RENEGOTIATION BOARD v. BANNERCRAFT CLOTHING CO., INC., ET AL.
No. 72-822
Supreme Court of the United States
Argued October 17, 1973—Decided February 19, 1974
415 U.S. 1
Harriet S. Shapiro argued the cause for petitioner. With her on the brief were Solicitor General Griswold, Assistant Attorney General Wood, Walter H. Fleischer, and William D. Appler.
Robert L. Ackerly argued the cause for respondents Bannercraft Clothing Co., Inc., et al. With him on the brief were James J. Gallagher, Charles A. O‘Connor III, and David V. Anthony. Burton A. Schwalb argued the
MR. JUSTICE BLACKMUN delivered the opinion of the Court.
Three cases, consolidated for hearing in the court below, raise the issue of the effect of the Freedom of Information Act (FOIA),
I
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,
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,
Bannercraft promptly requested that it be furnished, pursuant to
Bannercraft‘s response was that it had “submitted all of the evidence which it believes to be relevant to the
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
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
On August 4, the Board moved to dissolve the pre
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.
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
On July 31, Judge Jones issued an order temporarily restraining the Board from continuing renegotiation with Lilly and Delaware. Subsequently, the Board moved to dismiss the complaint or, in the alternative, for summary judgment. On September 1, a preliminary injunction was issued. The Board appealed.
The three appeals were consolidated and heard together in the United States Court of Appeals for the District of Columbia Circuit. The Court of Appeals, one judge dissenting, affirmed all three decisions. 151 U. S. App. D. C. 174, 466 F. 2d 345 (1972). It held that the District Court possessed jurisdiction under the FOIA to enjoin administrative proceedings before the Board and to order the production of appropriate documents. It concluded that, “although it is undeniably true that Congress was principally interested in opening administrative processes to the scrutiny of the press and general public” when it enacted the FOIA, “Congress was also troubled by the plight of those forced to litigate with agencies on the basis of secret laws or incomplete information.” Id., at 181, 466 F. 2d, at 352. The court then described this latter congressional concern as a “subsidiary statutory purpose,” citing excerpts from S. Rep. No. 813, 89th Cong., 1st Sess., 7 (1965), and from H. R. Rep. No. 1497, 89th Cong., 2d Sess., 8 (1966), and also citing
The court then turned to the exhaustion-of-administrative-remedies question. It observed that there is no general rule that it is always improper for a court to interfere with pending administrative proceedings, citing McKart v. United States, 395 U. S. 185, 193 (1969). It concluded that “when the purposes of the doctrine are individually measured against the facts of these cases, it is plain that no legitimate judicial policy would be served by depriving these appellees of the relief they seek.” 151 U. S. App. D. C., at 184, 466 F. 2d, at 355. In effect, the court reasoned that contractors need exhaust only their administrative remedies under the FOIA, and not their administrative remedies under the Renegotiation Act, as a condition precedent to requesting injunctive relief against renegotiation proceedings. The court found the contractors’ remedies before the Board and de novo proceedings in the Court of Claims inadequate to prevent irreparable harm.
The dissenting judge began with the accepted proposition that federal courts have only limited jurisdiction and stated that the majority‘s observation, to the effect that the “existence of present need for judicial intervention does have a bearing on both jurisdiction and exhaustion,” is “an error bordering on constitutional dimensions,” for the appellees’ need “is wholly irrelevant to determination of the jurisdiction of the District Courts in these cases.” Id., at 191, 466 F. 2d, at 362.
The dissent then turned to the principle that where a statute creates a right and provides a special remedy, that remedy is exclusive. Thus, in the FOIA, Congress
The dissent also was at odds with the majority‘s disposition of the exhaustion issue. It asserted that the majority seriously misconstrued the intended functioning of the Renegotiation Board‘s procedures, namely, that controlled access to information concerning the Government‘s position plays a significant role in the administrative process; that interruption of the administrative proceedings totally destroys the balance of negotiating strength; and that the attempt to enjoin the ongoing negotiations was really not a request for relief under the FOIA but was a challenge to the Board‘s procedures themselves. Id., at 194-195, 466 F. 2d, at 365-366.
We granted certiorari, 410 U. S. 907 (1973), because of the importance of the issue of the impact of the FOIA upon long-established procedures of the Renegotiation Board.
Before considering the issue of the District Court‘s jurisdiction to enjoin a proceeding pending in the Renegotiation Board, it is helpful to review the provisions of the FOIA and of the Renegotiation Act of 1951:
A. The FOIA. This statute,
Section 552 (a) states, “Each agency shall make available to the public” certain information of enumerated categories. This covers virtually all information not specifically exempted by § 552 (b). Section 552 (a) (2)9 provides the sanction that a “final order, opinion, statement of policy, interpretation, or staff manual or instruc
B. The Renegotiation Act of 1951.11 This statute,
The Board operates primarily by informal negotiation with the contractor and not by formal hearing. It is directed to “endeavor to make an agreement with the contractor... with respect to the elimination of excessive profits.” § 105 (a),
If the Board and the contractor do not agree, the Board by order determines the excessive profits. § 105 (a),
The renegotiation process itself is initiated by notice to the contractor and by assignment of the contractor‘s report to the appropriate Regional Board.
III
It is clear, we think, that the Renegotiation Board, as an entity, is not exempt from applicable provisions of the FOIA. The Board, of course, is an “independent establishment” in the Executive Branch. § 107 (a) of the Renegotiation Act,
So to conclude, however, does not provide automatically the answer to the question whether the FOIA authorizes a district court to enjoin Renegotiation Board
As to this question, the respondent contractors assert that, although the FOIA does not grant this injunctive power in express terms, the power is to be implied from the court‘s inherent capacity to provide appropriate equitable relief. The Board, on the other hand, emphasizes that Congress in the Act expressly authorized the court to compel the production of agency records improperly withheld, placed the burden on the agency to sustain its action, and directed precedence on the docket for suits under the Act “over all other causes” and expedition of those suits “in every way.”
Clearly, as the Court of Appeals held, 151 U. S. App. D. C., at 181, 466 F. 2d, at 352, the Congress “was principally interested in opening administrative processes to the scrutiny of the press and general public when it passed the Information Act.” The Second Circuit has described the Act‘s “ultimate purpose” as one “to enable the public to have sufficient information in order to be able, through the electoral process, to make intelligent, informed choices with respect to the nature, scope, and procedure of federal governmental activities” (footnote omitted). Frankel v. SEC, 460 F. 2d 813, 816, cert. denied, 409 U. S. 889 (1972). The Senate Report, too, expressed concern for “an informed electorate.” S. Rep. No. 813, 89th Cong., 1st Sess., 3 (1965).17
This primary purpose of the FOIA, and this express grant of jurisdiction to enjoin in a specific way, coupled with a limited sanction, might suggest that the Act‘s provision for compelled production was intended to be the exclusive enforcement method. It has been held that “where a statute creates a right and provides a special remedy, that remedy is exclusive.” United States v. Babcock, 250 U. S. 328, 331 (1919). And “Congress for reasons of its own decided upon the method for the protection of the ‘right’ which it created. It selected the precise machinery and fashioned the tool which it deemed suited to that end.” Switchmen‘s Union v. NMB, 320 U. S. 297, 301 (1943). See National Railroad Passenger Corp. v. National Assn. of Railroad Passengers, 414 U. S. 453, 458 (1974). One therefore may argue, as the Board has argued here, that this is not a situation where “Congress has utilized... the broad equitable jurisdiction that inheres in courts and where the proposed exercise of that jurisdiction is consistent with the statutory language and policy, the legislative background and the public interest.” Porter v. Warner Holding Co., 328 U. S. 395, 403 (1946).
There is significant authority, however, that points to the opposite conclusion. Porter itself, although recognizing the kind of situation to which Babcock is applicable, 328 U. S., at 403, upheld broad equitable power in the District Court under a statute authorizing the court to grant injunctive and restraining relief “or other order,” and did so, not only because of the presence of the “other order” language, but because of the “traditional equity powers of a court.” Id., at 400. Emphasis on broad equity power, even in the face of a silent statute, also appears in Mitchell v. Robert DeMario Jewelry, Inc., 361 U. S. 288, 290-291 (1960); Scripps-Howard Radio, Inc. v. FCC, 316 U. S. 4 (1942); Arrow Transportation Co. v. Southern R. Co., 372 U. S. 658, 671 n. 22 (1963); see L. Jaffe, Judicial Control of Administrative Action 659 (1965), and is sometimes related to the All Writs Act,
The broad language of the FOIA, with its obvious emphasis on disclosure and with its exemptions carefully delineated as exceptions; the truism that Congress knows how to deprive a court of broad equitable power when it chooses so to do, Scripps-Howard, supra, 316 U. S., at 17; and the fact that the Act, to a definite degree, makes the district courts the enforcement arm of the statute,
IV
We find it unnecessary, however, to decide in these cases, whether, or under what circumstances, it would be proper for the District Court to exercise jurisdiction to enjoin agency action pending the resolution of an asserted FOIA claim. We hold only that in a renegotiation case the contractor is obliged to pursue its administrative remedy and, when it fails to do so, may not attain its ends through the route of judicial interference. The nature of the renegotiation process mandates this result, and, were it otherwise, the effect would be that renegotiation, and its aims, would be supplanted and defeated by an FOIA suit.19
Before the adoption of the FOIA this Court consistently held that the design of the Renegotiation Act was to have renegotiation proceed expeditiously without interruption for judicial review, and that the Board‘s proceedings were not to be enjoined prior to the exhaustion of the administrative process. This was the result where the proceedings were challenged on constitutional grounds, Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U. S. 752 (1947); Lichter v. United States, 334 U. S. 742, 789-793 (1948), on statutory grounds, Macauley v. Waterman S. S. Corp., 327 U. S. 540 (1946), and on procedural grounds, Lichter, 334 U. S., at 791.
Court‘s emphasis was on the absence of any “lawful function” on the part of the courts “to anticipate the administrative decision with their own,” Aircraft, 331 U. S., at 767; on the availability of a due process hearing in the post-administrative de novo proceeding in the Tax Court, Macauley, 327 U. S., at 543, where constitutional as well as nonconstitutional issues could be resolved, Aircraft, 331 U. S., at 769 n. 30, citing
In Aircraft the Court rejected arguments substantially the same as those advanced by the respondents here, id., at 758 n. 12 (inability to participate effectively because of lack of information upon which the Board had relied, see No. 95, O. T. 1946, Tr. of R., Vol. I, p. 141), and refused to permit renegotiation to be enjoined. “To countenance short-circuiting of the Tax Court proceedings here would be, under all the circumstances but more especially in view of Congress’ policy and command with respect to those proceedings, a long overreaching of equity‘s strong arm.” 331 U. S., at 781.
Reflection upon the nature of the Renegotiation Board‘s process fortifies these conclusions. The character and the entire atmosphere of the process is negotiation—that is, renegotiation of an existing contract. And negotiation is a bargaining process, with give and
We see nothing in the adoption of the FOIA in 1966 that impinges upon the settled law of the Aircraft-Lichter-Macauley cases or that warrants an exception to the principle they espouse. Nothing new by way of due process emerged with the FOIA. Nothing therein indicates that Congress wished to change the Renegotiation Act‘s purposeful design of negotiation without interruption for judicial review. FOIA‘s stress was on disclosure, to be sure, but it was on disclosure for the public, EPA v. Mink, 410 U. S. 73, 80 (1973), and not for the negotiating self-interested contractor. Id., at 86; see K. Davis, Administrative Law Treatise § 3A.4, p. 120, § 3A.29, p. 171 (Supp. 1970). And when Congress in 1971 reviewed the Renegotiation Act and substituted the Court of Claims for the Tax Court, no other significant change in the existing process was effected. See S. Rep. No. 92-245 (1971), accompanying H. R. 8311, which became the amending statute,
It is no answer to say, as Bannercraft and Astro urge, that Aircraft, Lichter, and Macauley relate only to issues on the merits over which Congress had vested jurisdiction in the first instance in the Board and then in the Tax Court. We read those decisions otherwise.
There is no limitation or denial of the contractor‘s normal litigation rights when the renegotiation process is at end. The contractor may institute its de novo proceeding in the Court of Claims, unfettered by any prejudice from the agency proceeding and free from any claim that the Board‘s determination is supported by substantial evidence. There the usual rights of discovery are available.21 And there the parties are not bound by a prior determination made at any level of the Renegotiation Board structure.
Interference with the agency proceeding opens the way to the use of the FOIA as a tool of discovery, see Sears, Roebuck & Co. v. NLRB, 433 F. 2d 210, 211 (CA6 1970), over and beyond that provided by the regulations issued by the Renegotiation Board for its proceedings. See
The Renegotiation Act and its predecessors obviously emerged from congressional awareness that, with the vastness of defense expenditure, overcharging and misappropriation of public funds by unscrupulous contractors and those fortuitously placed to perform needed work were almost inevitable. The target of the legis-
Of course, there is uncertainty in the renegotiation process. And, of course, that uncertainty is lessened or eliminated if the contractor, like the poker player, is able to ascertain all the cards in the Board‘s hand. There is risk, also, when the contractor accepts the determination of excessive profits made at any level of the renegotiation process. These risks, however, are the same risks that are inherent in the negotiation and voluntary settlement of any dispute. The one who pays possibly might pay less if he resorts to the factfinder instead of making the settlement. But he might pay more. That is the calculated risk he takes. It is the calculated risk provided for by Congress in the administrative process it prescribed in the Renegotiation Act. It is not a risk ungenerously laid upon the contractor, for it is counterbalanced by the profound interest of the public in the recapture of excessive profits that may flow to the contractor under its government contracts.
The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
MR. JUSTICE DOUGLAS, with whom MR. JUSTICE STEWART, MR. JUSTICE MARSHALL, and MR. JUSTICE POWELL concur, dissenting.
The Court reverses the Court of Appeals, saying that respondent-contractors had not exhausted their administrative remedies. At issue is whether data in possession of the Renegotiation Board and relevant to the controversy between respondents and that Board should be disclosed to respondents. That raises a question under the Freedom of Information Act. It is, I submit, clear that respondents had exhausted every known way to obtain those data through administrative channels. Nothing remained to be done at that level. The District Court is the enforcement arm of the FOIA. Today‘s decision, however, says that court cannot act. Hence respondents are without remedy. The end result is to make the FOIA a dead letter in this area. Hence my dissent.
The nature of the so-called administrative law aspects of the problems under the Renegotiation Act is unique. The aim, of course, is the elimination of excessive profits of contractors and subcontractors in the national defense program,
That is the end of the administrative road; but the contractor still has an appeal to the Court of Claims which may redetermine de novo what the excessive profits are,
In the three cases involved in this litigation the District Court entered its stay orders before the contractors had run the gantlet of the administrative process in the limited sense that each of them had another opportunity to negotiate a lower settlement with the Board, not counting a de novo hearing before the Court of Claims.
The documents which the contractors want are in possession of the Board. These documents, it is said, will reveal the strength or weakness of the Board‘s case against the contractors and the facts or assumptions on which the Board relies in assessing liability. Without those documents, it is said, any meaningful negotiation, envisioned by the Act, is difficult or impossible. Future de novo review is not meaningful, it is said, since the contractors are completely in the dark as to the practical considerations which could end the dispute, if the documents were made available. Disclosure of the documents aids negotiation, which is the aim of the Act, and disclosure is necessary and appropriate to carry out the purposes of the Act.
The Court properly holds that the Renegotiation Board is an “agency” within the meaning of the Freedom of Information Act,
The Court relies on Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U. S. 752, and other decisions of that vintage which established a judicial “hands off” policy in renegotiation cases until the case had reached the Tax Court (now the Court of Claims) stage. But those cases antedated the FOIA. That Act, contrary to what the Court says, had as one of its purposes “discovery for litigation purposes.” Congress was concerned not only with the press and the general public when it lifted the veil of secrecy surrounding federal agencies but also with litigants. According to the Senate Report, the new FOIA was designed in part to “prevent a citizen from losing a controversy with an agency because of some obscure and hidden order or opinion which the agency knows about but which has been unavailable to the citizen simply because he had no way in which to discover it,” S. Rep. No. 813, 89th Cong., 1st Sess., 7.
The FOIA deals with problems of discovery, to use a lawyer‘s term, and it does not leave the formulation of precise rules of discovery exclusively to the agencies themselves but, as noted, makes the district court the enforcement arm of the Act.
Exhaustion of administrative remedies has skeins of various colors, McKart v. United States, 395 U. S. 185, 193-194. Ordinarily courts do not interfere until the agency has completed its action, id., at 194, “or else has clearly exceeded its jurisdiction,” ibid. The present case does not entail supplanting administrative expertise on the merits. The issues tendered concern only administrative procedure.
The court errs in saying that the contractors did not exhaust their administrative remedies. They strenuously
“[I]t should be apparent here that if the contractors are to be granted relief at all they must have it now before the administrative momentum carries their cases beyond the point where the harm can be undone. If we take Congress’ declaration of purpose seriously, then the parties are supposed to negotiate over excess profits at the lower administrative levels. The seemingly endless de novo reviews were intended to make the negotiating process work, not to provide a substitute for negotiation. If the negotiating process fails to occur, the opportunity is lost forever. To say that compulsory awards imposed by the Board or the Court of Claims at the end of the process provide an adequate remedy is to ignore the difference between an agreement freely arrived at, as preferred by Congress, and a judgment imposed by a court of law.” 151 U. S. App. D. C. 174, 186, 466 F. 2d 345, 357.
The proceeding in the Court of Claims proscribes review of the Board. Title
“A proceeding before the Court of Claims to finally determine the amount, if any, of excessive profits shall not be treated as a proceeding to review the determination of the Board, but shall be
treated as a proceeding de novo.” (Emphasis added.)
There is no power, as I see it, for the Court of Claims to remand the case to the Board to cure any irregularity in its procedures. If these contractors are to have the remedy of full disclosure, it is now or never.
A procedure that accelerates settlements furthers the policy of the Renegotiation Act. The Board judges the profits of the contractors involved in the present case with the profits of other contractors in determining whether their profits are excessive. The relative prices, costs, and profits of those other companies are germane to the ultimate issue to be resolved. One of these contractors has a low “front office” overhead, as the executive officer is the president who has only a secretary. The rest of the employees are engaged in production. The contractor who has a low “front office” expense is penalized for efficiency, if its profits are reduced to the scale allowed contractors who have a high “front office” expense. The Board in its Regulations under the FOIA makes “available for public inspection and copying summaries of facts and reasons issued by the Board,”
The result of today‘s decision is to put the citizen in a game of “blind man‘s buff” with the Renegotiation Board. Enforcement of the policy of full disclosure under the FOIA is no intrusion in the determination of the merits of the controversy before the Board. The expertise of the Board does not relate to the FOIA but only to the Renegotiation Act. The FOIA merely describes some of the procedure to be followed by the Board. Aircraft concerned the intrusion of the judiciary into the administrative process by a suit to declare the whole renegotiating procedure unconstitutional prior to any adjudication of the merits of the contractor‘s claim. Granting the relief asked in that case would have gutted the statutes. Granting the relief here would merely make the rules of discovery, established by Congress, applicable to the Renegotiation Board. Denial of the relief establishes a regime of secrecy when Congress has demanded disclosure and gives the Renegotiation Board a degree of administrative absolution4 at war with the philosophy of the FOIA.
“The proceedings are to be de novo so that the court can consider the propriety of the withholding instead of being restricted to judicial sanctioning of agency discretion. The Court will have authority whenever it considers such action equitable and appropriate to enjoin the agency from withholding its records and to order the production of agency records improperly withheld. The burden of proof is placed upon the agency which is the only party able to justify the withholding. A private citizen
cannot be asked to prove that an agency has withheld information improperly because he will not know the reasons for the agency action.” Id., at 9.
The reluctance of the Court to require this administrative agency to live under the law calls to mind the admonition of Mr. Justice Stone speaking for the Court in United States v. Morgan, 307 U. S. 183, 191:
“Court and agency are the means adopted to attain the prescribed end, and so far as their duties are defined by the words of the statute, those words should be construed so as to attain that end through coordinated action. Neither body should repeat in this day the mistake made by the courts of law when equity was struggling for recognition as an ameliorating system of justice; neither can rightly be regarded by the other as an alien intruder, to be tolerated if must be, but never to be encouraged or aided by the other in the attainment of the common aim.”
I would affirm the judgment below.
Notes
“(1) Reasonableness of costs and profits, with particular regard to volume of production, normal earnings, and comparison of war and peacetime products;
“(2) The net worth, with particular regard to the amount and source of public and private capital employed;
“(3) Extent of risk assumed, including the risk incident to reasonable pricing policies;
“(4) Nature and extent of contribution to the defense effort, including inventive and developmental contribution and cooperation with the Government and other contractors in supplying technical assistance;
“(5) Character of business, including source and nature of materials, complexity of manufacturing technique, character and extent of subcontracting, and rate of turn-over;
“(6) Such other factors the consideration of which the public interest and fair and equitable dealing may require, which factors shall be published in the regulations of the Board from time to time as adopted.”
“When a Regional Board has made ... a final recommendation in a Class A case, ... and the contractor is unable to decide whether to enter into an agreement for the refund of excessive profits so determined or recommended, the Regional Board or the Board, as the case may be, will furnish the contractor a written summary of the facts and reasons upon which such final determination or recommendation is based in order to assist the contractor in determining whether or not it will enter into an agreement: Provided, That the contractor requests such a statement within a reasonable time after it has been advised of such final determination or recommendation, and states that it has submitted all the evidence which it believes to be relevant to the renegotiation proceedings.” 32 CFR § 1477.3. (Emphasis added.)