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Kramer v. Secretary

decided: July 16, 1980.

ROSE L. KRAMER, 100% STOCKHOLDER -- FINAST METAL PRODUCTS, INC., PLAINTIFF-APPELLANT,
v.
SECRETARY, UNITED STATES DEPARTMENT OF THE ARMY AND CHIEF, LEGAL DEPARTMENT OF THE DEPARTMENT OF THE ARMY, DEFENDANTS-APPELLEES .



Appeal from an order of the United States District Court for the Eastern District of New York, Costantino, J., dismissing plaintiff's pro se action under the Federal Tort Claims Act for failure to state a claim upon which relief can be granted. Reversed and remended.

Before Kaufman, Chief Judge, Timbers, Circuit Judge, and Lasker, District Judge.*fn*

Author: Lasker

Rose Kramer, appearing pro se, appeals from an order dismissing her complaint for failure to state a claim upon which relief can be granted. Because we conclude that Kramer has stated a cause of action for wrongful misuse of a trade secret under New York law that is within the jurisdiction of the district court under the Federal Tort Claims Act, 28 U.S.C. § 1346(b), we reverse the order of the district court and remand the case for further proceedings.

In determining the sufficiency of Kramer's complaint, the district court properly looked beyond the complaint itself, which was prepared without the aid of counsel and provides only an imperfect view of her claim. We, too, have considered Kramer's submissions in addition to the formal pleadings in piecing together her factual allegations and legal theories. We rely in particular on Kramer's memorandum of law and fact in opposition to defendants' motion to dismiss, dated June, 1979.

As reported there, the circumstances that bred this lawsuit relate to a contract for the manufacture of 60 mm. mortar projectiles let by the Army to Finast Metal Products, Inc., a corporation owned and managed by Kramer. Because a multitude of difficulties arose in connection with the contract almost from the moment Finast's bid was opened, on September 10, 1973, and determined to be the lowest responsive bid submitted, the contract was not awarded until June 18, 1974, following extensive surveys, negotiations, and reviews. Of the intervening events, those particularly relevant here relate to Kramer's efforts to locate a foundry willing and able to supply 60 mm. forging blanks for use in the production of 60 mm. projectiles.

When she submitted Finast's bid to the Army, Kramer expected to use blanks supplied by the National Extruded Metal Products Company ("Nempco"), the only known source of such blanks. However, in January, 1974, she learned that Nempco was about to go out of business and would not be able to supply forgings to Finast. The very day she learned this, Kramer telephoned an acquaintance, an engineer and entrepreneur who was in the process of setting up a foundry. He informed her that his new company would be able to supply the forging blanks Finast would require in order to fulfill the contract then being worked out with the Government. That company, Canusa Extrusion-Engineering, Inc. ("Canusa"), was established shortly thereafter.

Kramer notified the Government that she had located a new supplier of forging blanks, but declined to identify the new source until the Government agreed to treat the information in confidence. She asserts that the government did agree, and on May 14, 1974, she sent the Government a mailgram identifying Canusa as the new supplier. Her mailgram stated:

"Due to circumstances existing in the world market and the fact that this supplier is presumably the only known additional source and was developed by us for the production of the subject items, we claim that the name and address of this source is proprietary information to our company and must not be divulged to competitors or other sources of supply for 60 mm projectiles."

Government inspectors then visited Canusa's plant and eventually approved Canusa as a subcontractor for 60 mm. forging blanks.

Having obtained the identity of her source, Kramer charges, Government employees contrived to award Finast a contract they knew was unworkable, to wrongfully terminate that contract, and to put Finast out of business, so that they could award the contract for the production of 60 mm. projectiles to a favored firm, to which they disclosed Canusa's identity.

Although Kramer's pleadings and other papers contain wide-ranging charges, and her detailed and lengthy allegations of fact are broad enough to compass a variety of causes of action, the gravamen of her complaint is the claim that the Government wrongfully procured and disclosed the identity of the new source of forgings that she had discovered. Thus, the introductory paragraph of her memorandum of law and fact in opposition to the defendants' motion to dismiss complains of alleged

"wrongful acts of Government employees while acting within the scope of their office and employment in order to conspiratorilly (sic) gain control of plaintiff's sole source 60 MM forging subcontractor, the only independent Government approved 60 MM forging source in the United States then, so that these Government employees could place contracts for 60 MM projectiles with their favored prime contractors . . .."

Kramer persists in mislabelling this claim as one for "conversion." On the Government's motion to dismiss, the district court properly looked beyond the label to the facts alleged in reviewing Kramer's complaint. The court dismissed the complaint "pursuant to reasons placed on the record after argument" in a hand endorsement dated July 17, 1979. After Kramer moved for reargument, the district court issued a memorandum of decision and order dated August 17, 1979, reaffirming the prior dismissal. There the court stated:

"It is clear that to the extent that plaintiff seeks review of the administrative action below (in which Kramer unsuccessfully appealed the termination of Finast's contract to the Armed Services Board of Contract Appeals), the Court of Claims is the proper forum because she seeks damages in excess of $10,000. 28 U.S.C. § 1346(a)(2). And while conversion does state a cause of action under the Federal Tort Claims (Act), the facts as alleged by plaintiff do not constitute conversion but rather constitute a claim for intentional ...


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