNER, Secretary of the Navy, et al., Petitioners, v. Honorable W. Harold COX, United States District Judge for the Southern District of Mississippi, Respondent. On Petition for Writ of Mandamus or Prohibition LITTON SYSTEMS, INC., Plaintiff-Appellee, v. The Honorable John W. WARNER, Secretary of the Navy, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

487 F.2d 1301 (1974)

John W. WARNER, Secretary of the Navy, et al., Petitioners, v. Honorable W. Harold COX, United States District Judge for the Southern District of Mississippi, Respondent.

On Petition for Writ of Mandamus or Prohibition

LITTON SYSTEMS, INC., Plaintiff-Appellee, v. The Honorable John W. WARNER, Secretary of the Navy, et al., Defendants-Appellants.

Nos. 73-1627, 73-2275.

United States Court of Appeals, Fifth Circuit.

January 11, 1974.

Morton Hollander, William D. Appler, Dept. of Justice, Washington, D. C., Robert E. Hauberg, U. S. Atty., Joseph E. Brough, Asst. U. S. Atty., Jackson, Miss., Albert C. Kornblum, Asst. Gen. Counsel, Dept. of the Navy, Washington, D. C., Raymond D. Battocchi, Dept. of Justice, Washington, D. C., for defendants-appellants.

W. Harold Cox, U. S. Dist. Judge, Jackson, Miss., Robert L. Ackerly, Herbert L. Fenster, Washington, D. C., W. Timothy Jones, E. L. Brunini, Jackson, Miss., for plaintiff-appellee.

Before BROWN, Chief Judge, and RONEY and GEE, Circuit Judges.

GEE, Circuit Judge:

On May 1, 1969, Appellee, Litton Systems, Inc. (Litton), and the Navy Department executed a multi-billion dollar contract for the procurement of five large ships, each about the size of an aircraft carrier, described as Landing Helicopter Assault Vessels (LHA). The contract's novel concept, and at least a remote if not a proximate cause of this suit, was "total package procurement." Litton was not only to construct but to design the vessels, a departure from received procurement wisdom.

Litton's design responsibility entailed a substantial paper-work phase preceding any hardware production, thus requiring modification of the Navy's standard "per cent of physical completion" payment clause. In so doing, the scriveners fathered what we may charitably call a hybrid: for the first forty months, a period deemed sufficient for completion of design and a good start on production, Litton was to be reimbursed weekly for its actual costs incurred; thereafter, payment was to be made upon the conventional percentage-of-completion plan. Transition from one payment plan to another was to be accomplished by determining the amount which would have been due on a percentage-of-completion basis at the end of the initial forty-month period and comparing it with actual payments made to Litton. Any overage was to be refunded by Litton under an arrangement, apparently intended as an exclusive remedy, whereby Litton would continue work without pay for a period not exceeding three months and would then repay in cash any amount remaining due after credit for the unpaid work.

At the end of the initial period and one agreed six-month extension, the officer in charge of the contract for the Navy (contracting officer) denied any further extension of the cost refund program, thus placing payment on a percentage-of-completion basis, and determined that at the point of transition Litton had received nearly fifty-five million dollars in overpayments. Litton promptly took an administrative appeal to the Armed Services Board of Contract Appeals, where it pends. At about the same time, Litton applied to a different official, the financing officer, for an unrelated administrative remedy, deferment of the repayment until the contract appeal fixed its amount. This remedy, founded in regulations of general application¹ and not in the text of the contract, but similar or identical in effect to the extension sought of the contracting officer, was also denied. Litton sued in United States District Court to reverse this denial, asserting that the financing officer had violated various regulations in ruling adversely on its request for deferred payment. Jurisdiction was pleaded in the federal question, mandamus and declaratory judgment statutes (28 U.S.C. 1331, 1361, 2201-2202) and in the Administrative Procedure Act (5 U.S.C. 702-706). The United States resisted, asserting mandatory and exclusive jurisdiction in the Court of Claims under the Tucker Act.

The court below ruled it had federal question and Administrative Procedure Act (APA) jurisdiction, concluded that the Navy had indeed transgressed various procurement regulations, and entered an injunction obliquely ordering the defendants to continue to pay Litton's vouchers currently,² an expenditure averaging approximately three million dollars per week. This appeal and a petition for writ of mandamus or prohibition to confine the court below to its jurisdiction followed, were heard and will be decided together. After argument of this case, we stayed the district court injunction pending our decision on the merits. We now reverse.

This is a suit against the United States, though in form against its ministers, Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963). The order of the court below amply meets the Dugan test, expending itself (with sensible impact) on the public treasury and compelling the government to pay money in advance of the time specified in its contract, money which it conceivably might never otherwise have to pay at all.

Litton virtually conceded at oral argument that jurisdiction in the district court must stand on the APA or fall.³ In the view which we take of the case, a correct resolution of the issues raised by the briefs of soveriegn immunity and its waiver vel non, of the extent to which the APA is to be deemed a grant of jurisdiction, and of the interplay of the APA and the Tucker Act⁴ commences and virtually ends with analysis and characterization of Litton's claim and of the relief Litton seeks and has received from the district court. Once this claim is properly identified, the rest becomes plain.

None of the substantive claims presented to the court below concerned anything but the payment of money— when, how much, and by whom it should be paid. The government contends that all were founded solely in Litton's express contract with the United States, and that it has consented to be sued ex contractu only in the Court of Claims under the Tucker Act. Litton urges that its sole claim below was for review of administrative errors committed in the process of refusing a deferred payment agreement, noting that such agreements have their source in general procurement regulations rather than in this contract. It points out in this connection that the more distinctively contract claims—the amount of the overpayment and termination of the cost reimbursement scheme of payment—are already on administrative appeal and ". . . are not before the District Court." (emphasis Litton's)

The court below adopted Litton's view:

This suit against these government officials in their official capacity is undeniably a suit against the United States, but it is not for the recovery of any money from the United States or the Defendants. The sole purpose of this suit is for a review of the administrative actions of these defendants in arbitrarily and capriciously denying deferment of the immediate payment of approximately $54,660,000 as advancements or payments in that amount in excess of the amount payable under progress estimates under the contract. (emphasis the court\'s)

So reasoning, the court entered an order⁵ directing the United States (not to refuse) to pay Litton's multi-million dollar weekly vouchers. The sovereign was thus directed by the district court to pay money claims which, on the face of the contract, it had a clear right to refuse. The effect of the district court's order was to extend indefinitely the operation of the cost-reimbursement clause of the contract, a matter directly before the Armed Services Board of Contract Appeals but undecided at the time of the court's order and one which will presumably make its way to the Court of Claims if the contractor is dissatisfied by the appeal board's decision of it. S. & E. Contractors v. United States, 406 U.S. 1, 92 S.Ct. 1411, 31 L. Ed. 658 (1972). In this manner, Litton achieved by indirection the interim injunctive relief which the Court of Claims, being without power to grant equitable relief, could not give.⁶ For several reasons, this will not do.

In the first place, the APA does not provide for review under such circumstances. Specifically exempted from review is agency action for which there is some ". . . other adequate remedy in a court." 5 U.S.C. § 704. Suit under the Tucker Act in the Court of Claims has been held such an adequate remedy. Mohawk Airlines, Inc. v. CAB, 117 U.S.App.D.C. 326, 329 F.2d 894 (1964); Ove Gustavsson Contracting Co. v. Floete, 278 F.2d 912 (2d Cir., 1960). Admittedly those cases concern less than 50 thousand dollars, our case over 50 million, but Congress has not seen fit to address itself on a general basis⁷ to the special problems posed by claims of great magnitude. Thus Congress' judgment seems to be that Tucker Act relief is adequate for these as well, and to that judgment we defer.

Second, the APA is not a waiver of sovereign immunity in this case. Although some circuit courts, including this one, have seen in the APA a broad and general waiver of sovereign immunity in cases to which it applies,⁸ none has yet extended this to suits seeking money damages against the United States. See Scanwell Laboratories, Inc. v. Shaffer, 137 U.S.App.D.C. 371, 424 F.2d 859 (1970); Kletschka v. Driver, 411 F.2d 436 (2d Cir., 1969); Estrada v. Ahrens, 296 F.2d 690 (5th Cir., 1961). It has been suggested that our decision in Colson v. Hickel, 428 F.2d 1046 (5th Cir., 1970), cert. denied, 401 U.S. 911, 91 S.Ct. 875, 27 L.Ed.2d 810 (1971), marks a retreat from the view of the APA taken in Estrada. See Littell v. Morton, 445 F.2d 1207, 1212 (4th Cir., 1971). This we need not determine here. Assuming for Litton's benefit that Estrada survives intact, the case provides the company no comfort. Whatever waiver the APA provides does not extend so far as an action ex contractu for money. Having decided that this is a contract suit against the United States solely...