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ROLLS-ROYCE, INC. v. STIMSON

DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF COLUMBIA


June 29, 1944

ROLLS-ROYCE, Inc.,
v.
STIMSON, Secretary of War

The opinion of the court was delivered by: MORRIS

MORRIS, Justice.

This action was brought by the petitioner to prevent the Secretary of War, by a writ of prohibition, from doing certain acts under the authority of Title VII of the Revenue Act of 1943, 26 U.S.C.A., Int.Rev.Acts, or its antecedent legislation, Section 403 of the Sixth Supplemental National Defense Appropriation Act, 1942, as amended, 50 U.S.C.A. Appendix, § 1191, and to compel the Secretary of War, by a writ of mandamus, to cancel and vacate certain orders heretofore made pursuant to said legislation. This relief is sought upon the ground that such legislation is repugnant to the Constitution of the United States, particularly as it relates to the renegotiation of contracts executed prior to the enactment of the first act authorizing the renegotiation of contracts. Immediately after the filing of the petition in this case, the petitioner filed a motion asking for the same relief asked for in the petition and "for other and further relief as the nature of the case may require and as to the Court may seem proper to maintain the status quo between petitioner and respondent." Thereupon, the respondent filed a motion to dismiss the petition and opposed the granting of petitioner's motion. Upon these motions, a hearing was had.

While the process to secure the relief sought is denominated a writ of prohibition and a write of mandamus, it is in effect no different from injunctive relief, and would be granted, if at all, only upon such considerations as would justify the granting of an injunction. So, at the threshold, although neither party has raised the question, I must determine whether or not this relief is interdicted unless there is compliance with the Act of Congress, approved August 24, 1937, 28 U.S.C.A. § 380a. *fn1" It seems beyond question that the end sought to be attained by that Act of Congress would require its application to this action, and I fail to see how the employment of a different nomenclature in the denomination of the relief here sought, when in substance it is not different, can avoid the terms of the Act. I, therefore, reach the conclusion that it is my duty under that Act to request the Chief Justice of the United States Court of Appeals for the District of Columbia to designate two other judges, one of whom shall be a justice of that Court, to participate in the hearing and determination of the motions and other proceedings in this action.

 It is insisted by the petitioner that, even in this view, I should treat the petitioner's motion for "such other and further relief * * * as to the Court may seem proper to maintain the status quo between petitioner and respondent" as an application for a temporary restraining order, and that such order should be granted to prevent irreparable loss or damage to the petitioner I fully agree that the motion should so be treated, but I do not agree with the petitioner's contention that such timporary restraining order is needed to prevent irreparable loss or damage.

 It is made to appear that demand has been made upon petitioner to attend a hearing for the purpose of renegotiating certain contracts. The Act of Congress, the validity of which is here challenged, provides for review of such hearings and an appeal to the Tax Court of the United States, where the matter may be tried de novo. Surely no final action which can injure the petitioner can reasonably be anticipated before this cause can be considered by the three-judge court authorized to hear and determine the validity of the legislation.

 It is alleged, however, that demand has been made upon petitioner for information of a confidential nature relating to its right to use the name Rolls-Royce, patents, copy rights, trade marks and other trade secrets, all of which, it is alleged, are wholly irrelevant to the question of petitioner's costs under its contracts and not germane to a determination of whether or not such contracts would results in excessive profits. Petitioner is correct in the assertion that the Act, the constitutionality of which is challenged, does require the furnishing by a contractor of a financial statement, setting forth information prescribed by regulations promulgated by the War Contracts Price Adjustment Board, and that such Act further provides:

 "In addition to the statement required under the preceding sentence, every such contractor or subcontractor shall, at such time or times and in such form and detail as the Board may by regulations prescribe, furnish the Board any information, records, or data which is determined by the Board to be necessary to carry out this section. Any person who willfully fails or refuses to furnish any statement, information, records, or data required of them under this subsection, or who knowingly furnishes any such statement, information, records, or data containing information which is false or misleading in any material respect, shall, upon conviction thereof, be punished by a fine of not more than $10,000 or imprisonment for not more than two years, or both."

 It is the petitioner's contention that its refusal to comply with the demand for confidential information above referred to would subject it to criminal sanctions in the event the legislation is determined to be valid. Without in the slightest giving approval to any demand that a contractor submit confidential information irrelevant to the inquiry of excessive profits, I do not believe that the demand, if such, constitutes a threat for irreparable loss or damage. Surely criminal sanctions could not be invoked unless petitioner "willfully fails or refuses" to furnish information demanded. "Willful refusal," as used in its context here, has never meant a refusal in good faith for the purpose of having a legitimate dispute settled. If the petitioner in good faith wants a determination by a constitutional court of whether or not the demanded information should be furnished, the Act clearly gives him an opportunity to secure such determination. The Act provides in part:

 "For the purposes of this section the Board shall have the same powers with respect to any such contractor or subcontractor that any agency designated by the President to exercise the powers conferred by Title XIII of the Second War Powers Act, 1942, has with respect to any contractor to whom such title is applicable."

 Title XIII of the Second War Powers Act, 1942, Section 1303, 50 U.S.C.A. Appendix, § 643b, is set forth in the margin. *fn2"

  It is thus, not only apparent that a method has been provided whereby it may be determined whether or not the confidential information in question should be furnished, but that the term "willfully refuse" is substantially the same as refusal without good cause. The petitioner faces no serious peril of having criminal sanctions invoked if he offers to furnish the information demanded, provided a court, upon a hearing to enforce a subpoena, determines that it should be furnished. It was doubtless to avoid the transgression of constitutional rights in this particular respect that the Congress made the provision which it did for the enforcement of subpoena of an administrative agency.

 For the reasons stated, I conclude that a temporary restraining order should not be issued.


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