653 F. 2d 726 - Kramer 100% v. Secretary United States Department of Army

Under New York law, then, Kramer's complaint states a cause of action sounding in tort. This brings her claim within the purview of the Federal Tort Claims Act, which creates exclusive jurisdiction in the district courts over tort claims against the United States "under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." 28 U.S.C. § 1346(b). There remains only the question whether her action can be maintained despite the provisions of 28 U.S.C. § 2680(h), which bars any claim under the Federal Tort Claims Act

"arising out of assault, battery, false imprisonment, false arrest, malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights."

At oral argument the Government suggested that even if Kramer's complaint is construed as stating a claim for misappropriation of a trade secret, her claim is barred because she charges that the Government accomplished its tortious object through fraud and deceit, which, the Government argues, brings her claim within the scope of section 2680(h). However, the essence of the tort of misappropriation of a trade secret is the unauthorized use or disclosure of secret information obtained through improper means, including theft, espionage, bribery, and coercion as well as trickery, or in breach of confidence, including breach of a good faith representation that a confidence would be protected as well as a fraudulent misrepresentation to the same effect. Although Kramer's papers are replete with charges of deceit leveled at Government employees, those charges form no necessary element of her claim, which is simply that she provided secret information to the Government in confidence, and that the Government subsequently made unauthorized use of that information. If proven, this alone would establish the Government's liability. "One does not have a right to secure a trade secret or invention by reason of a confidential relationship and to use it without accounting to the source." Ewen v. Gerofsky, supra, 86 Misc.2d at 918, 382 N.Y.S.2d at 655.

The dissent argues that Kramer will not be able to establish that Canusa's identity qualifies as a trade secret under New York law. Of course, if she cannot, her claim must fail. But the record establishes that she clearly considered it a secret, and treated it as a secret. The question whether it was actually a secret is one of fact that must be determined by the trier. The dissent also argues that Kramer was required to disclose the identity of her subcontractor as part of the Government's pre-award survey procedure, and that she did so "freely and voluntarily." However, Kramer's allegations are quite clear that whatever the requirements may have been, government employees agreed to honor her demand that the information, once disclosed, be treated in confidence, and that she disclosed it only in reliance on this commitment. If she proves this, and the Government's failure to honor that commitment, it is irrelevant whether (as she also alleges) the Government never intended to honor the commitment when it made it. Thus, although Kramer clearly believes that the Government acted deceitfully, she need not prove that it did so to prevail on her claim.

As an alternate ground for affirming the district court's decision, the Government asserts that Kramer failed to exhaust all available administrative remedies before commencing this suit. Since the Government did not raise this jurisdictional defense below, we do not have an adequate record before us to pass upon it here. Specifically, we do not know the fate of Kramer's administrative claim submitted to the Army. Similarly, the Government's statute of limitations defense, not raised below, should be heard there first.

We conclude that the district court's characterization of Kramer's "conversion" claim was in error, and that properly construed that claim states a cause of action for misuse of a trade secret that is within the district court's jurisdiction under the Federal Tort Claims Act.

Accordingly, we reverse and remand this case to the district court for further proceedings.

If this case involved no more than the majority's liberal reading of a pro se litigant's complaint, there would be no occasion for this dissent. That rule of construction has long been established by our Court and the Supreme Court. E.g., Haines v. Kerner, 404 U.S. 519 (1972).

What the majority has done, however, goes far beyond a liberal construction of the complaint, read in the context of the record before the district court. In what strikes me as a transparent effort to bring appellant under the Federal Tort Claims Act, the majority sua sponte has devised a purported cause of action for misappropriation of a trade secret which neither appellant nor her attorney in the district court ever remotely suggested a cause of action, moreover, which finds no support whatsoever in the record, even read in the light most favorable to appellant. For these reasons I respectfully but emphatically dissent.

It is important to keep in mind that appellant herself never has made any claim that the government misappropriated any trade secret. Nowhere in the district court record or in the briefs before this Court does there appear any suggestion of an allegation involving a trade secret. This is not a case where an inexperienced layman has failed to comply with technical rules of pleading or has stumbled in selecting a precise tort rubric. Appellant's asserted tort claims are many and varied, but they lie in other areas misrepresentation, deceit, or interference with contract rights which are expressly excluded by § 2680(h) of the Federal Tort Claims Act.

Moreover it is noteworthy that, although appellant appeared pro se in our Court and at various times in the district court, she did have the aid of counsel in the district court proceedings on the motion to dismiss her complaint which gave rise to this appeal. Yet neither appellant nor her counsel ever mentioned a trade secret either in the arguments before the district court or in the memorandum of law filed in the district court in opposition to the motion to dismiss. While we of course must be vigilant in safeguarding the rights of pro se litigants, it seems to me that this Court furthers no sound policy by devising new claims or theories of law for litigants who are capable of advancing such claims themselves, but fail to do so.

The majority's ill-advised rush to bring appellant's claim under the Federal Tort Claims Act is further compounded by the utter lack of support in the record for a claim of misappropriation of a trade secret. This is so for at least two reasons.

First, as a matter of law, appellant will not be able to demonstrate that the name of a single, independent supplier of 60 mm. "forging blanks" (i.e., her subcontractor) could qualify as a trade secret under New York law which is applicable here. 28 U.S.C. § 1346(b) (1976). There simply is no real secret involved. The forging subcontractor was not precluded from publicizing its capabilities to others or from dealing with appellant's competitors.1 Moreover the existence of this forging subcontractor was required to be disclosed to the government as part of the pre-contract award procedure; and, when the government conducted a pre-award survey of appellant and her subcontractor, the existence of the latter became part of the public domain. See, e. g., Ferranti Electric, Inc. v. Harwood, 43 Misc.2d 533, 537-40, 251 N.Y.S.2d 612, 61619 (Sup.Ct., Nassau County, 1964) (held that name of supplier and information disclosed in reports to government were not trade secrets). Mere conclusory statements by appellant that such information was "secret" or "proprietary" cannot transform the subcontractor's existence into a trade secret.

Second, assuming arguendo that somehow appellant could get over this hurdle and establish that the name of her subcontractor was a trade secret, there still are no allegations and no basis in the record for allegations that the government "misappropriated" this information. Appellant gave the name of her subcontractor to the government freely and voluntarily as part of her effort to win a government contract for the manufacture of 60 mm. mortar projectiles. The contract would not have been awarded without the pre-award survey by the government of appellant and her subcontractor referred to above; and the survey could not have been made without disclosure of the name of the subcontractor. If appellant had decided not to disclose her "secret" subcontractor to the government, then the "secret" would have been worthless; she would have been awarded no contract and she would have had no need of a subcontractor. In short, the government did not "misappropriate" anything. It was given information by appellant as part of a standard procedure by which appellant sought to win a government contract. Appellant's grievance, viewed in the light most favorable to her, is not that the government stole her "secret", but rather that the government deceived her into signing a contract which she could not perform and then "took away" her subcontractor when she defaulted. Such "deceit", however, is not actionable under § 2680(h) of the Federal Tort Claims Act.

If this case involved a hapless pro se litigant who had mislabeled a valid cause of action under the Federal Tort Claims Act, I would agree with my brothers that it should be remanded to the district court. But I think it is elemental that courts should not restructure a pro se litigant's allegations in order to state a claim which does not exist. Appellant's claim is not that a trade secret was stolen by the government; her claim is that the government wrongfully terminated her contract in order to "take over" her forging subcontractor. In other words, appellant claims that the government purposely destroyed her business relationship with her subcontractor so that the subcontractor would be free to sell its forging blanks to others. Such a claim is not actionable under the Federal Tort Claims Act, since § 2680(h) excludes misrepresentation, deceit, or interference with contract rights from the coverage of the Act. As a Court, we should not concoct a new claim for appellant in order to bring her under the Act, especially when Congress has expressly excluded from coverage under the Act the only claim appellant asserts.

I therefore dissent.