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https://www.courtlistener.com/api/rest/v3/opinions/1944713/ | 801 F. Supp. 9 (1992)
MIDWEST PAYMENT SYSTEMS, INC. Plaintiff,
v.
CITIBANK FEDERAL SAVINGS BANK f/k/a Brookfield Federal Bank Savings, Defendant.
No. C-1-91-581.
United States District Court, S.D. Ohio, W.D.
August 31, 1992.
*10 John Charles Greiner, Graydon, Head & Ritchey, Cincinnati, Ohio, for plaintiff.
William Kendall Flynn, Strauss & Troy, Cincinnati, Ohio, for defendant.
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
SPIEGEL, District Judge.
This matter is before the Court on the Plaintiff Midwest Payment Systems, Inc.'s ("Midwest") Motion for Summary Judgment (doc. 6), the Defendant Citibank Federal Savings Bank's ("Citibank") Motion for Partial Summary Judgment (doc. 11), Citibank's Response (doc. 12), Midwest's *11 Reply (doc. 14), and Citibank's Reply (doc. 16).
BACKGROUND
On October 7, 1987, Midwest and Brookfield Federal Bank for Savings ("Brookfield") entered into a contract. About eight months later, Midwest and Brookfield agreed to an addendum to the contract. As a result of a merger, Citibank assumed all of Brookfield's rights and obligations under the contract and the addendum.
Pursuant to the Midwest-Citibank contract, Midwest was required to provide a data processing service known as Electronic Funds Transfer ("EFT") for five years commencing on November 1, 1987. Under the addendum, Midwest was also required to provide data processing services known as CIRRUS Gateway Services for three years beginning on May 31, 1988. If neither party objected, the provisions in the addendum were to be automatically extended for an additional three years.
Under the contract, Midwest and Brookfield agreed that Midwest would be the exclusive provider of Midwest's EFT requirements. Plaintiff's Motion for Summary Judgment, doc. 6, ex. A.[1] Following Brookfield's merger with Citibank, representatives from Citibank and Midwest discussed a possible "buy out" of Citibank's obligations under the contract and the addendum. The talks between the two corporations were not successful, however. As a result, on July 14, 1991, Citibank began using other providers for the services which Midwest had the exclusive right to provide to Citibank under the Midwest-Citibank contract. Four days later, a Midwest Vice President wrote to Citibank that Citibank had breached the Midwest-Citibank contract, and appropriate remedies would be taken through litigation. Midwest brought suit eight days after this letter, seeking to enforce the liquidated damages remedy set forth in the contract. Plaintiff Midwest claims that under the liquidated damages provision, its damages total $290,980.08.
Citibank contends that Midwest is not entitled to damages. Citibank points to section 8 of its contract with Midwest:
(a) Default by Customer. Customer shall be in default under this Agreement upon the occurrence of any of the following events ("Events of Default"):
... (iii) In the event that customer is in default is in default of any terms or conditions of this Agreement ... whether by reason of its own action or inaction or that of another, and such default continues for 30 days after receipt of a notice from MPS [Midwest] describing such default or violation, unless within such 30 day period Customer either corrects the default or, in the opinion of MPS, initiates appropriate action to correct such default and thereafter diligently pursues to cure such default.
(b) Termination. Upon the occurrence of an Event for Default, MPS may at any time thereafter terminate this Agreement effective 60 days after notice of such termination is given by MPS to Customer. Termination of Customer for any reason shall not relieve Customer from any liability or obligation to MPS arising prior to such termination. In the event this Agreement is terminated by MPS other than at the end of the initial Term or any renewal period, Customer shall pay to MPS an amount equal to the average sum of the monthly billings payable by customer for the three calendar months immediately prior to the date of termination, multiplied by the number of months remaining during the then current term of this Agreement.
Citibank argues that Midwest did not properly notify Citibank of its default under the contract, after Citibank transferred its EFT requirements to another source.
STANDARD OF REVIEW
The narrow question that we must decide on a motion for summary judgment *12 is whether there exists a "... genuine issue as to any material fact and [whether] the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court cannot try issues of fact on a Rule 56 motion, but is empowered to determine only whether issues exist that should be tried. In re Atlas Concrete Pipe, Inc., 668 F.2d 905, 908 (6th Cir.1982).
The moving party "has the burden of showing conclusively that there exists no genuine issues as to a material fact and the evidence together with all inferences to be drawn therefrom must be read in the light most favorable to the party opposing the motion." Smith v. Hudson, 600 F.2d 60, 63 (6th Cir.) (emphasis in original), cert. denied, 444 U.S. 986, 100 S. Ct. 495, 62 L. Ed. 2d 415 (1979). Moreover, "while the movant's papers are to be closely scrutinized, those of the opponent are to be viewed indulgently." Id. at 63. "[T]he District Court [is] obligated to consider not only the materials specifically offered in support of the motion, but also all `pleadings, depositions, answers to interrogatories, and admissions' properly on file and thus properly before [the] court." Id. (quoting Rule 56(c), Fed.R.Civ.P.).
Summary judgment "must be used only with extreme caution for it operates to deny a litigant his day in court." Id. The Supreme Court elaborated upon this standard, in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986), as follows:
[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial....
Id. at 322, 106 S. Ct. at 2552. Summary judgment is not appropriate if a dispute about a material fact is "genuine," that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). Nevertheless, conclusory allegations are not sufficient to defeat a motion for summary judgment. McDonald v. Union Camp Corp., 898 F.2d 1155, 1162 (6th Cir.1990).
DISCUSSION
In resolving the pending motion, this Court must consider a number of issues. We shall examine these in turn.
Whether Citibank Repudiated the Contract
Midwest argues that Citibank repudiated the parties' contract. A contractual repudiation must be a clear and unequivocal refusal to perform by one of the parties. See e.g., McDonald v. Bedford Datsun, 59 Ohio App. 3d 38, 40, 570 N.E.2d 299 (1989). Citibank admits that it began using another source for its EFT requirements, in violation of the Midwest-Citibank contract. Nevertheless, Citibank contends that it demonstrated a continued willingness to perform its obligations under the Midwest-Citibank contract by payment of monthly service charges.
In examining the over-all bargain between the parties, the payment of monthly service charges appears incidental to the contractual provision requiring that Midwest act as the exclusive provider of Citibank's EFT requirements. The monthly service charges were relatively small in comparison to the EFT charges. If a party refuses to substantially perform its side of the contract, that party is in breach. Mobley v. New York Life Ins. Co., 295 U.S. 632, 55 S. Ct. 876, 79 L. Ed. 1621 (1935). The Restatement adds that a party has a legally cognizable interest when the other party has committed a material breach which "... so substantially impairs the value of the contract to the injured party at the time of the breach that it is just in the circumstances to allow him to recover damages based on all his remaining rights to performance." Restatement (Second) of Contracts § 243 (1979) (emphasis added); see also John D. Calamari and Joseph M. Perillo, The Law of Contracts § 12-3, at 459 (2d ed. 1977). In the case before the Court, Citibank may have complied with some of the contract specifications, but its transfer of its EFT requirements to another *13 source violated the heart of the deal between Midwest and Citibank. Thus, Citibank's actions substantially impaired the value of the Midwest-Citibank contract and constituted a repudiation of that contract.
Whether Midwest Must Follow the Notice Requirements
Citibank next argues that Midwest's failure to follow the notice provisions in the contract precludes Midwest from recovering the liquidated damages set forth in the contract. The parties implicitly agree that Midwest did not comply with the notice requirements upon learning of Citibank's repudiation of their contract. However, the contract's notice provision was designed to allow a breaching party to cure any defect in its performance. This provision states that Citibank will be in default:
... unless within such 30 day period Customer either corrects the default or, in the opinion of MPS, initiates appropriate action to correct such default and thereafter diligently pursues to cure such default.
In the matter before the Court, Citibank gave no indication that it had any desire to cure its default. Citibank failed in its attempt to renegotiate its contract with Midwest and proceeded to disconnect Midwest's EFT service, completely violating the Midwest-Citibank contract.
Contract scholar Arthur Corbin has explained that:
[a] repudiation or other total breach by one party enables the other to get a judgment for damages or for restitution without performing acts that would otherwise have been conditions precedent.
4 Corbin, The Law of Contracts § 977, at 920 (1963); see also Livi Steel, Inc. v. Bank One, Youngstown, 65 Ohio App. 3d 581, 584 N.E.2d 1267 (1989) (quoting Corbin); see generally, The George Wiedemann Brewing Co. v. Maxwell, 78 Ohio St. 54, 84 N.E. 595 (1908). Thus, Ohio courts have concluded that the "... renunciation of a contract by one of the parties constitutes a breach of contract which gives rise to a cause of action in damages, and in such a case, notice, demand, and tender are waived." Loft v. Sibcy-Cline Realtors, Case No. C-880446, 1989 WESTLAW 149667, at *2 (Hamilton Cty. Dec. 13, 1989) (emphasis added); Bagnoli v. Cleveland Trust Co., 84 Ohio App. 170, 79 N.E.2d 557 (1948). In essence, after repudiating the contract, Citibank cannot demand now that Midwest scrupulously adhere to the terms of the contract. See Bu-Vi-Bar Petroleum Corp. v. Krow, 40 F.2d 488, 490-91 (10th Cir.1930) (by its acts a party may waive the required performance of the other party); Kopeyka v. Woodstrom, 305 Ill. 69, 137 N.E. 137, 138 (1922) (the repudiation of the contract waived the necessity for strict compliance with the written notice provision).
Nevertheless, the parties' contract did specify that in the event of Citibank's nonperformance, Midwest would notify Citibank thirty days before taking action. The United States Court of Appeals for the Sixth Circuit has stated that:
[i]t is well established in Ohio contract law that a party must comply with all express conditions to be performed in case of breach before it can claim damages by reason of the breach. A right of action requiring notice as a condition precedent cannot be enforced unless the notice for has been given.
Au Rustproofing Center, Inc. v. Gulf Oil Corp., 755 F.2d 1231 (6th Cir.1985) (citations omitted). However, in the case before the Court, the notice provision of the Midwest-Citibank contract simply is not applicable, given the facts of this case. Contract scholar E. Allan Farnsworth notes that:
... the purpose of requiring a period of time before termination is to give the party in breach an opportunity to cure, the likelihood that party will do so is particularly important in determining how long the injured party must wait before treating the breach as total.
E. Allan Farnsworth, 2 Farnsworth on Contracts § 8.18, at 449 (1990); see also Wickahoney Sheep Co. v. Sewell, 273 F.2d 767, 770 (9th Cir.1959) ("[t]he purpose of notice of default in the usual case is to give the party allegedly in default an opportunity *14 to remedy the default and meet its obligation. ... [therefore] notice in a prescribed manner is not required where a party has actual notice and has not suffered prejudice").
In the case before the Court, Farnsworth's reasoning behind notice provisions is explicitly stated in the Midwest-Citibank contract. The Midwest-Citibank contract provides that Midwest must give Citibank thirty days in order to allow Citibank to either correct its default or to initiate appropriate action to correct its default. However, there is no reason to require Midwest to give thirty days notice, based upon the facts before the Court. Clearly, Citibank had no intention to comply with the Midwest-Citibank contract with Midwest when it disconnected Midwest's EFT service. Citibank needed no notice that a breach had occurred, because its actions constituted a repudiation of the contract. Thus, we refuse to hold that Midwest was required to perform the futile act of notifying Citibank of Citibank's breach before Midwest can bring suit. See Hartford Accident and Indem. Co. v. Armstrong, 125 Ind.App. 606, 127 N.E.2d 347 (1955).
Citibank contends that under the election of remedies doctrine, Midwest had three options after Citibank repudiated the contract: (1) treat the contract as rescinded and recover the costs of reasonable reliance; (2) keep the contract alive for the benefit of both parties; or, (3) treat the repudiation as putting an end to the contract for all purposes and sue for recovery. See The Cleveland Co. v. Standard Amusement Co., 103 Ohio St. 382, 387-88, 133 N.E. 615, 616 (1921). However, the election of remedies doctrine is not at issue in the case before the Court. Contract scholar E. Allan Farnsworth has written that the election of remedies doctrine arises when "... an injured party ... will treat the breach as partial, rather than total, and then reconsiders and seeks to treat it as total." E. Allan Farnsworth, 2 Farnsworth on Contracts § 8.19, at 456-457 (1990). In the case before the Court, Midwest has never attempted to treat the breach as partial. Instead, Midwest has consistently sought the liquidated damages that it believes it is entitled to under the contract.
The Measure of Damages
The Midwest-Citibank contract provides a liquidated damages remedy if Midwest is in default:
Customer shall pay to MPS an amount equal to the average sum of the monthly billings payable by Customer for three (3) calendar months immediately prior to the date of termination, multiplied by the number of months remaining during the then current term of [the] Agreement. Customer shall also reimburse MPS for any damage, loss, or expense incurred by MPS as a result of a breach by Customer. All such amounts shall be due and payable by customer on the effective date of termination.
Citibank asserts that its damages under the liquidated damages provision total $280,980.08. Midwest derived this figure from taking the average sum of the monthly billings and revenue received for April, May, and June of 1991, and multiplying that number by the months remaining in the original contract and in the addendum. Finally, an additional $10,000 was included as a "deconversion fee."
Citibank argues that Midwest's damages should equal the present value of its future profits. The Ohio Supreme Court decided in Allen, Heaton and McDonald, Inc. v. Castle Farm Amusement Co., 151 Ohio St. 522, 526, 86 N.E.2d 782, 784 (1949), that:
[w]hen a plaintiff sues on a contract to recover the amount he would have received for the full performance prevented by defendant's breach, he seeks in effect to recover his damages and the profit from performance on the contract which profit defendant's breach prevented him from earning. In each case, the plaintiff has the burden of alleging and proving not only (a) what he would have received from performance so prevented, but also (b) what such performance would have cost him (or the value to him of relief therefrom). *15 See also Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co., 6 Ohio St. 3d 436, 453 N.E.2d 683 (1983) (when a contract is repudiated, the savings to the injured party is deducted from the damages); F. Enters., Inc. v. Kentucky Fried Chicken Corp., 47 Ohio St. 2d 154, 351 N.E.2d 121 (1976) (same).
Ohio law requires that a liquidated damages provision should be enforced, provided that: (1) the damages are difficult to ascertain; (2) the contract as a whole is not so manifestly unconscionable, unreasonable, and disproportionate as to justify the belief that the contract did not express the true intention of the parties; and, (3) the contract is consistent with the conclusion that the parties intended the liquidated damages to apply in the event of a breach. Samson Sales, Inc. v. Honeywell, Inc., 12 Ohio St. 3d 27, 465 N.E.2d 392 (1984).
In the case before the Court, we recognize that the contracting parties were two sophisticated litigants. Thus, this Court's inclination is to apply the liquidated damages provision as stated in the contract. However, we believe questions of fact exist as to how the liquidated damages formula applies to the facts of this case.
Moreover, even if the parties agree on the formula, if the liquidated damages are "... manifestly inequitable and unrealistic, courts will ordinarily regard ... [them] as a penalty." Id. at 28, 465 N.E.2d at 393. Thus, we conclude that the amount of Midwest's damages is a question for the trier of the fact. See Developers Diversified, Ltd. v. Graves, Case No. 1131, 1985 WL 11125 (Ross Cty. Ct.App. June 18, 1985).
CONCLUSION
Based upon the reasons discussed above, we grant the Plaintiff's Motion for Summary Judgment. However, the amount of the Plaintiff's damages is a question of fact to be determined at trial.
SO ORDERED.
NOTES
[1] The Plaintiff appears to have erred in numbering its exhibits. The Plaintiff's exhibits proceed A, B, C, D, A, B. We will consider the second A and B exhibits to be exhibits E and F. The Plaintiff also stated incorrectly that the Loft v. Sibcy Cline Realtors decision was attached to its Memorandum. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1944769/ | 52 B.R. 997 (1985)
In re WHEELING-PITTSBURGH STEEL CORPORATION, Debtor-in-Possession.
Civ. A. No. 85-1660.
United States District Court, W.D. Pennsylvania.
August 28, 1985.
*998 John McLean, M. Bruce McCullough, Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, Pa., for Wheeling-Pittsburgh.
Roger J. Lerner, Washington, D.C., for Pension Ben. Guar. Corp.
George Raynovich, Jr., Pittsburgh, Pa., for Wheeling-Pittsburgh.
Robert G. Sable, Pittsburgh, Pa., and Barbara Kaplan, New York City, for Official Committee of Unsecured Creditors.
Michael J. Yurcheshen, Pittsburgh, Pa., and Harvey R. Miller, New York City, for Prudential Life Ins. Co., et al.
Joel M. Walker, Pittsburgh, Pa., and Warren R. Stern, New York City, for principal banks.
Paul Whitehead, Carl Frankel, Garry Sasso, Michael H. Gottesman, Robert M. Weinberg, Gary L. Sasso, Bredhoff & Kaiser, Washington, D.C., and Claude Montgomery, Booth Marcus & Pierce, New York City, for UWSA.
OPINION
MENCER, District Judge.
In 1960, Justice Douglas wrote:
A collective bargaining agreement is an effort to erect a system of industrial self-government. When most parties enter into contractual relationship, they do so voluntarily, in the sense that there is no real compulsion to deal with one another, as opposed to dealing with other parties. This is not true of the labor agreement. The choice is generally not between entering or refusing to enter into a relationship, for that in all probability preexists the negotiations. Rather, it is between having the relationship governed by an agreed-upon rule of law or leaving each and every matter subject to a temporary resolution dependent solely upon the strength, at any given moment, of the contending forces.
United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 580, 80 S. Ct. 1347, 1351, 4 L. Ed. 2d 1409 (1960).
In 1984, the Supreme Court in NLRB v. Bildisco and Bildisco, 465 U.S. 513, 104 S. Ct. 1188, 79 L. Ed. 2d 482 (1984), held that collective bargaining agreements may be rejected under the provisions of the then-existing bankruptcy laws if a Chapter 11 debtor can establish that the agreement is *999 burdensome to the estate and that the balance of the equities favors rejection.
Disappointment was the understandable reaction of organized labor to the Bildisco decision. Congress responded by adding Section 1113 to the Bankruptcy Code by P.L. 98-353 for cases commenced on and after July 10, 1984.
Section 1113 provides in relevant part:
(a) The debtor in possession, or the trustees if one has been appointed under the provisions of this chapter, other than a trustee in a case covered by subchapter IV of this chapter and by title I of the Railway Labor Act, may assume or reject a collective bargaining agreement only in accordance with the provisions of this section.
(b)(1) Subsequent to filing a petition and prior to filing an application seeking rejection of a collective bargaining agreement, the debtor in possession or trustee (hereinafter in this section `trustee' shall include a debtor in possession), shall
(A) make a proposal to the authorized representative of the employees covered by such agreement, based on the most complete and reliable information available at the time of such proposal, which provides for those necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor and assures that all creditors, the debtor and all of the affected parties are treated fairly and equitably; and
(B) provide, subject to subsection (d)(3), the representative of the employees with such relevant information as is necessary to evaluate the proposal. (2) During the period beginning on the date of the making of a proposal provided for in paragraph (1) and ending on the date of the hearing provided for in subsection (d)(1), the trustee shall meet, at reasonable times, with the authorized representative to confer in good faith in attempting to reach mutually satisfactory modifications of such agreement.
(c) The court shall approve an application for rejection of a collective bargaining agreement only if the court finds that
(1) the trustee has, prior to the hearing, made a proposal that fulfills the requirements of subsection (b)(1);
(2) the authorized representative of the employees has refused to accept such proposal without good cause; and
(3) the balance of the equities clearly favors rejection of such agreement.
On May 31, 1985, Wheeling-Pittsburgh Steel Corporation (hereinafter "Wheeling-Pittsburgh"), the debtor-in-possession in this case, sought authorization in the bankruptcy court of this district to reject its collective bargaining agreements with the United Steelworkers of America, AFL-CIO-CLC (hereinafter "USWA"), agreements entered into by Wheeling-Pittsburgh and USWA in January 1983 and scheduled by their terms to expire on July 31, 1986.
The bankruptcy court held that Wheeling-Pittsburgh had established its entitlement under Section 1113 to reject the agreement, and entered an order on July 17, 1985 authorizing Wheeling-Pittsburgh to do so. USWA filed an appeal to this Court from that order. After denying a Motion to Stay filed by USWA, we established an expedited briefing schedule relative to its appeal.
The proper standard of this Court's review is Bankruptcy Rule 8013 which provides:
On an appeal the district court . . . may affirm, modify, or reverse a bankruptcy court's judgment, order or decree, or remand with instructions for further proceedings. Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the bankruptcy court to judge the credibility of the witnesses.
Therefore, the standard of review of facts required by the bankruptcy rules is the clear erroneous test and the Court of Appeals for the Third Circuit has so declared *1000 in the case of In Re Morrissey, 717 F.2d 100 (3d Cir.1983).
In the instant case, Bankruptcy Judge Bentz made his analysis of the nine requirements necessary for rejection of a collective bargaining agreement as imposed by § 1113 of the Code.
1. The debtor in possession must make a proposal to the Union to modify the collective bargaining agreement.
2. The proposal must be based on the most complete and reliable information available at the time of the proposal.
3. The proposed modifications must be necessary to permit the reorganization of the debtor.
4. The proposed modifications must assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably.
5. The debtor must provide to the Union such relevant information as is necessary to evaluate the proposal.
6. Between the time of the making of the proposal and the time of the hearing on approval of the rejection of the existing collective bargaining agreement, the debtor must meet at reasonable times with the Union.
7. At the meetings the debtor must confer in good faith in attempting to reach mutually satisfactory modifications of the collective bargaining agreement.
8. The Union must have refused to accept the proposal without good cause.
9. The balance of the equities must clearly favor rejection of the collective bargaining agreement.
Judge Bentz concluded that the burden of persuasion is on the debtor as to all nine requirements. He then applied these requirements to the facts that he found to exist in the instant case and concluded that the debtor in possession had met its burden here and that the application for rejection of the collective bargaining agreement should be approved.
Wheeling-Pittsburgh is willing to adopt the opinion of Bankruptcy Judge Bentz without supplementation and not surprisingly contend that he reached "a correct conclusion." USWA advances a plethora of reasons why the Bankruptcy Court misunderstood and misapplied the applicable legal standards and misconceived the nature and quality of the proof necessary to meet them.
Contractual obligations should be deemed binding and not subject to unilateral termination or capable of being set aside on slight pretense of financial inability. However, in a Chapter 11 setting successful rehabilitation of debtors may require a rejection of agreements entered into by employer-employee parties. The eye of the beholder must focus in on the fundamental fact of economic life the purpose of reorganization for a debtor in bankruptcy is to prevent that debtor from going into liquidation with an attendant loss of jobs and possible misuse of economic resources. Surely, the intent of Congress when it enacted into law Section 1113 of the Bankruptcy Code was not of a contrary nature.
On April 16, 1985, Wheeling-Pittsburgh filed its Chapter 11 petition. On May 9, 1985, the company made a new proposal to the Union seeking further and deeper labor concessions, the main items being a reduction in overall wage costs to $15.20 per hour, as compared to $21.40 per hour at the end of 1984, and a five-year contract term. On May 31, 1985, Wheeling-Pittsburgh filed a motion to reject the collective bargaining agreements with USWA and a hearing lasting four days was held during mid-June.
USWA in this appeal mounts a very serious challenge to the Bankruptcy Court's holding that the modifications to the collective bargaining agreements proposed by Wheeling-Pittsburgh were "necessary to permit the reorganization of the debtor." The Company put into evidence its new contract proposal, together with the Company's financial projections on which it was based and assertions, conclusory in nature, from three key officials and a financial expert that the labor concessions were necessary for the Company to reorganize. *1001 The Union responded by evidence that it was not necessary to modify the collective bargaining agreement at all in order to permit the reorganization of Wheeling-Pittsburgh, since the agreement would expire in approximately one year on July 31, 1986. In addition, the Union asserts that if some modification is necessary to permit reorganization, the modifications sought here are unduly drastic and unsupportable.
A central feature of § 1113 is that the debtor must prove that the proposed alterations of the collective bargaining agreement "are necessary to permit the reorganization of the debtor." Here, the Wheeling-Pittsburgh officials testified relative to the depressed condition of the steel industry which impacts on its capability to operate profitably and causes its severe financial difficulties. The officials also proffered the projected $15.20 labor rate as being necessary in order to successfully reorganize. Likewise, it was urged that labor stability was necessary during the reorganization period.
Judge Bentz evaluated this evidence as follows:
Three of Wheeling-Pittsburgh's witnesses testified that the $15.20 labor cost and five year contract term both are necessary for the Company to reorganize: Chairman and CEO Carney, Senior Vice-President and Chief Financial Officer Rose, and Senior Vice-President for Industrial Relations Scalise. In addition, Nicholas John Sakellariadis, First Vice-President in the Corporate Finance Department of E.F. Hutton Company, who assisted Wheeling-Pittsburgh in the preparation of the May 9 proposal, also testified that both the $15.20 labor rate and five year contract term were necessary to the Company's reorganization. In response, the Union offered the testimony of its experts to show that (1) no modifications of the existing collective bargaining agreement are necessary; and (2) in any event, the particular modifications that the Company proposes are not necessary for reorganization.
In support if its position that no modifications of the existing contract are necessary, the Union first posits that honoring the existing contract could threaten reorganization only if paying the contractual labor costs (through the end of the contract period) would deny Wheeling-Pittsburgh the cash required to meet the Company's operational needs. The Union then adduced evidence to show that Wheeling-Pittsburgh would have sufficient cash balances throughout the contract term to meet current operational needs if the Company continued to pay the contractual labor rate. From this the Union concludes that the current contract rate does not threaten reorganization, and therefore no proposed modification of the contractual labor rate is necessary.
It must be observed that the only reason the Company is in business today is that its cash has been protected and regenerated by the protections against creditors afforded by the bankruptcy laws. The cash availability is created by freezing the status of creditors who ought to be paid in the ordinary course of business. This factor, and the plight of creditors so held at bay, cannot be overlooked in determining what is necessary to achieve a reorganization.
Assuming arguendo that the Company could continue to pay the contract rate and still have enough cash on hand at the expiration of the collective bargaining agreement to meet its current operational needs, those facts do not resolve the relevant issue. The Union concedes as much when it emphasizes that:
The initial question posed by § 1113 is not whether the existing collective agreement (sic) needs to be modified but whether the contract modifications proposed by the debtor are `necessary to permit reorganization' (emphasis in original). The statutory focus is thus on the terms of the debtor's proposal not on the terms of the existing agreement (emphasis supplied).
Accordingly, the question is not simply whether Wheeling-Pittsburgh can continue to pay the $21.40 rate required by the current collective bargaining agreement and still emerge with enough cash in hand *1002 at the contract term to meet current operational expenses. The relevant question is whether it is necessary for Wheeling-Pittsburgh to pay the $15.20 rate found in its proposal in order to successfully reorganize. The questions are not the same. At the expiration of the collective bargaining agreement, Wheeling-Pittsburgh may emerge with enough cash on hand to meet its current operating expenses; but if a successful reorganization necessitates more cash than that, and if the proposed $15.20 modification is necessary to help generate the additional cash requirements, then the proposed modification is necessary for reorganization. Therefore, the first problem with the Union's characterization of the issue is that it overlooks the fact that in order for the debtor to successfully reorganize, it will be necessary to do more than just emerge from the current labor contract with enough cash on hand to meet current operating expenses.
A related problem with the Union's characterization of the issue is that it focuses on what the debtor does not need to do in order to `ride out' the period of the collective bargaining agreement rather than focus on what the debtor needs to do in the long run to reach the broader goal of reorganization. The paramount goal in a Chapter 11 is reorganization of the Company, not preservation of the collective bargaining agreement. Understandably, the Union desires to emerge from this proceeding having preserved the terms and conditions of its collective bargaining agreement. However, if by doing so, the Company is pushed into liquidation, the Union's victory will have been a Pyrrhic one. "`[C]ontracts with a liquidated company offer hollow promises.'" In any event, the proper issue to consider is whether the proposed $15.20 rate is necessary to permit Wheeling-Pittsburgh's reorganization.
The evidence and testimony support the Company's argument that the $15.20 labor rate is necessary for the Company's reorganization. This $15.20 figure was the product of a calculation predicated on various assumptions relating to Wheeling-Pittsburgh's costs, production volume, price, market share, and capital expenditures over the next five years. The Union contends, however, that the Company's assumptions were unreasonably pessimistic and that the Company will be in a better financial position in five years than it predicts, thereby enabling it to afford a wage rate higher than $15.20. The court does not find credible the Union experts' optimism regarding the steel industry and Wheeling-Pittsburgh's future participation therein. The United States steel industry today is in very critical shape; the price of steel over the last three to five years, adjusted for inflation, has declined; rising steel imports have cut into the domestic steel market despite federal "dumping" laws; steel plant shutdowns are growing more numerous as are steelworker layoffs; and the most optimistic forecasts predict only relatively small market improvements which are not significant when measured against the industry overcapacity.
The foregoing factors help explain this debtor's current plight. Wheeling-Pittsburgh has sustained significant losses over the last three years; the Company is producing steel at only 50%-60% of capacity; the bulk of the Company's cash goes to paying utilities and labor costs (labor costs comprise 35-40% of the Company's total costs); the Company owes $50-$65 million this year for last year's pension fund liabilities; the Company owes approximately $125 million to unsecured creditors, $547 million to secured creditors (the collateral for which may be worth less than $100 million); and a total of $121 to $363 million to pension benefit plans. In view of the foregoing, it cannot be said that the Company's projections were unecessarily (sic) pessimistic. Even if Wheeling-Pittsburgh could significantly reduce its utility and other non-labor costs, (which is doubtful) it is clear that a reduction in labor costs is also necessary if the Company is to have any hope of reorganizing. This Company is in deep financial difficulty; its continued existence is in question; and the $15.20 labor rate, along with other concessions by all parties in interest, is necessary if a *1003 reorganization is to be achieved and a liquidation avoided.
Turning to the proposed five year collective bargaining term, the Union concedes that the Company should have a stable labor arrangement at the time it emerges from reorganization. However, the Union argues that a five year agreement is not necessary to achieve this goal since stability can be achieved through a contract of shorter duration. The Union further argues that in any event, it is unnecessary to commence any agreement at the present time to achieve a stable labor cost during reorganization since there will be time enough at the expiration of the current agreement (in 13 months) to negotiate that figure.
Wheeling-Pittsburgh's period of reorganization likely will last at least five years. The Company proposal contemplates a 10 year payout of a 50% dividend to over $500 million of general unsecured claims. The court accepts as credible the testimony that with the $15.20 labor rate, the Company would get to a point 5 years out where it is at almost a dead break even. This will hopefully allow, but not guarantee, payment on dividends to general creditors. Conceding, as the Union does, that labor stability is necessary during the reorganization period, there is no evidence as to how labor stability can be achieved with a contract of less than five years' duration. Therefore, the court finds that the five year term is necessary for the debtor's reorganization.
The Union next argues that, in any event, it is not necessary to commence any agreement at the present time to achieve a stable labor cost during reorganization since there will be time enough at the expiration of the current agreement (in 13 months) to negotiate a new labor rate. The court has already found that $15.20 is the labor rate necessary for the Company's reorganization. Therefore, there is no need, reason or justification for waiting 13 months for relief from a losing situation, and there are good reasons for commencing relief now. Labor instability threatens the Company's sales volume and customer base. If, as both parties agree, labor stability is necessary to protect sales and customer relations in this reorganization process, then it should be achieved now and not 13 months in the future. (Emphasis in original.) (Footnote omitted.)
Although this Court might not have made the same findings of fact, we agree with Judge Bentz's conclusion that the "necessary" standard of § 1113 does not mean "absolutely essential" as the USWA contend here. A more practical long range test of a less stringent nature is more compatible with congressional intent where the emphasis in § 1113(b)(1)(A) is upon the reorganization of the debtor and the fair and equitable treatment of all creditors, the debtor and all affected parties. The prevention of the debtor going into liquidation, ensuring the loss of jobs, is a goal and policy decision of the Bankruptcy Code which indicates an intent of Congress to impose a "necessary" standard to be satisfied by considerations of feasibility for reorganization.
The Bankruptcy Judge is entrusted with making the determination as to whether the debtor has met its burden of showing that the modifications proposed are necessary to permit the reorganization of the debtor.[1] The District Court on appeal may *1004 only reverse that determination where the Bankruptcy Judge is clearly erroneous and this Court's review of the entire record does not leave us with the definite and firm conviction that a mistake has been committed by Judge Bentz.
The USWA argue that a "necessary" standard that is satisfied by considerations of feasibility for reorganization is a return to the holding of the Bildisco decision and ignores the response of Congress to that decision. Not so, since Bildisco permitted a unilateral termination of a collective bargaining agreement before formal rejection by the Bankruptcy Court. Congress in turn passed P.L. 98-353 which prevents such unilateral termination by the debtor and sets forth the nine procedural and substantive requirements that must be met prior to rejection approval by the Bankruptcy Court. However, we cannot conclude that Congress intended to impede and prevent a plan of reorganization, which would avoid liquidation of the debtor and the termination of jobs, by enacting a standard for reorganization that postpones until the future the facing of economic reality.
In actuality, this is not a typical adversary proceeding but rather a tense and imperative struggle for the survival of a company and the preservation of jobs generated by that company's normal operations. The Company and Union are both in the same boat faced with a serious and common problem that may well sink all who are aboard, including the equity holders and lenders. The response to the problem cannot be unfairly shifted to one group while the others sit by with a nonchalant claim of a preferred interest. The response needed is for all to bail water, pull together, throw overboard that portion of the heavy cargo that can be sacrificed, head for safe ground and try to weather the storm with the hope that all will not be lost. This is really what is involved and must be faced when a debtor in possession in Chapter 11 seeks to survive in the business world by a reorganization plan. Congress entrusted the supervision of the plan to the Bankruptcy Court and Congress cannot be charged with taking sides by setting standards which favor one of the boat's occupants over another.
USWA contends that even if the Company's May 9 proposal sought contract modifications "necessary" to permit reorganization, the proposal did not assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably as required by § 1113(b)(1)(A).
Judge Bentz made the following analysis:
The Union contends that the Company's proposal would impose a disproportionate share of the burden of reorganization on the backs of its employees. In particular, the Union argues that the proposal does not provide for any upward adjustment in the labor rate to ensure that the employees share in whatever benefits may eventuate should the Company do better financially than it has projected. Instead, the Union argues, the employees are relegated to a `substandard' wage rate for five years.
However, the Union produced no evidence to establish the level of a `standard' wage rate, nor to prove that one rate or another is `substandard.' It is obvious that $15.20 is far from $21.40 and even farther from $25.00. But the evidence before the court relates to costs necessary to achieve a reorganization, not to whether such costs are `standard' or `sub-standard' as measured against some other scale.
It is relevant to note that the proposal also does not provide for any downward adjustment below the $15.20 in the event the Company continues to lose money. The steel industry and this Company are *1005 in serious financial trouble. It might not be inequitable to ask hourly employees to share in future shortfalls, but that has not been done. In any event, the proposal provides cost stability for the Company, and also provides wage stability for Union workers.
Creditors, on the other hand, are to be subjected to a 50% loss amounting to losses of some $250 million, with the 50% balance payable over 10 years. This is a significant sacrifice by itself; and if the Company's profitability projections ultimately prove to have been too optimistic, there could be a default in payments to creditors resulting in further losses to them. Therefore, the creditors are sacrificing much for the reorganization of the Company.
The Union further argues that creditors may fare better than employees because creditors may get stock for their claims. But that will likely occur only if there is insufficient money to pay dividends on creditors' claims. If stock is issued as payment for claims, in whole or in part, such claimants will have become involuntary investors in stock of questionable value.
Finally, salaried employees have been without wage increases since about 1981, and took a 10% reduction in 1982, half of which was restored in 1984. The salaried wage structure is below that of the industry generally, and is such that salaried workers leave for better paying jobs elsewhere. The Company has difficulty finding qualified replacements. No further sacrifices in this sector are warranted.
Our review of the record does not produce a conviction that the proposed plan will place a burden upon the employees disproportionate from that burden on other affected parties or that Judge Bentz's conclusion "that under the proposal, the burdens of past losses and future recovery from an unfortunate present financial situation will be shared fairly and equitably among all the parties concerned" constitutes a mistake which requires correcting by this Court.
Next, we turn our attention to the Union's contention that the Bankruptcy Court erred in concluding that Wheeling-Pittsburgh had shown that it had bargained in good faith in attempting to reach mutually satisfactory modifications.
Section 1113(b)(2) reads:
During the period beginning on the date of the making of a proposal provided for in paragraph (1) and ending on the date of the hearing provided for in subsection (d)(1), the trustee shall meet, at reasonable times, with the authorized representative to confer in good faith in attempting to reach mutually satisfactory modifications of such agreement.
If the debtor does not confer in good faith toward the end of reaching mutually satisfactory modifications of the agreement, the Union will have "good cause" to reject the debtor's proposal. To ensure a realistic prospect that the parties will reach mutually satisfactory modifications, the debtor must provide the representative of the employees with such relevant information as is necessary to evaluate the proposal.
USWA assert that Wheeling-Pittsburgh waited only 22 days after submitting the May 9 proposal to the Union before filing its application for rejection of the collective bargaining agreements and refused to cooperate with the Union's financial experts relative to providing necessary financial information to the Union. Accordingly, the Union claims a lack of good faith on the part of the Company.
We deem "good faith" as that term is used in § 1113(b)(2) to mean that the debtor in possession make reasonable efforts to negotiate a voluntary modification but a failure to achieve mutually satisfactory modifications indicates no more than the difficulty of the task.
In the instant case, Judge Bentz made a specific finding of fact that "Wheeling-Pittsburgh did provide the Union with the information necessary to evaluate the proposal, did provide this information in time *1006 to conduct meaningful negotiations and did in fact make reasonable efforts to negotiate."
Although there is testimony of record that would refute these findings, we cannot state that this Court is left with a definite and firm conviction that the Bankruptcy Court's findings in this regard are mistaken and not supportable by substantial evidence of record.
The 22 day period utilized by the Company for this phase of the § 1113 procedure, although short, when measured against the complexity of the financial information that could be marshaled for or against the proposal, is not inherently unreasonable since § 1113 has no time restraint relative to when the debtor, following the submission of a proposal, may file its rejection application. Such a lack of a time restraint in § 1113 further supports Judge Bentz's determination that the three week negotiation period in and of itself did not evidence a lack of good faith on the part of the debtor.
The Court has carefully examined the balance of the requirements imposed by § 1113 of the Bankruptcy Code as necessary prerequisites for approval of a debtor application for rejection of a collective bargaining agreement and we are satisfied that here the debtor has met its burden of proof relative to these remaining requirements. USWA does not strongly challenge in this appeal our conclusion as to these requirements.
Little authority has been cited in this opinion since this seems to be a case of first impression following the enactment of § 1113 of the Bankruptcy Code, 11 U.S.C. § 1113. The cases that have dealt with this section have mainly considered interim changes as provided for by § 1113(e). See In re Carey Transportation, Inc., 50 B.R. 203 (S.D.N.Y.1985); In re Russell Transfer, Inc., 48 B.R. 241 (W.D.Va.1985); In re Salt Creek Freightways, Inc., 47 B.R. 835 (D.Wyo.1985); In re Salt Creek Freightways, Inc., 46 B.R. 347 (D.Wyo.1985); In re American Provision Co., 44 B.R. 907 (D.Minn.1984), and In re Wright Airlines Inc., 44 B.R. 744 (N.D.Ohio 1984).
Our search for congressional intent relative to § 1113 has been foundationed on a realization that the policy of Chapter 11 is to permit successful rehabilitation of debtors. Of course such rehabilitation must involve the balancing of the interests of the debtor, creditors and employees.
Justice Rehnquist wrote of this Chapter 11 policy consideration in NLRB v. Bildisco & Bildisco, supra, in these terms:
The Bankruptcy Court must consider the likelihood and consequences of liquidation for the debtor absent rejection, the reduced value of the creditors' claims that would follow from affirmance and the hardship that would impose on them, and the impact of rejection on the employees. In striking the balance, the Bankruptcy Court must consider not only the degree of hardship faced by each party, but also any qualitative differences between the types of hardship each may face.
The Bankruptcy Court is a court of equity, and in making this determination it is in a very real sense balancing the equities, as the Court of Appeals suggested. Nevertheless, the Bankruptcy Court must focus on the ultimate goal of Chapter 11 when considering these equities. The Bankruptcy Code does not authorize free-wheeling consideration of every conceivable equity, but rather only how the equities relate to the success of the reorganization. The Bankruptcy Court's inquiry is of necessity speculative and it must have great latitude to consider any type of evidence relevant to this issue.
Section 1113 was not enacted to change the policy of Chapter 11 but only to guarantee that full and careful consideration would precede any rejection, a rejection that would not be a unilateral one by the debtor but by a Bankruptcy Court functioning as a court of equity. The intent of Congress was to place the burden on the debtor to show to the Bankruptcy Court, charged with balancing the equities and the interests of the affected parties, the need *1007 to reject the collective bargaining agreement in order to achieve a successful rehabilitation of the debtor to avoid the consequences of liquidation and the loss of jobs.
The legal representation provided to USWA relative to this appeal has been outstanding and this Court has pondered long as to the correctness of the legal concepts which they have espoused. However, we cannot accept interpretations of § 1113 which attribute to Congress an intent to temporarily shield employees from the consequence of the employer's financial plight with the attendant risk that such temporary protection will exasperate the crisis and fuel the possibility of total fiscal disaster which would jeopardize future job availability for those employees.
Finally, this entire matter is one about which men of good will can hold honest differences of opinion. This is not the problem. The task is finding a way that will be deemed fair to all parties to move forward together to cope with a most serious financial dilemma, the cause of which in part is no one's fault and in part supplies sufficient fault to be shared by all involved parties.
If a way out of this financial and legal mire, which has produced anger, distrust, accusations, finger pointing and a major labor strike, is to be found, it will have to be a joint effort based on cooperation by the parties and not judicial fiat. Judge Bentz counseled likewise when he concluded his opinion in this fashion:
The parties recognize that this is a collective bargaining dispute and that this court, as a place for resolving a collective bargaining dispute, is not the proper forum. The real decisions must be made at the bargaining table. If Wheeling-Pittsburgh is to be saved and not liquidated, the Union and the Company (representing not only management and shareholders, but also bargaining on behalf of creditors because the Company must later deal with creditors) must work out a solution at the bargaining table taking into consideration the hard realities that face them economically. This court cannot compel, but it can and does encourage the parties to continue negotiations to reach a solution, without which the likelihood of liquidation is very real.
A word to the wise has not yet been sufficient and so it is hoped that its repetition here will prompt the parties to negotiate without ceasing until a fair accord is reached. The inability or unwillingness to do so will not produce a winner and a loser but the premature fall of proud warriors whose last struggle will be overshadowed by a failure to sense their need for each other.
An appropriate order will issue.
ORDER
AND NOW, this 28th day of August, 1985, after the consideration of briefs, and for the reasons set forth in the Opinion filed with this Order,
IT IS ORDERED that the Order, dated July 17, 1985, of the Bankruptcy Court of the Western District of Pennsylvania which approved the rejection by the Wheeling-Pittsburgh Steel Corporation of the collective bargaining agreements, bargained to end on July 31, 1986, between Wheeling-Pittsburgh Steel Corporation and the United Steelworkers of America, AFL-CIO-CLC is AFFIRMED.
NOTES
[1] Admittedly, the debtor in possession can place unrealistic and unfair evaluations and projections on the formula factors of volume, future price, overhead, including settlement with creditors, when estimating affordable labor costs. As the Chairman and Chief Executive Officer of Wheeling-Pittsburgh, Dennis J. Carney, testified on cross-examination: "Any one of those three [price, volume and settlement with creditors] and you can get [by changing assumptions] any number you want. You can get $28 an hour. If you want to assume nice price and volume. And you can get $15 an hour. And you can get $15 an hour, if you look at where we are today, losing our shirts."
This record may arguably approach such an unrealistic projection because of the assumptions made in arriving at the proposed $15.20 per hour labor cost. However it is the Bankruptcy Court in the first instance who having heard the witnesses and reflected upon the evidence that is the safety valve which prevents the Company from unfairly computing labor's wage rate to produce a plan of reorganization born of corporate greed and not stark fiscal reality. As the current strike proves, workers do not have to work for wages they deem unfair, but a company cannot long continue to operate when costs exceed income and when such a company stops operating, workers have no choice relative to working on any terms, since there are no longer jobs to work. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1944569/ | 801 F. Supp. 585 (1992)
Douglas CRAIG, et al., Plaintiff,
v.
SELMA CITY SCHOOL BOARD, et al., Defendant.
Civ. A. No. 90-0777-AH-S.
United States District Court, S.D. Alabama, N.D.
August 25, 1992.
*586 *587 Bruce Boynton, Selma, Ala., for plaintiff.
Larry Bradford, Birmingham, Ala., for defendant.
ORDER
HOWARD, Chief Judge.
This matter is before the Court on motions for summary judgment filed by all parties. The defendants filed their "Amended Motion for Summary Judgment" [Doc. # 64] on January 2, 1992. The plaintiffs responded on February 3, 1992, with "Plaintiffs' Response to Defendants' Motion for Summary Judgment" [Doc. # 72], incorporating the "Plaintiffs' Motion for Summary Judgment" [Doc. # 73] and accompanying brief [Doc. # 74] filed the same day.
The Court has fully reviewed the motions, the briefs and evidentiary materials filed in support of and in opposition to the motions, and all other pertinent materials in the file. For the reasons that follow, the Court concludes that, except for Count 14 of the Amended Complaint, the defendants are entitled to judgment as a matter of law. Accordingly, the defendants' "Amended Motion for Summary Judgment" [Doc. # 64] is GRANTED as to all portions of the Amended Complaint except Count 14, and the "Plaintiffs' Motion for Summary Judgment" [Doc. # 73] is DENIED in its entirety.
I. FINDINGS OF FACT[1]
This lawsuit began on October 3, 1990. The original plaintiffs were Douglas Craig, Shinether Craig, Jerry Harris, Sametra Peasant, Sonya Brown, Tonya Brown, and John Dubose, all students at Selma High School. The original defendants were the Selma City School Board, James H. Carter in his official capacity as Interim Superintendent of the Selma City Schools, F.D. Reese in his official capacity as principal of Selma High School, Ralph Hobbs in his capacity as attorney for the Selma City School Board, the State Board of Education, and Wayne Teague in his official capacity as Superintendent of the State Board of Education. Of the original plaintiffs, John DuBose was dismissed on his own motion on July 1, 1991. [Doc. # 51] Of the original defendants, the State Board of Education, Wayne Teague, and Ralph Hobbs have all been dismissed from the case. [Docs. ## 19, 33, 36]
The incidents giving rise to this lawsuit occurred in the Fall of 1990. After a Selma High School football game on September 7, 1990, the plaintiffs became involved in an altercation with another group of students. At about 1:30 a.m. on the morning after the game, Thelma Craig, the mother of two of the plaintiffs, telephoned the defendant Reese, the Principal of Selma High School, to inform him of the fight at the football stadium. Mrs. Craig and Evalina Peasant, along with the plaintiff students (the "Craig group"), arrived at Selma High School on September 10, 1990 at approximately 7:40 a.m. and were instructed *588 by Reese to go to the conference room adjacent to his office.
Principal Reese met with the Craig group for approximately 30 minutes and at the conclusion of the conference instructed them to remain in the conference room. While the Craig group was meeting with Principal Reese, the other people involved in the post-game brawl (the "Ford group") arrived for a conference. As the Craig group left the conference room renewed fighting erupted between the Craig group and the Ford group. During the melee Principal Reese's office and his secretary's desk and typewriter suffered substantial damage.[2]
The day after the altercation in Principal Reese's office, each plaintiff received a written notice from Reese informing the student that the student would be suspended for five days for "fighting/altercation during school." Subsequently, on the recommendation of Principal Reese that the students be expelled, the plaintiffs or their parents or guardians received a letter dated September 14, 1990 from Selma School Superintendent Carter informing them that they were charged with a Class III violation of the Code of Conduct, namely, "inciting, leading or participating in major disruptions which interfere with the academic program and/or result in damage to private or public property or personal injury."[3]
The letter from Carter notified the plaintiffs of Reese's recommendation, of the date of a scheduled expulsion hearing, that they had a right to attend the expulsion hearing, that they had a right to legal counsel at the hearing, that they had a right to present witnesses at the hearing, and that they had a right to cross-examine the superintendent's witnesses.
The expulsion hearing was held by the Selma City School Board on September 20, 1990, at which time Superintendent Carter provided the plaintiffs' attorney with a copy of the Code of Conduct for him to use at the hearing. The plaintiffs' attorney requested but the Board refused to allow an open hearing attended by the press.
During the hearing the Chairman, over the objection of the plaintiffs' attorney, allowed the presentation of hearsay evidence on the grounds that the Board was interested in learning all the facts. At the close of the evidence presented by the complaining parties, the plaintiffs' attorney argued that there was no evidence against Sametra Peasant, Sonya Brown, and Tonya Brown, and that the charges against them should be dismissed. The Board did not agree to dismiss the charges.
This lawsuit was filed before the expulsion hearing was completed, with the plaintiffs seeking and failing to obtain a temporary restraining order. The expulsion hearing was resumed on November 19, 1990.[4] After the hearing the Board expelled Douglas and Shinether Craig and decided that the remaining plaintiffs' suspensions already served were sufficient punishment for their involvement in the matter and allowed them to return to school on "strict conduct probation."[5]
*589 The plaintiffs filed their Complaint predicated on 42 U.S.C. § 1983 in the Middle District of Alabama on October 3, 1990 [Doc. # 5] and a motion for change of venue was granted on October 10. [Doc. # 16] After an amendment and the voluntary dismissal of several counts, the plaintiffs' Amended Complaint alleges nine causes of action against the remaining defendants. The plaintiffs charge that the defendants' failure to inform the plaintiffs of their procedural rights deprived them of due process of law [Count 4], that the expulsion hearing was beyond the authority of the Board and deprived the plaintiffs of a due process right [Count 5], that the defendants' failure to provide the plaintiffs with a copy of the Code of Conduct deprived the plaintiffs of a due process right [Count 6], that the defendants' failure to prove the plaintiffs' knowledge of the Code of Conduct deprived the plaintiffs of a due process right [Count 7], that the defendants' failure to establish a procedure to dismiss an unsupported charge violated the plaintiffs' due process rights [Count 9], that the defendants' failure to allow the plaintiffs to receive the § 16-1-24 report violated their due process rights [Count 12], that the decision of the defendants Reese and Carter to prevent the plaintiffs from receiving their books violated their due process rights [Count 14], that the defendants' failure to provide the plaintiffs with an education deprived them of a due process right [Count 15], and that the imposition of any restrictions on returning plaintiffs violated their due process rights [Count 16].
II. CONCLUSIONS OF LAW
This action has been filed by the plaintiffs alleging a cause of action under 42 U.S.C. § 1983. The Court has jurisdiction over the matter pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1343(a)(4).
A court may grant a motion for summary judgment only when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. A material fact is one which "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986) (citations omitted). On a motion for summary judgment, a court must review the record, and all its inferences, in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 994, 8 L. Ed. 2d 176 (1962).
A. PROCEDURAL DUE PROCESS CLAIMS
Under the Fourteenth Amendment to the United States Constitution, no state may "deprive any person of life, liberty, or property, without due process of law." U.S. CONST. amend. XIV, § 1. Under the doctrine known as "procedural due process," the Fourteenth Amendment requires a two-part analysis. After a citizen shows that he has been deprived of a constitutionally protected "life, liberty, or property" interest through state action, a court must determine *590 whether the procedural formalities of that deprivation comport with the requirements of the Due Process Clause. "In short, once it is determined that the Due Process Clause applies, `the question remains what process is due.'" Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 541, 105 S. Ct. 1487, 1493, 84 L. Ed. 2d 494 (1985), quoting Morrissey v. Brewer, 408 U.S. 471, 481, 92 S. Ct. 2593, 2600, 33 L. Ed. 2d 484 (1972). The Supreme Court has explained that "[t]he fundamental requirement of due process is the opportunity to be heard `at a meaningful time and in a meaningful manner.'" Mathews v. Eldridge, 424 U.S. 319, 333, 96 S. Ct. 893, 902, 47 L. Ed. 2d 18 (1976), quoting Armstrong v. Manzo, 380 U.S. 545, 552, 85 S. Ct. 1187, 1191, 14 L. Ed. 2d 62 (1965).
In Goss v. Lopez, 419 U.S. 565, 95 S. Ct. 729, 42 L. Ed. 2d 725 (1975), the Supreme Court held that students in state public schools have a property interest in their legitimate entitlement to public education and a reputational liberty interest in not being suspended except for good cause. The Supreme Court determined that these interests are protected by the Fourteenth Amendment to the Federal Constitution, for
[n]either the property interest in educational benefits temporarily denied nor the liberty interest in reputation, which is also implicated, is so insubstantial that suspensions may constitutionally be imposed by any procedure the school chooses, no matter how arbitrary.
Goss, 419 U.S. at 576, 95 S. Ct. at 737. The denial of procedural due process in the suspension or expulsion of students supports a claim for damages by the students under 42 U.S.C. § 1983. Carey v. Piphus, 435 U.S. 247, 98 S. Ct. 1042, 55 L. Ed. 2d 252 (1978).
Under Goss v. Lopez, it is clear that the plaintiffs' suspensions and later expulsions deprived them of constitutionally protected liberty and property interests. The question before the Court, therefore, becomes whether the deprivations were accompanied by procedural safeguards sufficient to satisfy the Due Process Clause of the United States Constitution. Evaluated under the standards set out in the relevant precedents, the notice and hearing afforded the plaintiffs in the instant case were adequate and provided the plaintiffs with due process of law.
1. The Suspensions
Having decided that the Due Process Clause was implicated, the Court in Goss v. Lopez turned to the question of what process was due, and held that
due process requires, in connection with a suspension of 10 days or less, that the student be given oral or written notice of the charges against him and, if he denies them, an explanation of the evidence the authorities have and an opportunity to present his side of the story. The Clause requires at least these rudimentary precautions against unfair or mistaken findings of misconduct and arbitrary exclusion from school.
Goss, 419 U.S. at 582, 95 S. Ct. at 740.
It is undisputed that in the instant case the students were not given any sort of notice or hearing before their initial five-day suspensions. However, it is also undisputed that the suspended students, in the presence of the principal, engaged in a brawl in the principal's office, damaging school property and endangering others nearby. Thus, this case fits within an exception to the pre-deprivation notice and hearing requirement. While it is true that "as a general rule notice and hearing should precede removal of [a] student from school," the Goss court recognized that
there are recurring situations in which prior notice and hearing cannot be insisted upon. Students whose presence poses a continuing danger to persons or property or an ongoing threat of disrupting the academic process may be immediately removed from school. In such cases, the necessary notice and rudimentary hearing should follow as soon as practicable.
Goss, 419 U.S. at 582-83, 95 S. Ct. at 740; see also North American Cold Storage Co. v. Chicago, 211 U.S. 306, 29 S. Ct. 101, 53 L. Ed. 195 (1908) (finding no due process violation when there was no pre-deprivation *591 hearing in an emergency situation because there was an opportunity for a post-deprivation hearing).
The situation in this case appears to be that contemplated by the Goss court in formulating its exception to the general rule of prior notice and hearing. Just as Principal Reese feared,[6] the Craig group and the Ford group were apparently unable to encounter one another without the eruption of renewed fighting, and as such they clearly presented "an ongoing threat of disrupting the academic process." The presence of the belligerents at Selma High School posed "a continuing danger to persons or property." Moreover, the students who received five-day suspensions were soon thereafter participants in an expulsion hearing, satisfying Goss's requirement that "notice and [a] rudimentary hearing [] follow as soon as practicable." Accordingly, there was no due process violation regarding the suspension of the plaintiffs.
2. The Expulsions[7]
Different forms of punishment of schoolchildren may require different amounts of process. Compare Goss, supra, (some notice and hearing generally required before short suspension) with Ingraham v. Wright, 430 U.S. 651, 97 S. Ct. 1401, 51 L. Ed. 2d 711 (1977) (no notice and hearing required before infliction of corporal punishment if state common-law remedies are fully adequate to afford due process). The Supreme Court made clear that its decision in Goss v. Lopez applied only to short suspensions, and that "[l]onger suspensions or expulsions for the remainder of the school term, or permanently, may require more formal procedures." Goss, 419 U.S. at 584, 95 S. Ct. at 741. The Eleventh Circuit applied Goss v. Lopez in such a context in Nash v. Auburn University, 812 F.2d 655 (11th Cir.1987), a case involving the expulsion of two veterinary students for cheating.
Examining the constitutional requisites of the timing and content of the notice before the hearing, the Eleventh Circuit acknowledged that "[t]here are no hard and fast rules by which to measure meaningful notice." 812 F.2d at 661. In that case the court determined that the plaintiffs had waived any lengthier notice than was given but found the total of about six days to have been reasonable anyway. Regarding the content of the notice, the court held that "[t]here is no constitutional requirement that, to provide them an opportunity to respond, [students facing an expulsion hearing] must [] receive[] any more in the way of notice than a statement of the charge against them." 812 F.2d at 663.
Turning to the procedures at the hearing itself, the Nash court noted that student disciplinary hearings need not necessarily involve the cross-examination of witnesses, for "[w]here basic fairness is preserved, the [Circuit] has not required the cross-examination of witnesses and a full adversary proceeding." 812 F.2d at 664. As the court elaborated, "[d]ue process requires that [the students] have the right to respond [to the charges against them], but their rights in the academic disciplinary process are not co-extensive with the rights of litigants in a civil trial or with those of defendants in a criminal case." Id.; Cf. New Jersey v. T.L.O., 469 U.S. 325, 105 *592 S.Ct. 733, 83 L. Ed. 2d 720 (1985) (recognizing that public schoolchildren have lesser Fourth Amendment rights than the public generally). The court also noted that an impartial decision-maker is a requisite procedural safeguard under the Fourteenth Amendment. 812 F.2d at 665.[8]
Applying these rules, the Court finds that the procedures surrounding the expulsion hearing comported with the requirements of the Fourteenth Amendment's Due Process Clause.
The plaintiffs complain that the defendants failed to inform the plaintiffs of their procedural rights regarding the expulsion hearing. However, the parties' agreed facts indicate that the plaintiffs were notified of Reese's recommendation of expulsion, of the date of a scheduled expulsion hearing, that they had a right to attend the expulsion hearing, that they had a right to legal counsel at the hearing, that they had a right to present witnesses at the hearing, and that they had a right to cross-examine the superintendent's witnesses. All that is constitutionally required of notice of an expulsion hearing is that students receive "a statement of the charge against them," Nash, supra, 812 F.2d at 663, and the notification of procedures in this case did not violate due process of law. Moreover, the timing of the notice, given five days before the hearing, is acceptable under Nash.
Likewise, the alleged failure of the Board to provide the plaintiffs with a copy of the Code of Conduct before the beginning of the expulsion hearing would not support a claim of a due process violation. It is undisputed that Superintendent Carter provided the plaintiffs' attorney with a copy of the Code of Conduct for him to use at the hearing on September 20, and that the hearing was interrupted and was not resumed until November 19. Accordingly, the plaintiffs had two months time in which to review the Code of Conduct.
The allegation that the defendants failed to prove the plaintiffs' knowledge of the Code of Conduct and in so doing deprived them of a due process right borders on the frivolous. The Court doubts whether there is any school in the United States where fighting is not a serious infraction of the rules, or whether there is any schoolchild in the United States who is unaware of the fact that fighting is misconduct. The Court is of the opinion that to prevail on this claim the plaintiffs would be required to satisfy the trier of fact that they were reasonably unaware of any rule against fighting at school and therefore were unable, through ignorance, to conform their conduct to the rules prescribed by the school. The plaintiffs have come forward with no evidence to this effect, see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986) ("the plain language of Rule 56(c) mandates entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case"), and in fact apparently indicated to Principal Reese at their September 10 meeting with him that they knew the rules governing their conduct at school.[9]
The plaintiffs' claim that the Board acted beyond its authority in conducting *593 the expulsion hearing also appears clearly to be without merit. Under Alabama law,
[t]he city board of education is [] vested with all powers necessary or proper for the administration and management of the free public schools within such city ...
Ala.Code § 16-11-9. Thus, Alabama law provided the Board with ample authority to conduct the expulsion hearing in this case.
The plaintiffs also charge that the failure to allow them to receive a copy of the § 16-1-24 report violated their due process rights.[10] Section 16-1-24(c) of the Alabama Code requires that a principal file a written report of certain incidents with the superintendent within 72 hours of the incident. The statute does not provide that the student involved in the incident may receive a copy of the report, and the plaintiffs have cited no authority suggesting that students have a constitutional right to access to the report.[11] The plaintiffs' Complaint states that obtaining the report was necessary to prepare to cross-examine Reese and to obtain the names and addresses of other witnesses to the incident. However, the Eleventh Circuit has made clear that a student has no constitutional right to cross-examine witnesses at an expulsion hearing, Nash, supra, 812 F.2d at 664, so that a student clearly can have no federal right to obtain materials to prepare for cross-examination. Moreover, because the students were present at the altercation and presumably able to identify witnesses on their own, the defendants' failure to provide them with the § 16-1-24 report did not interfere with their right to respond to the charges against them.[12] Thus, even if under state law the defendants should have provided a copy of the § 16-1-24 report to the plaintiffs, the Court finds that providing such a report is not a requisite of providing a fundamentally fair hearing as required by the federal constitution.
The Court has reviewed the transcript of the expulsion hearing, and finds nothing therein to suggest that the hearing was not fundamentally fair. The students facing expulsion were clothed with a presumption of innocence.[13] The Board members responded negatively to a question whether they had independent knowledge of the facts of the case which would affect their decision. [TR1, 22-23] While the expulsion hearing did not proceed according to the Federal Rules of Evidence, such is not required to insure due process, see Loudermill, supra, 470 U.S. at 546, 105 S. Ct. at 1495 (recognizing that the formality and procedural requisites of a hearing need not be elaborate), and the plaintiffs, represented by counsel, were allowed to cross-examine witnesses although such is not required by the Due Process Clause. Nash, supra, 812 F.2d at 664. Principal Reese, a coach named Willie Maxey, Superintendent Carter, and all of the plaintiffs except Douglas Craig testified, as did several of the plaintiffs' parents and siblings, and the Board considered all of this testimony in reaching its decisions.
*594 It is important to note that the Court's task in ruling on the competing summary judgment motions regarding federal damages actions based on procedural due process claims is not to review the correctness of the decisions of Principal Reese or the Selma City School Board in deciding to punish the plaintiffs, but to decide whether the procedures employed in reaching those decisions were so inadequate as to rise to the level of a constitutional tort. The Court is convinced that the plaintiffs did have "the opportunity to be heard at a meaningful time and in a meaningful manner," Mathews, supra, 424 U.S. at 333, 96 S. Ct. at 902, and that the procedures employed at the expulsion hearing afforded the plaintiffs due process of law as required by the United States Constitution. Accordingly, with respect to the counts alleging a procedural due process violation in the conduct of the expulsion hearing, summary judgment is due to be granted to the defendants and denied to the plaintiffs.
B. OTHER CONSTITUTIONAL CLAIMS
The plaintiffs have made three claims denominated as "due process" claims which do not appear to be "procedural due process" claims. The Court finds that summary judgment in the defendants' favor is due to be granted on two of these claims as well, and that summary judgment is due to be denied both parties on Count 14.
1. Substantive Due Process Failure To Provide Education Claims
The plaintiffs allege in Count 14 that the defendants Reese and Carter denied them due process by preventing them from receiving their books and in Count 15 that "the entire conduct of all defendants, as previously described, has prevented plaintiffs and their class [from] obtaining an education in violation of their right to same as contemplated in Brown." The plaintiffs do not appear in these counts to be complaining of the procedure followed by the defendants in deciding to "deprive them of their right to an education," but rather of the deprivation itself. Thus, the claim seems to be one of a violation of "substantive due process" rather than "procedural due process." See, e.g., Daniels v. Williams, 474 U.S. 327, 337, 106 S. Ct. 677, 678, 88 L. Ed. 2d 662 (1986) (Stevens, J., concurring) (explaining that the Fourteenth Amendment "contains a substantive component, sometimes referred to as `substantive due process,' which bars certain arbitrary government actions `regardless of the fairness of the procedures used to implement them.'") Because there is no explicit or fundamental constitutional right to an education, these claims are subject to "rational basis" scrutiny.
Clearly, "[p]ublic education is not a `right' granted to individuals by the Constitution." Plyler v. Doe, 457 U.S. 202, 220-21, 102 S. Ct. 2382, 2396, 72 L. Ed. 2d 786 (1982), citing San Antonio Independent School Dist. v. Rodriguez, 411 U.S. 1, 35, 93 S. Ct. 1278, 1298, 36 L. Ed. 2d 16 (1973). Brown v. Board of Education of Topeka, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873 (1954), explaining the importance of public education, states that the opportunity to receive an education, "where the state has undertaken to provide it, is a right which must be made available to all on equal terms." 347 U.S. at 493, 74 S.Ct. at 691 (emphasis supplied). The Supreme Court in Brown thus held that where a state chooses to provide citizens with a public education, the Equal Protection Clause requires that such education be provided equally to all citizens, and that segregation of students based on race violates the Equal Protection Clause. Brown nowhere establishes a constitutional obligation on the part of states to provide public education. Likewise, the Supreme Court has recognized that a student may have a property interest in receiving a public education such that "[h]aving chosen to extend the right to an education [to a student, a state] may not withdraw that right on grounds of misconduct absent fundamentally fair procedures to determine whether the misconduct has occurred," Goss v. Lopez, 419 U.S. 565, 574, 95 S. Ct. 729, 736, 42 L. Ed. 2d 725 (1975) (emphasis supplied), but the Supreme Court has not recognized that a person has a constitutionally protected *595 property interest in an education in the absence of a state's choice to provide one.
Because the right to obtain a public education is not explicitly granted to American citizens by the language of the federal constitution and has never been recognized as "fundamental" by the Supreme Court, state action infringing on a person's right to obtain a public education is not unconstitutional under substantive due process analysis as long as that action is directed to a legitimate purpose and is rationally related to achieving that purpose. See generally West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S. Ct. 578, 81 L. Ed. 703 (1937); Williamson v. Lee Optical of Oklahoma, 348 U.S. 483, 75 S. Ct. 461, 99 L. Ed. 563 (1955); Ferguson v. Skrupa, 372 U.S. 726, 83 S. Ct. 1028, 10 L. Ed. 2d 93 (1963); Cf. Regents of University of Michigan v. Ewing, 474 U.S. 214, 225, 106 S. Ct. 507, 513, 88 L. Ed. 2d 523 (1985) (when a court entertains a substantive due process challenge to an academic decision, it "may not override it unless it is such a substantial departure from accepted academic norms as to demonstrate that the person or committee responsible did not actually exercise professional judgment").
i. COUNT 15
With respect to Count 15, the Court is easily satisfied that there has been no substantive due process violation.[14] The plaintiffs allege that "the entire conduct of all defendants" has deprived them of an education. The purposes of the defendants in seeking to enforce school regulations and to protect other students as well as school property from violence are certainly legitimate. The means chosen to bring about these legitimate purposes, the time-honored methods of suspension and expulsion, clearly have a rational relation to achieving those purposes. Accordingly, there has been no generalized substantive due process violation based on "the entire conduct of all defendants."
ii. COUNT 14
The substantive due process issues surrounding Count 14 are more difficult because the factual record before the Court is incomplete. The only part of the record which deals with Count 14 is a portion of the transcript of the second part of the expulsion hearing. In questioning by plaintiffs' counsel, Principal Reese responded as follows:
Q: ... Reverend Reese, there was a point after the hearing was discontinued that a request was made to you by me that these students that I represent would have a representative to come to the school and get their books for them to study while a final decision would be made by the Board; is that right?
A: That's right.
Q: And you agreed that that could be done; is that right?
A: Yes.
Q: Initially?
A: Initially, yes.
Q: And my question is would you tell us why was that request, why was that decision later changed that they could not receive their books?
A: Well, I submitted that request that you made to me to the superintendent, and, of course, I assume the superintendent speaks for himself. He indicated to me that possibly would not be advisable at that point. He can speak for himself about that.
Q: You were simply told not to do it?
A: Yeah.
Q: It's just that simple?
A: Well, he indicated that he advised not at that point.
[TR2, 21-22] Superintendent Carter did not testify concerning the matter at the expulsion hearing. [See TR2, 24-31 (Carter's testimony)]
If the plaintiffs' claim in Count 14 is a procedural claim, it does not appear from the record what, if any, procedures were employed in deciding that the plaintiffs would not be allowed to retrieve their *596 books. If the plaintiffs' claim in Count 14 is a substantive claim, it may well present a due process violation, because the Court cannot at this point ascertain any legitimate governmental end in depriving these students of their books. The defendants indicate in brief that the plaintiffs "were simply refused the right to return to school during the pendency of the hearing to remove their schoolbooks ... [because] [t]here was no sense in escalating an explosive situation ..." [Opposition to Plaintiffs' Motion for Summary Judgment, Doc. # 84, p. 8] The Court is inclined to agree that this explanation would pass substantive due process muster if the plaintiffs themselves were attempting to enter school property, but it appears that perhaps the plaintiffs sought rather to have a representative (such as their counsel) retrieve the books.
Regarding Count 14, the Court is of the opinion that the record is not sufficiently clear as to what the facts are and that neither side has met its initial "burden of showing the absence of a genuine issue as to any material fact." Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 585 n. 10, 106 S. Ct. 1348, 1355 n. 10, 89 L. Ed. 2d 538 (1986); Adickes v. S.H. Kress and Company, 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970). Accordingly, as to Count 14, the motions for summary judgment filed by both sides are due to be denied.
2. Restrictions On Returning Students: Equal Protection Clause Claim
The Court has ruled that the students who were not expelled cannot object to the procedures employed at the expulsion hearing. However, those students also claim that
[t]he placing of any terms, restrictions or conditions on the return of those plaintiffs allowed to resume their education restricted their opportunity to receive an education without being set apart from other students who had done no wrong and constituted an impermissible restraint on their opportunity to receive an education.
[Amended Complaint, Doc. # 43, Count 16, pp. 33-34]
The parties are agreed that Sametra Peasant, Sonya Brown, and Tonya Brown returned to school after the November 19 conclusion of the expulsion hearing on "strict conduct probation," but the parties have not elaborated on what this entails. The school's Code of Conduct defines "disciplinary probation," which the Court presumes to be equivalent to "strict conduct probation," as follows:
Disciplinary probation is a period of time specified by the principal during which a student must correct his/her behavior while abiding by all other school regulations. The staff member involved in the action will assist in monitoring the student's adjustment to the school environment.
[Plaintiff's Motion for Summary Judgment, Doc. # 73, Exhibit 1, p. 7]
Although denominated a "due process" claim, Count 16 appears to the Court to be in reality some sort of Equal Protection Clause claim.[15] However, because the "right to an education" is not an explicit or fundamental right, and because the government action complained of does not employ a suspect classification,[16] the imposition of the restraint of "strict conduct probation" on the returning plaintiffs is not unconstitutional so long as the purpose was legitimate and the means were rationally related to the purpose. See, e.g., Hodel v. Indiana, 452 U.S. 314, 331, 101 S. Ct. 2376, 2387, 69 L. Ed. 2d 40 (1981). It clearly appears *597 to the Court that closely monitoring students who have been involved in a series of fights is legitimate, and that "strict conduct probation" is rationally related to achieving this legitimate objective. Accordingly, the Court finds no constitutional violation regarding Count 16.
C. THE PLAINTIFFS' MOTION FOR SUMMARY JUDGEMENT
The plaintiffs' arguments in their brief accompanying their motion for summary judgment do not demonstrate that the plaintiffs are entitled to judgment as a matter of law.[17] The only argument not previously addressed by the Court is the plaintiffs' contention that "the prosecution of plaintiffs for a Class III offense in the Code of Conduct constituted an ex post factor [sic] application of a penal regulation, in fact or in spirit, to the extent that plaintiffs' due process right to a fundamentally fair hearing was violated." [Plaintiffs' Brief, Doc. # 74, p. 1] The plaintiffs' Amended Complaint does not allege an ex post facto Clause violation. The Court will not address this frivolous issue raised by counsel for the plaintiffs because there is no evidence that any part of the Code of Conduct was amended between the time when the plaintiffs engaged in the conduct for which they were punished and the time of their punishment.
III. CONCLUSION
For the foregoing reasons, the defendants' "Amended Motion for Summary Judgment" [Doc. # 64] is GRANTED as to all portions of the Amended Complaint [Doc. # 43] except Count 14. The defendants' "Amended Motion for Summary Judgment" is DENIED as to Count 14 of the Amended Complaint. The "Plaintiffs' Motion for Summary Judgment" [Doc. # 73] is DENIED.
NOTES
[1] These Findings of Fact are taken from the Agreed Facts in the proposed Joint Pretrial Order submitted and signed by representatives of all parties. [Doc. # 57]
[2] Principal Reese signed a warrant against the adults involved in the altercation. Subsequently, Henry Ford's sister and Mrs. Craig were both found guilty of disorderly conduct in Municipal Court and placed on probation. Later the Municipal Court Judge suspended the conviction and sentence against Mrs. Craig.
[3] The Code of Conduct provides that commission of a Class III offense may necessitate the involvement of legal agencies and further provides that the Principal will suspend a student committing a Class III offense and may recommend him or her for expulsion.
[4] When the expulsion hearing was resumed on November 19, the plaintiffs' attorney incorrectly informed the Board that plaintiff Jerry Harris was not enrolled in school as a student at the time of the two altercations, causing the Board to discontinue any further consideration of the charge against Harris.
[5] The Court is uncertain from the record in this case whether the plaintiffs were absent from school for the entire time period from the incident until the conclusion of the expulsion hearing in November, or for only five days. The hearing, which began roughly when the five-day suspensions were scheduled to conclude, was continued by agreement with the plaintiffs' counsel, and he was to advise the Board as to when and whether the hearing should be reconvened. [Exhibits In Support of Defts. Amended Motion for Summary Judgment, Transcript of September 20, 1990 Selma City School Board Meeting, p. 48 ("TR1, 48")] Afterwards, the Board offered to allow several of the plaintiffs the opportunity to return to school subject to certain conditions, an offer which those plaintiffs refused. [Exhibits In Support of Defts. Amended Motion for Summary Judgment, Transcript of November 19, 1990 Selma City School Board Meeting, p. 6 ["TR2, 6")]. At the conclusion of the hearing in November, Superintendent Carter recommended that the Board allow several of the plaintiffs to return to school rather than expel them, explaining that he felt "they ha[d] been punished enough by the number of days they ha[d] been out." [TR2, 89] This testimony indicates that the plaintiffs had not returned to school after their initial five-day suspension. In light of the fact that the plaintiffs were only suspended for five days, and that the onus was on the plaintiffs' counsel to see that the expulsion hearing was reconvened, the Court will treat the suspensions as being five-day suspensions, even if as a matter of fact they resulted in the plaintiffs' absence from school for a period of time longer than five days.
[6] Principal Reese testified at the expulsion hearing that after meeting with the Craig group,
I said, make sure that you stay inside the conference room until I return until I clear the hall to make sure that there were no students in the hall that could possibly cause any type of confrontation because after they explained to me the nature of what transpired there at the stadium, then I felt really that the possibility of some altercation might take place when students would come into the building in the morning or if they would be passing to their first period class.
[TR1, 33]
[7] Only Douglas and Shinether Craig were in fact expelled, and the Court is of the opinion that none of the other plaintiffs have standing to attack the procedures used at the expulsion hearing. Accordingly, summary judgment is due to be granted in favor of the defendants on the procedural due process claims regarding expulsion against all plaintiffs except Douglas and Shinether Craig for that reason. Count Nine is an allegation by Sametra Peasant, Sonya Brown, and Tonya Brown only, and summary judgment is therefore due to be granted against the plaintiffs on that count in its entirety.
[8] These specific rules announced by the Eleventh Circuit are derived from the general test of the adequacy of any procedure used in deciding whether to deprive one of his due process rights, first laid down by the Supreme Court in Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976). In analyzing the procedures used in the instant case, this Court must fill in any gaps in the Eleventh Circuit's inexhaustive list by resort to the more general Mathews test:
[I]dentification of the specific dictates of due process generally requires consideration of three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
Mathews, 424 U.S. at 334-35, 96 S. Ct. at 903.
[9] At the expulsion hearing, Thelma Craig, the mother of several of the plaintiffs, stated that "the children told [Reese] they knew the rules and stuff like that." [TR2, 81]
[10] The plaintiffs also allege that "there existed no procedure by which plaintiffs could ascertain whether defendant Reese had prepared and submitted a Section 16-1-24 report." [Amended Complaint, Doc. # 43, p. 29] However, it is undisputed that Principal Reese submitted such a report to the superintendent. Apparently, the School Board did not receive such a report, [TR1, 55], but the Court is of the opinion that any failure of the Board to receive the report did not deny the plaintiffs due process. In fact, plaintiffs' counsel charged at the hearing that if the Board had received the report, then the Board would not be an impartial tribunal. [Id.]
[11] The Court notes that the students may well have had a statutory right of access to the report under Alabama law if a § 16-1-24 report is a "public writing." Ala.Code § 36-12-40. But Cf. Stone v. Consolidated Pub. Co., 404 So. 2d 678 (Ala.1981) (recognizing exceptions to the broad general definition of "public writing"); Chambers v. Birmingham News Co., 552 So. 2d 854 (Ala.1989) (same).
[12] The Court also notes that apparently the plaintiffs did not attempt to gain access to the § 16-1-24 report before the start of the expulsion hearing. [TR1, 48]
[13] Board member Sheila Okoye began the hearing by stating "[t]he attitude of this Board shall be that the students are innocent of the charges until this Board is persuaded by the evidence otherwise." [TR1, 2-3] Board Chairman Dr. Lett reiterated that "no one is considered guilty until it is proven." [Id. at 13]
[14] If in fact the plaintiffs intend for Count 15 to be a procedural due process claim, it is merely redundant of the preceding counts and lacks merit for the same reason as those counts.
[15] If the plaintiffs' claim is in fact a procedural due process claim, the Court finds that the procedures which were adequate to expel the Craigs were a fortiori adequate to impose the lesser sanction of "strict conduct probation" on the remainder of the plaintiffs. If the plaintiffs' claim is in fact a substantive due process claim, the analysis in this case would be identical to that for an equal protection claim, and the Court finds no substantive due process violation.
[16] The plaintiffs' Amended Complaint states that they are black, but the plaintiffs neither allege nor argue that the allegedly unconstitutional treatment they received was related to their race.
[17] Among the arguments made by the plaintiffs in their brief in support of their motion for summary judgment is that the board violated Jerry Harris' federal due process rights when it failed to consider what action to take against him after being informed by Harris' attorney that Harris was no longer enrolled at the school. Whether or not this argument has merit, the Court is unable to find a claim for such a violation in the Amended Complaint [Doc. # 43]. Moreover, the plaintiffs' brief argues that the Board's offer to allow Sametra Peasant, Sonya Brown, and Tonya Brown to participate in an alternative punishment scheme violated those students' federal due process rights. Whether or not this argument has merit, the claim (Count 10 of the Amended Complaint) has been dismissed on the plaintiffs' own motion. [Doc. # 85] | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1943345/ | 174 B.R. 271 (1994)
In re LIFSCHULTZ FAST FREIGHT CORP., Debtor.
Bruce E. de'MEDICI, Trustee for Lifschultz Fast Freight Corp., Plaintiff,
v.
FDSI MANAGEMENT GROUP, Defendant.
Nos. 94 C 4718, 90 B 21673 and 92 A 841.
United States District Court, N.D. Illinois, Eastern Division.
October 26, 1994.
*272 Bruce E. de'Medici, Riordan, Larson, Bruckert & Moore, Chicago, IL, trustee/plaintiff and counsel for trustee/plaintiff.
Robert B. Walker, Joseph L. Steinfeld, Jr., John T. Siegler, Sims, Walker & Steinfeld, P.C., Washington, DC, for trustee/plaintiff.
William D. Brejcha, Abramson & Fox, Chicago, IL, Robert J. Gallagher, M. Shields Gallagher & Gallagher, P.C., Northampton, MA, for defendant.
MEMORANDUM OPINION
KOCORAS, District Judge:
This matter is before the court on the plaintiff trustee's objections to the Bankruptcy Judge's proposed findings of fact and conclusions of law, granting the defendant's motion for summary judgment. For the reasons that follow, we overrule the plaintiff's objections and affirm the proposed findings of the bankruptcy judge.
BACKGROUND
The background of this Chapter 7 case is fully recounted in Bankruptcy Judge Barliant's opinion dated July 1, 1994. As such, our recitation of the facts will be brief. The debtor, Lifschultz Fast Freight Corporation ("Lifschultz"), was a trucking company. The defendant, FDSI Management Group ("FDSI"), was a customer of Lifschultz. After Lifschultz filed for bankruptcy, its appointed Trustee in Bankruptcy, Bruce E. de'Medici (the "trustee") filed suit against FDSI to collect so-called "undercharges" which were allegedly owed to Lifschultz. These undercharges represent the difference between the applicable tariff rate that Lifschultz was legally obligated to charge and the rate that Lifschultz actually charged FDSI.[1] The defendant moved for summary judgment, asserting that under the Negotiated Rates Act of 1993 (the "NRA"), Pub.L. No. 103-180, 107 Stat. 2044 (1993), liability for undercharges of "small business concerns" such as FDSI was eliminated. See 49 U.S.C. § 10701(f)(9). The bankruptcy court agreed with the defendant's position and recommended that we enter judgment in defendant's favor. The plaintiff trustee objects to the proposed findings of the bankruptcy court.
*273 DISCUSSION
The plaintiff trustee objects to the bankruptcy court's proposed findings. Essentially, the plaintiff argues that, contrary to the findings of the bankruptcy court, subsection 9 of 49 U.S.C. § 10701(f) does not "unconditionally extinguish a small-business concern's liability to pay undercharges." Proposed Findings at 10. The plaintiff asserts that the bankruptcy court's interpretation of § 10701(f) of the NRA was in error, pointing to plain language and legislative history to support the trustee's proposition. According to the plaintiff, § 10701(f)(9), which expressly relieves small business concerns of liability from undercharges, must be read in conjunction with the "In general" provisions set forth in § 10701(f)(1). Having failed to consider § 10701(f)(1), the plaintiff contends that the bankruptcy court misread the statute.
The NRA was enacted to "alleviate the explosion of freight motor carrier undercharge litigation." Gross Common Carrier, Inc. v. A.B. Dick Co., 861 F. Supp. 638, 640 (N.D.Ill.1993). Section 10701(f) of the NRA sets forth the procedures for resolving claims involving unfiled, negotiated transportation rates. In pertinent part, § 10701(f)(1) provides:
(1) In general. When a claim is made by a motor carrier of property . . ., or by a party representing such a [carrier] regarding the collection of rates or charges for such transportation in addition to those originally billed and collected by the [carrier] for such transportation, the person against whom the claim is made may elect to satisfy the claim under the provisions of paragraph (2), (3), or (4) of this subsection, upon showing that
(A) the carrier or freight forwarder is no longer transporting property or is transporting property for the purpose of avoiding the application of this subsection; and. . . .
49 U.S.C. § 10701(f)(1). Paragraphs (2), (3), and (4) of § 10701(f) then set forth settlement percentages which a qualifying defendant shipper may require a non-operating carrier (or its trustee) to accept in return for a complete satisfaction of the claim. Paragraph (9) of § 10701(f) pertains to claims involving small-business concerns and provides:
(9) Claims involving small-business concerns, charitable organizations, and recyclable materials. Notwithstanding paragraphs (2), (3), and (4), a person from whom the additional legally applicable and effective tariff rate or charges are sought shall not be liable for the difference between the carrier's applicable and effective tariff rate and the rate originally billed and paid
(A) if such person qualifies as a small-business concern under the Small Business Act (15 U.S.C. 631 et seq.),. . . .
49 U.S.C. § 10701(f)(9). The plaintiff asserts that a proper interpretation of § 10701(f) necessitates that § 10701(f)(9) be read in conjunction with the "In general" provisions of § 10701(f)(1). The plaintiff further contends that, as such, an application of § 10701(f)(9) in the present case, conflicts with the anti-forfeiture provisions of the Bankruptcy Code. See 11 U.S.C. §§ 541(c)(1) and 363(l).
The plaintiff stresses that the applicability of the "procedures" set forth in ¶¶ (2)-(4) of 49 U.S.C. § 10701(f) depends upon the cessation of the carrier's operations. The plaintiff trustee contends that conditioning the application of the NRA on the operating status of a carrier is the equivalent of conditioning the application of the NRA on the carrier's financial condition (because a non-operating carrier presumably generates no revenue). Because such a condition would violate the anti-forfeiture provisions of the Bankruptcy Code,[2] the trustee concludes that the NRA is unenforceable against a bankruptcy trustee.
*274 The bankruptcy court, however, did not agree with the trustee's "conditional" interpretation of § 10701(f). The bankruptcy court discounted the trustee's argument, finding that the defendant was not seeking to apply the ¶¶ (2)-(4) "procedures" for resolving claims under § 10701(f). Rather, the defendant was invoking ¶ (9) of that subsection, which "unconditionally extinguishes a small-business concern's liability to pay undercharges." Proposed Findings at 10. Finding that ¶ (9) operates independently of ¶ (1), it did not therefore rely upon the debtor's insolvency or financial state or operating status. Id. As such, the bankruptcy court found the trustee's anti-forfeiture provision argument to be inapplicable.[3]Id. at 10-11.
This court agrees with the bankruptcy court's reading of the statute. In Hoarty v. Midwest Carriers Corp. (In re Best Refrigerated Express), the court, after a careful examination of § 10701(f), concluded that the "no longer transporting property" provision of the Act did not apply to the application of the small-business defense enumerated in ¶ (9). Hoarty v. Midwest Carriers Corp. (In re Best Refrigerated Express), 168 B.R. 978, 984-85 (Bankr.D.Neb.1994). In so holding, the Best Refrigerated court looked to the language of the statute. Notably, the court noted that nothing exists in either paragraph (1) or (9) which would indicate that the "no longer transporting property" provision of § 10701(f)(1)(A) must be met in order to claim the ¶ (9) small-business exemption. Id. at 984. Had Congress intended for these provisions to apply to the small-business defense, it could have either incorporated them by reference or set them forth in the body of the relevant paragraphs. Congress chose to do neither.
We hold that the plain language of the statute supports the finding that the "In general" provisions of ¶ (1) do not apply to the small business defense as set forth in ¶ (9) of § 10701(f). As such, ¶ (9) operates independently of ¶ (1) and unconditionally relieves small-business concerns from liability for undercharges. Given that no material facts are in dispute, the bankruptcy court correctly found that the defendant, as a small-business concern, was exempt from undercharge liability under 49 U.S.C. § 10701(f)(9). Summary judgment in favor of the defendant, FDSI, was therefore appropriate. The Proposed Findings of Fact and Conclusions of Law of the bankruptcy court are affirmed. The plaintiff's objections are overruled.
CONCLUSION
For the reasons set forth above, we affirm the bankruptcy court's Proposed Findings of Fact and Conclusions of Law. The defendant's motion for summary judgment is granted. The plaintiff's objections are overruled.
PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW
I. INTRODUCTION
The Debtor in this chapter 7 case, Lifschultz Fast Freight Corporation, was a trucking company operating under the Interstate Commerce Act (the "ICA"). The Defendant, FDSI Management Group ("FDSI"), was a customer of the Debtor. This adversary proceeding is an action by the *275 Trustee to collect so-called "undercharges" that is, the difference between the applicable tariff rate that the Debtor was legally obligated to charge and the rate that the Debtor actually charged FDSI. FDSI has moved for summary judgment, arguing that in the Negotiated Rates Act of 1993 (the "NRA"), Pub.L. No. 103-180, 107 Stat. 2044 (1993), Congress eliminated the liability of "small-business concerns" for undercharges. FDSI further asserts that it qualifies as a small-business concern. The court agrees with FDSI's position and recommends that the district court enter judgment in its favor.
II. JURISDICTION
The bankruptcy court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C. §§ 157 & 1334. This proceeding is not a core proceeding, but it is related to a case under title 11. See In re Bulldog Trucking, Inc., 173 B.R. 517, 525 (W.D.N.C. 1994) (concluding that, with regard to a bankruptcy trustee's adversary proceeding to recover alleged undercharges from a shipper, "this matter has been determined by the undersigned to be a matter related to a case under Title 11"). But see In re Best Refrigerated Express, Inc., 168 B.R. 978, 980 (Bankr.D.Neb.1994) (concluding that, under identical circumstances, "[t]his is a core proceeding as defined by 28 U.S.C. § 157(b)(2)(A) and (E)").
Pursuant to the option afforded by Fed. R.Bankr.P. 7008(a), FDSI has chosen not to consent to the entry of final orders or judgment by the bankruptcy judge. Accordingly, this memorandum constitutes this court's proposed findings of fact and conclusions of law, which are hereby submitted to the district court for the entry of a final judgment. 28 U.S.C. § 157(c)(1); Fed.R.Bankr.P. 9033.
III. BACKGROUND
The evolution of this case "is typical of many similar cases appearing since the 1980 deregulation of the trucking industry that have been filed by bankruptcy trustees of motor common carriers, as well as by motor common carriers who are themselves debtors-in-possession." Bulldog, 173 B.R. at 526.
A. Historical Perspective
Briefly, the standard scenario for this type of case is as follows: A motor carrier (such as the Debtor) publishes its rates (the "filed rates") in tariffs filed with the Interstate Commerce Commission (the "ICC"), as it is required to do by the ICA, codified at 49 U.S.C. §§ 10101-11917. The carrier, however, negotiates lower rates (the "negotiated rates") with its customers, the shippers (such as FDSI). The carrier bills, and the shippers pay, the lower negotiated rates. Sometime later the carrier encounters financial difficulties and perhaps finds itself, voluntarily or involuntarily, under the protection of a bankruptcy court. The carrier or its successor, the bankruptcy trustee, seeks to recover from the shippers the difference between the negotiated rates and the filed rates. This difference is termed an "undercharge."
Before 1990, shippers who found themselves in this predicament routinely asserted the defense that the carrier's or the trustee's attempt to collect these undercharges constitutes an "unreasonable practice." The ICC generally supported this defense; in fact, the ICC's position came to be known as the "negotiated rate doctrine." In Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 130, 110 S. Ct. 2759, 2768, 111 L. Ed. 2d 94 (1990), however, the Supreme Court held that the negotiated rate doctrine is contrary to the ICA and is, therefore, invalid. But later, in Reiter v. Cooper, ___ U.S. ___, ___, 113 S. Ct. 1213, 1217, 122 L. Ed. 2d 604 (1993), the Supreme Court ruled that shippers may assert that the filed rates themselves are unreasonable. As a matter of procedure, the Court permitted shippers to raise a counterclaim for recoupment of an amount equal to the undercharge, thus asserting that the negotiated rate was the reasonable one.
Congress enacted the NRA against this historical backdrop. See Gross Common Carrier, Inc. v. A.B. Dick Co., 861 F. Supp. 638, 640-41 (N.D.Ill.1994). The NRA "is intended to alleviate the explosion of freight motor carrier undercharge litigation." Id. at 640.
*276 B. Procedural History of This Adversary Proceeding[1]
The court entered an order for relief under chapter 11 in the underlying involuntary bankruptcy case on December 13, 1990. Thereafter, the Debtor ceased operations, and the case was converted to a case under chapter 7. Bruce E. de'Medici, the chapter 7 Trustee, filed numerous adversary complaints in this court in an attempt to collect undercharges from shippers who had utilized the Debtor's services. In this proceeding, the Trustee claims $7,992.27 in undercharges from FDSI.
On July 23, 1993, this adversary proceeding was stayed pending the ICC's resolution of FDSI's recoupment counterclaim. In re Lifschultz Fast Freight Corp., 157 B.R. 397 (Bankr.N.D.Ill.1993). The ICC subsequently held its proceeding in abeyance pending this court's decision regarding FDSI's instant motion for summary judgment based upon the newly enacted NRA. FDSI Management Group, No. 41055 (ICC Feb. 4, 1994).
IV. ANALYSIS
A. Summary Judgment
1. Standard of Review
In order to succeed in a motion for summary judgment, the moving party must "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).[2]See also Damnjanovic v. United States, 9 F.3d 1270, 1272 (7th Cir.1993) ("Taking all facts and inferences in favor of the non-moving party, the question is whether a genuine issue of material fact exists to preclude judgment as a matter of law for the moving party."); Gross Common Carrier, Inc. v. Baxter Healthcare Corp., 851 F. Supp. 313, 314 (N.D.Ill.1994) ("Summary judgment will be granted where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law.").
None of the facts relevant to the resolution of this summary judgment motion is in dispute: The Debtor was a motor carrier subject to the jurisdiction of the ICC. The Debtor provided transportation services to FDSI. The Debtor billed and FDSI paid the negotiated rate instead of the filed rate, and the value of the undercharges for the services that the Debtor provided to FDSI is $7,992.27.[3] The Trustee's adversary proceeding against FDSI for undercharges was pending on the date that the NRA was enacted. FDSI is a small-business concern for the purposes of the NRA.
With regard to this last finding, the NRA refers to the Small Business Act (the "SBA"), codified at 15 U.S.C. §§ 631-697c, for the definition of small-business concerns. 49 U.S.C. § 10701(f)(9)(A). The SBA, in turn,
does not define the criteria for determining what constitutes a small business in the common motor carrier industry; it merely sets forth guidelines for administrative agencies to make such determinations. 15 U.S.C. § 632. The Code of Federal Regulations . . ., 13 C.F.R. § 121.601, however, does provide specific direction in this matter in a table of "Standard Industrial Classification" [SIC] codes and corresponding industrial size standards for small-business programs.
Lewis v. H.E. Wisdom & Sons, Inc., No. 93 C 0985, 1994 WL 110659, at *4 (N.D.Ill. Mar. 31, 1994) (brackets in original).
The president of FDSI signed an affidavit asserting that FDSI is a small-business concern under SIC classification code 4731. The Trustee has not disputed this assertion.
*277 2. Applicability of the Negotiated Rates Act of 1993
Section 2(a) of the NRA amends 49 U.S.C. § 10701 by adding a new subsection (f), which is entitled "Procedures for Resolving Claims Involving Unfiled, Negotiated Transportation Rates." Paragraph (9) of 49 U.S.C. § 10701(f), as amended, provides in pertinent part:
(9) Claims involving small-business concerns, charitable organizations, and recyclable materials. Notwithstanding paragraphs (2), (3), and (4), a person from whom the additional legally applicable and effective tariff rate or charges are sought shall not be liable for the difference between the carrier's applicable and effective tariff rate and the rate originally billed and paid
(A) if such person qualifies as a small-business concern under the Small Business Act (15 U.S.C. 631 et seq.)[.]
* * * * * *
Accordingly, since FDSI is a small-business concern, if the NRA, and in particular the "small-business concern defense" codified at 49 U.S.C. § 10701(f)(9), applies to the instant adversary proceeding, then FDSI is entitled to summary judgment as a matter of law because any liability to the Trustee for undercharges is extinguished.
The Trustee asserts that the small-business concern defense is ineffective against him for two reasons. First, according to the Trustee, this provision conflicts with the so-called "anti-forfeiture provisions" of the Bankruptcy Code, 11 U.S.C. §§ 541(c)(1) and 363(l),[4] especially when NRA § 9 (quoted below at part IV.A.2.b) is taken into account. Second, the Trustee maintains that the application of the small-business concern defense violates the automatic stay provision of the Code, 11 U.S.C. § 362(a)(3).
a. Anti-Forfeiture Provisions of the Bankruptcy Code
In general, when an entity files a bankruptcy petition, a bankruptcy estate is created, and all of that entity's pre-petition real and personal property becomes property of the estate. See 11 U.S.C. § 541(a)(1). Section 541(c)(1) of the Code invalidates any contractual or nonbankruptcy statutory provision that would otherwise restrict the transfer of the debtor's property to the bankruptcy estate.[5]
Similarly, a trustee in bankruptcy is vested with broad authority to use, sell, or lease property of the estate, either in the ordinary course of business, see 11 U.S.C. § 363(c), or outside the ordinary course of business after notice and a hearing, see 11 U.S.C. § 363(b). Section 363(l) of the Code parallels § 541(c)(1) by invalidating any contractual or statutory provision that would otherwise restrain the trustee in exercising this power.[6]
The Trustee contends that these two provisions of the Code, in conjunction with NRA § 9, render NRA § 2(a) inapplicable here because 1) "the NRA is a `non-bankruptcy law'"; 2) NRA § 2(a) "purport[s] to work a forfeiture, modification and termination of the right of specified motor carriers and their trustees to recover freight undercharges"; *278 and 3) "the applicability of the NRA is conditioned on the financial condition of the carrier." Pl.'s Mem. in Supp. of Pl.'s Opp'n to Def.'s Mot. for Summ. J., at 6. The Trustee's argument fails on point 3 because the NRA provision extinguishing a small-business concern's liability for undercharges is not triggered by the carrier's insolvency or financial condition.
The NRA provides that a shipper may elect to apply that statute's "procedures" for resolving claims, codified at 49 U.S.C. §§ 10701(f)(2)-(4), "upon showing that (A) the carrier . . . is no longer transporting property or is transporting property for the purpose of avoiding the application of this subsection. . . ." 49 U.S.C. § 10701(f)(1). Thus, the applicability of the "procedures" set forth in ¶¶ (2)-(4) of 49 U.S.C. § 10701(f) is conditioned upon the cessation of the carrier's operations. The Trustee contends that a non-operating carrier generates no revenue, and this lack of revenue directly affects a carrier's financial condition. Consequently, the Trustee argues, conditioning the application of the NRA on the operating status of a carrier is the same as conditioning its application on a carrier's financial condition. Such a condition violates the Code's anti-forfeiture provisions. Therefore, the Trustee concludes, the NRA is unenforceable against a bankruptcy trustee.[7]
What the Trustee overlooks is that FDSI is not seeking to apply the "procedures" for resolving claims appearing at ¶¶ (2)-(4) of 49 U.S.C. § 10701(f); instead, FDSI is invoking ¶ (9) of that subsection, which unconditionally extinguishes a small-business concern's liability to pay undercharges. That is, the provision upon which FDSI relies is not conditioned upon the Debtor's insolvency or financial state or operating status. Therefore, the Trustee's anti-forfeiture provision argument, which applies only when a forfeiture is triggered by the Debtor's insolvency or financial condition, is inapplicable here. See Best Refrigerated, 168 B.R. at 984-85 ("Had Congress intended the `no longer transporting property' clause of (f)(1)(A) to apply to (f)(9), the small business concern paragraph, it would have listed paragraph (9) with (2), (3) and (4) under Section 10107(f)(1), as it did under 10701(f)(7).").
b. Section 9 of the Negotiated Rates Act
The Trustee's position is not strengthened by the application of NRA § 9. This section, which is entitled "Limitation on Statutory Construction," provides as follows:
Nothing in this Act (including any amendment made by this Act) shall be construed as limiting or otherwise affecting application of title 11, United States Code, relating to bankruptcy; title 28, United States Code, relating to the jurisdiction of the courts of the United States (including bankruptcy courts); or the Employee Retirement Income Security Act of 1974.
Section 9 of the NRA merely provides that if a conflict exists between the NRA and the Bankruptcy Code, then the Code takes precedence. There is no such conflict here, so NRA § 9 does not affect the court's decision.
c. Automatic Stay Provision of the Bankruptcy Code
The Trustee's other argument is that FDSI's attempt to invoke the NRA to eliminate FDSI's liability to the Trustee for undercharges is a violation of automatic stay imposed by the Code when a bankruptcy petition is filed.
The Code section upon which the Trustee relies provides in pertinent part that "a [bankruptcy] petition . . . operates as a stay, applicable to all entities, of . . . any act . . . to exercise control over property of the estate. . . ." 11 U.S.C. § 362(a)(3). The "property of the estate" to which the Trustee refers is his cause of action against FDSI to collect undercharges. See, e.g., In re Chenoweth, *279 143 B.R. 527, 534 (S.D.Ill.1992) ("Causes of action are among the property interests that become property of a debtor's bankruptcy estate under section 541(a)(1)."), aff'd, 3 F.3d 1111 (7th Cir.1993); In re U.S. Marketing Concepts, Inc., 113 B.R. 487, 490 (Bankr.N.D.Ind.1990) ("The bankruptcy estate extends to include any cause of action that the trustee may be entitled to prosecute against third parties for the benefit of the estate and, ultimately, its creditors.").
According to the Trustee, "Allowing [FDSI] to dismiss this action under Section 2 of the NRA would allow [FDSI] to `control' that property because the Trustee would then be prohibited from pursuing those claims." Pl.'s Mem. in Supp. of Pl.'s Opp'n to Def.'s Mot. for Summ.J., at 27. The Trustee's argument misapprehends the scope of the automatic stay.
The automatic stay imposed by the Bankruptcy Code is indeed exceedingly broad; it prohibits any entity from taking certain actions, including commencing or continuing litigation affecting the estate. See 11 U.S.C. § 362(a)(1). However, the stay does not prohibit a defendant from asserting an affirmative defense in a bankruptcy trustee's adversary proceeding. Nor does the stay "freeze," as of the date of the bankruptcy petition, the substantive law applying to such an adversary proceeding. Accordingly, the automatic stay does not prohibit the retroactive application of the NRA, and the Trustee's argument fails.
B. Other Relief
In its motion for summary judgment, FDSI also "ask[s] the Court to allow the Interstate Commerce Commission to continue its determination on this matter, if the order of dismissal is appealed, as challenges to the Act are anticipated, and the Defendant does not want other valid defenses to be wasted." Def.'s Mem. of Law in Supp. of Mot. for Summ.J., at 2.
There are a number of problems with this requested relief, including issues of jurisdiction and justifiability. The most significant complication, however, is that the ICC held its proceeding in abeyance specifically in response to a motion by FDSI. If FDSI wishes the ICC to resume its proceeding, then FDSI should seek that relief from the ICC directly. Therefore, it is recommended that the district court deny this relief.
V. CONCLUSION
While the Trustee's adversary proceeding against FDSI to collect undercharges was pending, Congress enacted the NRA. This statute retroactively absolves FDSI, a small-business concern, from any liability for undercharges. Neither the anti-forfeiture provisions nor the automatic stay imposed by the Code applies to the application of this provision of the NRAFDSI may properly assert the small-business concern defense to the Trustee's proceeding. Therefore, this court recommends that, pursuant to 28 U.S.C. § 157(c)(1), the district court enter judgment in favor of FDSI and deny all other requested relief.
DATED: July 1, 1994.
ENTERED: /s/ Ronald Barliant
Hon. Ronald Barliant
Bankruptcy Judge
NOTES
[1] The facts before us represent the typical scenario for this type of case: A motor carrier (such as the debtor) publishes its rates (the "filed rates") in tariffs filed with the Interstate Commerce Commission (the "ICC"). The carrier, however, negotiates lower rates (the "negotiated rates") with its customers, the shippers (such as FDSI). The carrier bills, and the shippers pay, the lower negotiated rates. At some point thereafter the carrier experiences financial difficulties and finds itself under the protection of a bankruptcy court. The carrier or its successor, the bankruptcy trustee, then seeks to recover from the shippers the difference between the negotiated rates and the filed rates. This difference is termed an "undercharge". Proposed Findings at 3.
[2] Section 541(c)(1) of the Bankruptcy Code provides in pertinent part:
[A]n interest of the debtor in property becomes property of the estate . . . notwithstanding any provision in . . . applicable nonbankruptcy law
(A) that restricts or conditions transfer of such interest by the debtor; or
(B) that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title, or on the appointment of or taking possession by a trustee in a case under this title or a custodian before such commencement, and that effects or gives an option to effect a forfeiture, modification, or termination of the debtor's interest in property.
11 U.S.C. § 541(c)(1). Section 363(l) of the Bankruptcy Code parallels § 541(c)(1) and provides in pertinent part:
[T]he trustee may use, sell, or lease property under subsection (b) or (c) of this section . . . notwithstanding any provision in . . . applicable law that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title concerning the debtor, or on the appointment of or the taking possession by a trustee in a case under this title or a custodian, and that effects, or gives an option to effect, a forfeiture, modification, or termination of the debtor's interest in such property. 11 U.S.C. § 363(l).
[3] We note that several courts have expressly rejected the plaintiff's reasoning with respect to the anti-forfeiture argument. See e.g., Jones Truck Lines v. Grinnell Corp. Anvil Prods. Div., 167 B.R. 488, 492-93 (N.D.Ill.1994); Jones Truck Lines v. Alliance Rubber Co., 166 B.R. 691, 693 (W.D.Ark. 1994); Jones Truck Lines v. AFCO Steel, Inc., 849 F. Supp. 1296, 1304-07 (E.D.Ark.1994). On the other hand, only one court has adopted the plaintiff's position. See In re Bulldog Trucking, Inc., 173 B.R. 517, 525 (W.D.N.C.1994).
[1] The background of the underlying bankruptcy case is set forth in the following two previously published opinions: In re Lifschultz Fast Freight Corp., 140 B.R. 482, 484 (Bankr.N.D.Ill.1992), and In re Lifschultz Fast Freight Corp., 157 B.R. 397, 398-99 (Bankr.N.D.Ill.1993).
[2] Fed.R.Bankr.P. 7056 applies Fed.R.Civ.P. 56 to adversary proceedings.
[3] FDSI disputes the existence and value of the purported undercharges. However, these issues are not material because, as discussed below, the NRA eliminates FDSI's liability for any undercharges, regardless of the amount.
[4] The subsection letter "(l)" (as in "Lima") of 11 U.S.C. § 363 is typically italicized to distinguish it from the paragraph numeral "(1)" ("one").
[5] 11 U.S.C. § 541(c)(1) provides in pertinent part:
[A]n interest of the debtor in property becomes property of the estate . . . notwithstanding any provision in . . . applicable nonbankruptcy law
(A) that restricts or conditions transfer of such interest by the debtor; or
(B) that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title, or on the appointment of or taking possession by a trustee in a case under this title or a custodian before such commencement, and that effects or gives an option to effect a forfeiture, modification, or termination of the debtor's interest in property.
[6] 11 U.S.C. § 363(l) provides in pertinent part:
[T]he trustee may use, sell, or lease property under subsection (b) or (c) of this section . . . notwithstanding any provision in . . . applicable law that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title concerning the debtor, or on the appointment of or the taking possession by a trustee in a case under this title or a custodian, and that effects, or gives an option to effect, a forfeiture, modification, or termination of the debtor's interest in such property.
[7] Only one court has adopted the Trustee's position with respect to this argument. See Bulldog, 173 B.R. at 533-42. Several other courts have expressly rejected this reasoning. See Jones Truck Lines, Inc. v. Grinnell Corp. Anvil Prods. Div., 167 B.R. 488, 492-93 (N.D.Ill.1994); Jones Truck Lines, Inc. v. Alliance Rubber Co., 166 B.R. 691, 693 (W.D.Ark.1994); Jones Truck Lines, Inc. v. AFCO Steel, Inc., 849 F. Supp. 1296, 1304-07 (E.D.Ark.1994); Allen v. ITM, Ltd. South, 167 B.R. 63, 66-67 (M.D.N.C.1994); Jones Truck Lines, Inc. v. Aladdin Synergetics, Inc., 174 B.R. 76, 81 n. 9 (M.D.Tenn.1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1950481/ | 505 F. Supp. 192 (1981)
Stephen BERGER, Plaintiff,
v.
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. and Robert S. Corwin, Defendants.
No. 79 Civ. 5653(MEL).
United States District Court, S. D. New York.
January 21, 1981.
*193 Butler, Fitzgerald & Potter, New York City, for plaintiff; Stuart L. Potter, Stephen F. Bailly, New York City, of counsel.
William T. Marshall, Jr., New York City, for defendants.
LASKER, District Judge.
Stephen Berger alleges inter alia that Merrill Lynch, Pierce, Fenner & Smith, Incorporated ("Merrill Lynch") and Robert S. Corwin, a securities salesman for Merrill Lynch, violated the Securities and Exchange Act of 1934, 15 U.S.C. § 78b, and Rule 10b-5, 17 C.F.R. § 240.10b-5, by failing to inform him that he did not own the underlying stock for four options purchased for his account, i. e. that he was engaged in "naked option" trading. Defendants move for summary judgment on the ground that knowledge that Berger did not own the underlying stock in these transactions must be imputed to him as a matter of law because (1) Merrill Lynch and Corwin provided Berger with confirmations of each transaction as well as monthly statements of his account which revealed that he did not own the underlying stock and (2) Berger approved each transaction at issue. Defendants also move to dismiss the pendent state claims or for an order compelling arbitration.[1] Finally, defendants seek dismissal of the complaint pursuant to Fed.R.Civ.Pr. 9(b) and 12(b)(6) on the ground that the complaint fails to state any factual basis to support the allegation that the defendants' conduct was fraudulent.
According to Berger's affidavit in opposition, he and Corwin first met in 1974 when they discussed Berger's investment goals and strategies. Berger told Corwin of prior losses he had sustained in the securities market and said that if he again became involved in the market, he would accept limited profits in exchange for minimal risk. Corwin recommended that Berger begin selling and repurchasing call options on stock he owned ("covered options"). Prior to this time, Berger had not engaged in options trading. Between November, 1974 and November, 1977, Corwin executed close to one hundred covered option transactions for Berger's account. Before each transaction, Corwin telephoned Berger with a recommendation and Berger approved each transaction. Berger states that he relied exclusively on Corwin for advice and information. In addition, Berger and Corwin discussed the account three or four times a *194 year, from which it might be inferred that Corwin learned of Berger's level of financial sophistication and of his reliance on Corwin.
In late 1977, Berger told Corwin that he was dissatisfied with the performance of the account and Corwin assured him that it would improve. In the summer of 1978, Berger called Corwin to discuss the status of his account, learned that he had incurred substantial losses and directed Corwin to close his account. According to Berger, Corwin never told him that he had begun to execute naked option transactions for Berger's account. He did not learn until over a year later, when his attorneys analyzed his account statements, that between November, 1977 and May, 1978 Corwin had engaged in naked option transactions for his account in place of the more conservative covered option transactions.
In these circumstances, there is a genuine issue as to the material fact whether Corwin knew that Berger would not be able to infer from the confirmations and account statements sent to him that he was engaged in naked option transactions, rather than the safer covered options in which he had traded for three years.
Defendants rely on Scarfarotti v. Bache & Co., Inc., 438 F. Supp. 199 (S.D.N.Y. 1977) in urging the adoption of a flat rule of law that knowledge of material facts must be imputed to an investor whenever the investor has been provided with the relevant information. In Scarfarotti, however, the court found the plaintiffs to be experienced, sophisticated investors. Whatever the soundness of imputation of knowledge in that context, it is inappropriate here, where the broker may be shown to have had reason to believe that the investor was not financially sophisticated and would be unable to recognize the material facts themselves or deduce their implications from the information provided him. See Cant v. A.G. Becker & Co., Inc., 374 F. Supp. 36 (N.D.Ill.1974); Feit v. Leasco Data Processing Corp., 332 F. Supp. 544 (S.D.N.Y. 1971). Given such knowledge on the part of the broker and the prior history of the relationship between broker and client, it could be found at trial (although we make no such finding), that by failing to inform Berger when they began executing naked options for his account, the defendants had intentionally or recklessly omitted "to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading ..." 17 C.F.R. § 240.10(b)-5; see Ernst & Ernst v. Hochfelder, 425 U.S. 185, 96 S. Ct. 1375, 47 L. Ed. 2d 668 (1976); Rolf v. Blyth Eastman Dillon & Co., Inc., 570 F.2d 38 (2d Cir. 1978), cert. denied 439 U.S. 1039, 99 S. Ct. 642, 58 L. Ed. 2d 698 (1978). Accordingly, the motion for summary judgment is denied.[2]
Defendants contend that in any event the complaint should be dismissed because it does not specify any factual basis to support the allegation that defendants' conduct was fraudulent. The argument is unpersuasive. The complaint specifically alleges that Corwin managed Berger's account for four years, that Corwin represented to Berger at the outset that Corwin would engage in covered option trading for Berger so as to yield modest profits with minimal risk to Berger's invested capital, that Corwin began engaging in naked option trading for Berger without informing Berger of the change, that Corwin omitted to inform Berger of the change with the intention of misleading Berger, and that Berger would not have approved the transactions if he had known their true nature. The complaint identifies the particular allegedly fraudulent omissions, specifies in what respect each of the omissions was false and misleading, and provides the factual basis for believing that defendants acted fraudulently. See Todd v. Oppenheimer, 78 F.R.D. 415, 420 (S.D.N.Y.1978).
The motion for summary judgment in defendants' favor, dismissal of the pendent state claims or an order compelling arbitration, *195 or alternatively for dismissal pursuant to Fed.R.Civ.Pr. 9(b) and 12(b)(6) is denied in all respects.
It is so ordered.
NOTES
[1] The portions of the motion seeking dismissal of the pendent state claims or an order compelling arbitration are predicated on summary judgment on the Rule 10b-5 claim being granted. (Defendants' Brief, pp. 7-10).
[2] In light of this disposition, the portions of the motion seeking dismissal of the pendent state claims or an order compelling arbitration are also denied. See note 1, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1950755/ | 505 F. Supp. 19 (1980)
Michael D. BURGESS, Plaintiff,
v.
Tony G. BRYANT, Defendant.
No. CIV-80-415-D.
United States District Court, W. D. Oklahoma.
August 6, 1980.
Roger H. Foster, Oklahoma City, Okl., for plaintiff.
Douglas J. Juergens and Jennie Lyn McLean, Norman, Okl., for defendant.
ORDER
DAUGHERTY, Chief Judge.
This is a civil rights action under 42 U.S.C. § 1983 arising out of an alleged assault on Plaintiff by Defendant Tony G. Bryant, a police officer for the City of Norman, Oklahoma, which occurred at the Norman jail subsequent to Plaintiff's arrest by the Defendant. Pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure, Defendant has filed herein a Motion to Dismiss this action for failure to state a claim upon which relief can be granted. Said Motion is supported by a Brief and Plaintiff has filed a Brief in opposition thereto.
In support of his Motion to Dismiss, Defendant contends that this action is barred *20 by the applicable statute of limitations. In this connection, Defendant contends that the limitations period provided by the Oklahoma Political Subdivision Tort Claims Act, 51 Okla.Stat.Supp.1979 §§ 151-170,[1] should apply in this case while Plaintiff maintains that the two-year limitations period for tort actions provided by 12 Okla.Stat.1971 § 95 controls.
As 42 U.S.C. § 1983 does not provide a period of limitations for the cause of action created thereby, federal courts must look to the most nearly analogous state statute of limitations to determine the time within which a cause of action may be commenced. Crosswhite v. Brown, 424 F.2d 495 (Tenth Cir. 1970); Wright v. St. John's Hospital, 414 F. Supp. 1202 (N.D.Okla.1976); Seibert v. McCracken, 387 F. Supp. 275 (E.D. Okla.1974). In this regard, the Court is not persuaded that the limitations provisions of the Oklahoma Political Subdivision Tort Claims Act, supra, should apply in this case as Plaintiff is seeking recovery directly against an individual defendant only and not against a political subdivision of the State of Oklahoma. Furthermore, it has been established that the two year limitations period for tort actions provided by 12 Okla.Stat.1971 § 95 is the applicable statute of limitations in actions brought under 42 U.S.C. § 1983. See Crosswhite v. Brown, supra; Seibert v. McCracken, supra. As it appears from the record before the Court herein that Plaintiff's cause of action arose on November 27, 1978, and this action was commenced on April 7, 1980, it is obvious that Plaintiff's action is timely. Therefore, the Court finds and concludes that Defendant's Motion to Dismiss should be overruled. Accordingly, Defendant is directed to answer Plaintiff's Complaint within 20 days of this date.
It is so ordered.
NOTES
[1] The pertinent sections of said Act are 51 Okla.Stat.Supp.1979 §§ 156 and 157. § 156 provides in pertinent part as follows:
A. Any person having a claim against a political subdivision or an employee within the scope of this act shall petition the political subdivision for any appropriate relief including the award of money damages.
B. A claim against a political subdivision or employee shall be forever barred unless notice thereof is filed with the clerk of the governing body of the political subdivision within one hundred twenty (120) days after the loss occurs.
C. The written notice of claim shall state the time, place and circumstances of the claim and the amount of compensation or other relief demanded. Failure to state either the time, place, circumstances and amount of compensation demanded shall not invalidate the notice unless the claimant declines or refuses to furnish such information within ninety (90) days after demand by the political subdivision. No action for any cause arising under this act shall be maintained unless valid notice has been given and the action is commenced within six (6) months after notification of denial of the claim by the clerk of the political subdivision. The time for giving written notice of claim does not include the time during which the person injured is unable due to incapacitation from the injury to give such notice, not exceeding ninety (90) days of incapacity.
§ 157 provides as follows:
Within ninety (90) days after receiving the filing of a claim, the clerk of the political subdivision shall notify the claimant in writing of the approval or denial of the claim. A claim is denied if the political subdivision fails to approve the claim in its entirety within ninety (90) days, unless the interested parties have reached a settlement before the expiration of that period. A person may not initiate a suit against a political subdivision or employee whose conduct gave rise to the claim unless the claim has been denied in whole or in part. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1950864/ | 505 F. Supp. 880 (1981)
Jimmy Allen ALEWINE et al., Plaintiffs,
v.
CITY COUNCIL OF AUGUSTA, GEORGIA, Defendant.
Civ. A. No. 179-113.
United States District Court, S. D. Georgia, Augusta Division.
January 13, 1981.
*881 Charles L. Wilkinson, III, Augusta, Ga., for plaintiffs.
Samuel F. Maguire, Augusta, Ga., for defendant.
MEMORANDUM OPINION AND ORDER ON MOTIONS FOR SUMMARY JUDGMENT
BOWEN, District Judge.
Plaintiff bus drivers, employees of the Transit Department of the City of Augusta, *882 Georgia, filed their complaint on the 31st day of May, 1979, seeking to recover compensation for back pay alleged to be due them as overtime pay claimed under the maximum hours provisions of the Fair Labor Standards Act (29 U.S.C. § 201 et seq.) and under a section of the Ordinances of the City of Augusta (Augusta City Code § 2-48). The complaint is cast in one count and seeks relief under federal and state (city ordinance) law. Plaintiffs seek injunctive relief, back pay, attorney's fees and liquidated damages under the provisions of 29 U.S.C. § 217.
During the course of the litigation, the plaintiffs applied to the Court for a preliminary injunction seeking to restrain the city's implementation of a plan to reduce their work hours. An order was entered, after hearing and consideration of said application, on June 20, 1980.
Findings of fact have been made and necessary inferences have been drawn. The Court proceeds to dispose of the case not on summary judgment, but after the evidence has case has been tried without a jury and the evidence reaches the Court from the testimony, the record, and the parties' stipulation.
This memorandum is cast in six parts. First, the Court determines its jurisdiction to proceed. Second, there is a statement of facts found by the Court upon the stipulations made by the parties. Third, there is a discussion and a statement of conclusions of law regarding the federal law claim of the plaintiffs. Fourth, there is a discussion and a statement of conclusions of law made regarding the pendent jurisdiction state law claim. Fifth, there is a discussion and a statement of findings with respect to the plaintiffs' recovery. Last, there is an order according some of the relief sought by the plaintiffs and the defendant.
Both the plaintiffs and the defendant have filed motions for summary judgment. This opinion and order disposes of the case on the merits. The Court has heard testimony and received evidence in the case on a prior application for preliminary injunction. The Court has considered the pleadings, the briefs, and the affidavits submitted by the parties. Most importantly, the Court has considered the detailed stipulation of facts which able counsel for the parties have presented. The case is not one of factual dispute. The lawyers have handled the case vigorously, but unemotionally. They have succeeded in an effort to present the facts of the case to the Court in a well organized, impartial, and meaningful way. In some litigation, there is great need for heated pursuit of minor factual matters. In this case, however, the parties, the public, the Court, and the interest of justice and proper advocacy have been best served by this simple, direct approach to the facts. Counsel are to be commended for their presentation in this regard. However, their agreement to the facts has never diminished the zeal with which counsel have approached the legal issues. The case has been aptly briefed and argued. It is thoroughly before the Court.
JURISDICTION
There is no dispute between the parties as to the Court's jurisdiction in this case. With respect to the federal law cause of action, this Court has jurisdiction under the provisions of the Fair Labor Standards Act, 29 U.S.C. § 216(b) and under the provisions of 28 U.S.C. § 1331. Venue is proper in the Augusta Division of the Southern District of Georgia where the claim arose. 28 U.S.C. § 1391(a).
With respect to the state law claim made by the plaintiffs grounded in the city ordinances of Augusta, the facts which control are identical to those presented under the federal claim. The parties are the same and the interest of judicial economy is served by this Court's determination and disposition of that claim. The Court may therefore decide the state law claim under the doctrine of pendent jurisdiction. This doctrine provides that a federal court has the discretionary constitutional power to hear a state law claim if it arises out of the same nucleus of operative facts as plaintiffs' federal claim. Tower v. Home Construction Co., 625 F.2d 1161 (5th Cir. 1980); *883 Curtis v. Taylor, 625 F.2d 645 (5th Cir. 1980); United States v. Capeletti Brothers, Inc., 621 F.2d 1309 (5th Cir. 1980). Here, the federal and state law claims clearly arise out of the same nucleus of operative facts.
THE FACTS
Plaintiffs are present or former employees of the City Council of Augusta, Georgia (hereinafter "the City"), who, at the time of the filing of the complaint, were working or who had worked within the preceding three years as bus drivers for the City Council of Augusta, Georgia. Plaintiff Francis H. Stafford was an employee in the housekeeping section of the Transportation Department. Her claim has been withdrawn by stipulation of counsel.
The City Council of Augusta is the governing body of the City of Augusta, Georgia, and is subject to the jurisdiction of this Court. The City of Augusta was chartered by the legislature and is a political subdivision of the State of Georgia.
The Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201, et seq., provides for minimum wages to be paid and limits the hours which can be worked by covered employees during a workweek. Section 207 provides for the maximum hours which certain employees can work during a workweek and provides for overtime pay above the maximum hours. Originally the provisions of the Fair Labor Standards Act exempted employees of street car, trolley, and motor bus carriers from the application of the minimum wage and maximum hours provision. The 1966 amendments to the Fair Labor Standards Act, Pub.L.No.89-601, extended the maximum hours coverage to non-operating employees of transit systems and extended minimum wage coverage to all transit employees.
Effective May 1, 1974, the maximum hours exemption for operating employees of transit systems contained in 29 U.S.C. § 213(b)(7) was repealed in two stages. On May 1, 1974, they were to be paid overtime compensation for hours worked in excess of forty-eight hours per week; beginning May 1, 1975, such employees were to be paid overtime compensation for hours worked in excess of forty-four hours per week; and beginning May 1, 1976, they were to be paid overtime compensation for hours worked in excess of forty hours per week; 29 U.S.C. § 207 requires employees to be paid time and one-half for all hours worked in excess of forty hours in any one workweek.
Section 2-48 of the Code of the City of Augusta, Georgia, 1972, as amended, pages 177-178, provides as follows:
The number of hours of work to be observed by any employee in any department of the City Council, except the departments under the control and jurisdiction of the Civil Service Commission of the City, and except all employees of the City Council engaged in the paving, macadamizing, or otherwise improving for travel the streets and alleys of the City, or in connection with the curbing and guttering of such streets and alleys, shall not exceed forty hours per work week. The term "work week" shall mean a calendar week. This section shall not be construed as a reduction of the salaries and wages of any of the present or future employees of the City Council.
It shall be lawful for any City official, the Mayor, the committee superintendent, foreman, or other person directing an employee to require an employee to proceed with any duties in excess of such forty hours per work week in case of an emergency and only in such event. However, when an emergency has ended, such time devoted by such employee in excess of a forty hour work week shall be allowed the employee as overtime with time and one-half pay.
The term "employees" as used in this section, shall mean the employees covered or hereafter covered by the Officers and Employees Tenure Act of 1937-38, as amended. Each of such employees employed by the day, now or in the future, shall be paid, when he has worked forty hours in any work week his daily wages for six days, whether such forty hours work is in six days or less. Each of such *884 employees working in any work week, now or in the future, less than forty hours, shall be paid on a time basis of the number of hours worked, as such time is in proportion to the time calculated for an employee who worked forty hours in the calendar week. (Code 1952, Ch. 2, Section 32)
On December 21, 1979, the Secretary of Labor published a regulation in the Federal Register, 44 Fed.Reg. 75630 (Dec. 21, 1979), declaring municipal transit bus systems to be within the "non-traditional" classification of municipal activities, within the meaning of National League of Cities v. Usery, 426 U.S. 833, 96 S. Ct. 2465, 49 L. Ed. 2d 245 (1976).
Prior to 1950, local bus service in Augusta was provided by the Georgia Power Company. In 1950, the Augusta Coach Company, a privately owned corporation, began operating local bus service in Augusta under a franchise from the City.
As shown by financial statements for the years 1968 through 1972, of record in this case, the Augusta Coach Company experienced a steady decrease in net income and working capital. The financial situation of the Augusta Coach Company steadily deteriorated until, in 1969, its Board of Directors notified the City of Augusta of their intention to discontinue service. The financial situation of the Augusta Coach Company continued to deteriorate, and early in 1973, the Augusta Coach Company again informed the City of Augusta of its intention to discontinue service.
The City Council of Augusta executed a six-month option to purchase assets of the Augusta Coach Company in April, 1973. For six months, the City Council provided operating assistance to the company while an application for federal assistance was processed.
The Augusta Coach Company made several attempts to remain profitable: it discontinued service to North Augusta, South Carolina, in 1964; it discontinued Sunday service and curtailed charter service in 1972; it deferred capital expenditures, such as the purchase of new buses; it deferred pay raises to employees and it was allowed to operate without a franchise.
The average age of each bus in the fleet of buses owned by the Augusta Coach Company in 1973 was approximately 19 years. The buses generally were not mechanically reliable and often broke down in every day service. None of the buses were air conditioned.
The assets of the Augusta Coach Company were purchased with federal assistance by the City Council of Augusta by a "Letter of No Prejudice" dated November 7, 1973. The City Council of Augusta began operating the Augusta Transit Department on November 21, 1973. The City Council of Augusta made application to the Urban Mass Transportation Administration for capital assistance and operating grants. Said application was approved in January, 1975, and a grant contract was executed on January 30, 1975.
On January 10, 1975, the Urban Mass Transportation Administration offered the City a grant contract, which the City accepted on January 30, 1975; a copy of said Urban Mass Transportation Administration Capital Grant Contract between the City and the United States of America, Project Number GA-03-0004, the terms and conditions of that contract, a letter of certification from the Department of Labor to the Urban Mass Transportation Administration dated October 16, 1974, which is incorporated into said grant contract by reference, the Agreement between the City, the Municipal Employees Association, and the Amalgamated Transit Union, dated October 3, 1974, and incorporated into said grant contract by reference, are of record in this case.
In the Agreement between the City, the Municipal Employees Association, and the Amalgamated Transit Union, dated October 3, 1974, of record in this case, the City agreed that there would be no "worsening" of employees' position with respect to their employment. This agreement was required by the provisions of the Urban Mass Transportation Act of 1964, 49 U.S.C. §§ 1601, 1609(c).
*885 Prior to the City's purchase of the assets and the rolling stock of the Augusta Coach Company, the City did not provide bus service.
The Augusta Transit Department of the City Council of Augusta provides fixed route, scheduled bus service and charter service. The bus service offered by the City Transit Department is similar to the service that was being provided by the Augusta Coach Company at the time of public takeover.
The quality of equipment has greatly improved. Had it not been for the grant from the Urban Mass Transportation Administration, the City would not have purchased the assets of the Augusta Coach Company. Were it not for the operating grants from the Urban Mass Transportation Administration, the City would not pay the cost of operating the local transit system.
After purchasing the assets of the Augusta Coach Company, the City hired the drivers and non-operating personnel employed by the company. The functions and duties of the newly hired personnel remained about the same as before.
The City charges bus riders a fee for regular bus service. Since acquisition by the City, the bus service has frequently contracted with private businesses and groups to provide private charter service.
Neither plaintiffs, nor other transit employees, are under the management of the Civil Service Commission (Police and Fire departments) of the City. In operating a bus service, the City engages in an activity previously engaged in by a private enterprise.
Since May 1, 1976, the City has paid overtime pay to the bus drivers only for hours they worked in excess of forty-eight hours a week; the City pays the mechanics in the Transit Department overtime after forty hours a week. Under this Court's order of June 20, 1980, the City has implemented a plan which reduced the bus drivers workweek to approximately 40 hours. Both the forty-eight hour workweek and the present week have been designed around the time required to make certain scheduled "runs" of bus service.
The State of Georgia does not require that by statute a municipal corporation provide bus service to its citizens.
The following chart shows the operating expense, revenue-fares, revenue-other and total revenue for the City Council of Augusta Transit Department for the years 1973 through 1978:
OPERATING
YEAR EXPENSE REVENUE-FARES REVENUE-OTHER TOTAL REVENUE
1973 $226,482.83 $110,392.71 $ 55.10 $110,447.81
1974 598,287.34 432,980.54 2,720.67 435,701.21
1975 669,807.93 440,638.58 1,252.78 441,891.36
1976 731,512.06 440,669.10 864.89 441,533.99
1977 858,846.61 421,925.77 675.11 442,600.88
1978 994,606.27 431,495.66 8,098.00 439,593.66
___________ ___________ __________ ___________
For the years 1973 through 1978, the following chart shows the Federal Government's participation in operating costs and net operating loss for the City Council of Augusta Transit Department:
FEDERAL FEDERAL
GOVERNMENT NET GOVERNMENT NET
YEAR PARTICIPATION OPERATING LOSS YEAR PARTICIPATION OPERATING LOSS
1973 $ ___ $116,035.02 1976 86,269.00 203,709.07
1974 ___ 162,586.13 1977 ___ 436,245.73
1975 ___ 257,916.57 1978 347,839.00 207,173.61
__________ __________
The Federal Government's involvement, through the Urban Mass Transportation Administration, is extensive. The Federal Government absorbs 50% of the system's operating loss.
*886 The capital outlays from the City's State Street Maintenance Account, Government (Federal) participation capital account and net capital cost for the Transit Department for the years 1973 through 1978 are as follows:
FEDERAL GOVERNMENT
STATE STREET PARTICIPATION NET COST
YEAR MAINTENANCE ACCT. CAPITAL ACCT. CAPITAL ACCT.
1973 $ ___ $ ___ $ ___
1974 476,140.16 ___ 476,140.16
1975 787,048.08 1,050,331.05 263,282.97
1976 76,304.32 980.20 53,938.52
21,385.60
1977 566,021.66 407,547.20 153,764.14
4,710.32
1978 605,162.40 491,726.46 113,435.94
__________ ____________ ____________
For the years 1973 through 1978, the City Council of Augusta Transit Department had an annual ridership of approximately 1.9 million persons.
In fiscal year 1978, Transit Department operating expenses totaled $998,503, while the Department produced $432,418 in operating revenues from bus service. The deficit in fiscal year 1978 between operating expenses and operating revenues was paid by Federal funds in the amount of $283,042 from Federal funding sources, and $283,043 in City funds.
According to a recent survey conducted by the Augusta-Richmond County Planning Commission, 86% of the riders of the Augusta Transit Department belong to households without a car or with only one car.
Bus service in Columbia and Charleston, South Carolina, is provided by the South Carolina Electric and Gas Company. South Carolina Electric and Gas Company is a privately owned corporation.
The cities of Columbia and Charleston, South Carolina, are larger in population than is the City of Augusta. The counties of Richland and Charleston, South Carolina, in which are located the cities of Columbia and Charleston, respectively, are larger in population than is Richmond County, Georgia.
The public transit systems in the following major cities in Georgia are now owned and operated by local governments: Atlanta, Athens, Macon, Columbus, Savannah, Rome, Albany and Augusta.
In the following five stipulations, the term "Publically owned Transit Systems" refers to systems owned, operated or subsidized in major part by local, state or federal governments, and includes transit systems operated or managed by private firms under contract to governmental agency owners. According to the American Public Transit Association's Transit Fact Book, in 1978, in the United States,
(a) 90% of the total operating revenues generated by metropolitan transit systems were generated by publically owned transit systems,
(b) publically owned transit systems accounted for 89% of all vehicle miles operated in the transit industry,
(c) publically owned transit systems had 91% of all "linked passenger trips" in the transit industry,
(d) publically owned transit systems owned or leased 84% of the total motor buses owned or leased by the United States transit industry, and
(e) publically owned transit systems accounted for 48% of all transit systems nationwide.
A copy of the 1979 American Public Transit Association's Transit Fact Book is of record in this case.
FEDERAL LAW CLAIMS
The plaintiffs' complaint as it relates to claims under federal laws involves both the *887 Fair Labor Standards Act (29 U.S.C. § 201 et seq.) and the Urban Mass Transit Act (49 U.S.C. § 1609(c)). This Court is guided by a number of recent federal appellate decisions with respect to the interpretation of these statutes.
Over 40 years ago, the Congress of the United States enacted the Fair Labor Standards Act. The Act required covered employers to pay their employees minimum wages plus overtime pay at increased rates for time in excess of a maximum-hour workweek. The Supreme Court of the United States unanimously upheld the Fair Labor Standards Act as a valid exercise of congressional authority under the Commerce Clause of the Constitution in United States v. Darby, 312 U.S. 100, 61 S. Ct. 451, 85 L. Ed. 609 (1941), observing: "whatever their motive and purpose, regulations of commerce which do not infringe some constitutional prohibition are within the plenary power conferred on Congress by the Commerce Clause." Id. at 115, 61 S. Ct. at 457.
The original Fair Labor Standards Act passed in 1938 specifically excluded from coverage the states and their political subdivisions. However, in a series of amendments beginning in 1961, Congress began to extend the coverage provisions of the Act to some types of public employees. This series of amendments culminated in the 1974 amendments which are the most recent in the series of broadening amendments to the Fair Labor Standards Act. By the 1974 amendments, Congress has extended the minimum wage and maximum hour provisions to almost all public employees employed by the states and their political subdivisions. The constitutionality of this vast extension of the coverage of the Act under the 1974 amendments was tested in the case of National League of Cities v. Usery, 426 U.S. 833, 96 S. Ct. 2465, 49 L. Ed. 245 (1976), in which the Supreme Court provided to the lower courts some guidance and few specifics as to the unconstitutionality of the coverage broadening 1974 amendments to the Fair Labor Standards Act.[1]
Briefly, the Court reasoned that while Congress may have plenary power under the Commerce Clause[2] to regulate commerce, and that the Fair Labor Standards Act was a legitimate exercise of this authority, it may not effect legislation which attacks the integrity or the very sovereignty of the states as states. Recognizing that independent sovereign states are necessary to the maintenance of the union in a federal system envisioned by the Constitution, the Court determines that even the plenary grant of authority to legislate contained in the Commerce Clause must yield to the right of the states to structure their own agreements with employees engaged in integral government functions. The Court gave examples of integral government functions such as fire prevention, police protection, sanitation, public health, and parks and recreation, and noted that "these examples are obviously not an exhaustive catalog of the numerous line and support activities which are well within the area of traditional operations of state and local governments." 426 U.S. at 851 n. 16, 96 S. Ct. at 2474. The Court ultimately concluded: *888 "we hold that insofar as the challenged amendments operate to directly displace the states' freedom to structure integral operations in areas of traditional governmental functions, they are not within the authority granted Congress by Article I, Section 8, Clause 3." Id. at 852, 96 S. Ct. at 2474.
Further, the Supreme Court specifically overruled its decision in Maryland v. Wirtz, 392 U.S. 183, 88 S. Ct. 2017, 20 L. Ed. 2d 1020 (1968) and recognized that although "... there are obvious differences between the schools and hospitals involved in Wirtz, and the fire and police departments affected here, each provides an integral portion of those governmental services which the states and their political subdivisions have traditionally afforded their citizens." National League of Cities v. Usery, 426 U.S. at page 855, 96 S.Ct. at page 2476. Thus, the Supreme Court has added schools and hospitals to the examples of other traditional operations of state and local governments.
Quite simply put, the main issue before this Court on the plaintiffs' federal law claim is whether the operation of an urban transit department by the City of Augusta (a political subdivision of the State of Georgia) is an integral operation in an area of traditional governmental function. If so, the Fair Labor Standards Act provisions cannot apply to this case to reduce the workweek of the drivers to 40 hours. If not, the Transit Department and all of its employees are subject to all provisions of the Act.
In National League of Cities, the Supreme Court did not provide specific definitions of the words "integral" and "traditional" as they are used therein. While this may be regretable for city and state administrators in attempting to ensure that the activities of their operations comply with the Constitution and the acts of Congress, the resulting flexibility afforded to courts in molding relief under the opinion, according to the facts of the cases arising, may be beneficial. A determination of whether an activity or operation of a state or a city is integral and one of traditional governmental function involves an interpretation of those terms and their construction in light of the facts. Thus, a conclusion thereon is mixed of law and fact.
Several courts have interpreted the National League of Cities decision. The esteemed Second Circuit Court of Appeals commented at length on National League of Cities in United Transportation Union v. Long Island Railroad Company, 634 F.2d 19 (1980). In that case, the Second Circuit noted the absence of a precise definition of the key words but found solace in the fact that the Court had given several examples of integral operations of traditional governmental functions. In holding that the Long Island Railroad Company was not subject to federal regulation, the court observed that a traditional governmental function need not be one always provided by government. I interpret their holding to mean that integral operations of governmental functions may become traditional, or less so, depending on the change of times and the needs of a developing society.
In Amersbach v. City of Cleveland, 598 F.2d 1033 (6th Cir. 1979), the Sixth Circuit Court of Appeals determined that Cleveland's operation of a municipal airport amounted to an integral traditional government function within the ambit of National League of Cities. The Amersbach court suggested a four-prong test[3] noting certain elements common to each of the examples given by the Supreme Court. However, I do not conclude that the application of the Amersbach test in strict form should be dispositive of this case.
*889 The first element of the Amersbach test requires a finding that the service is available to the public at "little or no direct expense." This element of the test seems to be contrary to its application to at least one of the examples mentioned by the Supreme Court. Hospital services are seldom, if ever, available to the general public at little or no direct expense. If the Amersbach test were applied strictly in this case, it would fail upon the finding that the riding public pays approximately one-half of the expense of the transit operations of the City of Augusta. While the payments by the riders are small, they are direct, and they are not so insignificant as to amount to "little or no direct expense". I do not consider the Amersbach test to be conclusive in this case, nor that it should be strictly applied in any case. Obviously, it was correct for application to the municipal airport of Cleveland, but it need not be strictly applied here.
While the Supreme Court has provided no definition of "integral" or "traditional" and while the Amersbach and Long Island Railroad decisions are not directly on point with the operation of a city transit department, a decision must be made. The foremost exponent of "tradition" known to this Court is Tevye.[4] Even that source has been studiously researched along with several Websters. In my opinion, none of these sources envision "tradition" or "traditional" in quite the way that the Supreme Court did in National League of Cities. Thus, I cannot conclude that traditional government functions must be those which are time honored, hoary, or historic. Integral operations of traditional government functions may be those which the public has come to expect and demand in light of the change of times and needs of society. Here, the city's operation of the transit department benefits the community as a whole, is available to the public at small cost, is undertaken for the purpose of public service rather than pecuniary gain, and government is the principal provider of the service and is particularly suited to provide the service. There is an obvious community wide need for the service. Accordingly, within the view of the National League of Cities case as I interpret the terms from the usage of the Supreme Court, the operation of the City Transit Department of Augusta is an integral operation of traditional governmental function.
Because of the application of equitable principles elsewhere in this memorandum, it should be noted that this case is not an easy one. It presents a very complex question to the district court. The conclusions are not facile, nor is there a wealth of authority to guide the Court's decision. Skilled lawyers have legitimately different opinions derived after hours of careful research. It is difficult to imagine that city or state administrators, even those skilled in the law, could make a meaningful, correct determination as to whether their operations are covered by the Fair Labor Standards Act without litigation. This is due not to the fact that the Supreme Court has employed euphemism in its opinion, but to the flexibility of its decision which must be judicially applied to fit the circumstances of a given case. In short, it is unreasonable to demand perfection of those charged with a decision when the choices are as vague and obscure as presented here.
With the resolution of the integral operation of traditional governmental function *890 question, other issues involving the application of federal law and principles arise. The Court concludes that the defendant has not waived any immunity, or contracted away its right to challenge the constitutionality of the Fair Labor Standards Act by accepting grants from the Urban Mass Transit Administration.
The National League of Cities opinion does not suggest that federal financial involvement or support to any state activity has bearing upon the right of a state or political subdivision to challenge an unconstitutional act of Congress. After National League of Cities, it is clear that fire prevention, police protection, sanitation, public health, parks and recreation, and school and hospital operations are not subject to the application of the Fair Labor Standards Act. It is a truism to state that federal involvement by financial assistance in the aforementioned "traditional" governmental functions is massive. For example, the federal government assists local government with traditional governmental functions by financial aid as follows:
Police: Omnibus Crime and Safe Streets Act of 1968, 42 U.S.C. § 3701, et seq.
Fire: Federal Fire Prevention and Control Act of 1974, 15 U.S.C. § 2201, et seq.
Education: Elementary and Secondary Education Act of 1965, 20 U.S.C. § 2701, et seq.
Public Health/Hospitals: Public Health Service Act, 42 U.S.C. § 201, et seq.
Parks and Recreation: Housing and Community Development Act of 1974, 42 U.S.C. § 5301, et seq.
Sanitation: Safe Drinking Water Act, 42 U.S.C. § 300f, et seq.; Water Pollution Control Act, 33 U.S.C. § 1251, et seq.
Also, there is the generalized federal aid program to state and cities known as "revenue sharing".
All of the aforementioned federal assistance to local government programs were created by statutes in effect on the date of the National League of Cities opinion. It would be illogical to conclude that the mere acceptance of federal aid could be the basis of a waiver of immunity or the right to challenge the unconstitutionality of an act of Congress.
More specifically, however, the City of Augusta has accepted federal money from the Urban Mass Transit Administration. In order to obtain the federal aid, the City has applied for grants and has signed agreements under section 13(c) of the Urban Mass Transit Act, 49 U.S.C. § 1609.[5]
The city of Augusta has executed an agreement with the Urban Mass Transit Administration under section 13(c) of the Urban Mass Transit Act. This is commonly known as a 13(c) agreement. The plaintiffs have argued that the 13(c) agreement requires the payment of overtime compensation under the Fair Labor Standards Act. The plaintiffs reason that the failure to require such payment amounts to "a worsening" of their conditions of employment. There is little authority on this point. Here, the employees now enjoy far greater job security. Also, they have received several pay raises. They are City employees and have tenure under the City ordinances. When the City took over the transit operation, the drivers workweek remained the *891 same, 48 hours. It is true that had the Augusta Coach Company remained in business, the workweek of the drivers would have been reduced by the Fair Labor Standards Act to 40 hours in 1976. However, this is speculation in which the Court shall not engage.
It is clear that the conditions of employment for the plaintiff bus drivers are now equal to or better than those which existed when they worked for the Augusta Coach Company. Whether conditions of employment for employees protected by a 13(c) agreement have undergone "a worsening" is one of reasonable comparison.
In realistic terms, it appears that the working conditions of the bus drivers employed by the City of Augusta are better than those which existed during their employment by the Augusta Coach Company. Certainly, it would be error to conclude that the conditions of employment of the bus drivers of the City of Augusta had, in fact, deteriorated since their employment by the City.
STATE LAW CLAIM
Plaintiffs' complaint alleges a cause of action against the defendant City under state law. The Court has already determined its jurisdiction with respect to the state law claim. A claim alleging the violation of a right created by city ordinance is cognizable as a cause of action under state law. City Council of Augusta v. Kelly, 53 Ga.App. 589, 186 S.E. 222 (1936).
Here, the plaintiffs as city employees are entitled to benefit from the rights created by an old ordinance of the City of Augusta, which, in general terms, establishes the same maximum hour limitations as plaintiffs have sought to impose in this case under the Fair Labor Standards Act. The ordinance is direct and specific, and its language is unambiguous. The ordinance, which is quoted in the "facts" portion of this memorandum, covers all city employees who are not specifically exempted by its terms.
The defendants have argued that the plaintiffs are exempt from the provisions of the overtime ordinance because it has been utilized in the past only to award compensatory time to overtime employees, and because the plaintiff bus drivers "are engaged in the paving ... or otherwise improving for travel the streets and alleys of the city" because the performance of their duties relieves traffic congestion and reduces air pollution.
Whether or not the ordinance has been used to pay overtime rates or to award compensatory time to other employees in other departments of the city is irrelevant to this dispute. Compensatory time allocations have not been used in the Transit Department nor has the allocation of such time become a part of any tacit or express agreement between the City and the bus drivers. The bus drivers have been regularly paid overtime in excess of the forty-eight hour week which was adopted upon the City's takeover of the Augusta Coach Company. The language of the ordinance is clear. It provides for payment of overtime wages at the rate of 1 and ½ times the regular rate. Thus, the "comp time" argument urged by the defendant is to no avail.
The argument that the bus drivers are exempt from the overtime pay provisions of the ordinance because of the fact that their services reduce traffic congestion and air pollution thus "improving for travel the streets and alleys of the City of Augusta" is disingenuous at best. Such an interpretation of the clear language of the ordinance requires elasticity of logic and agility of linguistic ability this Court does not possess. The bus drivers do not fall within the categories of exempted city employees.
The essence of the case with respect to the state law claim is that some recovery is required. The quoted ordinance is the duly enacted law within the sphere of operations of the City of Augusta. City employees are entitled to its observance, no more nor any less. While there may have been active or acquiescent nonobservance of the ordinance from time to time, by particular City departments, the ordinance is law *892 and remains so. There can be no tacit repeal of the ordinance by actions of the Mayor, the transit committee of council, or council members acting individually. The repeal of the city ordinance and the rights which it confers upon city employees could only be accomplished by the duly elected mayor and council of the City of Augusta acting in accord with the terms of the city charter. No such repealer has been enacted.
The Supreme Court of Georgia spoke authoritatively to this proposition in 1894 in Harper v. Mayor of Jonesboro, 94 Ga. 801, 22 S.E. 139 (1894). "The passage of an ordinance is a legislative act, accompanied with a certain degree of formality, and, ... no change can be made in such an ordinance except by the passage of another, qualifying, repealing, or modifying its terms." Id. at 803, 22 S.E. 139.
Until some act of equal dignity to the enactment of the quoted ordinance takes place, the ordinance remains in full force and effect. The ordinance may not be repealed, modified, altered, amended, or changed in any way by acquiescense of the mayor and council members or by agreement between the city employees individually with the mayor and members of council, or other city employees.
Thus, it seems that the bus drivers, as city employees, are entitled to a 40-hour workweek and are entitled to receive the rate of 1 and ½ times their regular wage for hours worked in excess of 40 hours per week. With respect to the city ordinance, this conclusion is inescapable. The only time to be included under the ordinance dictated forty-hour workweek is that spent on regular, scheduled runs or required charter trips. The workweek calculation should exclude time spent on charter trips for which drivers volunteer.[6] The ordinance does not speak to this point, but this is the only reasonable interpretation.
PLAINTIFFS' RECOVERY
The Court has determined that the plaintiff bus drivers are entitled to recover from the defendant upon their state law claim. No recovery is permitted with respect to their federal law claim. The next question then is as to the amount which each employee should recover.
For this state law claim, there is no statutory provision providing for liquidated damages similar to those which are afforded in certain circumstances under the Fair Labor Standards Act, 29 U.S.C. § 217. Under Georgia law, the award of attorney's fees to a prevailing party is permitted only under carefully defined circumstances. Similarly, punitive damages, liquidated damages, or other types of penalties are permitted only when authorized by statute. Here, the right to recover, or cause of action, is created by city ordinance and there is no statutory provision authorizing the collection of attorney's fees, punitive damages, liquidated damages or penalty by the successful plaintiff.[7] Accordingly, no damages in addition to the back pay amounts due the plaintiffs can be recovered by them or on their behalf.
*893 During the course of this litigation, counsel for both parties have exhibited admirable zeal in the representation of their clients and in their responsibilities to the Court and the public in general. Counsel have made stipulations which have established most of the facts found by the Court. Additionally, counsel have stipulated the back pay amounts which would be due to the individual party plaintiffs in the event of their recovery. This stipulation of amounts with respect to each employee has been filed with the Court and made a part of the record in this case. The parties, thereby, have relieved the Court of the laborious task of calculating damages in the case of each of the individual plaintiffs. Counsel are to be commended for this endeavor.
The city ordinance is glaringly explicit. However, the city administration has historically used this ordinance to allocate compensatory time to its employees. The city has always maintained a forty-eight hour workweek for its bus driver employees prior to the inception of this litigation. This practice was held over from the prior operation of the Augusta Coach Company. The city bus drivers have received several raises since the Transit Department was organized and the city began its transit operations. The working conditions of the drivers has not undergone "a worsening" as that term is contemplated in the Urban Mass Transit Act. For years, the drivers were apparently content with their agreement and the practice of the forty-eight hour workweek. There is no evidence that the city administration has willfully or intentionally deprived its bus driver employees of any right created by ordinance. Instead, the failure to accord its bus drivers employees with the same maximum hours enjoyed by other city employees seems to be the result of inadvertence, misdirected attention to similar provisions of the Fair Labor Standards Act, and the urgent needs of the Transit Department.
While the employees' agreement to the forty-eight hour workweek cannot be construed to abrogate the city ordinance requirement of a forty-hour workweek, the special factual situation that this case presents should be thoroughly considered. Here, the City took over a business operation, not formerly subject to the overtime provisions of the Fair Labor Standards Act, where the ordinary workweek was 48 hours. This forty-eight hour workweek was not designed to be oppressive or exploitive. It was designed around the drivers' average daily run. Moreover, it should be remembered that the plaintiffs, after the inception of this litigation, strenuously protested the reduction of their forty-eight hour workweek by the City. They cited extreme financial hardship as the only possible result from the City's action. Also, the drivers actively seek charter runs in addition to their regular scheduled runs. The Court has already observed that it would be difficult and improbable, if not impossible, for City administrators of ordinary skill and experience to apply with certainty the provisions of the Fair Labor Standards Act in light of the National League of Cities opinion. It is easy to see how the attention and concern of City administrators and council members could have been quite honestly misdirected to the question of coverage under the Fair Labor Standards Act and the imagined impact that would have. Apparently, that concern and attention has been to the exclusion of thorough consideration of the City ordinances themselves.
This is a case for the application for equitable principles. The background of the city's entry into the transit operations, the delay in bringing the question to the forefront of the city's consideration, the good faith of all the parties, and the fact that the arrangement between the city and the employees had worked smoothly for a considerable period of time, and other special facts observed by the Court make it unconscionable to award to the plaintiffs the total amount which they seek to recover in this case. Here the Court sits as trier of fact as well as the judge of the law. Under the state law claim, a jury could return a general verdict. This Court has determined the facts under the parties' factual stipulation and the judgment to be entered by the *894 Court must be responsive both to the law and all of the facts of the case. Accordingly, the award to the bus driver plaintiffs under their state law claim shall be in an amount equal to 66 2/3 % of the maximum recovery which has been stipulated by the parties.
NOTES
[1] Incidentally, the 1974 amendments also eliminated the exemption from coverage under the Act for operator employees of motor bus and trolley carriers.
As stated earlier, the FLSA 29 U.S.C. § 213(b)(7) excludes bus drivers from coverage. By the 1974 amendments to the Act, the exemption clause was repealed, effective May 1, 1976. It should be noted that the plaintiffs would be entitled to a forty hour workweek if they were employed in private industry. The Court views this only incidentally, and has concluded elsewhere that this fact does not amount to a "worsening" of conditions of employment.
This case deals with the status of the plaintiffs as employees of a political subdivision of the State of Georgia, and not as employees of a private motor bus or trolley carrier. The elimination of that coverage exemption is of interest, but of importance only in considering the plaintiffs' contention with respect to the Urban Mass Transit Act and the "worsening" of their employment conditions.
[2] Article I, Section 8, Clause 3 of the United States Constitution grants to the Congress the power "... to regulate commerce with foreign nations, and among the several states, and with the Indian tribes ...."
[3] The Amersbach court noted:
(1) the government service or activity benefits the community as a whole and is available to the public at little or no direct expense;
(2) the service or activity is undertaken for the purpose of public service rather than for pecuniary gain;
(3) government is the principal provider of the service or activity; and
(4) government is particularly suited to provide the service of a communitywide need for the service or activity.
[4] Tevye, of course, is the main character in the musical play Fiddler on the Roof by Joseph Stein, Jerry Bock and Sheldon Harnick. In the prologue, Tevye, the religious but poor dairyman, defines "tradition" at least as well as the Supreme Court has done: "And how do we keep our balance? That I can tell you in a word tradition! Because of our traditions, we've kept our balance for many, many years. Here in Anatevka we have traditions for everything how to eat, how to sleep, how to wear clothes. For instance, we always keep our heads covered and always wear a little prayer shawl. This shows our constant devotion to God. You may ask, how did this tradition start? I'll tell you I don't know! But it's a tradition. Because of our traditions, everyone knows who he is and what God expects him to do."
(Enter the villagers, singing)
"Tradition, tradition tradition.
Tradition, tradition tradition."
[5] 49 U.S.C. § 1609 provides in pertinent part:
"It shall be a condition of any assistance under section 3 of this Act ... to protect the interests of employees affected.... Such protective arrangements shall include, without being limited to, such provisions as may be necessary for ... the protection of individual employees against a worsening of their positions with respect to their employment.
While Congress could have chosen between such words as "deterioration", "diminution" and others, it chose to use the curious term "worsening". It appears, through lack of any other precise definition of the term, that "worsening" presumes that things were already bad before they worsened. Apparently, the Urban Mass Transit Act proscribes any act which makes employment conditions worse than they were. Worse is a comparative term. As compared to some other convoluted language we observe in federal statutes, the tortured genesis of "worsening" as a noun is not the worst ever. To adopt the congressional idiom, it should not be referred to as "better" than some; perhaps it is simply less worse.
[6] The Fair Labor Standards Act specifically excludes charter trip time. The pertinent language of 29 U.S.C. § 207(n) is "In the case of an employee of an employer engaged in the business of operating a street, suburban or interurban electric railway, or local trolley or motorbus carrier (regardless of whether or not such railway or carrier is public or private or operated for profit or not for profit), in determining the hours of employment of such an employee to which the rate prescribed by subsection (a) applies there shall be excluded the hours such employee was employed in charter activities by such employer if (1) the employee's employment in such activities was pursuant to an agreement or understanding with his employer arrived at before engaging in such employment, and (2) if employment in such activities is not part of such employee's regular employment."
[7] Under Ga.Code § 20-1404, the expenses of litigation are not generally allowed as a part of the damages unless the defendant has acted in bad faith or has been stubbornly litigious. There is no evidence here of bad faith on the part of the defendant. Ga.Code § 20-506 allows attorney's fees in cases involving written evidence of indebtedness, and as such, is not applicable here. Ga.Code § 20-1405 prohibits the award of exemplary damages in contract cases. Otherwise, punitive damages are available in tort actions only under §§ 105-2002 and 105-2003. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1950917/ | 505 F. Supp. 135 (1981)
Arnold Lee VANCE, Petitioner,
v.
Donald E. BORDENKIRCHER, Warden, West Virginia State Penitentiary, Respondent.
Civ. A. No. 80-0097-E.
United States District Court, N. D. W. Va., Elkins Division.
January 12, 1981.
*136 MEMORANDUM ORDER
MAXWELL, Chief Judge.
Arnold Lee Vance, a prisoner at the West Virginia State Penitentiary, seeks, in this petition pursuant to 28 U.S.C. § 2254, to overturn his 1962 conviction of first degree murder, for which he is serving a sentence of life imprisonment.
The petitioner was fourteen years of age at the time the murders of which he stands convicted were committed, and was fifteen years of age at the time of his trial. One of his claims for relief, that he should have been treated as a juvenile rather than as an adult, has been dismissed for reasons stated in an earlier Memorandum Order filed August 11, 1980. In the same Memorandum Order, the Court denied the respondent's motion to dismiss which was based upon the ground that "[B]y coming forward eighteen years following his conviction, petitioner has severely prejudiced the State, bringing himself squarely within the scope of Johnson v. Riddle, 562 F.2d 312 (4th Cir. 1977)." The Court did, however, indicate that the instant petition would be dismissed for abuse of process unless the petitioner amended his petition by (1) explaining his failure to raise the claim that his confession was involuntary in any of the three previous habeas corpus petititons filed in this Court, or (2) showing that such failure was not deliberate, or (3) showing that such ground was not previously known to him.
The petitioner has amended his petition, asserting, in essence, that his failure to present the claim in question in prior petitions was the result of his low mentality and his inability to obtain legal advice except that from other inmates. The record of the trial substantiates that Vance is moderately mentally retarded (full scale IQ of 62), and the Court does not believe, under these circumstances, that the petitioner's failure to raise this issue previously can be construed as an abuse of the writ within the meaning of Rule 9(b) of the Rules Governing Section 2254 Cases in the United States District Courts. Accordingly, the Court will address this claim on the merits, the respondent having acknowledged that the petitioner has exhausted his state remedies with respect thereto.
The plaintiff's trial took place in September, 1962. Therefore, neither Escobedo v. Illinois, 378 U.S. 478, 84 S. Ct. 1758, 12 L. Ed. 2d 977 (1964) nor Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), are applicable in determining whether the petitioner's confession was illegally obtained. Johnson v. New Jersey, 384 U.S. 719, 86 S. Ct. 1772, 16 L. Ed. 2d 882 (1966). The voluntariness of the confession must be determined by examination of the totality of the circumstances. Spano v. New York, 360 U.S. 315, 79 S. Ct. 1202, 3 L. Ed. 2d 1265 (1959).
In order to view the totality of the circumstances surrounding the petitioner's confession in an understandable fashion, it is necessary to give a recitation of the factual background as developed at the trial.
On May 20, 1961, the bodies of Dr. Archer A. Wingrove and his housekeeper, Mrs. Georgia Broyles, were discovered at Dr. Wingrove's home near Scarbro, in Fayette County, West Virginia. Both victims had been shot in the head, and Mrs. Broyles had also been beaten about the head, as a result of which she had several lacerations and a fractured skull. The coroner was unable to establish the time of death of either victim, except to say that both had been dead for more than twenty-four hours. (Tr. 136). However, from the testimony of other witnesses, it was established that Mrs. Broyles was alive at 10:30 p. m. on May 18, 1961. The paper boy had collected his payment *137 from Mrs. Broyles on May 18, 1961, late in the afternoon, and at about 10:30 p. m. that night Mrs. Broyles' niece, Belle Snelson, spoke with her on the telephone. (Tr. 4-5 and 240-241). Although local and state police officers were continuing their investigations of the murders, as of March 29, 1962, no arrests had been made.
On the latter date, the petitioner had been arrested as a suspect in several breaking and enterings. (Tr. 87, 92). He was arrested at his home and was taken to the Oak Hill, West Virginia, city jail. The petitioner's mother was informed that he was being picked up for questioning, and did not accompany him to the jail. (Tr. 92-93). The petitioner told the chief of police that he was seventeen years of age, and the officer obtained permission from the judge of the juvenile court to place him in custody in the county jail. (Tr. 97). The chief of police acknowledged that he was aware that the petitioner was a student at a school for the mentally retarded. (Tr. 102).
The police chief testified that he advised the petitioner prior to questioning him about the breaking and enterings that he had the right to remain silent (Tr. 91-92), and that he had the right to be advised by counsel before making any statement. (Tr. 94). Chief Janney, while questioning the petitioner about the breaking and enterings, routinely asked him if he knew anything about the Wingrove-Broyles murders. (Tr. 88). This occurred in the police chief's office. The petitioner "acted a little funny" about the questions concerning the murders (Tr. 92), and Chief Janney had him put in jail, inasmuch as he had given a statement in connection with the breaking and enterings. Chief Janney then called Trooper C. A. Berkley of the West Virginia State Police, one of the officers involved in the Wingrove-Broyles murder investigation.
Trooper Berkley went to the Oak Hill city jail, and discussed the Wingrove-Broyles investigation with Chief Janney. (Tr. 100, 146). Chief Janney was not familiar with any of the particulars of the case, and Trooper Berkley acquainted him with some of the details in order to aid the chief in questioning the petitioner. (Tr. 100, 146-147). It was determined that Chief Janney would question the petitioner, with Trooper Berkley remaining in earshot, but out of sight.
The plan for questioning the petitioner was carried out, and Vance acknowledged that he and one Roger Belcher had gone to the Wingrove house, supposedly to try to borrow some money, and that the murders were committed while they were at the house, although he claimed that Belcher had actually done the shooting. Vance stated that he and Belcher took some jewelry and Dr. Wingrove's wallet, and that these items were divided between himself and Belcher. Both Chief Janney and Trooper Berkley testified that no threats, promises or inducements were made to Vance to obtain this confession, and that Vance did not appear to be nervous or emotionally upset at the time he gave the statement. (Tr. 84, 148-149).
After orally confessing to his participation in the murders, Vance was taken to the police chief's office, where the confession was reduced to writing, read to the petitioner and signed by him. (Tr. 157-166). Later the same night, Vance made a drawing of the floor plan of the Wingrove home (Tr. 223-232), and gave a second written statement. This confession was in conflict with the first in several particulars, the most important being that in the second written confession Vance stated that he, rather than Belcher, had shot Dr. Wingrove and Mrs. Broyles. Vance made yet another statement the next day.
On the afternoon of March 30, 1962, the petitioner had been taken to the state police office at Oak Hill. Trooper William F. Wiant of the West Virginia State Police testified that he was a polygraph examiner, and that Vance asked him to conduct a polygraph examination in order to verify the statements he had made previously. Trooper Wiant obtained an oral statement from the petitioner in order to assist him in conducting this polygraph examination. In this statement, Vance again stated that he had done the shootings. (Tr. 72).
*138 The record shows that Vance was first taken to the Oak Hill city jail at approximately 4:45 p. m. on March 29, 1962. (Tr. 87). He was first asked about the Wingrove-Broyles murders at about 6:45 p. m., in Chief Janney's office. (Tr. 83). The first oral confession (the one overheard by Trooper Berkley) was obtained between 7:30 p. m. and 8:00 p. m., and the first written statement was taken at 9:15 p. m., although it was sometime later before Trooper Berkley completed reading it to Vance and it was signed. The record reflects that the petitioner did not make the drawing of the Wingrove home until 11:30 p. m., and the second written statement was not taken until 1:50 a. m. on March 30, 1962. According to Trooper Berkley's testimony, during the course of the evening, Vance had several soft drinks and some candy which he bought, and some coffee and sandwiches which were brought in to him. (Tr. 178). Trooper Berkley also testified that the questioning of the petitioner was intermittent, not constant, and that he did not appear to be sleepy or tired. (Tr. 178-180).
The Court does not believe, based upon the record, pertinent portions of which have been referred to above, that the petitioner's will was overborne by excessively constant questioning or by the lack of food, rest or sleep. This is particularly so because the initial confession was given early in the evening, after a relatively short period of questioning.
Of greater concern in determining the voluntariness of Vance's confession is his youth and his subnormal intelligence. Juvenile confessions must be scrutinized with special care, Haley v. Ohio, 331 U.S. 596, 68 S. Ct. 302, 92 L. Ed. 224 (1948), but youth alone is not a per se ground for holding a confession inadmissible. Williams v. Peyton, 404 F.2d 528, 530 (4th Cir. 1968). Similarly, subnormal intelligence, although a significant factor in the "totality of the circumstances" equation for determining the voluntariness of a confession, will not, standing alone render an otherwise voluntary confession involuntary. United States v. Young, 529 F.2d 193 (4th Cir. 1975).
This case, of course, presents a combination of both of these factorsa confession by a fifteen year old youth who was moderately mentally retarded. Nevertheless, the Court does not believe this combination of factors calls for a per se finding of involuntariness.
Before admitting the written and oral confessions into evidence, the trial judge conducted scrupulously thorough voluntariness hearings out of the presence of the jury. Defense counsel were given very wide latitude in their cross-examinations of the witnesses. The trial judge was fully aware of Vance's age and his mental limitations, and had the opportunity to observe him during the course of the trial. In each instance, the trial court found that the confession had been made voluntarily. Voluntariness need be established only by a preponderance of the evidence, Lego v. Twomey, 404 U.S. 477, 92 S. Ct. 619, 30 L. Ed. 2d 618 (1972), and this Court is not prepared to say, upon reviewing a cold record, that these findings were erroneous.
Accordingly, for the reasons herein stated, the petition of Arnold Lee Vance for a writ of habeas corpus pursuant to 28 U.S.C. § 2254 will be denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1944619/ | 801 F.Supp. 674 (1992)
Reina GOMEZ, Plaintiff,
v.
METRO DADE COUNTY, FLORIDA, Defendant.
No. 91-0560-CIV-HIGHSMITH.
United States District Court, S.D. Florida.
July 24, 1992.
*675 Robert I. Spiegelman, Spiegelman & Spiegelman, Miami, Fla., for plaintiff.
Robert A. Ginsburg, Dade County Atty., Lee Kraftchick, Asst. County Atty., Miami, Fla., for defendant.
ORDER ON DEFENDANT DADE COUNTY'S MOTION FOR SUMMARY JUDGMENT AND ORDER OF PARTIAL FINAL SUMMARY JUDGMENT
HIGHSMITH, District Judge.
THIS CAUSE comes before the Court upon Defendant Metro Dade County's Motion *676 for Final Summary Judgment with Respect to Plaintiff Reina Gomez, filed April 24, 1992.
I. Background
Plaintiff Reina Gomez ("Gomez") alleges that Metro Dade County ("County") violated 42 U.S.C. § 1983 and Title VII of the Civil Rights Act of 1964 by allowing a co-employee, Hector Gutierrez ("Gutierrez"), to sexually harass her, and by demoting her from her position as a site manager in the Dade County Housing and Urban Development Department ("HUD"). Gomez also seeks compensatory damages from the County based on its allegedly negligent supervision and retention of Gutierrez.
The following facts are not in dispute. The County has employed Gomez in a variety of positions for eighteen years. (Gomez's Statement of Undisputed Facts, at ¶ 2, D.E. # 85.) In May 1989, Gomez was promoted to the position of site manager in HUD. (Bilateral Pretrial Stipulation, at 3, D.E. # 88.) Her immediate supervisor in this position was district supervisor Arturo Velasquez ("Velasquez"), whose superior was Gutierrez, a regional manager. (Gomez's Statement of Undisputed Facts, at ¶ 2, D.E. # 85.) Sexual harassment complaints have been filed against Gutierrez in the past. (The County's Response to Gomez's Statement of Undisputed Facts, at ¶ 3, D.E. # 94.)
As a site manager, Gomez was required to serve a one year probationary period, during which time she was subject to demotion back to her previous position. (Bilateral Pretrial Stipulation, at 3, D.E. # 88.) All employees hired as site managers for HUD prior to May 15, 1989, had to sign agreements to become certified by the United States Housing and Urban Development Department in housing management. (Gomez's Statement of Undisputed Facts, at ¶ 7, D.E. # 85.) If these employees failed to become certified, the individuals agreed, pursuant to written agreement, to vacate the job. (Gomez's Statement of Undisputed Facts, at ¶ 7, D.E. # 85.) This certification required passing a written examination. (The County's Statement of Undisputed Facts, at ¶ 13, D.E. # 75.) No such requirements existed when Gomez applied for and was appointed site manager on May 15, 1989. (Gomez's Statement of Undisputed Facts, at ¶ 7, D.E. # 85.) Seven months into Gomez's one year probationary period, Earl Phillips ("Phillips") became director of HUD and changed the policy of HUD by requiring all site managers who (1) had previously not been trained or (2) who had not passed the full examination, to take the test. (Gomez's Statement of Undisputed Facts, at ¶ 8, D.E. # 85.) Phillips reduced the two year period previously allowed for taking and passing the test to one year. (Gomez's Statement of Undisputed Facts, at ¶ 8, D.E. # 85.) Gomez took the exam twice and both times the County advised her that she did not pass.[1] (Gomez's Statement of Undisputed Facts, at ¶ 9, D.E. # 85.) Gomez has never seen the graded tests or her scores and alleges that she did in fact pass the test. (Gomez's Statement of Undisputed Facts, at ¶¶ 6, 9, D.E. # 85.) After failing the test for the second time, the County informed Gomez that due to her inability to meet the requirements necessary for the satisfactory performance of her duties as a site manager, she had failed her probationary period. (Bilateral Pretrial Stipulation, at 4, D.E. # 88.) As a result, Gomez was returned to her former department, in the last classification for which she had held permanent status, that of eligibility interviewer. (Bilateral Pretrial Stipulation, at 4, D.E. # 88.) Gomez asserts that her demotion was in retaliation for making the sexual harassment complaint against Gutierrez and not as a result of her test scores.
The County does not move for summary judgment on the basis that Gutierrez did not sexually harass Gomez, but rather the County asserts that it may not be held liable for such harassment. (The County's Response to Gomez's Statement of Undisputed Facts, at ¶ 4, D.E. # 94.) Therefore, the specific acts of alleged sexual harassment *677 are immaterial for purposes of this motion for summary judgment.
II. Standard of Review
In deciding a summary judgment motion, a court must apply the standard in Fed. R.Civ.P. 56(c):
The standard sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
In applying this standard the Eleventh Circuit has stated that:
The party seeking summary judgment bears the exacting burden of demonstrating that there is no genuine dispute as to any material fact in the case. In assessing whether the movant has met this burden, the courts should view the evidence and all favorable inferences therefrom in the light most favorable to the party opposing the motion. All reasonable doubts about the facts should be resolved in favor of the non-movant.
Clemons v. Dougherty County, Ga., 684 F.2d 1365, 1368-69 (11th Cir.1982) (citations omitted). Moreover, "the party opposing the motion for summary judgment bears the burden of responding only after the moving party has met its burden of coming forward with proof of the absence of any genuine issues of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).
The United States Supreme Court has provided significant additional guidance as to the evidentiary standard which trial courts should apply in ruling on a motion for summary judgment:
[The summary judgment] standard mirrors the standard for a directed verdict under Federal Rule of Civil Procedure 50(a), which is that the trial judge must direct a verdict if, under the governing law, there can be but one reasonable conclusion as to the verdict. Brady v. Southern R. Co., 320 U.S. 476, 479-480, [64 S.Ct. 232, 234, 88 L.Ed. 239] (1943).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). The Court in Anderson further stated that "[t]he mere existence of a scintilla of evidence in support of the position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Id. at 252, 106 S.Ct. at 2512. The evidence presented cannot consist of conclusory allegations, legal conclusions or evidence which would be inadmissible at trial. Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir.1991). "If the evidence is merely colorable ... or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-251, 106 S.Ct. at 2510-2511.
III. 42 U.S.C. § 1983
Gomez asserts that the County violated her civil rights under the First and Fourteenth Amendments of the United States Constitution, pursuant to 42 U.S.C. § 1983, by demoting her because she spoke out against sexual harassment. The County moves for summary judgment as to Gomez's § 1983 claim on the basis that Gomez cannot establish the existence of a genuine issue of material fact as to whether her demotion was the result of any County custom or policy.
In Monell v. New York City Dep't of Soc. Serv., 436 U.S. 658, 694, 98 S.Ct. 2018, 2037, 56 L.Ed.2d 611 (1978), the United States Supreme Court created a right of action against local government units for deprivation of federal rights in violation of 42 U.S.C. § 1983. The Supreme Court states that municipal liability under § 1983 attached only when a constitutional deprivation occurs pursuant to a municipality's "official policy."[2]Id. at 694, 98 S.Ct. at *678 2037. Thus, under Monell, "recovery from a municipality is limited to acts that are, properly speaking, acts `of the municipality', that is, acts which the municipality has officially sanctioned or ordered." Pembaur v. City of Cincinnati, 475 U.S. 469, 480, 106 S.Ct. 1292, 1298, 89 L.Ed.2d 452 (1986).
Subsequent to the Monell decision, the Eleventh Circuit explained how these general principles apply to § 1983 actions involving allegedly discriminatory employment practices. Brown v. City of Ft. Lauderdale, 923 F.2d 1474 (11th Cir.1991). The court stated that a public employee can establish municipal liability under § 1983 in either of two ways: (1) by showing that the decisionmaker possessed "final authority to establish municipal policy with respect to the action ordered." Brown, 923 F.2d at 1480 (quoting Pembaur, 475 U.S. at 481, 106 S.Ct. at 1299); or (2) by showing that her injury was the result of a municipal custom, defined as "a widespread practice that, although not authorized by written law or express municipal policy, is so permanent and well settled as to constitute a custom or usage with the force of law." Brown, 923 F.2d at 1481 (citing City of St. Louis v. Praprotnik, 485 U.S. 112, 127, 108 S.Ct. 915, 926, 99 L.Ed.2d 107 (1988) and quoting Adickes, 398 U.S. at 167-68, 90 S.Ct. at 1613-14.) Gomez seeks to hold the County liable under both of these theories.[3]
Final Policymaker
In order to impose liability under the final policymaker theory of municipal liability, "the challenged action must have been taken pursuant to a policy adopted by the official or officials responsible under state law for making policy in that area of the city's business." Praprotnik, 485 U.S. at 123, 108 S.Ct. at 924 (emphasis in original). "[T]he mere delegation of authority to a subordinate to exercise discretion is not sufficient to give the subordinate policymaking authority. Rather, the delegation must be such that the subordinate's discretionary decisions are not constrained by official policies and are not subject to review." Wright v. Sheppard, 919 F.2d 665, 674 (11th Cir.1990) (quoting Mandel v. Doe, 888 F.2d 783, 792 (11th Cir.1989)). It is "the trial judge [who] must identify those officials or governmental bodies who speak with final policymaking authority for the local government actor concerning the action alleged to have caused the particular constitutional statutory violation at issue." Jett v. Dallas Independent School District, 491 U.S. 701, 736, 109 S.Ct. 2702, 2723, 105 L.Ed.2d 598 (1989).
This Court finds that Phillips does not have final policymaking authority to demote subordinates. The Dade County Charter authorizes the Board of County Commissioners to pass ordinances and resolutions, including rules and regulations concerning County employment. (The County's Statement of Undisputed Facts, at ¶ 2, D.E. # 75, Exhibit 1, Metropolitan Dade County Charter § 1.01.A.)[4] The County Manager oversees the administration of operations, and appoints a Personnel Director who administers "the personnel and civil service programs and the rules governing them." (The County's Statement of Undisputed Facts, at ¶ 3, 4, D.E. # 75, Charter § 3.01, 3.04, and 4.05.B.)[5] Therefore, it is apparent that Phillips' decisions *679 regarding demotions are constrained by ordinances and resolutions passed by the Board of County Commissioners or the County Manager. Merely because Phillips may have exercised the authority to demote Gomez does not lead to the conclusion that he is able to establish official county policy on whether to demote a County employee. Although the Board of County Commissioners has permitted Phillips necessary discretion in hiring, firing, and demoting subordinates, there is no evidence that Phillips has been delegated the power to establish final employment policy. Therefore, Phillips is not a final policymaker whose employment decisions could subject the City to liability under § 1983.[6]
Municipal Custom
Gomez asserts for the first time in her memorandum of law in opposition to the County's motion for summary judgment that there is a custom of non-feasance by the County when sexual harassment claims are repeatedly filed against upper management officials. In order to impose liability under a "custom or usage" theory of municipal liability, Gomez must prove a longstanding and widespread practice that is deemed authorized by policymaking officials because they must have known about it and failed to stop it. Brown, 923 F.2d at 1481. Random acts or isolated incidents are usually insufficient to establish a custom or policy. Depew v. City of St. Mary's, Ga., 787 F.2d 1496, 1499 (11th Cir.1986). To hold the County liable, the custom or policy must be the moving force of the constitutional violation at issue. Samples on Behalf of Samples v. City of Atlanta, 846 F.2d 1328, 1333 (11th Cir.1988). Even if a custom or policy exists, Gomez must prove that there is a causal link between the custom or policy and the constitutional deprivation. Parker v. Williams, 862 F.2d 1471, 1477 (11th Cir. 1989).
As evidence of a custom of nonfeasance, Gomez states that there have been at least four complaints of sexual harassment filed against Gutierrez along with anonymous other allegations.[7] In addition, the employer's affirmative action department made a written recommendation to the director of HUD to consider the allegations of sexual harassment against Gutierrez.[8] Gomez asserts that Phillips *680 knew of these allegations and that both Phillips and the County have failed to take appropriate action in response to these allegations.
This Court finds as a matter of law that the allegations offered by Gomez as support for her theory that a de facto custom existed are nothing more than isolated incidents that clearly cannot be said to establish or create a "custom" or "widespread practice". The evidence does not show that the County has a policy of non-feasance when sexual harassment complaints are filed against upper management employees. Additionally, there is no evidence that the County, as opposed to Phillips[9], knew about these allegations of sexual harassment or acquiesced in such a custom. All of Gomez's evidence at most points to an isolated failure on the part of Phillips to discipline Gutierrez and prevent him from further sexual harassment after investigations were conducted by the Affirmative Action Office. This falls well short of the mark of a County policy of non-feasance with respect to sexual harassment complaints that is so permanent and well settled as to constitute a force of law. See Prieto v. Metropolitan Dade County, 718 F.Supp. 934 (S.D.Fla.1989) (evidence of four isolated incidents involving only the plaintiff over two year period insufficient to establish a custom under § 1983); Burnette v. Ciolino, 750 F.Supp. 1562 (M.D.Fla.1990) (five isolated incidents of police shootings were insufficient to establish police custom of failing to maintain a proper system for the investigation of incidents of firearm discharge under § 1983). Therefore, the County's Motion for Summary Judgment with respect to Gomez's claim for the City's violation of § 1983 is GRANTED. Final Summary Judgment is entered on behalf of the County and against Gomez with respect to her § 1983 claim.
IV. Title VII claim
Gomez asserts that the County violated Title VII of the Civil Rights Act of 1964 by allowing Gutierrez to sexually harass her and by demoting her. The County moves for summary judgment, asserting that the undisputed facts show (1) that Gomez's demotion was not the result of sexual harassment; and (2) that once the County was notified of Gomez's allegation of a sexually hostile environment, it took prompt remedial action.
The courts recognize two forms of sexual harassment: quid pro quo sexual harassment and hostile work environment sexual harassment. See Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 65-66, 106 S.Ct. 2399, 2404-2405, 91 L.Ed.2d 49 (1986).
"Quid pro quo sexual harassment occurs when an employer alters an employee's job conditions as a result of the employee's refusal to submit to sexual demands. Hostile environment sexual harassment occurs when an employer's conduct `has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile, or otherwise offensive environment.'"
Steele v. Offshore Shipbuilding, Inc., 867 F.2d 1311, 1315 (11th Cir.1989) (citations omitted) (quoting from Vinson, 477 U.S. at 65, 106 S.Ct. at 2404). Gomez alleges both forms of sexual harassment.
Quid Pro Quo
Gomez's quid pro quo claim is based on the allegation that she, in fact, passed the required examination and that her demotion from site manager back to eligibility interviewer was in retaliation for failing to acquiesce to Gutierrez's sexual demands and for complaining about his conduct. Gomez asserts that factual issues regarding the passage or failure of the test, policy changes regarding the necessity of taking the test, and policy changes as to the time permitted to take the test, are unresolved.
This Court finds that the undisputed facts show that Gomez was demoted because *681 the County believed that she failed the required examination. Seven months into Gomez's probationary period, Phillips changed the policy of HUD by requiring all site managers who had previously not been trained or who had not passed the examination, to take the examination. (Gomez's Statement of Undisputed Facts, at ¶ 8, D.E. # 85.) Additionally, Phillips reduced the period allowed for taking the test from two years to one year. (Gomez's Statement of Undisputed Facts, at ¶ 8, D.E. # 85.) Gomez took the exam twice, and both times the County was informed by the testing company that Gomez had failed the test. (Bilateral Pretrial Stipulation, at 4, D.E. # 88.) Consequently, Gomez, as well as four other employees hired at the same time as Gomez who failed to pass the test within their probationary period were, like Gomez, demoted to their previous position. (The County's Statement of Undisputed Facts, at ¶ 18, D.E. # 75, Exhibit 10, Memoranda from E. Phillips to Various Site Managers re: Failure of Probation Period.)[10]
The Eleventh Circuit has explained that "Title VII only proscribes employment discrimination on the basis of race, color, religion, sex, or national origin." Gilchrist v. Bolger, 733 F.2d 1551, 1553 (11th Cir. 1984). Whether the employer's practice "is a good employment policy or a bad one, or even a policy prohibited under other laws, Title VII does not prohibit employment decisions based on that policy provided the policy is applied equally to all employees." Id. Phillips, rightly or wrongly, decided to require all of his department's site managers to pass the examination within one year of their probationary period. That requirement, whether Gomez agrees with it or not, does not violate Title VII because it was applied equally to all employees hired at the same time as Gomez.
Gomez has offered no evidence, other than her own belief, which could support her assertion that she in fact passed the test. Gomez was treated exactly the same way as any other site manager hired at the same time as herself. Gomez's bare assertion that she passed the test and was demoted as a retaliatory move for complaining about sexual harassment, is at most, pure conjecture. This evidence is not significantly probative enough, whereby, a jury could reasonably find in favor of Gomez. Gomez has not raised any genuine issues of material fact relating to her quid pro quo sexual harassment claim. Therefore, this Court finds that as a matter of law, the County is entitled to summary judgment with respect to Gomez's quid pro quo sexual harassment claim.
Hostile Work Environment
In order to hold the County liable under a hostile environment claim of sexual harassment, Gomez must show that the County knew or should have known of the alleged harassment, but failed to take prompt remedial action. Steele, 867 F.2d at 1316. The County does not contest that it had knowledge of the alleged harassment, but seeks to avoid liability on the assertion that it has an effective grievance procedure and took prompt remedial action. The mere existence of a grievance procedure and a policy against discrimination does not insulate the City from liability. Vinson, 477 U.S. at 72, 106 S.Ct. at 2408. The Eleventh Circuit has stated that "an employer may be insulated from liability for hostile working environment sexual harassment where (1) the employer has an explicit policy against sexual harassment; and (2) it has effective grievance procedures `calculated to encourage victims of harassment to come forward' that the plaintiff did not employ." Sparks v. Pilot Freight Carriers, Inc., 830 F.2d 1554, 1560 (11th Cir, 1987) (quoting from Vinson, 477 U.S. at 73, 106 S.Ct. at 2408).
*682 This Court finds that there remain genuine issues of material fact concerning the effectiveness of the County's grievance procedure, and whether the County took prompt remedial action. On May 5, 1990, Gomez met with HUD Deputy Director Gregory Byrne and Phillips to discuss her complaints of sexual harassment against Gutierrez. (Gomez's Statement of Undisputed Facts, at ¶ 5, D.E. # 85.) Phillips turned the matter over to Velda McCray, of the Affirmative Action Office for an investigation. (The County's Statement of Undisputed Facts, at ¶¶ 20, 21, D.E. # 75.) Gomez, on May 11, 1990, contacted Carmen Dieguez ("Dieguez"), of the Affirmative Action Office, stating that she wished to file a complaint against Gutierrez. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 13, Affidavit of Dieguez.) Dieguez set up an appointment for May 15, 1990, to discuss Gomez's complaint. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 13, Affidavit of Dieguez.) Gomez failed to keep that appointment and did not call to cancel or reschedule. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 13, Affidavit of Dieguez.)
Subsequently, McCray attempted to contact Gomez by phone and through the mail by a certified letter sent on June 14, 1990, but was unsuccessful in her attempts to speak with Gomez concerning her sexual harassment complaint. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 12, Memorandum from V. McCray to S. Dallas re: Reina Gomez, dated June 14, 1990.) On June 21, 1990, Gomez's attorney contacted McCray concerning the certified letter McCray had sent. (The County's memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 12, McCray Memorandum.) McCray, on the advice of her superiors, said she would not be responding to Gomez's attorney. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 12, McCray memorandum.) According to Dieguez, Gomez stated to her in a conversation on June 22, 1990, that Gomez did not keep her appointment because after speaking with her attorney, it was best for her to complain to the Equal Employment Opportunity Commission rather than to waste time pursuing the County's internal processes. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 13, Affidavit of Dieguez.) Gomez stated that Dieguez had told her that if she had an attorney or was looking for one that the Affirmative Action Office would not help her. (Gomez's Exhibits in Opposition to the County's Motion for Summary Judgment, D.E. # 83, Gomez deposition, at 143-144.)[11]
Due to the above facts, neither Dieguez nor McCray was able to investigate Gomez's complaint. Therefore, at the present time no Affirmative Action Office investigation has taken place concerning Gomez's allegations, although one was attempted.
From the above facts it is clear that the County does have an internal grievance procedure, and that an investigation of Gomez's complaint of sexual harassment was attempted. A dispute remains about whether Gomez's failure to invoke the grievance procedure was the result of her own choice or because the County refused to investigate her complaint due to the fact that Gomez hired an attorney. A dispute also exists as to whether this grievance procedure is effective. Although the County claims that in the past two years, the County's Affirmative Action Office has investigated seven sexual harassment claims that resulted in the disciplining of the alleged harasser (The County's Statement of Undisputed Facts, at ¶ 24, D.E. # 75.), it is clear that no action was ever taken to put a *683 stop to Gutierrez's alleged acts of harassment. The fact that four complaints of sexual harassment have been filed against Gutierrez casts further doubt on the effectiveness of such a grievance procedure. Because genuine issues of material fact remain as to whether the County took prompt remedial action and whether the grievance procedure is indeed effective, the County's motion for summary judgment with respect to Gomez's claim of hostile work environment sexual harassment is DENIED.
V. State Law Negligent Retention and Supervison of Gutierrez[12]
Gomez asserts that the County negligently retained and supervised Gutierrez resulting in her sexual harassment and subsequent demotion. The County moves for summary judgment on the basis that to the extent that Gomez's claim is one for negligence, it is barred by the exclusivity provision of the state's Workers' Compensation Act (Fla.Stat. § 440.11); and to the extent that Gomez's claim involves a deliberate intent to injure, it is barred by Fla. Stat. § 768.28(9)(a).
Florida's Workers' Compensation Act, Fla.Stat. § 440.11 (West 1991), states that an employer's liability to its employees "shall be exclusive and in place of all other liability." The Florida Supreme Court has stated that it is "now well established in our law, that workers' compensation generally is the sole tort remedy available to a worker injured in a manner that falls within the broad scope and policies of the workers' compensation statute." Byrd v. Richardson-Greenshields Securities, 552 So.2d 1099, 1100 (Fla.1989). However, in Byrd, the Florida Supreme Court created an exception to the exclusivity rule for sexual harassment claims. In Byrd, female employees brought claims for assault and battery, intentional infliction of emotional distress, and negligent hiring and retention of employees based upon male employees repeatedly touching and making verbal sexual advances to them in the workplace. The Florida Supreme Court stated:
"In light of this overwhelming public policy, we cannot say that the exclusivity rule of the workers' compensation statute should exist to shield an employer from all tort liability based on incidents of sexual harassment. The clear public policy emanating from federal and Florida law holds that an employer is charged with maintaining a workplace free from sexual harassment. Applying the exclusivity rule of workers' compensation to preclude any and all tort liability effectively would abrogate this policy, undermine the Florida Human Rights Act, and flout Title VII of the Civil Rights Act of 1964.
This, we cannot condone. Public policy now requires that employers be held accountable in tort for the sexually harassing environments they permit to exist, whether the tort claim is premised on a remedial statute or on the common law....
Similarly, to the extent that the claim alleges assault, intentional infliction of emotional distress arising from sexual harassment of the specific type of battery involved in this case, the exclusivity rule also will not bar them. This is so because these causes of action address the very essence of the policies against sexual harassment an injury to intangible personal rights."
Byrd, 552 So.2d at 1103-4 (footnotes omitted).
Therefore, in light of the strong public policy against sexual harassment in the workplace, this Court interprets Byrd as holding that the exclusivity rule of the workers' compensation statute does not bar Gomez's claim of negligent retention and supervision.
The County also asserts that to the extent that Gomez's claim involves a deliberate *684 intent to injure[13], her claim is barred by Fla.Stat. § 768.28(9)(a).[14] As Gomez is asserting a claim involving negligence and not a claim involving a deliberate attempt to injure, the Court need not address the County's argument with regard to Fla.Stat. § 768.28(9)(a) because it is misplaced.[15] Thus, the County's motion for summary judgment with respect to Gomez's claim for negligent retention and supervision of Gutierrez is DENIED.
VI. Conclusion
Thus, it is hereby
ORDERED AND ADJUDGED that:
(1) The County's motion for summary judgment with respect to Gomez's § 1983 claim is GRANTED. Final Summary Judgment as to Gomez's § 1983 claim, be and the same is hereby entered in favor of Metro Dade County, Florida.
(2) The County's motion for summary judgment as to Gomez's Title VII claim is GRANTED with respect to Gomez's quid pro quo sexual harassment claim and DENIED with respect to Gomez's hostile work environment claim.
(3) The County's motion for summary judgment with respect to Gomez's claim for negligent retention and supervision of Gutierrez is DENIED.
DONE AND ORDERED.
NOTES
[1] Each time Gomez took the test, the County was informed that Gomez failed the test by the organization that conducted the test. (Bilateral Pretrial Stipulation, at 4, D.E. # 88.)
[2] The term "official policy" is not limited to written laws. It may also include a custom or usage, "even though such a custom or usage has not received formal approval through the municipal body's official decisionmaking channels." Monell, 436 U.S. at 691, 98 S.Ct. at 2036. According to the Supreme Court, Congress included customs and usages in § 1983 because customs and usages may be so widespread and accepted that they have the force of law. Id. (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 167-68, 90 S.Ct. 1598, 1613-14, 26 L.Ed.2d 142 (1970)).
[3] Though she attempts to do so in her memorandum of law opposing summary judgment, Gomez never asserted in her Complaint that her alleged sexual harassment and demotion were the result of an unwritten custom or policy. In her Complaint, Gomez only alleged that the County is responsible for the decision to demote her because Phillips, the director of Dade County HUD, "had final policymaking authority concerning employment decisions for employees of Dade County HUD." (Complaint, at ¶ 20, D.E. # 1.) In considering the County's motion for summary judgment, the Court has, nonetheless, construed Gomez's Complaint to allege that her sexual harassment and demotion were the result of both a final policymaking decision, and the result of an unwritten custom.
[4] Gomez agrees that this fact is not in dispute. (See Gomez's Statement of Undisputed Facts, at ¶ 1, D.E. # 85.)
[5] Gomez agrees that this fact is not in dispute. (See Gomez's Statement of Undisputed Facts, at ¶ 1, D.E. # 85.)
[6] Gomez asserts for the first time in her memorandum of law in opposition to the County's motion for summary judgment that the Affirmative Action Office and Velda McCray have a policy of not investigating complaints of sexual harassment when there is attorney involvement. McCray, as a subordinate of Phillips, clearly does not have final policymaking authority. (The County's Reply Memorandum in Support of Motion for Summary Judgment, Exhibit 3, Affidavit of Velda McCray, at ¶ 9, D.E. # 92.) The Affirmative Action Office, which is under the control of the City Manager and the Board of County Commissioners, also does not have the authority to establish a final policy of not investigating complaints of sexual harassment. The County has adopted a specific written policy requiring the investigation of sexual harassment complaints. Nothing in that policy permits the Affirmative Action Office to ignore complaints simply because an employee has an attorney. Therefore, neither Velda McCray nor the Affirmative Action Office are final policymakers with respect to the decision to investigate or not to investigate complaints of sexual harassment.
[7] Gomez states that the four individuals who have been alleged victims of sexual harassment against Gutierrez are Lucia Llorente, Rosalind DePardee, Maria DeArmas, and Gomez herself. The Equal Employment Opportunity Commission has found that there is no reasonable cause to believe that Lucia Llorente suffered from any sexual harassment. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 4.) The County's Affirmative Action Office has investigated DePardee's claim and found no reasonable cause to believe that her allegations of sexual harassment are true. (Gomez's Exhibits in Opposition to the County's Motion for Summary Judgment, D.E. # 83, Exhibit B.) Although the investigation of Gomez is now closed, the County has offered to reopen the investigation any time Gomez desires. Lastly, anonymous complaints are clearly not sufficient to support a finding of knowing acquiescence in a widespread custom of harassment.
[8] The recommendation states:
"... it is strongly suggested that H.U.D. management consider all of the information on file or otherwise relating to sexual harassment allegations against Gutierrez and weigh it carefully."
(Gomez's Exhibits in Opposition to the County's Motion for Summary Judgment, D.E. # 83, Exhibit D.)
[9] As discussed, supra, Phillips is not a final policymaker. Therefore, even if he had knowledge of a custom of non-feasance with respect to investigating and disciplining employees who are charged with sexual harassment, and acquiesced in such custom, liability cannot extend to the County, because such acts cannot be said to constitute County policy.
[10] Gomez admits that she has no knowledge of anyone hired in the same group as herself that was given more than one year to pass the examination. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 6, Gomez deposition at 40-41.) Phillips confirms that no employees hired at the same time as Gomez were given extensions of the probationary period in order to take the test again, although such extensions were granted to employees hired before Gomez. (The County's Memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 7, Phillips deposition at 19-25.)
[11] Although Gomez now asserts that her reason for not pursuing an investigation with the Affirmative Action Office is because they have a policy of not investigating complaints once an attorney becomes involved, Gomez stated in a newspaper article that the reason was that she "knew from [her] meeting with Mr. Phillips [that the Affirmative Action Office] wouldn't do anything." (The County's memorandum in Support of Motion for Summary Judgment, D.E. # 74, Exhibit 1, New Times, Nov. 28-Dec. 4, 1990, at 20.)
[12] The County, in its motion, has not asserted that it is entitled to sovereign immunity for the negligent retention and supervision of Gutierrez; but rather, has argued the negligence claim based on the exclusivity provision of the Workers' Compensation Act and Fla.Stat. § 768.28(9)(a). Therefore, the Court assumes, as a matter of law, that the County is not entitled to sovereign immunity for the conduct complained of by Gomez in her negligence claim.
[13] The only exceptions to the exclusivity rule of the Workers' Compensation Act are where the employer's actions exhibit a deliberate intent to injure, the employer engages in conduct substantially certain to result in injury or death, or where the conduct arises from a sexual harassment claim. Elliot v. Dugger, 579 So.2d 827 (1st DCA Fla.1991).
[14] Fla.Stat. 768.28(9)(a) makes the state immune form suit for acts of employees committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.
[15] The County erroneously believes that claims for intentional infliction of emotional distress and assault and battery are included under the sexual harassment exception to the Workers' Compensation Act, while claims for negligence are not included. This Court has found that the exclusivity provision of the Workers' Compensation Act does not bar Gomez's claim for negligent retention and supervision of Gutierrez. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1943543/ | 21 F.Supp. 978 (1938)
WELLMAN
v.
WELCH, Collector of Internal Revenue.
No. 6964.
District Court, D. Massachusetts.
January 19, 1938.
Ralph E. Tibbetts and Bond, Tibbetts & Stacey, all of Boston, Mass., for plaintiff.
Francis J. W. Ford, U. S. Atty., and Arthur L. Murray, Sp. Asst. to U. S. Atty., of Boston, Mass., for defendant.
McLELLAN, District Judge.
The plaintiff seeks to recover an alleged overpayment of income taxes for the year 1934. Statements of fact herein are to be taken as findings of fact, and conclusions of law as rulings of law.
The case was heard this afternoon on a stipulation of facts. The primary facts are as stipulated. The stipulation discloses, among other things not necessary here to be set forth in detail, the following:
Nellie P. Carter died on January 15, 1933, leaving a will designating the plaintiff, Arthur H. Wellman, as executor. The allowance of the will was contested in the Suffolk county probate court, and, pending litigation, the State Street Trust Company and Francis J. Carney were appointed and qualified as special administrators on the 13th of February, 1933. They continued to serve until July 24, 1934, when the litigation was concluded and the will was allowed. The assets were subsequently turned over by the special administrators to the executor, and the estate is still in the process of settlement.
The plaintiff, as executor, filed an income tax return for the year 1934, reporting the combined amounts of income received by the special administrators from January 1 to July 24, 1934, inclusive, and received by him as executor from July 25 to December 31, 1934, inclusive. In 1936, after an examination of the plaintiff's accounts by the Treasury Department, a deficiency tax for the year 1934 was assessed against the plaintiff in the sum of $18,478.09. This deficiency, to the extent of $12,438.43, resulted from the disallowance by the Treasury Department as a deduction from income of the sum of $19,750 which the plaintiff had deducted in the original return, claiming it to be deductible under section 162(a) of the Revenue Act of 1934, 26 U.S.C.A. § 162(a), and the disallowance of the sum of $1,868.76, which the plaintiff *979 said was income in the year 1934 permanently set aside or to be used for such purposes and in the manner provided in said section. The latter sum had not been deducted on the original return filed by the plaintiff for the year 1934. The plaintiff paid the additional assessment of $18,478.09 on June 12, 1936, and on July 17, 1936, paid interest on this assessment in the sum of $1,370.41. On or about the 24th of July, 1936, the plaintiff filed with the defendant a claim for refund of $13,360.91, consisting of $12,438.43 of principal tax and $922.48 interest. When this action was commenced, no notice had been received from the Commissioner of Internal Revenue of either rejection or allowance of the claim for refund, although more than six months had elapsed since it was filed with the Collector of Internal Revenue.
When the will was executed in 1931, the property purporting to be disposed of thereby was of a value sufficient to pay all pecuniary legacies with a substantial sum for residuary legatees, but at the time of the testatrix' death in January, 1933, the value of the estate was insufficient to pay the pecuniary legacies in full. The amount of the pecuniary legacies under the will, after the deduction of a lapsed legacy for $100,000, was $3,883,000, and of this sum, $395,000 was to charitable or other organizations of the character described in section 162(a) of the Revenue Act of 1934. The charitable bequests, totaling $395,000, amounted to 10.17 per cent. of the total of all pecuniary bequests. No such bequests have been paid in full, and the parties have stipulated that the estate's assets will not be sufficient so to pay them.
The executor distributed 5 per cent. of the total amount of pecuniary legacies for the year 1934, though some of these payments were not actually made until after the close of the year. On October 24, 1934, by way of this 5 per cent. distribution, the sum of $190,750 was disbursed by the executor, and at this time there was paid to the charitable corporations named as pecuniary legatees a total of $19,750.
To revert to October 1, 1934, because the stipulation does so, the estate had cash on hand amounting to $3,317.21, all of which was a balance of dividends or other income which had not been disbursed by the executor. On October 11, 1934, the executor sold securities in the sum of $195,716.90, which represented a gain over inventory value of $64,466.90. When, on October 24, 1934, the distribution to the pecuniary legatees occurred, the executor had on hand a total cash of $200,813.21, made up of $131,250, representing the inventory value of stocks sold on October 11; $64,466.90, representing the gain on such sales; and $5,096.31, representing the balance of dividends and other income which had not previously been expended by the executor.
The estate's gross taxable income, as determined by the Commissioner, for the calendar year 1934, amounted to $232,057.82, made up of interest, $537.50; dividends, $116,729.46; and capital gain on the sale of capital assets to the extent of 80 per cent. thereof, $114,790.86. The allowable deductions, exclusive of payments to charitable corporations, amounted to $19,484.01, leaving a net taxable income of $212,573.81.
The increment to the estate during the calendar year 1934 amounted to $260,755.53, including interest, $537.50; dividends, $116,729.46; and gain on the sale of capital assets to the extent of 100 per cent. thereof, $143,488.57. In addition to the charges against the above amounts allowable as tax deductions in the amount of $19,484.01, there was a further payment on account of federal income tax of $24,712.32, paid in part by the special administrators and in part by the executor. There was thus left of the foregoing increment to the estate, after all deductions therefrom, the sum of $216,559.20.
All receipts by the executor, whether realized from inventory values or gains on such values, or in the form of interest and dividends received, were indiscriminately treated as assets of the estate and applied to the payment of legacies.
The question presented for determination upon the facts found is whether the plaintiff is entitled to any deduction under the provisions of section 162(a) of the Revenue Act of 1934 because of any distributions or allocations made by the plaintiff as executor during that year to charitable organizations. Inasmuch as the whole of section 162, Revenue Act 1934, 26 U.S. C.A. § 162, may be of assistance in construing paragraph (a), it is set forth, as follows:
"§ 162. Net Income
"The net income of the estate or trust shall be computed in the same manner and *980 on the same basis as in the case of an individual, except that
"(a) There shall be allowed as a deduction (in lieu of the deduction for charitable, etc., contributions authorized by section 23(o) any part of the gross income, without limitation, which pursuant to the terms of the will or deed creating the trust, is during the taxable year paid or permanently set aside for the purposes and in the manner specified in section 23(o), or is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, or for the establishment, acquisition, maintenance, or operation of a public cemetery not operated for profit;
"(b) There shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year which is to be distributed currently by the fiduciary to the beneficiaries, and the amount of the income collected by a guardian of an infant which is to be held or distributed as the court may direct, but the amount so allowed as a deduction shall be included in computing the net income of the beneficiaries whether distributed to them or not. Any amount allowed as a deduction under this paragraph shall not be allowed as a deduction under subsection (c) of this section in the same or any succeeding taxable year;
"(c) In the case of income received by estates of deceased persons during the period of administration or settlement of the estate, and in the case of income which, in the discretion of the fiduciary, may be either distributed to the beneficiary or accumulated, there shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year, which is properly paid or credited during such year to any legatee, heir, or beneficiary, but the amount so allowed as a deduction shall be included in computing the net income of the legatee, heir, or beneficiary."
Section 23(o) of the same act, 26 U.S. C.A. § 23(o) which is referred to in section 162(a), supra, follows:
"§ 23. Deductions from gross income
"In computing net income there shall be allowed as deductions: * * *
"(o) Charitable and other contributions. In the case of an individual, contributions or gifts made within the taxable year to or for the use of:
"(1) the United States, any State, Territory, or any political subdivision thereof, or the District of Columbia, for exclusively public purposes;
"(2) a corporation, or trust, or community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation;
"(3) the special fund for vocational rehabilitation authorized by section 440 of Title 38;
"(4) posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings inures to the benefit of any private shareholder or individual; or
"(5) a fraternal society, order, or association, operating under the lodge system, but only if such contributions or gifts are to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals; to an amount which in all the above cases combined does not exceed 15 per centum of the taxpayer's net income as computed without the benefit of this subsection. Such contributions or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the Commissioner, with the approval of the Secretary. (For unlimited deduction if contributions and gifts exceed 90 per centum of the net income, see section 120.)"
The applicable statute, by its express terms, is in lieu of deductions for charitable contributions authorized by section 23(o) of the act. There is nothing here in the nature of a charitable contribution. The testatrix died before 1934, and after her death the executor, as such, had no right to make such contributions. But the particular section on which the plaintiff founds his claim provides that an estate "shall be allowed as a deduction * * any part of the gross income * * * *981 which pursuant to the terms of the will or deed creating the trust, is during the taxable year paid or permanently set aside for the purposes and in the manner specified in section 23(o)," etc.
Section 162(a) of the statute was not intended to permit a deduction by an estate of sums paid in satisfaction of legacies of the type here involved. It was designed to meet such a situation as existed in Old Colony Trust Company v. Commissioner, 301 U.S. 379, 57 S.Ct. 813, 815, 81 L.Ed. 1169, on which the plaintiff relies because of the language in which the opinion is couched. In that case the court, interpreting the words "pursuant to" in the statute as meaning "Acting or done in consequence or in prosecution (of anything); hence, agreeable; conformable; following; according," concluded, in substance, that the Old Colony Trust Company, as trustee, having paid certain income to charities, as by the terms of the trust deed it was authorized but not required to do, was entitled to a deduction from its gross income. Neither the actual decision in the Old Colony Case that payments are "pursuant to" a deed of trust when authorized though not directed therein and such payments to charities are deductible though not made out of income of the year in which they are made, nor the court's language leading to this result, meets the instant case.
So, too, the statutory provision here considered is said to have been designed to meet such a situation as was presented in Bowers, Collector, v. Slocum, 2 Cir., 20 F.2d 350, 352, cited by the plaintiff. In that case the residuary legatees were charities. They received what was left of income and principal because the will naming them residuary legatees in legal effect so provided. It was decided that the statute applied to estates in process of settlement, and that under the circumstances the estate was entitled to a deduction of payments made to charities because "the income received by the estate [was] * * * permanently set aside for the residuary legatees by the will itself." (Italics added.) This case does not seem to me to apply to the facts of the instant case.
In the case at bar the charities, as legatees, received a sum of money in accordance with the will. Unless payments of bequests to charities are deductible from gross income, the payments here involved are not deductible. The fact that the money was paid to the charities under the particular circumstances here appearing does not matter. It is the will that counts and, as heretofore stated, all that the will does is entitle the charities to receive a definite sum of money as a bequest.
If material, it may be noted also that in this commonwealth, nonresiduary pecuniary legatees are not entitled to income received or gains accruing from the sale of the property of the estate. They are, under some circumstances, entitled to interest on their legacies after the expiration of a year, but under the circumstances here presented by the contest of the will, I do not understand that the legatees would have been entitled even to interest, though the estate were sufficient to pay it. Moreover, the will itself provides that no "legacy shall draw or bear interest except from or after the expiration of three years" after the testatrix' decease, and she died January 15, 1933.
I do not discuss further the fact that under Massachusetts law the income here received during the year 1934 became, in effect, capital, or the fact that "all receipts by the executor, whether realized from inventory values or gains on such values, or in the form of interest and dividends, were indiscriminately treated as assets of the estate and applied to the payment of legacies," because, as heretofore stated, I regard the will, and not what the executor did, as the important thing.
I do not regard what was here done as a payment or setting aside of a portion of the estate's gross income "pursuant to the terms of the will" for the purposes there specified within the meaning of section 162(a) of the Revenue Act of 1934, considered in the light of the whole of section 162 and the rest of the act. The conclusion is that the plaintiff is not entitled to the deductions claimed, and that upon all the facts the action cannot be maintained.
I find and rule as requested in substance by the defendant: (1) That the plaintiff is not entitled to the deduction claimed; (2) that all distributions were from the corpus or assets of the estate; (3) that they constituted payments of bequests under the will of the testatrix out of the corpus of the estate and not out of income; (4) that the determination of the Commissioner of Internal Revenue here attacked is correct; and (5) that judgment should be entered for the defendant.
To the allowance of these requests the plaintiff's exception is saved.
*982 As to the plaintiff's requests for rulings of law, the first, to the effect that the words "pursuant to the terms of the will," as used in section 162(a) of the act, do not mean "specifically directed" or "definitely enjoined," but mean what the court said they do in Old Colony Trust Company v. Commissioner, supra, is granted, as is his second request, that income received by the plaintiff executor was assets of the estate and, like all other assets in his hands, was held by him subject to the terms of the will. I grant, also, the plaintiff's third, fourth, fifth, and sixth requests for rulings in so far as they are consistent with what has been said, and in so far, if at all, as they are inconsistent, they are denied and the plaintiff's exception noted. The plaintiff's seventh request, stating that the defendant erred in not allowing the claimed deduction, and his eighth request, stating that the defendant is indebted to the plaintiff in a certain sum, are each denied, and in each instance the plaintiff's exception is saved.
The plaintiff's motion for judgment is denied, subject to his exception, and the defendant's motion for judgment is granted, subject to the plaintiff's exception.[1]
Let judgment be entered for the defendant.
NOTES
[1] The foregoing exceptions were duly taken at the trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1943921/ | 910 F.Supp. 655 (1995)
COLONIAL OIL INDUSTRIES, INC. and Colonial Terminals, Inc., Plaintiffs,
v.
UNDERWRITERS SUBSCRIBING TO POLICY NOS. T031504670 AND T031504671, Defendants.
Civil Action No. 494-010.
United States District Court, S.D. Georgia, Savannah Division.
December 6, 1995.
Ronald Clarkson Berry, Laura Jean Tromly, Adams, Gardner & Ellis, Savannah, GA, Tracy Ann O'Connell, Adams & Ellis, Savannah, GA, for plaintiffs.
John Milton Tatum, Miller, Simpson & Tatum, Savannah, GA, for defendant.
ORDER
EDENFIELD, Chief Judge.
Pursuant to F.R.Civ.P. 59(e), Underwriters moves this Court to alter its November 6, 1995 summary judgment to Colonial by deleting the attorney's fees and costs of this litigation, as well as any discussion regarding the agency of R.L. Harley and Associates. Colonial opposes the motion.
*656 I. Attorney's Fees And Costs
In its November 6, 1995 summary judgment Order, 1995 WL 692691, the Court stated:
(2) Defense Costs
Colonial also seeks the initial defense costs of the Gay lawsuit and prejudgment interest. Colonial is entitled to recover any sums it spent to defend against Gay's action. [Cit.] This includes attorney fees. [Cit.] The particulars of the $1,290,792.81 non-penalty amount demanded by Colonial (see Colonial's 9/18/95 Brief Exh. A (9/18/95 F. Brown Aff.)) are challenged by Underwriters in only two respects$12,731.03 in "ERM expert witness" fees and a Colonial executive's travel costs for an overseas deposition ($6,411.33, or half of $12,822.65 in claimed travel costs for two). Underwriters' 9/27/95 Reply Brief at 4 n. 1.
11/6/95 Order at 28.
Underwriters points to the F. Brown Affidavit, upon which the Court relied, and correctly notes that the $1,290,792.81 non-penalty amount included $134,995.54 in legal fees and expenses in the prosecution of this (i.e. Colonial v. Underwriters) case. However, the reasoning contained in the Court's November 6, 1995 Order supports Underwriters' present contention that, since Colonial is not entitled to recover under O.C.G.A. § 33-4-6, it can recover Gay v. Colonial attorney fees and expenses, but not Colonial v. Underwriters (i.e., present-litigation) attorney fees and expenses.
Therefore, Underwriters maintains, the Court must grant its Rule 59(e) challenge to this aspect of the judgment and reduce the $1,284,381.48 final judgment by $136,328.56, representing the present-litigation attorney fees and costs claimed in the Brown affidavit. Colonial does not argue with this calculation, nor the new net $1,148,052.90 judgment amount that Underwriters has calculated.
Colonial does contend, however, that American Family Life Assur. Co. v. U.S. Fire Co., 885 F.2d 826 (11th Cir.1989), authorizes recovery of its present-litigation attorney fees and expenses under either O.C.G.A. § 33-4-6 or § 13-6-11. Id. at 833 n. 3. Thus, Colonial maintains, it can recover present-litigation fees and costs under O.C.G.A. § 13-6-11 even if it cannot under O.C.G.A. § 33-4-6.
Post-American Family Georgia precedent, however, states that a "claim for attorney fees and expenses of litigation under O.C.G.A. § 13-6-11 is not authorized. [Rather, t]he penalties contained in O.C.G.A. § 33-4-6 are the exclusive remedies for an insurer's bad faith refusal to pay insurance proceeds." Howell v. Southern Heritage Ins. Co., 214 Ga.App. 536, 537, 448 S.E.2d 275 (1994) (emphasis added). Moreover, O.C.G.A. § 33-4-6 must be strictly construed. Primerica Life Ins. Co. v. Humfleet, 217 Ga.App. 770, 771, 458 S.E.2d 908 (1995) (citing Howell). Sitting as an Erie court, this Court must follow that precedent and disregard American Family.
In that regard, O.C.G.A. § 13-6-11 requires a showing that "the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense." Shepherd v. Aaron Rents, Inc., 208 Ga.App. 139, 143, 430 S.E.2d 67 (1993). Underwriters did not act in bad faith, and thus was not stubbornly litigious, nor caused Colonial unnecessary trouble and expense, as these phrases have been interpreted under O.C.G.A. § 13-6-11. Instead, Underwriters simply misapprehended less-than-clear Georgia law, see 11/6/95 Order at 29-30, and thus no bad-faith can be found. Ga. Farm Bureau Mut. Ins. Co. v. Richardson, 217 Ga.App. 201, 206, 457 S.E.2d 181 (1995) (an insurer need only have "reasonable and probable cause" to escape the bad-faith penalty); accord, Roland v. Georgia Farm Bureau Mut. Ins. Co., 265 Ga. 776, 778, 462 S.E.2d 623 (1995) ("doubtful question of law").
Colonial points to that portion of this Court's November 6, 1995 Order stating that
"damages for breach of an insurance contract by failing to defend [do] not automatically include the full amount of the judgment rendered against the insured, [rather, it appears] that the appropriate measure of damages [is] that which [is] `traceable to [the insurer's] refusal to defend the action.'" Ga. Farm Bureau *657 Mut. Ins. Co. v. Martin, 264 Ga. 347, 350 n. 4[444 S.E.2d 739] (1994) (quoting Leader Nat. Ins. Co. v. Kemp & Son, 259 Ga. 329, 331 [380 S.E.2d 458] (1989)).
11/6/95 Order at 24 n. 5.
Colonial argues that, since its present-litigation attorney fees are "traceable to the insurer's refusal to defend the action," it therefore should be awarded them under Martin and Kemp. The Court disagrees. Through O.C.G.A. § 33-4-6, the Georgia General Assembly has spoken, and so has the Georgia Court of Appeals in stating that "the penalties contained in O.C.G.A. § 33-4-6 are the exclusive remedies for an insurer's bad faith refusal to pay insurance proceeds." Howell, 214 Ga.App. at 537, 448 S.E.2d 275 (emphasis added); see also Hughes v. State Farm Mut. Auto Ins. Co., 101 Ga.App. 443, 445, 114 S.E.2d 61 (1960) (insurer's refusal to defend and pay costs subjects insurer to O.C.G.A. § 33-4-6 penalties). Whatever the Martin/Kemp courts meant by "traceable damages," they did not explicitly overrule the O.C.G.A. § 33-4-6 exclusive remedy with respect to attorney fees and expenses.
II. Agency
This Court found that R.L. Harley and Associates acted as Underwriters' agent, at least with respect to Colonial's notice that it challenged Gay's factual assertions, thus precluding Underwriters' ascertainment of coverage under the "exclusive pleading rule." Underwriters contends that this finding was unnecessary and therefore should be deleted from the November 6, 1995 Order. As Colonial correctly points out, the finding was necessary to the Court's core analysis, namely, that Underwriters mistook Georgia for an "exclusive pleading rule" state, when in fact it is not, at least when an insured or some other source places the insurer on notice that it must undertake a reasonable investigation of the third-party's claims before deciding not to defend its insured.
III. Conclusion
Accordingly, the Court GRANTS Underwriters' Motion To Alter Or Amend The Judgment Pursuant To FRCP 59(e) to the extent it seeks reduction of the judgment against it. The November 6, 1995 Order, therefore, is MODIFIED to reflect the fact that Colonial is not entitled to the attorney fees and expenses Colonial incurred in this (i.e., Colonial v. Underwriters) litigation.
That, in turn, requires that the November 6, 1995 Judgment be, and therefore is, VACATED. The Clerk shall enter a new judgment in favor of plaintiffs Colonial Oil Industries, Inc. and Colonial Terminals, Inc., against defendants Underwriters in the amount of $1,148,052.90. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1944855/ | 801 F.Supp. 1200 (1992)
Dorothy VISCONTI, Plaintiff,
v.
CONSOLIDATED RAIL CORPORATION, Defendant.
No. 91 Civ. 2552 (MBM).
United States District Court, S.D. New York.
August 25, 1992.
Philip J. Dinhofer, Sable, Gold & Dinhofer, New York City, for plaintiff.
Ralph G. Wellington, Michelle Schiffer, Michael G. Tierce, Schnader, Harrison, Segal & Lewis, New York City, for defendant.
*1201 OPINION AND ORDER
MUKASEY, District Judge.
Plaintiff, Dorothy Visconti, sues her employer, Consolidated Rail Corporation ("Conrail"), under the Federal Employers' Liability Act, 45 U.S.C. §§ 51-60 ("FELA"), for both intentional and negligent infliction of emotional distress. Defendant moves for summary judgment. For the reasons set forth below, defendant's motion is granted, with leave for plaintiff to amend her complaint to allege sexual harassment should the facts justify such an allegation.
I.
Summary judgment is appropriate if the evidence demonstrates that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). In determining whether there is a genuine issue of material fact, a court must resolve all ambiguities, and draw all reasonable inferences against the moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam); Donahue v. Windsor Locks Bd. of Fire Comm'rs, 834 F.2d 54, 57 (2d Cir.1987). Accordingly, the parties agree that for the purposes of this motion the Court should accept the version of the facts set forth in plaintiff's deposition testimony.[1]
Plaintiff has been employed by Conrail and a predecessor corporation, the Central Railroad of New Jersey, since October 23, 1974. (Visconti Dep. at 4)[2] On April 15, 1991, plaintiff filed this suit alleging that she has suffered extreme emotional distress as a result of "continuous, unrelenting and vicious forms of harassment, verbal, visual, abuse and emotional harassment" by Conrail management. (Compl. ¶¶ 6, 7)
The harassment allegedly began in June 1989, shortly after plaintiff injured her ankle at Conrail's South Kearney New Jersey Terminal. (Dep. at 44-45) According to plaintiff, "she was harassed by all the manage[rs]" at the South Kearney facility, initially because the injury tarnished the facility safety record. (Dep. at 45) Later, she was "harassed for harassment['s] sake." (Dep. at 290) In her testimony, plaintiff described a series of 54 "incidents of harassment."
Incident 1: Plaintiff maintains that on the night of the injury she was "harassed" by Fran Palumbo, a Conrail supervisor, who was forced to forego a social engagement to help plaintiff complete various accident reports. (Dep. at 85) According to plaintiff, Palumbo did not know how to file the necessary reports and, as a result of her frustration, Palumbo "turned everything around," and reported plaintiff for insubordination and failure to cooperate. (Id.) Plaintiff filed a grievance with her union, the Brotherhood of Railway and Steamship Clerks ("union"), and was exonerated after a hearing. (Dep. at 57, 86)
Incident 2: A week after the injury Kenneth Weber, a Conrail claims investigator, visited plaintiff's home to obtain a statement. According to plaintiff, Weber walked around and examined her property before knocking on the front door. (Dep. at 53-55)
Once inside, Weber, who "was very forceful," took out a tape recorder and plaintiff's employment records and began questioning plaintiff about the accident. (Id.) Plaintiff informed Weber that she wasn't feeling well and after speaking to her attorney asked him to leave. (Id.)
Incident 3: In September 1989, plaintiff returned to work as a gate clerk. One day shortly after her return, William Gallagher, her supervisor, left work early leaving plaintiff in charge of the gate operation. Later on that day there was an oil spill and plaintiff called Gallagher for help. Gallagher, however, was "belligerent" and refused *1202 to return to the terminal. Plaintiff threatened to report Gallagher to his supervisor and Gallagher replied that she would "`pay for this.'" (Dep. at 58-59)
The next day plaintiff received three notices of investigation charging her with violations of various work rules. (Id.) One charge was dropped because of insufficient evidence. The other two were resolved through the grievance procedure established by the collective bargaining agreement. (Dep. at 60-61)
Incident 4: In November 1989, Paul Birnbaum, another supervisor, called a junior clerk to work a shift that plaintiff, a senior employee, was entitled to work. Plaintiff filed a claim with the union that ultimately was resolved in her favor. (Dep. at 192)
Incident 5: In February 1990, pursuant to a procedure set forth in the collective bargaining agreement, plaintiff "bid" into a clerk stenographer position displacing Betty Staples, the employee who held the job. Plaintiff claims that she then was harassed by Conrail managers who "liked and favored" Staples. (Dep. at 61)
Shortly after plaintiff displaced Staples, Wayne Wagner, one of plaintiff's supervisors, "ran" out to her car as she was leaving for lunch and asked whether she had copied and removed any company payroll records. Plaintiff denied doing so; nevertheless, she later received a notice of investigation for tampering with confidential company records. (Dep. at 62-63)
Following a hearing at which she was represented by the union, an administrative officer determined that plaintiff had reproduced and removed confidential company records without authorization and disqualified plaintiff from holding the position of clerk stenographer. (Dep. at 69, 70, 82-83) The hearing officer's determination was affirmed on appeal. (Dep. at 70)
Incident 6: Plaintiff claims that in February or March 1990 Palumbo ordered plaintiff to leave the terminal because her shoes did not conform to company safety standards. The reader will recall that plaintiff already injured her ankle once, the event she claims loosed a torrent of harassment. (See p. 2, supra) In response, plaintiff informed a union representative who in turn called another of plaintiff's supervisors. The supervisor agreed to allow plaintiff to remain at work on condition that in the future she wear appropriate footwear. (Dep. at 74-76, 78-79)
Incident 7: According to plaintiff, Palumbo allowed other clerks, including Betty Staples, to leave work early with pay for medical purposes but required that plaintiff take a personal day to visit her physician. When plaintiff brought this to Palumbo's attention two clerks previously paid were docked for time spent at the doctor. Plaintiff complains that this unfairly "put [her] in the spot of the bad guy." (Dep. at 78-79)
Incident 8: According to plaintiff, Palumbo also harassed her by: having her revise letters "up to eight times, not for errors in typing but because [Palumbo] rearranged the wording"; making fun of plaintiff's clothes; "whispering" about plaintiff with other clerks; excluding plaintiff from conversations; and displaying an "unpleasant[] attitude" toward plaintiff. (Dep. at 77-78, 81)
Regarding work assignments, plaintiff claimed Palumbo would assign other clerks the "more important typing of letters and other things while she had [plaintiff] do the lesser things such as filing or typing out envelopes or making a hundred copies of a particular item." (Dep. at 81)
Incident 9: According to plaintiff, on one occasion Palumbo asked a junior employee to work a shift that plaintiff was entitled to work. Plaintiff's claim for three hours pay is pending. (Dep. at 86)
Incident 10: While plaintiff was working as a clerk stenographer, Gallagher asked her to type various documents including letters denying three of her claims. According to plaintiff, Gallagher "laughed" as he dictated the letters.
Plaintiff also maintains that Gallagher repeatedly accused her of improperly typing a document that another employee had typed. (Dep. at 90-94)
*1203 Incident 11: Plaintiff claims that she was "harassed" by Gallagher's "sexual innuendos". (Dep. at 94) Plaintiff maintains that Gallagher "was always talking about body parts and making dirty jokes and laughing about same." Although "he was doing it in a lighthearted manner," his language nevertheless "offended" plaintiff. (Dep. at 94-95)
Incident 12: One night while plaintiff was working the gate, Gil Mayer, a supervisor, brought her another employee's jacket because the heater in the gatehouse had malfunctioned. On completing her shift, plaintiff left the jacket in the gatehouse. Plaintiff contends that three months later Mayer wrongly accused her of stealing the jacket in the presence of other Conrail employees. (Dep. at 98-99)
Incident 13: According to plaintiff, Birnbaum persistently harassed and "pick[ed] on" female employees. Plaintiff described Birnbaum's conduct as follows: "He used to raise his voice and try to use intimidating tactics. He told dirty jokes. He had foul language and it was disparity of treatment. He treated the men better than he did the women." (Dep. at 100-101)
Incident 14: Plaintiff complains that Birnbaum frequently called her during her shifts at the South Kearney Terminal. According to plaintiff, Birnbaum would "pump her for information" about business at South Kearney and then discuss what he learned with other Conrail supervisors. (Dep. at 101-105)
Incident 15: In March 1990, after she was disqualified from her position as a clerk stenographer, plaintiff took several weeks sick leave in order to "recuperate." Upon her return to active status, she attempted to obtain several jobs by "bumping" junior employees pursuant to the collective bargaining agreement. Plaintiff maintains that management prevented her from obtaining a suitable position. (Dep. at 112)
Incident 16: In April 1990, plaintiff attempted to return to work at the South Kearney facility by bumping stenographer Lisa McGregor. When plaintiff arrived, Dan Borelli, a supervisor, informed her that she could not replace McGregor and demanded that she leave the terminal. When plaintiff refused, Borelli called the Conrail police who escorted her off Conrail property. (Dep. at 113-115)
Plaintiff's grievance was denied because of her earlier disqualification for copying and removing confidential records. The union has appealed on plaintiff's behalf. (Dep. at 115-116)
Incident 17: Following her unsuccessful attempt to return to South Kearney, plaintiff could obtain only "an inferior" janitorial position at Conrail's Oak Island, Newark facility. While working at Oak Island plaintiff filed a grievance against her supervisor, Jeff Harris, because on the day she was displaced by a senior employee, Harris sent her home in the middle of a shift. Plaintiff's claim is pending. (Dep. at 116-121)
Incident 18: During plaintiff's employment at Oak Island, a male yard worker filled in for a stenographer who had taken two weeks leave. Believing she was entitled to the position, plaintiff filed a grievance. (Dep. at 121-123)
Incident 19: Plaintiff returned to the South Kearney facility in September 1990. On September 19, 1990, a junior employee was called to work a shift plaintiff believed she was entitled to work. Plaintiff's grievance is pending. (Dep. at 127-128)
Incident 20: Plaintiff's appeal of her suspension for removing confidential documents was denied on November 5, 1990. Upon receiving the notice, Borelli directed another Conrail employee to inform plaintiff that she must immediately begin serving the suspension. The employee called plaintiff at 4:30 a.m. to tell her not to show up for the 6:30 a.m. shift. (Dep. at 128-130)
Plaintiff nevertheless reported for work but left after Borelli "shouted" at her and provided her with formal notice of the suspension. Plaintiff claims that as she was leaving Borelli and other supervisors laughed at her and humiliated her in front of her co-workers. (Dep. at 130-132)
*1204 Plaintiff reported the incident to the union. The following week she was reinstated because the notice of suspension was deficient. (Dep. at 133)
Incident 21: On November 5, 1990, the same day Borelli enforced plaintiff's suspension, plaintiff wrote to Carol Evans, Conrail's Equal Employment Opportunity Officer, accusing Borelli of sexual harassment. (Not. of Mot.Exh. C) Plaintiff claims that sometime during the summer of 1990, Borelli "brush[ed] close" to her body, stood close to her for one or two minutes and put his hand on her back for less than a minute. (Dep. at 18-24) In her letter to Evans plaintiff wrote:
Mr. Borelli does not conduct himself as a Manager of the Company should. He dates the clerks of this Company and is presently living with one. He has made many sexual advances to me in person and by phone. He parks behind my car to block me from getting out, so that I have to get him to move it. Because I have rebuffed all his advances he continues to make my life miserable.
In her deposition testimony, plaintiff accused Borelli of making "hang-up calls" to her home and reiterated her complaint that Borelli occasionally parked his car near hers in the parking lot. (Dep. at 26) Plaintiff conceded, however, that supervisors often call employees at home and when Borelli identified himself the conversations concerned only work-related matters. (Dep. at 34-35) Regarding the "many sexual advances ... [made] in person," plaintiff was vague in her testimony and cited only the use of "suggestive language." (Dep. at 29) When pressed for details, plaintiff admitted that many Conrail supervisors used similar language, but Borelli used it in "a different context ... one that suggested sexual overtones." (Dep. at 33) Plaintiff, however, was unable to articulate any specific ways in which Borelli's use of such language differed from that of other supervisors. (Dep. at 33-34) Finally, plaintiff acknowledged that there is a parking problem at the South Kearney terminal and employees typically have to double and triple park. (Dep. at 65)
Plaintiff also accused Birnbaum of making "hang-up and dirty phone calls" to her home. When confronted with the fact that earlier she had accused Borelli of similar behavior, plaintiff explained, cryptically, that "Borelli is a personal friend of Mr. Birnbaum." When asked who she thought was responsible for the phone calls, plaintiff answered: "I don't know. Some of the hang-up calls could have been either of them." (Dep. at 107) As with Borelli, plaintiff admitted that when Birnbaum identified himself, the conversations concerned only work-related matters. (Dep. at 108)
Incident 22: Plaintiff contends that although she was available for work on December 10, 1990, four junior employees were called instead. Her grievance is pending. (Dep. at 135, 140)
Incident 23: In December 1990, plaintiff's second attempt to displace Lisa McGregor was denied. (Dep. at 125) Plaintiff's grievance is pending.
Incident 24: At the close of 1990, Mayer suggested that plaintiff, then employed as a train programmer, look for another position because of her lack of programming experience. Plaintiff interpreted this as a threat that she would be "tormented again." As a result, plaintiff left her programming job for another position. (Dep. at 201-202)
Incident 25: On February 1, 1991, plaintiff had car trouble on the way to work. She called to inform her supervisor and was told to call back later. When she called back to tell her supervisor that the car was still disabled, she was told that her position had been filled for the day. Plaintiff did not file a grievance. (Dep. at 142-146)
Incident 26: On February 4, 1991, plaintiff was assigned to work the outside gate while a junior employee was assigned to do computer work. Plaintiff did not file a grievance. (Dep. at 147-148)
Incident 27: On February 5, 1991, plaintiff was asked by Palumbo to fill in at several different positions. Plaintiff complained to her union representative. The *1205 next day she was asked to perform only one type of task. (Dep. at 148-150)
Incident 28: On February 6, 1991, plaintiff and several other employees attended a hazardous materials class. The teacher informed the class that those in attendance would be paid for four hours. When plaintiff filled out her time sheet, Palumbo angrily told her she would be paid for three hours, the actual time spent in class. Because incidents were occurring almost daily, plaintiff did not file a grievance; she did not want "to appear to be a pain." (Dep. at 151-152)
Incident 29: On March 1, 1991, a junior employee worked an overtime shift which was not offered to plaintiff. Plaintiff filed a grievance which was denied because, according to management, plaintiff was not qualified to work with hazardous materials. Plaintiff has appealed. (Dep. at 152-153)
Incident 30: On March 12, 1991, plaintiff was notified by Conrail's labor relations department that she would be paid for two of her claims. Payment, however, was delayed. Although plaintiff concedes that she does not know who withheld the checks or even if it was done intentionally, she believes that Palumbo and Staples are responsible. Plaintiff complained to another supervisor and received the checks shortly thereafter. (Dep. at 155-157)
Incident 31: On May 9, 1991, plaintiff bid for yet another stenographer position. She was denied the position and filed a grievance. (Dep. at 161-163)
Incident 32: On May 15, 1991, two junior clerks were called to work but plaintiff was not. Plaintiff's grievance was denied. (Dep. at 159, 212-213)
Incident 33: On May 22, 1991, plaintiff called in sick. She contends, however, that later that week she tried to call back to return to active duty but could not reach her supervisor. Plaintiff eventually reached a Conrail police officer who promised to notify Wagner that plaintiff was available for work.
Plaintiff next was called to work on May 28, the day after the Memorial Day holiday. Plaintiff filed a grievance for holiday pay because she was available to work the day before the holiday and worked the day after. The grievance was denied. (Dep. at 208-210)
Incident 34: On June 5, 1991, supervisor Harry Ricks sent plaintiff home claiming her shoes did not conform to safety standards. Plaintiff filed a grievance. (Dep. at 166-168)
Incident 35: On June 6, 1991, a junior employee worked eight hours of overtime despite the fact that plaintiff, a senior employee, had not worked 40 hours that week. Plaintiff notified the union, but does not recall if she filed a grievance. (Dep. at 204-206)
Incident 36: On June 7, 1991, plaintiff filed a grievance because she again was denied Staples's stenographer position. This claim is pending. (Dep. at 206)
Incident 37: On July 2, 1991, plaintiff again attempted to displace Staples. A supervisor informed her that her request was denied because of her earlier disqualification for copying and removing confidential records. Plaintiff's claim is pending. (Dep. at 211)
Incident 38: On July 10, 1991, a junior employee worked a shift that was not offered to plaintiff. Plaintiff informed the union but did not file a grievance. (Dep. at 205-206)
Incident 39: On August 21, 1991, plaintiff, who at that time held a clerical position at South Kearney, was displaced by another employee. In turn, plaintiff again tried to displace Staples. A supervisor denied plaintiff the position citing her earlier disqualification. Plaintiff claims that Wagner laughed and said: "`[Y]ou have got to be kidding, do we have to go through this all over again? Why do you even bother trying to bump this job?'" (Dep. at 213-214)
Incident 40: On August 26, 1991, plaintiff received what is called an Appendix II letter, a letter used to admonish an employee for excessive absence. Plaintiff wrote to a supervisor claiming the letter was unwarranted. After reviewing the situation, the supervisor rescinded the Appendix *1206 II letter on procedural grounds and issued a less serious Appendix I letter. Plaintiff contests the propriety of the Appendix I letter and "is in the process of writing to the union regarding that problem." (Dep. at 217-219)
Incident 41: Plaintiff claims that during "her vacation week" Wagner sent her several certified letters regarding claims she had filed against Conrail. On September 1, 1991, plaintiff wrote to Wagner to complain about this "harassment." (Dep. at 220-221)
Incident 42: In the fall of 1991, plaintiff wrote to Weber, the Conrail representative that visited her home in 1989, to apply for a job in Conrail's claims department. Plaintiff met with Weber in October 1991, but maintains, without offering any details, that she was "harassed throughout the entire interview." Plaintiff was not offered the job and filed a grievance. (Dep. at 240)
Incident 43: On October 31, 1991, junior stenographer McGregor received a clerk stenographer position for which plaintiff also had applied. On November 2, 1991, plaintiff wrote to Wagner to complain about not being offered the position. (Dep. at 241-243)
Incident 44: On December 1, 1991, Wagner asked plaintiff to work on her "rest day." When plaintiff refused claiming she had car trouble, Wagner was "very belligerent." Plaintiff did not file a grievance. (Dep. at 277)
Incident 45: On December 21, 1991, plaintiff failed to show up for her scheduled 7 a.m. shift because her alarm was not working properly. Wagner called her at 7:15 a.m. and, finding her at home, told her not to come in. Plaintiff did not file a grievance. (Dep. at 277)
Plaintiff claims that as a result of her absences on December 1 and December 21, Wagner tried to bring her up on charges of excessive absenteeism. This upset plaintiff who "fully wanted to come in" on those days. (Dep. at 278)
Incident 46: On January 27, 1992, supervisors Wagner and Gosinsky "raided" the gatehouse where plaintiff was working and demanded that she sign a notice of investigation regarding charges of lateness. Plaintiff refused to sign the document. As a result of this incident plaintiff became physically ill and left work. (Dep. at 279-282)
Incident 47: Plaintiff claims that Wagner often challenged her time card. One day in early February 1992, Wagner insisted that plaintiff correct her card so that it reflect the actual time she arrived at work. At Wagner's insistence, plaintiff changed her sign-in time to 2:07 p.m. from 2:05 p.m. (Dep. at 284-286)
Incident 48: On February 17, 1992, President's Day, a junior clerk was asked to work; plaintiff was not. (Dep. at 284)
Incident 49: On February 19, 1992, Mayer came out to the gatehouse where plaintiff was working to check if she was wearing the proper kind of shoes. He watched her work for awhile, which upset plaintiff, and then instructed her to leave the gate-house and work another position. When plaintiff asked to go to lunch, Mayer refused and insisted she take her lunch break later. (Dep. at 282-283)
Incident 50: On February 20, 1992, plaintiff noticed that although fellow employee Dorothy Brown left work early, Wagner approved her time sheet which indicated Brown had worked a full eight hour shift. Plaintiff claims that this constitutes harassment because the managers are "very, very particular about ... [plaintiff's] time." Plaintiff concedes that she does not know the circumstances surrounding Brown's early departure, nor does she know whether Brown was paid for the time. (Dep. at 287-288)
Incident 51: According to plaintiff, F.J. Doyle, a member of Conrail's Labor Relations Department, sent her a letter stating that one of her claims would be denied because, contrary to plaintiff's calculations, she was not entitled to overtime. Plaintiff claims also that Doyle took "a very harsh position" regarding plaintiff's numerous attempts to obtain a stenographer position. (Dep. at 225-226)
*1207 Incident 52: Because of a lack of parking facilities at South Kearney, plaintiff often would have to circle the lot two or three times to find a spot and, as a result, would arrive a few minutes late. Supervisor John Marro often upset plaintiff by insisting that she sign in at the time she actually entered the building instead of the time she drove into the parking lot. Plaintiff also claims that she experienced "stress and anxiety" when Marro informed her that she would have to work on a weekend and might have to perform certain managerial tasks because she would be the only clerk at the terminal. (Dep. at 234-236)
Incident 53: Sometime in 1989, the exact date is unclear, supervisor C.A. Savoye selected a junior employee, instead of plaintiff, to work a shift as a stenographer. Plaintiff filed a grievance and was compensated. (Dep. at 238-239)
Incident 54: Plaintiff claims that fellow employees Staples, Matthias, and Werb falsely testified against her at a grievance hearing. (Dep. at 267)
Plaintiff maintains that as a result of these 54 incidents she has experienced chest and stomach pains, headaches, nausea, anxiety and depression. (Dep. at 15, 291, 294) She has frequently sought the advice of her family physician and a psychiatrist who have prescribed various medications including one for stress and depression.[3] (Dep. at 291-300) Plaintiff has not been hospitalized for these symptoms, but since the ankle injury she has been unavailable for work on 127 days. (Dep. at 308, 310-311)
II.
FELA, enacted in 1906, provides a cause of action in tort for railroad workers injured on the job. See 45 U.S.C. §§ 51-60. Section 51 of Title 45 states:
Every common carrier by railroad ... shall be liable in damages to any person suffering injury while he is employed by such carrier ... for such injury or death resulting in whole or in part from the negligence of any of the officers, agents, or employees of such carrier, or by reason of any defect or insufficiency, due to its negligence, in its cars, engines, appliances, machinery, track, roadbed, works, boats, wharves, or other equipment.
In applying FELA, courts have adopted a "standard of liberal construction" in order to effect FELA's broad remedial purpose. Urie v. Thompson, 337 U.S. 163, 180, 69 S.Ct. 1018, 1030, 93 L.Ed. 1282 (1949).
In Atchison, Topeka and Santa Fe Ry. Co. v. Buell, 480 U.S. 557, 567-68, 107 S.Ct. 1410, 1417, 94 L.Ed.2d 563 (1987), the Supreme Court considered but explicitly declined to decide whether § 51 creates a cause of action for "wholly mental injury." The Court, nevertheless, noted that "broad pronouncements in this area may have to bow to the precise application of developing legal principles to the particular facts at hand." Id. at 570, 107 S.Ct. at 1418. This statement in conjunction with the Court's discussion of the common law emotional distress torts and its observation that "FELA jurisprudence gleans guidance from common-law developments," seems, notwithstanding the Court's explicit refusal to decide the issue, to invite the lower federal courts to entertain suits for emotional injury under FELA in accordance with common law principles of negligent and intentional infliction of emotional distress. See Id. at 568, 107 S.Ct. at 1417 (citing Urie, 337 U.S. at 174, 69 S.Ct. at 1027).
However, in rejecting the argument that if such a tort were recognized the federal courts would be inundated with specious claims, the Court stated:
This parade of horribles mistakenly assumes that a significant percentage of employees bringing grievances suffer the type of severe emotional injury that has generally been required to establish liability for purely emotional injury, and that a significant percentage of employees are subject to the type of unconscionable abuse which is a prerequisite to recovery. *1208 480 U.S. at 566 n. 13, 107 S.Ct. at 1416 (emphasis added). This statement appears to require "severe emotional injury" and "unconscionable abuse" as prerequisites for an emotional distress claim under FELA, should such a cause of action be recognized. Moreover, because the Court spoke of "emotional injury" in general and did not differentiate between intentional and negligent infliction of emotional distress, it appears that the prerequisites of "severe emotional injury" and "unconscionable abuse" are to be applied regardless of whether the defendant's tortious conduct is characterized as intentional or unintentional. It seems that without recognizing the cause of action for emotional distress, the Court, nevertheless, managed to limit its scope. As the First Circuit has noted, the Buell opinion was "an attempt to leave the door to recovery for wholly emotional injury somewhat ajar but not by any means wide open." Moody v. Maine Central R.R. Co., 823 F.2d 693, 694 (1st Cir.1987).
In the wake of the Supreme Court's opinion in Buell, the circuits are divided as to whether FELA creates a cause of action for emotional distress. See Ray v. Consolidated Rail Corporation, ___ U.S. ___, 112 S.Ct. 914, 116 L.Ed.2d 813 (1992) (White, J., dissenting from denial of certiorari). The Ninth Circuit has adhered to its decision in Buell, subsequently affirmed in part and vacated in part by the Supreme Court on other grounds, that railroad employees may assert claims for wholly mental injury. Taylor v. Burlington Northern R.R. Co., 787 F.2d 1309, 1313 (9th Cir.1986) (citing Buell v. Atchison, Topeka & Santa Fe Railway, 771 F.2d 1320 (9th Cir.1985), aff'd in part, vacated in part, 480 U.S. 557, 107 S.Ct. 1410, 94 L.Ed.2d 563 (1987)). In Buell, the Ninth Circuit concluded that an employee's claim that he suffered an emotional breakdown as a result of "his supervisor's and co-worker's harassment, threats and intimidation" was covered by FELA. 771 F.2d 1321, 1324.
Reasoning that the purpose of FELA is to safeguard railroad employees from physical as opposed to emotional or psychological hazards, the Seventh Circuit, in an opinion by Judge Posner, held that FELA does not create a cause of action for tortious acts that do not involve physical contact or the threat of physical contact. Lancaster v. Norfolk and Western Ry. Co., 773 F.2d 807, 813 (1985). The Seventh Circuit has adhered to Lancaster, despite the Supreme Court's invitation to entertain suits for emotional injury. See Ray v. Consolidated Rail Corporation, 938 F.2d 704 (7th Cir. 1991), cert. denied, ___ U.S. ___, 112 S.Ct. 914, 116 L.Ed.2d 813 (1992); Gillman v. Burlington Northern R.R. Co., 878 F.2d 1020 (7th Cir.1989); Hammond v. Terminal R.R. Ass'n of St. Louis, 848 F.2d 95 (7th Cir.1988).
Relying in part on the Seventh Circuit's decision in Lancaster, the Sixth Circuit has held that FELA does not give rise to a cause of action for intentional infliction of emotional distress. The court concluded that although FELA has been applied to intentional torts despite statutory language in § 51 that appears to limit its application to negligence actions, "FELA has not been applied to any intentional torts lacking any physical dimension such as assault." Adkins v. Seaboard System Railroad, 821 F.2d 340, 341 (6th Cir.), cert. denied, 484 U.S. 963, 108 S.Ct. 452, 98 L.Ed.2d 392 (1987); see also Campbell v. Pan American World Airways, Inc., 668 F.Supp. 139, 144-145 (E.D.N.Y.1987) (following Sixth Circuit). The Sixth Circuit, however, explicitly declined to decide whether negligent infliction of emotional distress is actionable under FELA. Adams v. CSX Transp., Inc., 899 F.2d 536 (6th Cir.1990); Stoklosa v. Consolidated Rail Corp., 864 F.2d 425 (6th Cir.1988).
The Third Circuit, apparently following the Supreme Court's suggestion to "appl[y] developing legal concepts to the facts at hand", Buell, 480 U.S. at 570, 107 S.Ct. at 1418, has engaged in limited, fact-specific inquiries, and has refused to establish any bright-line rules. In Holliday v. Consolidated Rail Corp., 914 F.2d 421 (3d Cir. 1990), cert. denied, ___ U.S. ___, 111 S.Ct. 970, 112 L.Ed.2d 1057 (1991), plaintiff, although unqualified, was assigned to work as a conductor. As a result of his frequent *1209 mistakes, plaintiff experienced job related stress which manifested itself in the form of heart palpitations, sleep disorders, a spastic colon, tenesmus, involuntary rectal discharge, anxiety and depression. The court upheld summary judgment in favor of defendant concluding that the "allegedly tortious activity ... was simply an ordinary management decision and was not of such a character that [the employee's] emotional reaction and related physical consequences constituted an `injury' compensable under FELA." Id. at 425. In Outten v. National R.R. Passenger Corp., 928 F.2d 74, 79 (3d Cir.1991), the court, following Holliday, refused to adopt a general rule allowing a plaintiff to recover for emotional injuries if circumstances were such that he reasonably feared personal physical injury. Based on the facts in that case plaintiff complained of emotional injury from a train collision that occurred over a mile away the court upheld the grant of summary judgment for defendant. Id. at 79. Both Holliday and Outten were decided over Judge Mansmann's dissenting opinion that emotional distress is actionable under FELA. See Holliday, 914 F.2d at 427 (Mansmann, J., dissenting); Outten, 928 F.2d at 79 (same).
Other circuits have avoided the general question of whether FELA covers emotional distress claims by following the Supreme Court's approach to the issue that is, by determining that the elements of the cause of action are not present without deciding whether, if they were, the cause of action would be viable. For instance, in upholding a grant of summary judgment in favor of defendant in Moody, the First Circuit declined to address the general issue because even if wholly emotional injuries were cognizable under FELA, the plaintiff had failed to adduce sufficient evidence of causation. 823 F.2d at 694.
Similarly, courts have avoided the general question by focusing on the prerequisites to recovery set forth in Buell "unconscionable abuse" and "severe emotional injury" and in defining these terms have followed Buell's suggestion to "glean guidance from common law developments." See, e.g., Gaston v. Flowers Transportation, 866 F.2d 816, 820 (5th Cir.1989) (applying Louisiana law). To prevail at common law, a plaintiff must establish that the defendant's conduct was "`so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community.'" Murphy v. American Home Products Corp., 58 N.Y.2d 293, 303, 461 N.Y.S.2d 232, 448 N.E.2d 86 (1983) (quoting Restatement (Second) of Torts § 46, cmt. d (1965)); see also Mello v. Stop & Shop Companies, Inc., 402 Mass. 555, 524 N.E.2d 105 (1988); Kazatsky v. King David Memorial Park, Inc., 515 Pa. 183, 527 A.2d 988 (1987); Roberts v. Auto-Owners Ins. Co., 422 Mich. 594, 374 N.W.2d 905 (1985). "The requirements of the rule are rigorous, and difficult to satisfy."[4] W. Page Keeton et al., Prosser and Keeton on Torts § 12, at 56-57 (5th ed. 1984).
In Elliott v. Norfolk & Western Ry. Co., 910 F.2d 1224 (4th Cir.1990), plaintiff claimed that she experienced emotional distress as a result of (1) accusations that she had prepared erroneous operations reports; (2) her assignment to tasks that required lifting despite a back ailment; and (3) an inquiry from a supervisor questioning whether she properly had performed a certain task. The court upheld dismissal on grounds that the defendant's conduct "never rose to the level of being outrageous or amounting to unconscionable abuse." Id. at 1230. In so holding, the Fourth Circuit followed an earlier Fifth Circuit decision, Netto v. Amtrak, 863 F.2d 1210 (5th Cir. 1989). In Netto, the plaintiff, an Amtrak police officer, was questioned about his investigation of a rape at an Amtrak coach yard and was asked to submit to a polygraph *1210 examination. On the day of the polygraph examination, plaintiff was hospitalized for a nervous breakdown. In holding that plaintiff failed to impute outrageous or unconscionable conduct to Amtrak, the court noted that Amtrak was required to investigate such crimes and did so in an efficient and reasonable manner. Id. at 1215; see also Plaisance v. Texaco, Inc., 966 F.2d 166 (5th Cir.1992) (where plaintiff has not satisfied tort of emotional distress there is no need to decide whether FELA permits recovery for mental injury); Gaston, 866 F.2d at 821 (no recovery under Jones Act for mental anguish resulting from tortious act directed at a third person).
Judge Ward of this Court employed similar reasoning in Cohen v. Metro-North Commuter Railroad Co., No. 89 Civ. 7498, 1991 WL 4699 (S.D.N.Y. Jan. 11, 1991), a case remarkably similar to the case at hand. Between 1984 and 1986, Cohen, a trainman, complained of numerous unfair labor practices and violations of the collective bargaining agreement on the part of Metro-North. Specifically, Cohen complained that supervisory personnel were placing friends and relatives in senior positions and giving them preferential treatment, regardless of seniority. Cohen maintained that because of his complaints to the union, managers falsely accused him of work rule violations and singled him out for discipline while other employees' violations were ignored. Cohen alleged that as part of this harassment he was denied advanced training in favor of several less-qualified, junior employees and, therefore, became ineligible for promotion. Finally, Cohen claimed that he was fired because a supervisor purposely instigated an altercation by ordering him off company property. Following a hearing pursuant to the collective bargaining agreement, Cohen was reinstated with back pay. He then sued Metro-North alleging, inter alia, infliction of emotional distress.
After discussing Buell, Judge Ward concluded that Cohen failed to allege the outrageous conduct necessary to support a claim for infliction of emotional distress. Id. at 3. He reasoned that "FELA was not intended to permit recovery for the natural distress felt by an employee who believes he has a legitimate grievance against his employer." Id.
As in Elliott, Netto and Cohen, the conduct described by this plaintiff does not constitute "unconscionable abuse," Buell, 480 U.S. at 566, n. 13, 107 S.Ct. at 1416, n. 13; nor is it "beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community." Restatement (Second) of Torts § 46, cmt. d (1965). Therefore, summary judgment in favor defendant is appropriate on plaintiff's FELA claims and there is no need to address the question whether, had plaintiff adduced evidence sufficient to satisfy the elements of the tort, such a claim would be actionable under FELA. Moreover, because plaintiff has failed to show "unconscionable abuse," there also is no need to address the question whether she has made a sufficient showing of "severe emotional injury" or to decide to what extent, if any, physical symptoms need be present to permit recovery for emotional distress. See Elliott, 910 F.2d at 1230 n. 6.
The 54 "incidents of harassment" described in plaintiff's deposition testimony are primarily disputes over working conditions, jobs, rates of pay and other matters governed by the collective bargaining agreement. Over half involve: (1) disputes over shifts and positions which she claims she was entitled to work (Incidents 4, 9, 19, 22, 25, 26, 29, 32, 33, 35, 38, 44, 45, 53);[5] (2) hours she had worked (Inc. 7, 28); and (3) her inability to obtain positions and displace other Conrail employees. (Inc. 15, 16, 17, 18, 23, 31, 36, 37, 39, 43) In seeking redress for these incidents, plaintiff has taken full advantage of the grievance procedure established by the collective bargaining agreement. According to her testimony, she has filed 15 grievances as a result of this type of incident; four were denied and are currently on appeal (Inc. 16, 29, 32, 33); she has received compensation for two (Inc. 4, 51); the balance are pending. *1211 However, of those pending or on appeal, six involve secretarial positions held by Conrail employees Staples or McGregor for which plaintiff specifically had been disqualified by a hearing officer. (Inc. 16, 18, 23, 31, 36, 37) It therefore appears that rather than a pattern of unconscionable abuse by Conrail's managers, these incidents involve disagreements regarding interpretation of the collective bargaining agreement. In fact, as evidenced by the results of plaintiff's numerous filings and the merits of the appealed and pending claims, it seems that often what plaintiff labels harassment actually arises from plaintiff's own misunderstanding of her rights under the collective bargaining agreement.
Workplace disputes over hours, shifts and wages properly are resolved through the grievance procedures set forth in collective bargaining agreements and the mandatory statutory mechanisms.[6] Disgruntled employees cannot transform such disputes into tort actions simply because they are dissatisfied with the results of the appropriate procedures. Feldleit v. Long Island Railroad, 723 F.Supp. 892, 901 (E.D.N.Y. 1989); see also Murphy, 58 N.Y.2d at 303, 461 N.Y.S.2d 232, 448 N.E.2d 86 (plaintiff cannot avoid contract rules by casting cause of action in the guise of an emotional distress tort). Nor should courts define the "unconscionable abuse" element of emotional distress so as to include normal disputes over wages, hours and positions, such as those described by plaintiff, and thereby discourage managers from effectively administering collective bargaining agreements for fear of upsetting employees and subjecting the corporation to liability in tort.
Four of the incidents described by plaintiff involve alleged fabrication of work rule violations. These include Palumbo's charge that plaintiff was insubordinate (Inc. 1), Gallagher's charges following the oil spill (Inc. 2), the charge that plaintiff reproduced and removed confidential documents (Inc. 5), and the procedurally deficient Appendix II letter (Inc. 40). Again plaintiff has taken full advantage of the hearing and grievance procedures, and again the results are mixed. Plaintiff's testimony reveals that she was exonerated of the insubordination charge, found guilty of the record charge by a hearing officer, had the Appendix II letter changed to a less serious Appendix I letter on procedural grounds, and had one of Gallagher's charges dismissed for insufficient evidence. Thus, even on her own testimony, plaintiff is not a model employee: a hearing officer determined that she was guilty of the most serious of the charges, and the Appendix I letter indicates that there is some problem with absenteeism. Therefore, management's resort to formal disciplinary procedures can by no means be labeled unacceptable or intolerable behavior.
The other incidents cited by plaintiff involve personal disputes with managers and co-workers. (Inc. 2, 6, 7, 8, 10, 12, 14, 20, 24, 27, 34, 41, 46, 47, 49, 50, 51, 52) Some reflect plaintiff's dissatisfaction with management's attempts to carry out company procedures. For instance, she complains of Weber's attempt to obtain a statement following her accident (Inc. 2), being disciplined on two occasions for wearing high-heeled shoes in violation of company safety standards (Inc. 6, 34), being paid for three rather than four hours for attending a three-hour hazardous waste class (Inc. 28), having her time card challenged by Wagner (Inc. 47), and having to sign in at the time she entered the building rather than at the time she drove in to the parking lot. (Inc. 52) Other incidents reflect plaintiff's unhappiness with the tasks assigned her by *1212 certain managers: Palumbo insisting she revise letters "up to eight times" and assigning "more important" work to others (Inc. 8), Gallagher asking her to type denials of her claims (Inc. 10), and Palumbo requiring her to fill in at several positions on a single shift. (Inc. 27)
The remaining incidents appear to be personality conflicts with managers ranging from the trivial Palumbo's "whispering" about plaintiff and excluding her from conversations (Inc. 8), Birnbaum's inquiries regarding business at South Kearney (Inc. 14), a supervisor's allowing another employee to leave early (Inc. 50), and Wagner's sending certified letters to plaintiff's home during her vacation (Inc. 41) to incidents where managers allegedly used obscene language (Inc. 11, 21), laughed at plaintiff (Inc. 10), acted "belligerent[ly]" towards plaintiff (Inc. 3, 44), or "humiliat[ed]" plaintiff in front of co-workers. (Inc. 20) But these incidents, however upsetting to plaintiff, amount to nothing more than personality conflicts and workplace disputes that frequently arise between managers and employees. To cast an employer into liability based on such conduct would be to undermine the unconscionable abuse standard which is designed specifically to prevent the tort of emotional distress from becoming the weapon of every disgruntled employee. See Buell, 480 U.S. at 566 n. 13, 107 S.Ct. at 1416. Because the incidents described by plaintiff cannot be characterized as "`atrocious and utterly intolerable in a civilized community,'" they do not support her claim for emotional distress. See Murphy, 58 N.Y.2d at 303, 461 N.Y.S.2d 232, 448 N.E.2d 86 (quoting Restatement (Second) of Torts § 46, cmt d (1965)).
Finally, plaintiff describes several incidents Borelli's "brush[ing] close" to plaintiff (Inc. 21), Borelli and Gallagher's use of obscene language in the workplace (Inc. 11, 21), Birnbaum's picking on female employees (Inc. 13) and "hang-up" calls made to her home (Inc. 21) which she terms "sexual harassment." Notwithstanding plaintiff's characterization, the underlying facts as set forth in plaintiff's testimony show that these alleged incidents do not amount to outrageous or unconscionable conduct within the meaning of the cases that define infliction of emotional distress.
Regarding the incident of Borelli's "brushing close," plaintiff did not report the incident until the day Borelli attempted to enforce her suspension, months after the alleged brushing occurred, and although at the time she reported the incident she was ready to accuse Borelli of a litany of misdeeds, at her deposition the sexual advances became "hang-up calls" and "suggestive language" and the sexual harassment became a single incident of "brushing close" for one or two minutes. In fact, at her deposition, plaintiff could not decide whether the incident lasted a minute or two or whether as soon as she sensed someone "she moved away very quickly." (Dep. at 23) Regarding Borelli's "suggestive language," plaintiff could not recall the details of what he said nor how his language differed from the language used as a matter of course by other managers. (Dep. at 31-32)
Plaintiff also accused Gallagher of using obscene language. However, plaintiff conceded that Gallagher never used such language with her in private, never propositioned her, and that his use of such language was "lighthearted." (Dep. at 95)
Plaintiff maintains also that Birnbaum was "very condescending" and "picked on" female employees. (Dep. at 100-101, 106) But other than her assertion that Birnbaum would repeat information learned from plaintiff in conversations with other managers, hardly an unconscionable act, plaintiff does not describe any specific instances where Birnbaum's intimidating conduct was directed at her.
Finally, plaintiff accuses both Borelli and Birnbaum of making "hang-up" and "dirty" phone calls to her home. (Dep. at 26, 107-108) She bases this accusation on the fact that she received these calls at times when her relations with Borelli and Birnbaum were particularly strained. Plaintiff admitted, however, that because of the nature of the calls, she could not identify the caller. (Dep. at 108) "Although *1213 plaintiffs are entitled to the benefit of all reasonable doubt in determining whether a genuine issue of material fact exists, mere conjecture or speculation will not suffice to avoid summary judgment." Fox-Knapp, Inc. v. Employers Mut. Cas. Co., 725 F.Supp. 706, 708 (S.D.N.Y.1989), aff'd, 893 F.2d 14 (2d Cir.1989). On this record, the incidents plaintiff calls "sexual harassment" do not amount to unconscionable conduct by defendant.
On the whole, plaintiff has described a long but otherwise unexceptional list of disputes with Conrail management. Disagreements regarding the collective bargaining agreement, disputes over the propriety of invoking formal disciplinary procedures, personality conflicts between managers and employees and even outright manifestations of personal distaste for an employee do not constitute the type of unconscionable abuse or outrageous behavior for which tort law provides a remedy.
"[L]iability clearly does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. The rough edges of our society are still in need of a good deal of filing down and in the meantime plaintiffs must necessarily be expected and required to be hardened to a certain amount of rough language, and to occasional acts that are definitely inconsiderate and unkind. There is no occasion for the law to intervene in every case where some one's [sic] feelings are hurt."
Kraus v. Consolidated Rail Corp., 723 F.Supp. 1073, 1089 (E.D.Pa.1989) (quoting Restatement (Second) of Torts § 46, cmt. d (1965)); see Buell, 480 U.S. at 569 n. 16, 107 S.Ct. at 1418 n. 16 ("`The tort of intentional infliction of mental distress as described in § 46 of the Restatement ... can be safely characterized as the general rule in the United States.'") (quoting Leithead v. American Colloid Co., 721 P.2d 1059, 1066 (Wyo.1986)). Plaintiff's claims for emotional distress are dismissed.
III.
Although as described by plaintiff, the incidents she labels as sexual harassment do not, on this record, support a claim of infliction of emotional distress, plaintiff may be able to discover and present additional evidence necessary to establish a claim of sexual harassment. See Meritor Savings Bank FSB v. Vinson, 477 U.S. 57, 106 S.Ct. 2399, 91 L.Ed.2d 49 (1986). Because plaintiff has not proceeded on a sexual harassment theory to this point, she will be given an opportunity to amend her complaint to include a claim for sexual harassment, assuming without deciding that she has a good faith basis for doing so. Cf. Ross v. A.H. Robins Co., 607 F.2d 545, 549 (2d Cir.1979), cert. denied, 446 U.S. 946, 100 S.Ct. 2175, 64 L.Ed.2d 802 (1980).
SO ORDERED.
NOTES
[1] For the purposes of this motion, plaintiff accepts as accurate the summary of her testimony included in defendant's memorandum of law. (Pltf. Mem. at 1)
[2] Hereinafter, citations to plaintiff's deposition testimony will appear as follows: (Dep. at ____).
[3] The specific medications are not identified in the deposition transcript.
[4] Comment d of Restatement (Second) of Torts § 46 also states:
It has not been enough [to establish liability] that defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by "malice," or a degree of aggravation which would entitle the plaintiff to punitive damages for another tort.
[5] Hereinafter, citations to specific incidents will appear as follows: (Inc. ____)
[6] The Railway Labor Act, 45 U.S.C. §§ 151-163 ("RLA") sets forth administrative procedures for the resolution of labor disputes in the railroad industry. Minor disputes those "growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules or working violations" must be addressed first through the railroad's internal grievance procedure and, if not settled, may then be submitted to a panel of arbitrators. 45 U.S.C. § 153. This remedy is not exclusive and an employee may pursue remedies under both RLA and FELA. Buell, 480 U.S. at 564-568, 107 S.Ct. at 1415-17. At issue here is not whether Conrail's grievance mechanism and the RLA provide plaintiff's sole means of redress; rather, the question is whether plaintiff has alleged conduct actionable under FELA. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1944694/ | 801 F.Supp. 164 (1992)
BRANDT CONSOLIDATED, INC., Plaintiff,
v.
AGRIMAR CORP. and Goemar, S.A., Defendants.
No. 91-3364.
United States District Court, C.D. Illinois, Springfield Division.
August 13, 1992.
*165 *166 John W. Hofeldt, Stephen Manich, Chicago, Ill., Robert C. Walbaum, Springfield, Ill., for plaintiff.
Paul Bown, Springfield, Ill., Steven L. Brannock, James L. Simon, Tampa, Fla., for defendants.
OPINION
RICHARD MILLS, District Judge:
This case raises a plethora of issues:
process patents,
patent infringement,
transfer,
long-arm jurisdiction,
failure to state a claim,
the Sherman Act,
the Lanham Act,
preliminary injunctions,
permanent injunctions, and
summary judgment.
Writings on such broad subject matter are perhaps best left to the likes of Michner but the task is ours and we do our best.
This order addresses and resolves the following motions: Defendants' motion to transfer the case to Florida (or, alternately, to stay the case); Goemar, S.A.'s motion to dismiss for lack of personal jurisdiction; Defendants' motion to dismiss for failure to state a claim upon which relief can be granted; Plaintiff's motion for partial summary judgment; and Plaintiff's motion for preliminary injunction.
In sum, Plaintiff's motion for partial summary judgment is allowed, and all other motions are denied.
I. Background
Agrimar Corp. is the U.S.-based subsidiary of Laboratories Goemar, S.A., a French company. Agrimar primarily develops and sells agricultural foliar nutritional sprays in the United States. Agrimar's principal foliar products are Goemar BM86 and Goemar MZ63, in which the active and essential ingredient is Goemar GA-14, an algae extract. Agrimar has an exclusive license to produce GA-14 pursuant to United States Patent No. 4,023,734 (the "'734 patent"), the scope of which is the primary issue in this case.
Brandt Consolidated is in the business of formulating fertilizer mixtures. Agrimar provided GA-14 to Brandt under two agreements an August 1986 distribution agreement and a May 1987 tolling agreement. These agreements gave Brandt the right to use GA-14 in certain of its own nutritional products and to blend for Agrimar the Goemar BM86 and MZ63 products. Agrimar thus provided Brandt with the trade secret information on the use of GA-14 in blending liquid fertilizers. Brandt, in *167 turn, agreed to keep this information confidential and not to use it to make unauthorized products. By contractually limiting Brandt's rights to use GA-14, Agrimar was seeking to prevent Brandt from making products that would compete with Agrimar's products.
Both the distribution and tolling agreements terminated in 1989 pursuant to their terms. Upon termination of the distribution agreement, Brandt was contractually obligated to cease formulating Agrimar's products, to remove all labels bearing Agrimar's trademarks, and to generally refrain from all conduct which would associate Brandt with Agrimar.
Despite the restrictions in the distribution agreement, Brandt apparently manufactured and sold after 1989 a product virtually identical to Agrimar's Goemar BM86 Clawel BM86. In addition to similarities in packaging, Clawel BM86's formulation was identical to Goemar BM86, including the use of GA-14 as the primary ingredient. Upon discovering this apparent violation of the distribution agreement, Agrimar filed suit against Brandt in the Middle District of Florida, Tampa Division, on July 30, 1990 (Case No. 90-935-CIV.T-98C). On August 9, 1990, the Florida court entered a final order, with Brandt's consent, which permanently enjoined Brandt from representing that any Brandt product was authorized by or originated from Agrimar, from using the Agrimar formulations for the BM86 and/or MZ63 products, and from selling any product formulated in the same manner as the BM86 or MZ63 products. The order did not, however, enjoin Brandt from using GA-14 or from making products which contain GA-14.
In November of 1991, Agrimar accused Brandt of violating the terms of the injunction by mixing and selling formulations containing GA-14 to Vigoro Industries, Inc., a competitor of Agrimar who marketed the formulations in Florida. In addition, Agrimar accused Brandt of violating the injunction by providing an Agrimar comparison study to Vigoro to use on its label, thus suggesting to Vigoro that Agrimar had authorized Brandt's conduct. In response to Brandt's actions, Agrimar sent letters to Brandt and Vigoro indicating that the use of GA-14 was either a patent infringement or a violation of Agrimar's common law rights against unfair competition and breach of contract, as well as a violation of the 1990 injunction. Ultimately, on January 15, 1992, Agrimar filed in the Florida court a motion for an order adjudging Brandt in contempt of the 1990 injunction. Agrimar also filed a patent infringement suit against Brandt. On June 17, 1992, the Florida court denied Agrimar's contempt motion. The patent infringement suit is still pending.
Brandt, however, had preempted Agrimar by filing this suit against Agrimar and Goemar, S.A., on December 27, 1991, for declaratory judgment, an injunction, and compensatory and punitive damages for Agrimar's "unjustified" patent infringement claims. Brandt primarily seeks a declaratory judgment that it has not infringed upon the '734 patent by using GA-14 in its own products, and it wants the Court to enjoin Agrimar from publicly claiming that Brandt has infringed the patent. Brandt essentially argues that the '734 patent is for a method for producing GA-14, not for GA-14 itself. Since Goemar produced GA-14 and transferred it to Brandt, Brandt claims it is not infringing the patent by using GA-14 in its products.
Brandt's second claim is that Goemar-Agrimar have violated § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), by falsely claiming exclusive rights in the GA-14 product pursuant to the '734 patent.
Third, Brandt is accusing Goemar-Agrimar of using false accusations about patent infringement to unfairly compete with Brandt.
Finally, Brandt claims that Goemar-Agrimar are attempting to monopolize the market for nutritional plant products containing algae pulp by threatening Brandt and its customers with unjustified patent infringement claims a violation of § 2 of the Sherman Act, 15 U.S.C. § 2.
*168 II. Analysis
A. Defendants' Motion to Transfer or to Stay Case
On January 15, 1992, Defendants filed the pending motion to transfer this case to the Middle District of Florida, Tampa Division, for consolidation with the contempt motion pending in a related case, Agrimar Corp. v. Brandt Consolidated, Inc., Case No. 90-935-CIV.T-98C (MD Fla.). Alternatively, Defendants move to stay this case pending the resolution of the contempt motion. Defendants argue that the interest of justice requires that the case be transferred to Florida because the Florida court is the only forum where all pending claims can be litigated in one action. Defendants also argue that the principal of comity requires this Court to avoid interfering with the Florida court's enforcement of its permanent injunction. Finally, Defendants contend that neither a transfer nor a stay would prejudice Brandt.
Pursuant to 28 U.S.C. § 1404(a), the Court can transfer any civil action to any other district where it might have been brought if such a transfer is more convenient for the parties and the witnesses and the transfer is in the interest of justice. The decision whether to transfer is largely within the Court's discretion and depends upon the facts of the particular case. Federal Deposit Insurance Corp. v. Citizens Bank & Trust Co., 592 F.2d 364, 368 (7th Cir.), cert. denied, 444 U.S. 829, 100 S.Ct. 56, 62 L.Ed.2d 37 (1979). In this case, the Court finds that transfer to the Middle District of Florida, Tampa Division, is inappropriate.
The Defendants' entire argument for transfer is based upon the principal of comity, which requires federal district courts courts of coordinate jurisdiction and equal rank to exercise care to avoid interfering with each other's affairs. Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200 (1952). Sound judicial administration does indicate that when two actions involving the same issues and parties are filed in courts of concurrent jurisdiction, the court which first acquired jurisdiction should try the entire suit. See Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir.1982). However, in this action, the Defendants' contempt motion pending in the previously-filed Florida suit has been recently denied, thus terminating the Florida court's priority jurisdiction. Since Brandt's declaratory action was filed in this Court before Agrimar filed its own patent infringement action in Florida, any potential comity problems should be addressed to the Florida court. Consequently, the Court denies Defendants' motion to transfer or to stay this case.
B. Defendant Goemar, S.A.'s Motion to Dismiss for Lack of Personal Jurisdiction
On January 15, 1992, Defendant Laboratories Goemar, S.A., pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure, filed the pending motion to dismiss Plaintiff's complaint against it based upon the Court's lack of personal jurisdiction over Goemar. Goemar contends that Brandt has failed to allege that Goemar has sufficient contacts with Illinois to enable this Court to exercise jurisdiction over it. The Court disagrees and finds that it does have personal jurisdiction over Goemar, S.A., for the purposes of this action.
This Court has personal jurisdiction over a party only if an Illinois state court would have such jurisdiction. See John Walker & Sons v. De Mert & Dougherty, Inc., 821 F.2d 399, 401 (7th Cir.1987). Under Illinois law, the party seeking to establish personal jurisdiction over a non-resident must make out a prima facie showing that the court has long-arm jurisdiction. Kutner v. De Massa, 96 Ill.App.3d 243, 247-48, 51 Ill.Dec. 723, 727, 421 N.E.2d 231, 235 (1st Dist.1981). Previously, courts had required separate inquiries into whether Illinois' long-arm statute conferred jurisdiction and whether the exercise of jurisdiction comported with the 14th Amendment's due process standards. See Saylor v. Dyniewski, 836 F.2d 341, 343 (7th Cir.1988). Effective September 7, 1989, however, the Illinois long-arm statute *169 (Ill.Rev.Stat. ch. 110, ¶ 2-209) was amended to make its reach coextensive with minimum due process requirements. See FMC Corp. v. Varonos, 892 F.2d 1308, 1310-11, n. 5 (7th Cir.1990). Consequently, the Court will confine its analysis to whether asserting jurisdiction over Goemar, S.A., satisfies minimum due process requirements.
The central element in the due process analysis is whether the defendant "purposely established minimum contacts in the forum state." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). The Supreme Court has defined minimum contacts as "some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). The requirement of purposeful availment insures that the defendant's "conduct and connection with the forum state are such that he should reasonably anticipate being hailed into court there." Ultimately, the due process clause enables "potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). Applying these principles, the Court finds that subjecting Goemar, S.A., to suit in Illinois does not offend due process.
In deciding a motion to dismiss for lack of personal jurisdiction, the Court must accept all undenied factual allegations and resolve all factual disputes in favor of the party seeking to establish jurisdiction. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209 (7th Cir.1984). In this case, Plaintiff Brandt alleges that Goemar, S.A., was a party to sending Brandt and its customer, Vigoro Industries, Inc., letters that threatened patent infringement suits. Both Brandt and Vigoro are based in Illinois. Furthermore, Brandt alleges in its response that Goemar, S.A., shipped the disputed GA-14 product to Brandt in Illinois and that the president of Goemar, S.A., traveled to Illinois to negotiate the contract with Brandt that ultimately led to this litigation. Goemar, S.A., does not deny any of these allegations; consequently, the Court must accept them as true for the purposes of this motion.
While the sending of infringement letters alone may fail to satisfy due process, see E.J. McGowan & Assoc., Inc. v. Biotechnologies, Inc., 736 F.Supp. 808 (N.D.Ill. 1990), Goemar, S.A., has additional contacts with Illinois related to the cause of action which do satisfy due process. Goemar, S.A., purposely availed itself of a business relationship with Brandt, an Illinois corporation, and thus it is not unreasonable or unforeseeable for Goemar to be hailed into an Illinois court in response to a suit arising from that relationship. Furthermore, the presence of the Defendant in Illinois while conducting business related to the dispute is also relevant to jurisdiction. Goemar's president was present in Illinois to negotiate and execute the 1986 distribution agreement with Brandt, from which this suit seems to originate. Goemar also shipped the disputed GA-14 to Brandt in Illinois pursuant to that agreement. The Court thus finds that Goemar's continuing relationship with Brandt in Illinois and its affirmative act of being a party to the sending of infringement letters into Illinois make it reasonably foreseeable that it would be hailed into an Illinois court. Accordingly, Goemar's motion to dismiss is denied.
Alternatively, this Court can assert jurisdiction over an out-of-state parent (or grandparent) corporation through the activities of its subsidiary. See Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 419-26 (9th Cir.1977). In this case, Agrimar's jurisdiction-triggering activities can be imputed to Goemar if Agrimar was acting as Goemar's agent or if Agrimar is not an independent corporation but instead functions as a branch or division of Goemar. Under either of these theories, the primary issue is how much control Goemar has over Agrimar's activities. Considering *170 all relevant facts before it, the Court finds that Agrimar has no independent reason for existing except to market Goemar products in the United States. The extent of Goemar's control over Agrimar is illustrated by the fact that both companies have a common president, both share a unified marketing image evidenced by a common use of trademarks and, most importantly, Agrimar functions essentially as the exclusive U.S. distributor for Goemar products. All of these factors indicate a lack of completely independent decisionmaking on Agrimar's part, which allows the Court to "pierce the veil" of the subsidiary to reach the parent. See generally 2 J. Moore, Moore's Federal Practice ¶ 4.41-1[6], at 4-370 4-377 (2d ed. 1992).
C. Defendants' Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted
The Defendants have moved to dismiss Plaintiff's complaint for failure to state a claim upon which relief can be granted, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dismissal is not granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). In making its decision, the Court must accept the well-pleaded allegations of the complaint as true and view those allegations in the light most favorable to the plaintiff. Gomez v. Illinois State Bd. of Educ., 811 F.2d 1030, 1039 (7th Cir.1987).
In this case, the Plaintiff's complaint contains four counts. The Court finds that Count I, seeking a declaration that Plaintiff has not infringed upon Defendants' process patent, clearly states a claim upon which relief can be granted. Defendants' argument that Plaintiff has infringed upon the patent addresses the merits of the case and is thus inappropriate in a motion to dismiss, which only tests the sufficiency of the pleadings. The Defendants' motion to dismiss as to this count is thus denied.
As for Counts II and III, alleging violations of the Lanham Act and unfair competition based on Defendants' "false" patent infringement claims, Rule 8(a) of the Federal Rules of Civil Procedure requires only a "short and plain statement of the claim showing that the pleader is entitled to relief." The Court finds that Plaintiff provides a sufficient factual basis to give the Defendants fair notice of the nature and basis of Counts II and III. Defendants' motion to dismiss Counts II and III is thus denied.
Finally, Defendants attack Count IV of Plaintiff's complaint, which alleges anti-trust violations, on the basis that Brandt fails to allege that Defendants' threats of initiating patent infringement actions were in bad faith. The institution by Agrimar and Goemar of an ill-founded patent enforcement scheme could constitute an anti-trust violation if it is part of a purposeful drive to eliminate competition and to monopolize an industry. However, the Defendants have correctly noted that Brandt must plead that Agrimar and Goemar had a bad faith, predatory intent to attain an anti-competitive end, as opposed to a purely defensive motivation to protect their patent interests. Chromium Industries, Inc. v. Mirror Polishing & Plating, 448 F.Supp. 544, 558 (N.D.Ill.1978). While Brandt fails to expressly plead bad faith, monopolistic intent can be shown by an attempt to extend a patent beyond the scope of its applicable products or process. Chromium Industries, 448 F.Supp. at 558. The Court thus finds that Brandt's allegation to this effect satisfies the requirement of bad faith.
Defendants also argue that Brandt's anti-trust claim should be dismissed because it lacks detailed allegations pertaining to the relevant market and Defendants' market power. While Defendants are correct that such allegations are necessary to plead a viable anti-trust claim, see Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177-78, 86 S.Ct. 347, 350-51, 15 L.Ed.2d 247 (1965), the Court finds that Brandt has met the minimal burden imposed *171 by notice pleading and Rule 8(a) of the Federal Rules of Civil Procedure. Brandt alleges that Agrimar and Goemar are attempting to monopolize "the market for nutritional plant products containing algae pulp as an ingredient." Since this dispute arises from Brandt's use of GA-14, which is algae pulp made by a particular process, the Court finds that the relevant market for the anti-trust claim is clearly pleaded. Furthermore, Brandt pleads that Goemar and Agrimar have claimed to be the only companies with the right to manufacture, use or sell GA-14. The Court finds that this allegation suggests that the Defendants have significant market power, well capable of creating a monopoly. While substitutes for GA-14 may exist which lessen Defendants' market power, this is a factual question best left for discovery. Plaintiff Brandt has pleaded a viable anti-trust claim, and thus Defendants' motion to dismiss Count IV is denied.
D. Plaintiff's Motion for Summary Judgment on Counts I and II
Plaintiff Brandt filed the pending motion for partial summary judgment on March 26, 1992. Brandt seeks summary judgment on Counts I and II of its complaint, which in turn seek a declaration that neither Brandt nor Vigoro have infringed United States Patent No. 4,023,734 and a ruling that Defendants Agrimar and Goemar, S.A., have violated 15 U.S.C. § 1125(a) [§ 43(a) of the Lanham Act] by threatening patent infringement actions in bad faith.
Under Fed.R.Civ.P. 56(c), summary judgment should be entered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Unquestionably, in determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-59, 90 S.Ct. 1598, 1608-09, 26 L.Ed.2d 142 (1970). Nevertheless, the rule is also well established that the mere existence of some factual dispute will not frustrate an otherwise proper summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986). Thus, the "preliminary question for the judge [is] not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it upon whom the onus of proof is imposed." Id. at 251, 106 S.Ct. at 2511 (quoting Improvement Co. v. Munson, 14 Wall. 442, 448, 20 L.Ed. 867 (1872)); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Applying this standard, the Court now turns to the case at bar.
a. Count I
In relation to Count I, Brandt argues that the '734 patent is a "process" patent directed to the method of making GA-14, not to the GA-14 itself. Consequently, Brandt contends that a party can utilize the same product as that which Goemar, S.A., and Agrimar describe as GA-14, but made by a different process or method, without infringing upon United States Patent No. 4,023,734. Furthermore, once Goemar, S.A., and Agrimar sell GA-14 to another company, such as Brandt, Brandt argues that the purchaser's use of GA-14 can also not infringe upon a process patent, which is what Goemar and Agrimar have accused Brandt of in this case.
In response, Defendants cite 35 U.S.C. § 271(g) which provides, in part, that:
Whoever without authority imports into the United States or sells or uses within the United States a product which is made by a process patented in the United States shall be liable as an infringer, if the importation, sale, or use of the product occurs during the term of such process patent.
Defendants contend that Brandt has used "a product which is made by a process patented in the United States" without their authorization and thus is guilty under 35 U.S.C. § 271(g) of patent infringement. Brandt, in turn, cites a provision of the act which added § 271(g) to the patent statute, *172 § 9006 of Public Law 100-418, which limits the applicability of the section to products made or imported after the section's effective date. Brandt contends that all the GA-14 it used was made and imported into the United States prior to the effective date of § 271(g) [February 23, 1989]. Thus, Brandt argues that it is not subject to the restrictions of that section, but is instead subject to the prior rule of law, which stated that a process or method patent could be infringed only if the process were practiced in the United States. Since the GA-14 was produced in France, this prior rule would bar any infringement action against Brandt. Defendants contest Brandt's claim, arguing that significant amounts of GA-14 were imported and delivered to Brandt after February 23, 1989. Brandt maintains that its full inventory of GA-14 was purchased and imported prior to September of 1988. All subsequent GA-14 transactions involved Agrimar borrowing GA-14 from Brandt's inventory for use in its formulations and then replacing it later with its own GA-14 rather than paying Brandt for it.
Brandt also argues that its use of GA-14 after February 23, 1989, is protected under the "grandfather clause" found in the act which added § 271(g). The clause grants an exception to any person who continues to use, sell, or import any specific product already in substantial and continuous sale or use by such person on January 1, 1988, or for which sale or use substantial preparation was made before January 1, 1988. Brandt contends that its efforts, expenditures, and sales in 1986 and 1987 satisfy this exception. Defendants disagree, arguing that since Brandt's right to use GA-14 was restricted by the 1986 distribution agreement, its use of GA-14 under the agreement cannot be considered "substantial and continuous" within the meaning of the grandfather clause. Moreover, Defendants argue that the grandfather clause cannot be used to protect an expansion of Brandt's use of the GA-14 after January 1, 1988.
Finally, Brandt argues that whether § 271(g) applies to this case or not, Brandt is exempt from suit because patent law principles hold that once a patentee has achieved a financial reward for the use or sale of the patented invention, the purchaser has an implied license to use the resulting product. Defendants respond that GA-14 was provided to Brandt under a distribution agreement which limited Brandt's use of the product. Consequently, no implied license could exist.
The Court finds that in spite of arguments over the application of 35 U.S.C. § 271(g), there is no genuine dispute as to any material fact surrounding Brandt's purchase of the product GA-14. The Court is persuaded that Brandt maintained two separate inventories of GA-14 during the term of its business relationship with Agrimar (one for Brandt formulations and one for Goemar-Agrimar formulations) and that it had purchased all of the GA-14 in its inventory by September 30, 1988. The Court also finds that any shipments which Brandt received subsequent to that time were actually imported by Agrimar for its inventory. Although some of the GA-14 in these shipments may have been transferred to Brandt's inventory, the record indicates that these transfers were not additional sales but were instead replacements for GA-14 which Agrimar had previously borrowed from Brandt's inventory to incorporate into its own formulations. While technically imported after § 271(g)'s effective date, the status of these later transfers as replacements for GA-14 previously sold to Brandt allow the Court to consider them as equivalent to the GA-14 which Brandt had imported prior to the effective date, but had generously lent to Agrimar. Since Brandt's net inventory did not increase as a result of the replacing of the GA-14 lent to Agrimar, Brandt effectively received its entire inventory of GA-14 prior to the effective date of § 271(g) [i.e., prior to February 23, 1989]. The Court thus finds that Defendants cannot rely on § 271(g) to accuse Brandt of patent infringement.
Furthermore, even if the Court applies § 271(g) to this case, it finds that the "grandfather provision" contained in § 9006 of Public Law 100-418, the act *173 which added § 271(g) to the patent statute (Title 35), would exclude Brandt from § 271(g)'s scope. The Court is not persuaded by Defendants' contentions that the 1986 distribution agreement somehow prevents Brandt's use of GA-14 in 1986 and 1987 from being "substantial and continuous" within the meaning of this provision. Nor is the Court obligated to accept Defendants' version of what interests Congress intended for this provision to protect. The United States Supreme Court has made it abundantly clear that the starting point in statutory interpretation is the language of the statute itself. United States v. James, 478 U.S. 597, 604, 106 S.Ct. 3116, 3120, 92 L.Ed.2d 483 (1986). Absent the presence of special circumstances, when the terms of a statute are unambiguous, judicial inquiry is complete. Burlington Northern R.R. Co. v. Oklahoma Tax Comm'n, 481 U.S. 454, 461, 107 S.Ct. 1855, 1859, 95 L.Ed.2d 404 (1987). The Court finds that the plain meaning of the provision is that any person who has made substantial and continuous use of a product prior to January 1, 1988, or who has made substantial preparations for such use prior to that date, can continue to use that product. The purpose of this provision is to protect commercial investments. There is no dispute that Brandt invested considerable funds in its GA-14 inventory prior to January 1, 1988, for the sole purpose of using it in its formulations. Consequently, the Court finds that it would be inequitable to bar that use now.
Since the Court finds that § 271(g) does not apply to this case, it must apply pre-§ 271(g) patent law. The well-settled rule of law is that a process patent protects only the method of making a product as well as those products actually made using that method. The product itself is unpatented, since it could potentially be made by another method. See In re Amtorg Trading Corp., 75 F.2d 826, 832 (C.C.P.A.), cert. denied sub nom. Int'l Agri. Corp. v. Amtorg Trading Corp., 296 U.S. 576, 56 S.Ct. 102, 80 L.Ed. 407 (1935). In this case, the Court is persuaded that the GA-14 which Brandt purchased pursuant to the 1986 distribution agreement was made by Goemar's patented process and thus is protected by that patent from any unauthorized use. However, once Goemar and Agrimar sold the GA-14 to Brandt, they lost their ability to control the use of that product pursuant to their patent monopoly. An incident to the purchase of any article, whether patented or unpatented, is the right to use and sell it. The purpose of the patent law is thus fulfilled with respect to any particular article once the patentee has received the reward for the use of his invention by selling the article. Once that purpose is realized, the patent law affords no basis for restraining the use and enjoyment of the thing sold. United States v. Univis Lens Co., 316 U.S. 241, 249-51, 62 S.Ct. 1088, 1092-93, 86 L.Ed. 1408 (1942).
Consequently, Goemar's and Agrimar's contention that Brandt infringed the patent because its use of the GA-14 violated the 1986 distribution agreement is without merit. Contractual restrictions on the use of a patented article after the article has been sold are not enforceable under the patent laws. United States v. Univis Lens Co., 316 U.S. at 250, 62 S.Ct. at 1093. Defendants may have a cause of action under the 1986 agreement, but they do not have one for patent infringement. Neither Brandt nor its customer, Vigoro Industries, have infringed United States Patent No. 4,023,734. The Court thus finds that Brandt has met its burden under Rule 56(c) of the Federal Rules of Civil Procedure and is entitled to judgment as a matter of law on Count I of its complaint.
b. Count II
In relation to Count II, Brandt is arguing that by sending letters to its customer, Vigoro Industries, which made false representations of patent infringement and bad faith threats of legal action, Goemar and Agrimar violated § 43(a) of the Lanham Trademark Act [15 U.S.C. § 1125(a)]. Section 43(a) of the Lanham Act provides that:
Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any *174 combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which
(1) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or
(2) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act.
Brandt contends that Goemar's and Agrimar's claim to Vigoro that their patent for making GA-14 prohibits Brandt's use of GA-14 in its products is a false representation intended to divert customers away from Brandt's products and thus violates the Lanham Act. Defendants respond that Brandt has failed to prove that their patent infringement claims were made in bad faith and thus conclude that summary judgement should be denied.
The Lanham Act is designed to, among other things, protect competitors from misrepresentations which a defendant makes about its own or another's products and which relate to the principal bases of competition among sellers in this case, the active ingredients of foliar nutritional sprays. These types of misrepresentations are likely to have a direct and major impact in diverting sales from the plaintiff to the defendant. See In re Uranium Antitrust Litigation, 473 F.Supp. 393, 408-09 (N.D.Ill.1979). The facts of this case, as pleaded by Brandt, show that Goemar's and Agrimar's false representation as to the scope of their patent raised a false impression with Vigoro Industries that Defendants are the only authorized source of GA-14. The threat of a patent infringement action then caused Vigoro to offer to halt its sales of Brandt's products. Under these facts, the threat to plaintiff's sales posed by Defendants' claims of patent exclusivity raises a viable Lanham Act claim. See Chromium Industries, Inc. v. Mirror Polishing & Plating, 448 F.Supp. 544, 555 (N.D.Ill.1978).
To succeed on the merits of a claim under § 43(a) of the Lanham Act, as amended in 1988, Brandt must show that:
(1) Goemar and Agrimar have made false representations about their own or Brandt's products;
(2) The misrepresented products travel in interstate commerce;
(3) The misrepresentations deceive or are likely to deceive a substantial segment of the intended audience (present or potential customers of Goemar-Agrimar and Brandt), and
(4) The misrepresentations are material (likely to influence the purchasing decision) and they have caused injury, or are likely to do so.
See Valu Engineering, Inc. v. Nolu Plastics, Inc., 732 F.Supp. 1024, 1026 (N.D.Cal. 1990).
Contrary to what both Plaintiff and Defendants seem to believe, bad faith is not an element of this cause of action. Both parties seem to have confused the requirements of the common law action for unfair competition, which requires bad faith, with the requirements of a Lanham Act action. The well-settled rule is that there is no requirement under the Lanham Act that a false representation be made wilfully or with the intent to deceive. A mistake is not a defense to an action under § 43(a). See Parkway Baking Co. v. Freihofer Baking Co., 255 F.2d 641, 648 (3d Cir.1958). Based on the above criteria, the Court finds as a matter of law that Goemar and Agrimar have violated the Lanham Act.
The threshold requirement of a false representation is easily satisfied. The Court finds as a matter of law that Goemar's and Agrimar's communications with Vigoro contained false claims as to the scope of the '734 patent. The Court, however, makes no finding as to Defendants' knowledge or intent when making *175 these false claims because none is required. The second requirement is also easily satisfied. Both Plaintiff and Defendants sell their fertilizers in several states, thus subjecting themselves to congressional regulation. The Court is also convinced that the Defendants' false representations are likely to deceive Vigoro into believing that Brandt's products violated Goemar's and Agrimar's patent, thus satisfying the third criteria, since they were accompanied by threats of litigation. Finally, Brandt has satisfied the Court that the false representations are material since they influenced Vigoro to offer to stop selling Brandt's products, which in turn is likely to have an effect on Brandt's future sales to Vigoro. If Vigoro wants nutritional products containing GA-14 in the future, it is likely that it will buy from Agrimar rather than Brandt to avoid potential patent infringement suits. Although Brandt has alleged that Goemar and Agrimar have made these false patent claims to the fertilizer trade in general, the Court finds that no evidence supports this allegation and thus confines its findings to the single customer, Vigoro.
Brandt is seeking both an injunction and money damages. When a plaintiff seeks money damages, it must introduce evidence of actual deception on its customer's part, whereas to receive injunctive relief, the plaintiff need only prove that deception is likely. Resource Developers, Inc. v. Statue of Liberty-Ellis Island Foundation, Inc., 926 F.2d 134, 139 (2d Cir.1991). In this case, the Court finds that Vigoro was actually deceived by Goemar's and Agrimar's false representations as to the scope of the '734 patent. Vigoro's offer to stop selling Brandt's products is mute evidence of its belief in Defendants' claims. Consequently, Brandt may be entitled to both a permanent injunction, barring Goemar and Agrimar from making any further representations to Vigoro or to any other party that Brandt's use of its GA-14 violates the '734 patent, as well as to money damages. However, the Court has no evidence before it as to Brandt's actual losses resulting from Defendants' conduct. Consequently, the Court is unable to grant summary judgment on damages.
E. Plaintiff's Motion For Preliminary Injunction
Plaintiff Brandt filed the pending motion for preliminary injunction on March 26, 1992. Brandt contends that it will suffer irreparable damage if Agrimar and Goemar, S.A. are not enjoined from threatening Vigoro Industries or any other party with patent infringement litigation if he buys and/or sells Brandt fertilizers containing GA-14. Since the Court has found that Brandt may be entitled to a permanent injunction by allowing Brandt's motion for summary judgment on Counts I and II of its complaint, Brandt's motion for preliminary injunction is denied as moot.
Ergo, Defendants' Motion to Transfer Case to Florida For Consolidation With Previously-Filed Related Case or, Alternately, Motion to Stay Case Pending the Outcome of Agrimar's Motion For Contempt Pending in Florida Case (d/e 3) is DENIED.
Defendant Laboratories Goemar, S.A.'s Motion to Dismiss For Lack of Personal Jurisdiction (d/e 5) is DENIED.
Defendants' Motion to Dismiss For Failure to State a Claim Upon Which Relief Can Be Granted (d/e 7) is DENIED.
Plaintiff Brandt Consolidated's Motion for Summary Judgment on Counts I and II of its Complaint (d/e 15) is ALLOWED. A hearing will be held at 9:00 AM on Tuesday, September 8, 1992, to determine whether Defendants should be permanently enjoined from claiming that Brandt Consolidated or any present or future customer of Brandt has infringed United States Patent No. 4,023,734 and from threatening to initiate litigation based upon such infringement claims against Brandt or anyone with whom Brandt does business.
Plaintiff Brandt Consolidated's Motion for Preliminary Injunction (d/e 17) is DENIED AS MOOT. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1945082/ | 286 B.R. 294 (2002)
Irving E. WALKER, Trustee,
v.
Elizabeth G. WEESE, et al.
No. CIV. JFM-02-2768.
United States District Court, D. Maryland.
November 19, 2002.
*295 Morton A. Faller, Shulman, Rogers, Gandal, Pordy and Ecker, PA, Rockville, MD, for Elizabeth G. and Brian D Weese.
Irving E. Walker, Baltimore, MD, pro se.
Price O. Gielen, Neuberger, Quinn, Gielen, Rubin, and Gibber, PA, Baltimore, MD, for Alexander Grass.
Gerard P. Martin, Gregg L. Berstein, Kristin Elizabeth Blumer, Martin, Snyder and Bernstein, PA, Baltimore, MD, for Timothy Gurney.
MEMORANDUM
MOTZ, District Judge.
Plaintiff Irving Walker, trustee of the estates of debtors Elizabeth Weese and Brian Weese, has filed a complaint in bankruptcy court to recover assets plaintiff alleges were never effectively transferred and remain part of the bankruptcy estate. Defendants Elizabeth Weese, Brian Weese, and Alexander Grass (Elizabeth Weese's father) have filed motions to have the proceeding withdrawn from the bankruptcy court on the ground they are entitled to a jury trial under the Seventh Amendment. For the reasons set forth below, I will deny defendants' motions and remand this case to the bankruptcy court for trial.
I.
On August 23, 2001, creditors filed an involuntary bankruptcy petition naming both of the Weeses under Chapter 7 of the Bankruptcy Code. Prior to this time, the Weeses allegedly transferred millions of dollars worth of assets into an offshore trust. After an appeal to this court regarding jurisdiction over joint bankruptcy petitions, the initial case against the Weeses was transformed into two separate actions against each of them individually. See Bank of America, N.A. v. Weese, 277 B.R. 241 (D.Md.2002). Subsequently, the Weeses each filed a voluntary petition for bankruptcy under Chapter 11. (Def.'s Reply at 3.) The bankruptcy court converted the involuntary cases under Chapter 7 to *296 voluntary cases under Chapter 11 and determined those cases should be jointly administered, with the Weeses acting as debtors in possession. (Def.'s Mem. at 2.)
Several months later, the creditors moved to have the Weeses replaced in their capacity as debtors in possession. In April 2002, the Weeses were removed as debtors in possession and a trustee, Irving E. Walker, was appointed to oversee the debtors' estates. Acting as trustee, Walker filed a complaint against the Weeses and three other defendants.[1] The complaint requests various forms of declaratory and injunctive relief in order to recover assets plaintiff alleges the Weeses attempted to transfer to a trust in the Cook Islands ("the Trust") prior to the filing of the bankruptcy petitions. In Count I, plaintiff asks the court to declare that all of the Trust assets constitute property of the Weeses' bankruptcy estates. Count II requests an order directing four of the defendants to turn over the assets of the Trust. Alternatively, Counts III through V ask the court to set aside and avoid Elizabeth Weese's resignation as "Protector" of the Trust and require her to turn over, in her restored capacity as Protector, the assets of the Trust. Finally, Counts VI and VII ask the court to declare the notice removing Alexander Grass as co-trustee of the estate ineffective and require him to turn over the assets of the Trust in his capacity as trustee. (Compl.¶¶ 48-78.)
The debtors, Elizabeth G. Weese and Brian D. Weese, filed a joint motion to have the reference to the bankruptcy court withdrawn so they could be given a jury trial in the district court. Alexander Grass filed a similar motion. These two motions are now before me.
II.
Defendants' request to have this proceeding withdrawn from the bankruptcy court turns on their right to a jury trial. See U.S. CONST. amend. VII. If this case deserves a jury trial, then it must be conducted by the district court. See Official Comm. of Unsecured Creditors v. Schwartzman (In re Stansbury Poplar Place), 13 F.3d 122, 128 (4th Cir.1993). All parties agree the Seventh Amendment right to a jury trial must be assessed under the test explained and applied in Granfinanciera v. Nordberg, 492 U.S. 33, 42, 109 S.Ct. 2782, 106 L.Ed.2d 26 (1989). First, I must "compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of courts of law and equity." Id. Second, I "examine the remedy sought and determine whether it is legal or equitable in nature." Id. This second stage of analysis is more important than the first. See id. If these two considerations indicate a party is entitled to a jury trial, I must then "decide whether Congress may assign and has assigned resolution of the relevant claim to a non-Article III adjudicative body that does not use a jury as factfinder." Id. Even if Congress has assigned the case to a non-Article III adjudicative body, a jury trial will be required if Congress has done so impermissibly.
A.
Much of the work under the first part of the tripartite test was done by the Granfinanciera court itself. In Granfinanciera, a creditor who had not filed a proof of claim against the estate was being sued by the trustee for recovery of a preferential or fraudulent conveyance, and the creditor demanded a jury trial. See *297 Granfinanciera, 492 U.S. at 36-37, 109 S.Ct. 2782. The Court held that a trustee "would have had to bring his action to recover an alleged fraudulent conveyance of a determinate sum of money at law in 18th-century England, and that a court of equity would not have adjudicated it." Id. at 46-47, 109 S.Ct. 2782.
Plaintiff maintains, however, that a fraudulent conveyance (for a determinate sum of money) has not been alleged. He claims his suit is based on a cause of action that arises from the debtors' obligations under the Bankruptcy Code and that this cause of action has no analogue in 18th-century England. This contention, however, is not helpful to the analysis. The cause of action at issue must be compared to actions in 18th-century England; it need not be identical to one of them. The cause of action to which this action is most comparable is an action to avoid a fraudulent conveyance.
Because the action is not in fact an action to avoid a fraudulent conveyance, the required inquiry is admittedly a more difficult one. The variation in form, however, does not justify a contrary conclusion to the question of how an 18th-century English plaintiff would have brought the case. Other than detailing a few categories of claims into which this action does not fall and perhaps calling into question the validity of the distinction now drawn between the courts of law and equity in 18th-century England,[2] plaintiff does little to convince me this case would not have been tried in law at that time. Plaintiff has failed to produce a single case from that time period to support any contention this one would have been tried in equity. While I understand the difficulty of poring through reporters from hundreds of years ago in an attempt to find a case to distinguish the holding of Granfinanciera, I nonetheless must conclude the instant action would have been tried at law in 18th-century England.
B.
Greater emphasis is placed, however, on the second phase of the analysis. See Granfinanciera, 492 U.S. at 42, 109 S.Ct. 2782. At this stage, the inquiry is whether the relief being sought is legal or equitable in nature. See id. Because the relief being sought in each count is different, the nature of the relief being sought in each individual count must be examined. A single claim requiring a jury would call for withdrawal of the case from the bankruptcy court unless Congress had permissibly placed the resolution of that claim in a non-Article III adjudicative body that does not use a jury. See Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472-73, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962).
Count I presents the most difficult determination, partly because it is the count upon which all the other counts hinge. Defendants argue that Count I of the complaint is artfully pled to avoid the conclusion it calls for a legal remedy. On its face, the complaint asks only for a declaration that "all of the Trust assets constitute property of the Weeses' bankruptcy estates." (Compl.¶ 54.) Plaintiff claims the Weeses' attempted transfer of the assets to the Trust was ineffective as a matter of law because a self-settled trust is void against creditors. In declaring the transfer ineffective, plaintiff's argument goes, the court need simply determine the current contents of the estate (which would then be subject to the turnover obligations *298 of 11 U.S.C. § 542). See 11 U.S.C. §§ 541-42.
The defendants maintain that whatever label is placed on this count, its resolution in plaintiff's favor depends on a determination that a fraudulent conveyance has taken place. This view is incorrect. Defendants' argument has a surface appeal because, as previously stated, the common law claim to which this cause of action is most analogous is a fraudulent conveyance claim. The Weeses had the assets prior to the initiation of bankruptcy proceedings and divested themselves of the assets in an apparent attempt to place them beyond the reach of their creditors. Plaintiff, however, is not attempting to prove the Weeses committed fraud. At least in this lawsuit, plaintiff is actually alleging that the Weeses failed in their attempt to fraudulently convey the assets.[3] Plaintiff's request for declaratory relief does not rely upon the finding of a fraudulent conveyance.
Instead, plaintiff's prayer for declaratory relief in the first count depends upon whether an effective transfer of the funds ever took place. This will require the application of complex choice-of-law rules and a determination as to whether a self-settled trust can be maintained in these circumstances under the applicable law. See, e.g., Dzikowski v. Edmonds (In re Cameron), 223 B.R. 20, 24-25 (Bankr.S.D.Fla.1998) (examining validity of a self-settled trust against debtor's creditors); Marine Midland Bank v. Portnoy (In re Portnoy), 201 B.R. 685 (Bankr.S.D.N.Y.1996) (engaging in a lengthy analysis of the choice of law rules to determine whether the debtor retained control of assets allegedly transferred to a self-settled trust). Regardless of whether the case was tried before a jury, such determinations would be made by the court.[4]
If the Trust is self-settled and void under the applicable law, then the transfer would be ineffective and this action could be resolved with little need for a finder of fact. Sattin v. Brooks (In re Brooks), 217 B.R. 98, 103 (Bankr.D.Conn.1998) (determining on summary judgment that trusts were self-settled); Cameron, 223 B.R. at 25 (determining on summary judgment that trust was self-settled and subject to turnover obligation). Most of the Weeses' alleged activities in creating and maintaining the Trust are not in dispute. No determination as to the Weeses' intent needs to be made if fraud is not alleged, and it is difficult to ascertain what purpose the jury would serve in adjudicating this claim. See Cameron, 223 B.R. at 24 ("This principle [regarding the validity of self-settled trusts] applies without regard to whether there has been any fraud or other wrongdoing by the debtor, as settlor of the trust."). The transfers to the Trust were either valid or void against the creditors. A bankruptcy court, acting pursuant to its equity jurisdiction and applying the requisite expertise, is better suited to resolve this question. See Portnoy, 201 B.R. at 701 (noting "[e]quity would not countenance" the practice attempted by the debtor). *299 The declaratory relief being sought in Count I is equitable in nature.
Count II, requiring the turnover of the assets of the estate, is also fairly characterized as an equitable claim. Plaintiff maintains that compliance with the turnover provisions of the Bankruptcy Code is clearly an equitable remedy and that several courts have so held in analogous cases involving postpetition turnover actions. See, e.g., In re Warmus, 252 B.R. 584 (Bankr.S.D.Fla.2000). Defendants argue the turnover orders requested by plaintiff are different because they are aimed at recovering monies transferred pre-petition, and that § 549 claims are designed to protect the bankruptcy estate only following its inception. While it is true § 549 addresses postpetition transactions, the timing of the transaction giving rise to the turnover obligation does not affect the equitable nature of that obligation. Commanding turnover is at the very root of the bankruptcy court's equitable powers. See 11 U.S.C. § 542. If it has been established that certain assets are a part of the bankruptcy estate, there must be some mechanism for acquiring control of them. Requiring turnover is merely the bankruptcy court's means of enforcing its decisions, and it is therefore equitable in nature.[5]
Counts III and IV, both attempting to restore Elizabeth G. Weese as "Protector" of the Trust, also seek a remedy that is equitable in nature. Walker asserts that Weese's position as Protector was fraudulently conveyed in order to shield the assets of the Trust from the creditors. While admitting that adjudication of a fraudulent conveyance involving money requires a determination at law, plaintiff asserts that this particular fraudulent conveyance action involves an intangible right. Plaintiff correctly points out that a fiduciary position such as Protector of the Trust, unlike the assets in the Trust, is an intangible right with no intrinsic value. Cf. Comm. of Unsecured Creditors v. 90th Street Garage Corp. (In re Term Industries, Inc.), 181 B.R. 31, 33 (Bankr.S.D.N.Y.1995) (holding stocks to be intangibles). The resolution of a claim involving an intangible right, such as one's position as the Protector of a trust or as the trustee of a trust, can be adjudicated within the equitable powers of a court. See Official Dalkon Shield Claimants' Comm. v. Mabey (In re A.H. Robins Co.), 880 F.2d 769, 776 (4th Cir.1989); Sunset Beach v. Stocks (In re Stocks), 137 B.R. 516, 521-22 (Bankr.N.D.Fla.1991). Because the fifth Count merely requires Elizabeth Weese to fulfill her turnover obligation (which I have already determined to be an equitable remedy), Counts III through V all call for equitable relief.
Similarly, Counts VI and VII, directed at Alexander Grass, call for equitable forms of relief. In the allegations against Grass, there is no accusation that his position as co-trustee of the trust (along with CITL) was fraudulently conveyed. The complaint simply alleges that his removal as trustee was ineffective as a matter of law because the factual predicate for his removal did not exist at the time of his removal. (See Compl. at ¶ 74.) As discussed above, the appointment or removal of trustees is a remedy often utilized by courts of equity to resolve problems properly before them. See A.H. Robins Co., 880 F.2d at 776; Stocks, 137 B.R. at 521-22. Plaintiff is seeking equitable forms of relief by asking for the restoration of Grass as a trustee of the Trust and then *300 requiring him to turn over, in his capacity as trustee, the assets of the Trust. Of course, the court will only have the power to require the turnover of these assets if they are first determined to be part of the Weeses' bankruptcy estates. However, the forms of relief requested with respect to defendant Grass in Counts VI and VII are equitable in nature and do not require a jury trial.
C.
Resolution of the claims detailed in plaintiff's complaint does not give rise to a jury trial right.[6] While the action at issue can be analogized to one that would have been tried at law in 18th-century England, all of the relief sought in the complaint is equitable in nature. Because the emphasis in the Granfinanciera analysis is placed on the second inquiry, the scale is tipped toward finding this to be an action in equity without a right to a jury trial. As such, there is no need to reach the third part of the analysis. See Granfinanciera, 492 U.S. at 42, 109 S.Ct. 2782 (requiring further consideration only "[i]f, on balance, these two factors indicate that a party is entitled to a jury").[7] I will therefore deny defendants' motions for withdrawal of the reference to the bankruptcy court.
NOTES
[1] One of the defendants, the Cook Islands Trust, Ltd. (CITL), has not answered the complaint. Another defendant, Timothy Gurney, is asserting a lack of personal jurisdiction. Resolution of these issues will be left to the bankruptcy court upon remand.
[2] See Marcia S. Krieger, "The Bankruptcy Court is a Court of Equity": What Does That Mean?, 50 S.C. L.Rev. 275, 282-84 (1999).
[3] A suit, filed by creditor Bank of America, alleging a fraudulent conveyance, is pending in the Circuit Court for Baltimore County, Maryland. Another proceeding, to determine whether the transfers to the Trust are avoidable, is taking place in the High Court of the Cook Islands.
[4] While examination of the cases cited in this section implicitly endorse the jurisdiction of a bankruptcy court over claims regarding the validity of a self-settled trust, none of them directly address a litigant's request for a jury trial on the issue. See, e.g., In re Portnoy, 201 B.R. at 688 n. 1 (noting the initial challenge to the court's jurisdiction had apparently been withdrawn).
[5] The reasoning of this paragraph with respect to the remedy of turnover applies to Counts V and VII as well.
[6] To allay defendants' concerns regarding plaintiff's alleged attempts to circumvent their jury trial rights by pleading one set of claims and implicitly trying another set of claims at trial, I want to make it clear that the trial conducted by the bankruptcy court must be based on the pleadings. The pivotal determinations will be regarding the self-settled nature of the Trust, the law to be applied to the alleged transfers, and the validity of the Trust under the applicable law. The trial cannot be a veiled attempt to obtain a verdict as to an alleged fraudulent conveyance of the assets. The only allegation of a fraudulent conveyance in the complaint involves the conveyance of an intangible property right (the Protectorship) in Counts III and IV.
[7] Plaintiff's argument regarding waiver of the jury trial right by submission to the jurisdiction of the bankruptcy court through the filing of voluntary petitions would be addressed in the third phase of the analysis. Because the motions are resolved on other grounds, I will not address this argument. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1944891/ | 801 F.Supp. 1007 (1992)
TWENTY FIRST CENTURY CORPORATION and Twenty First Century/Allied Corporation, Plaintiffs,
v.
Joseph LaBIANCA, Richard Redzinski, Stephen Klemas, Michael J. Malpiedi, John Ahern, Richard Mandel, Robert Goldfine, Lucille Malpiedi Goldfine, Stephen Delli Bovi, Linda Citrynell a/k/a "Linda Drost," Delli Bovi Construction Corp. d/b/a "B.G. Improvement," J.M. Masonry & Tile Works, Inc., Allen Citarella d/b/a "Backflow Specialties," Angelo Vignola, D & D Electric Co., James M. Ahern, James Michaels, Inc. and Lillian Tesi, Defendants.
No. CV-92-2913.
United States District Court, E.D. New York.
September 25, 1992.
*1008 James A. Moss, Herrick Feinstein, New York City, for plaintiffs.
Gerald Kadish, New York City, for defendant Joseph LaBianca.
Richard A. Rehbok, New York City, for defendants Michael J. Malpiedi and Lillian Tesi.
Stains, Dillen, Bock, Kelly & Merle, New York City, for defendants Stephen Delli Bovi, Delli Bovi Const. Corp., J.M. Masonry & Tile Works, Inc. and Greico Steel.
Michael H. Soroka, Garden City, N.Y., for defendant Richard Mandel.
Michael F. Mongelli, Flushing, N.Y., for defendants James Ahern, James Michael Ahern and James Michael, Inc.
Eugene P. Cimini, Jr., Jaspen, Ginsberg, Schlesinger, Silverman & Hoffman, Garden City, N.Y., for defendants Angelo Vignola and D & D Elec. Co.
Lawrence Schoenbach, New York City, for defendant Richard Redzinski.
Andrew J. Maloney, U.S. Atty., Elliot M. Schachner, Asst. U.S. Atty. for intervenors (gov't).
MEMORANDUM AND ORDER
GLASSER, District Judge:
Defendant Richard Redzinski seeks an order staying all civil proceedings in this action pending completion of the related criminal trial. The government moves to intervene for the same purpose to move for a stay of all civil discovery. For the reasons set forth below, these motions are granted.
FACTS
Plaintiff in this action, Twenty-First Century Corporation, Inc. ("21st Century"), is a New Jersey corporation primarily engaged in the ownership and maintenance of thirty eight McDonald's franchises throughout the metropolitan area. In September of 1990, a grand jury sitting in the Eastern District of New York began investigating alleged criminal activities of plaintiff's then current and former employees. On June 19, 1992, the grand jury returned an indictment charging many of the defendants named in this case with criminal activity arising from and during their employ at 21st Century. That indictment, numbered 92-CR-579, is presently pending in this court and is set for trial on November 30, 1992.
Plaintiff filed this action in June of 1992 to recover from defendants damages sustained by reason of the following: alleged fraudulent conduct; breach of fiduciary duties; misappropriation of assets; acts of commercial bribery; and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. More specifically, the complaint alleges that defendants created sham corporations for the purposes of submitting fraudulent and inflated construction and security invoices; all funds diverted from the corporation allegedly were kicked back to the defendants. These claims are substantially similar to those charged in the criminal indictment. No civil discovery has yet taken place; however, defendant LaBianca issued a notice of deposition on defendant Redzinski, now postponed pending resolution of these motions.
There are several motions currently at issue. First, the government moves to intervene pursuant to Rule 24 of the Federal Rules of Civil Procedure for the limited purpose of moving to stay of discovery until completion of the criminal trial. The government has attempted to obtain the consent of all parties to its motion to intervene and stay discovery; several of the defendants have refused to consent, but the plaintiff has agreed.
*1009 Second, Redzinski, an unindicted co-conspirator in the criminal action, also moves to stay the civil proceedings. On June 12, 1992, Redzinski pleaded guilty to a separate but related criminal charge involving a conspiracy to commit mail fraud. Both Redzinski's attorney and the government state that sentencing will not proceed until the remaining defendants are tried. Since he has not yet been sentenced, Redzinski intends to assert his fifth amendment right against self-incrimination with respect to the averments against him in this case.
Redzinski has cooperated and continues to cooperate in the United States' investigation of the scheme to defraud 21st Century, and the government believes that he will be an important witness in the criminal case. Accordingly, they seek to prevent premature disclosure of the confidential information provided by Redzinski. Aware of the competing interests at stake, the government promises to "make every effort to minimize the effects of a stay on this action. The United States is prepared to go to trial ... on the scheduled date and expects that the trial will last approximately three to four weeks." (Okula Aff., ¶ 10).
DISCUSSION
United States' Motion To Intervene
Under Rule 24(a) of the Federal Rules of Civil Procedure a party may intervene as of right in an action when he "claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest...." Fed.R.Civ.R. 24(a)(2). Rule 24(b) alternatively permits permissive intervention "when an applicant's claim or defense and the main action have a question of law or fact in common." Fed.R.Civ.R. 24(b)(2).
As a rule, district courts in this Circuit have allowed the government to intervene in civil actions especially when the government wishes do so for the limited purpose of moving to stay discovery. For example, in First Merchants Enterprise, Inc. v. Shannon, 1989 WL 25214, *2, 1989 U.S.Dist. LEXIS 2512, *5 (March 14, 1989), the government contended that its ongoing criminal investigation would be prejudiced if civil discovery concerning the same facts and circumstances were allowed to proceed. Judge Haight granted the government's motion pursuant to Rule 24(b), although he refused to express a view as to the propriety of intervention as of right. Id.; see also Board of Governors of the Federal Reserve System v. Pharaon, 140 F.R.D. 634, 638 (S.D.N.Y.1991) (allowing state prosecutor to intervene in civil action when pending criminal action involved common questions of law or fact); Radutzky v. Walert, 87-CV-4340 (E.D.N.Y. June 15, 1989) (Nickerson, J.) (finding both forms of intervention appropriate because "[t]he United States, charged with enforcing federal criminal law, has an interest in the subject matter of [the civil] action.").
While the Second Circuit has not squarely held that such intervention is always appropriate, in Securities and Exchange Commission v. Chestman, 861 F.2d 49, 50 (2d Cir.1988), it recognized in dicta the government's interest. The Chestman court stated that the government has a "discernible interest in intervening in order to prevent discovery in [a] civil case from being used to circumvent the more limited scope of discovery in the criminal matter." Accordingly, it found that the district court did not abuse its discretion in allowing intervention under either of the provisions of Rule 24. Id.
In this civil case, as in the cases cited above, the government seeks to intervene to protect its companion criminal prosecution from prejudice. Because the government has a limited purpose for intervention moving to stay civil discovery pending disposition of the criminal case this intervention will not "unduly delay or prejudice the adjudication." Fed.R.Civ.P. 24(b)(2). Therefore, the government's motion is granted.
Motions to Stay Civil Proceedings
These motions to stay civil proceedings pending the outcome of the companion criminal case have two bases: first, defendant *1010 Redzinski claims that allowing the civil action to proceed will impinge upon his fifth amendment right against self-incrimination; second, the government contends that defendants will obtain discovery materials through civil discovery rules that these defendants could not obtain as part of the more restrictive criminal discovery process. Either of these two justifications provides grounds for granting the motion to stay this civil action.
"A federal district court has the inherent power, in the exercise of its discretion, to stay an action." John's Insulation, Inc. v. Siska Construction Co., 671 F.Supp. 289, 297 (S.D.N.Y.1987) (citing Landis v. North American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936)). Granting a stay of a civil proceeding to await the outcome of a pending parallel criminal investigation is appropriate "`when the interests of justice seem ... to require such action.'" Kashi v. Gratsos, 790 F.2d 1050, 1057 (2d Cir.1986) (quoting United States v. Kordel, 397 U.S. 1, 12 n. 27, 90 S.Ct. 763, 770 n. 27, 25 L.Ed.2d 1 (1970)). In making this determination, the court should balance:
(1) the private interest of the plaintiffs in proceeding expeditiously with the civil litigation as balanced against the prejudice to the plaintiffs if delayed; (2) the private interests of and burden on the defendant; (3) the convenience to the courts; (4) the interest of persons not parties to the civil litigation; and (5) the public interest.
Arden Way Associates v. Boesky, 660 F.Supp. 1494, 1497 (S.D.N.Y.1987); see also M. Pollack, Parallel Civil and Criminal Proceedings, 129 F.R.D. 201, 203-04 (1989) (discussing elements of balance in detail).
1. The Government's Motion to Stay Discovery
The leading case discussing the problem of balancing discovery interests in parallel proceedings is Campbell v. Eastland, 307 F.2d 478 (5th Cir.1962), cert. denied, 371 U.S. 955, 83 S.Ct. 502, 9 L.Ed.2d 502 (1963). In that case, Judge Wisdom discussed the reasons for maintaining a narrower scope of discovery in criminal as compared to civil actions including the danger of manufactured evidence and the one-sided availability of such discovery and cautioned judges to be sensitive to this difference. Id. at 487 & n. 12. Judge Wisdom went on to assert that "a trial judge should give substantial weight to [the public interest in law enforcement] in balancing the policy against the right of a civil litigant to a reasonably prompt determination of his civil claims or liabilities." Id. at 487; In re Ivan F. Boesky Securities Litigation, 128 F.R.D. 47, 49 (S.D.N.Y. 1989) (Pollock, J.) (quoting Campbell for proposition that "the public interest in the criminal case is entitled to precedence over the civil litigant"); Integrated Generics v. Bowen, 678 F.Supp. 1004, 1009 (E.D.N.Y. 1988) (staying civil discovery pending completion of grand jury proceedings where it was "difficult to understand how the government could produce the information sought in the civil case without also revealing the focus of [a factually related] criminal investigation.").
Allowing civil discovery to proceed including the deposition of defendant Redzinski may afford defendants an opportunity to gain evidence to which they are not entitled under the governing criminal discovery rules. No party to this action contends that the civil case was brought solely to obtain broader discovery in the criminal case. Cf. Dove v. Atlantic Capital Corp., 963 F.2d 15, 19 (2d Cir.1992) (courts justified in barring discovery when federal action brought chiefly for purpose of exploiting liberal discovery available in federal court). Nevertheless, this result may occur since the issues in the civil and criminal proceedings overlap extensively. See Integrated Generics, 678 F.Supp. at 1009 ("the decision of whether or not [to issue a stay] does not depend solely on whether this Court finds some wrongful intent ... to circumvent the criminal discovery rules").
Other factors in the balance also counsel in favor of granting the government's motion. Since the criminal trial is scheduled to proceed in November of 1992, little delay will be occasioned by granting the government a stay; thus, the plaintiff will suffer *1011 minimal harm. As the government points out, the stay in this action may streamline later civil discovery since transcripts from the criminal case will be available to the civil parties. In addition, many of the interested parties have consented to this stay. Finally, courts are more likely to grant such stays when an indictment has already been issued, as is the case here. See Par Pharmaceutical, Inc. Securities Litigation, 133 F.R.D. 12, 13 (S.D.N.Y. 1990) (citing cases for proposition that courts in this Circuit regularly stay civil proceedings when "criminal investigation has ripened into an indictment.").
2. Defendant Redzinski's Fifth Amendment Claim
Defendant Redzinski presents another independent ground for granting the stay at issue. As a preliminary matter, a defendant who has pleaded guilty to criminal charges but has not yet been sentenced retains his constitutional right against self-incrimination. United States v. Willard, 919 F.2d 606, 608 (9th Cir.1990), cert. denied, ___ U.S. ___, 112 S.Ct. 208, 116 L.Ed.2d 167 (1991); United States v. Rodriguez, 498 F.2d 302 (5th Cir.1974). Redzinski claims that he will be forced to assert his fifth amendment right in response to most of the charges in the complaint and will therefore risk liability on those charges. See Brock v. Tolkow, 109 F.R.D. 116, 120 (E.D.N.Y.1985) (discussing propriety of granting stay when defendants face choice between asserting rights against self-incrimination and civil liability). Alternatively, Redzinski will move to amend his complaint after he has been sentenced, thereby consuming resources of the court. Finally, it is relevant that this defendant did not create the problem he seeks to remedy. See Arden Way v. Boesky, 660 F.Supp. at 1498 (refusing to stay discovery because movant "deliberately courted the impediment he seeks to erect as a shield").
"Where invocation of the fifth amendment imposes undue sanctions or penalties on a defendant, a court may in its discretion stay civil proceedings, postpone civil discovery, or impose protective orders and conditions in the furtherance of the interests of justice." Arden Way Assocs. v. Boesky, 660 F.Supp. 1494, 1498 (S.D.N.Y. 1987). In United States v. District Council of New York City, 782 F.Supp. 920, 925 (S.D.N.Y.1992), the court refused to grant a stay for two unindicted civil defendants and one acquitted defendant. Judge Haight found that imposing on defendants the "unpleasant choice" between asserting their rights against self-incrimination and facing liability alone did not constitute undue prejudice. Id. However, the court recognized that pending indictments could change its calculus. Id. at 924. That Redzinski's sentencing awaits his cooperation in the criminal case provides an analogous reason for staying this action. See Securities Exchange Commission v. Dresser Industries, Inc., 628 F.2d 1368, 1376 (D.C.Cir.), cert. denied, 449 U.S. 993, 101 S.Ct. 529, 66 L.Ed.2d 289 (1980) (If "[t]he noncriminal proceeding ... might undermine the party's Fifth Amendment privilege against self-incrimination, expand rights of criminal discovery beyond the limits of Federal Rule of Criminal Procedure 16(b) ... [and] delay of the noncriminal proceeding would not seriously injure the public interest, a court may be justified in deferring it.").
As noted above, all of the other equities also balance in favor of granting this stay; these include: the consent of various parties; the similarity of the civil and criminal matters; and the advanced stage of the criminal proceeding and its assured expeditious resolution. Thus, for all of the reasons provided above, the motions to stay the civil proceedings pending outcome of the criminal trial in this case is granted.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1943733/ | 174 B.R. 351 (1994)
In re INDIAN MOTOCYCLE ASSOCIATES III LIMITED PARTNERSHIP, and Indian Motocycle Associates Limited Partnership.
MASSACHUSETTS HOUSING FINANCE AGENCY, Appellant,
v.
INDIAN MOTOCYCLE ASSOCIATES III LIMITED PARTNERSHIP, Appellee.
Civ. A. No. 94-30038-FHF.
United States District Court, D. Massachusetts.
October 31, 1994.
*352 Mark D. Cress, Bulkley, Richardson & Gelinas, Springfield, MA, for Massachusetts Housing Finance Agency.
Paul R. Salvage, Bacon & Wilson, P.C., Springfield, MA, for Indian Motocycle Associates III Ltd. Partnership and Indian Motocycle Associates Ltd. Partnership.
MEMORANDUM AND ORDER
FREEDMAN, Senior District Judge.
I. INTRODUCTION
Before the Court is a bankruptcy appeal brought by the Massachusetts Housing Finance Agency ("the MHFA") against Indian Motocycle Associates Limited Partnership and Indian Motocycle Associates III Limited Partnership (respectively, "Indian" and "the Debtor"). The MHFA seeks reversal of the Bankruptcy Court's refusal to compel the Debtor to restore certain funds that it allegedly diverted from the operating account of a low-income multifamily housing project.
II. FACTUAL AND PROCEDURAL HISTORY
On October 30, 1987, Indian obtained a mortgage loan for $8.6 million from the MHFA to convert a former industrial building in Springfield, Massachusetts, into a low-income multifamily residential housing project ("the Project"). Appellant's Brief ("MHFA's Brief") at 2. Under the provisions of the National Housing Act ("the Act"), the United States Department of Housing and Urban Development ("HUD") coinsured the loan. Id. In addition to a promissory note and a mortgage, Indian executed a "Regulatory Agreement" which required Indian to comply with all applicable federal regulations relating to the coinsurance provided by HUD. Id. The mortgage and Regulatory Agreement were subsequently recorded. Id. at 5.
In 1989, the Debtor acquired the Project from Indian, and the Debtor assumed all of Indian's financial obligations under the note, mortgage and Regulatory Agreement. Id. at 5. On August 4, 1992, the MHFA notified the Debtor of the latter's default on its obligations under the note, mortgage and Regulatory Agreement. Id. After being notified of its default on its financial obligations, the Debtor withdrew Project funds from the operating account of the Project. Id. at 5-6. Specifically, the Debtor withdrew and paid the following:
$ 5,000.00 to New York counsel to pursue the
Debtor's claim in an unrelated
bankruptcy case.
$20,000.00 to Coopers & Lybrand.
$35,000.00 to Bacon & Wilson (bankruptcy retainer).
$ 5,000.00 to Rubin Enterprises, an entity
owned by the principal of the
managing general partner of the
Debtor.
Id. at 6.
On December 15, 1992, after it made the above disbursements, the Debtor filed a *353 Chapter 11 petition. Brief of Appellee ("Debtor's Brief") at 2. In addition to its obligations to the MHFA, the Debtor owed well over $9 million to unsecured creditors, and over $2.2 million to secured creditors. Id. On December 31, 1992, the MHFA filed a motion to compel the Debtor to restore the above disbursements to the Project. MHFA's Brief at 3. On January 6, 1994, the Bankruptcy Court found that the disbursements were, in fact, disbursements of Project funds. In re Indian Motocycle Associates III Limited Partnership and Indian Motocycle Associates Limited Partnership, 161 B.R. 865, 867 (Bankr.D.Mass.1994) ("Bankruptcy Opinion"). The Bankruptcy Court also found that the disbursements were not authorized by the terms of the Regulatory Agreement. Id. at 867. Despite such findings, the Bankruptcy Court denied the MHFA's motion to compel the Debtor to restore the diverted funds. In re Indian Motocycle Associates III Limited Partnership and Indian Motocycle Associates Limited Partnership, 161 B.R. 865 (Bankr. D.Mass.1994) ("Bankruptcy Order").
The MHFA contends that the Bankruptcy Court erred as a matter of law in failing to enforce the terms of the Regulatory Agreement and in refusing to order the Debtor to restore the diverted Project funds. Therefore, the MHFA urges this Court to reverse the Bankruptcy Court order and mandate entry of an order compelling the Debtor to restore the diverted funds. Alternatively, the Debtor argues that the Bankruptcy Court was correct in refusing to order restoration of the diverted funds. As support for its position, the Debtor points out that the MHFA has other remedies by which the terms of the mortgage and Regulatory Agreement could be enforced against the Debtor.
III. STANDARD OF REVIEW
In reviewing the bankruptcy proceedings, the Court applies a de novo standard with respect to legal determinations, and a "clearly erroneous" standard as to findings of fact. In re DN Assocs., 3 F.3d 512, 515 (1st Cir.1993).
IV. DISCUSSION
The Debtor does not dispute the Bankruptcy Court's finding that the disbursements were Project funds. See Bankruptcy Opinion at 867. Nor does the Debtor challenge the Bankruptcy Court's determination that the disbursements were not authorized by the Regulatory Agreement. Id. at 867. Thus, the only issue before the Court is whether the Bankruptcy Court should have compelled the Debtor to restore the diverted funds. See Bankruptcy Order. The Court now turns to a discussion of this issue.
A. The MHFA's Argument Regarding the Mortgage and the Regulatory Agreement
At the threshold, the Court lays out the framework that guided the financial relationship between the Debtor and the MHFA. The Debtor assumed an $8.6 million mortgage loan from the MHFA. Because the loan was coinsured by HUD, the National Housing Act's regulations applied. Under the Act, the Secretary may require the mortgagor to be regulated or restricted as to rent, sales, operation methods, and the like. See 12 U.S.C. § 1715k(d)(2)(A); see also MHFA's brief at 10.
The mortgage was consistent with the National Housing Act. Specifically, the mortgage required that the Debtor assign to the MHFA its rights to all leases, rents, profits and income from the Project:
Assignment of Leases and Rents That all leases, rents, profits and income from the property covered by this Mortgage are hereby assigned to the Mortgagee [MHFA] for the purpose of discharging the debt hereby secured.
See MHFA's Brief at 13, quoting Mortgage; see also 12 U.S.C. § 1715k(d)(2)(A). Nonetheless, so long as the Debtor did not default, the MHFA gave it permission to collect the rents, profits and income for use consistent with the Regulatory Agreement:
Permission is hereby given to the Mortgagor [Debtor] so long as no default exists hereunder, to collect such rents, profits and income for use in accordance with the *354 provisions of the Regulatory Agreement. . . .
See MHFA's Brief at 13, quoting Mortgage. However, the Debtor did default on the mortgage loan. MHFA's Brief at 5. Thus, the MHFA asserts, the permission given to the Debtor under the mortgage to collect rents, profits and income was revoked. See id. at 13-15.
In addition to defaulting, the Debtor disregarded the terms of the mortgage by distributing Project funds in violation of the Regulatory Agreement. See id. As a result, the MHFA argues that the Regulatory Agreement enables it to seek injunctive relief against the Debtor. Id. at 17. Specifically, the MHFA believes that it is entitled to recover the unauthorized distributions. Id. The MHFA points to the Regulatory Agreement for support of its position:
[I]f the Owner [Debtor] violates any provisions of this Agreement, the Mortgagee [MHFA] or Secretary [of HUD] . . . may initiate any of the following actions. . . .
d. Apply to any court, State or Federal, for specific performance of this Agreement, for an injunction against any violations of this Agreement, for the appointment of a Receiver to take over and operate the Project in accordance with the terms of the Agreement, or for such other relief as may be appropriate, given the nature of the default and the damage resulting from the default.
Regulatory Agreement at 17, ¶ C(1)(d). The Regulatory Agreement further provides that:
The damage to the Project as a result of Owner's [Debtor's] breach of its duties and obligations under this Agreement will include, but not [be] limited to, the amounts specified below. Any damages collected or recovered by the Mortgagee [MHFA] or the Secretary [of HUD] will be payable to the Project account. . . .
a. In the case of unauthorized distributions of Project funds or Project assets, the damages will be the amount of the unauthorized distributions plus interest from the date the distribution was made.
Id. at 17-18, ¶ C(2)(a). The MHFA argues that because the Debtor's actions clearly violated the terms of the mortgage and the Regulatory Agreement, the Bankruptcy Court should have enforced those terms as a remedy. MHFA's Brief at 7, 17.
B. The Bankruptcy Court's Decision
Instead of enforcing the terms of the mortgage and the Regulatory Agreement as the MHFA would have preferred, the Bankruptcy Court concluded that "[b]reach of the Regulatory Agreement is immaterial with respect to the MHFA's rights against the Debtor." Bankruptcy Opinion at 867. As support for its conclusion, the Bankruptcy Court reasoned that the Regulatory Agreement was "merely designed to protect the note obligation." Id. The Debtor's breach of the Regulatory Agreement, the Bankruptcy Court continued, was analogous to a debtor converting collateral since the disbursements taken from the rents due under the Project were the MHFA's collateral. Id. at 867-68. With or without conversion of the collateral, the Bankruptcy Court deduced, the MHFA's claim against the Debtor remained the same the amount on the defaulted mortgage loan. Id. The Court turns to a consideration of the propriety of the Bankruptcy Court's decision, in light of the arguments proffered by the MHFA.
C. Classifying the Disbursements
To reiterate, it is undisputed that the disbursements were Project funds. It is also undisputed that the disbursements were not authorized by the Regulatory Agreement. Thus, the Court moves to consider what type of interest the MHFA had in the disbursements.
1. Federal or State Law
As a prerequisite to determining what type of interest the MHFA had in the disbursements, the Court must first determine whether federal or state law controls the parties' rights in relation to the disbursements. The Supreme Court has held that state law controls the determination of the extent of a security interest in property, such as rents, unless a federal interest requires otherwise. See Butner v. United States, 440 U.S. 48, 55, 99 S.Ct. 914, 918, 59 L.Ed.2d 136 *355 (1979). Because of Butner, and because the MHFA is a Massachusetts agency and the Debtor is a Massachusetts limited partnership, the Debtor claims that Massachusetts law should apply. Debtor's Brief at 10; see also Prudential Ins. Co. of Am. v. Boston Harbor Marina Co., 159 B.R. 616, 619 (D.Mass.1993). On the other hand, the MHFA states that Butner's exception applies a federal interest does require otherwise, so that state law does not control the determination of the extent of a security interest in property. See MHFA's Reply Brief at 5; see also Butner, 440 U.S. at 55, 99 S.Ct. at 918. Specifically, the MHFA asserts that the federal interest at issue is that of the National Housing Act since the loan in question was made under the Act's provisions, and it is coinsured by the United States, through HUD. See MHFA's Reply Brief at 5.
The Court notes that federal law governs the rights of the United States arising under nationwide federal programs. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 726, 99 S.Ct. 1448, 1457, 59 L.Ed.2d 711 (1979). Thus, "when federal agencies lend funds by the authority of federal legislation, their rights as lenders also derive from and warrant the protection of federal law." United States v. Landmark Park & Assocs., 795 F.2d 683 (8th Cir.1986), quoting Kimbell Foods, Inc., 440 U.S. at 726-27, 99 S.Ct. at 1457. Because HUD in the case at bar did not lend funds, but rather coinsured a mortgage, the Debtor urges that there is no sufficient federal interest warranting an application of federal law. See Debtor's Brief at 19-21. The Debtor points out that where cases have held that federal law applies pursuant to the Butner exception, the mortgagee was a federal agency or arm of the federal government. Debtor's Brief at 19. For example, in Landmark Park & Assocs., 795 F.2d at 684, and in In re Westwood Plaza Apartments, Ltd., 154 B.R. 916, 918 (Bankr. E.D.Tex.1993), HUD held a mortgage directly. In the case at bar, however, HUD only coinsured the loan, while the MHFA held the mortgage directly. See Debtor's Brief at 19. Because HUD was only a coinsurer and the MHFA was the mortgagee, the Debtor contends that the Butner exception does not apply and state law controls. Debtor's Brief at 21.
Upon review, the Court disagrees with the Debtor's argument. The Debtor is correct in asserting that the cases applying the Butner exception had a federal agency as the mortgagee. See Landmark Park & Assocs., 795 F.2d at 684; In re Westwood Plaza Apartments, Ltd., 154 B.R. at 918. However, the Debtor points to no case nor does the Court find any where the court held that the Butner exception applied only when the federal agency was a mortgagee. Rather, the Court believes that the policy underlying the National Housing Act applies equally well where the federal agency was the mortgagee as well as the coinsurer. That is,
the application of federal law to the rights and remedies of the United States upon default of federally held or insured loans is warranted by the `overriding federal interest in protecting the funds of the United States and in securing federal investments'. . . . Protection of the federal treasury and the purposes and integrity of nationwide federal lending programs is thus a `federal interest' of the kind referred to in Butner which requires a different result from the general rule of resort to state law.
Landmark Park & Assocs., 795 F.2d at 686, quoting United States v. Victory Highway Village, Inc., 662 F.2d 488, 497 (8th Cir.1981) (emphasis added).
Furthermore, the Court notes that the National Housing Act authorizes HUD to grant mortgages and to coinsure mortgages. 12 U.S.C. § 1701 et seq.; 12 U.S.C. § 1709. Because HUD's power to grant mortgages as well as to coinsure mortgages arises from the same authority, the policy considerations underlying both aspects of HUD's power are the same. That is, the National Housing Act encourages the creation of decent and affordable housing for individuals who would otherwise suffer with inadequate housing. See 12 U.S.C. § 1715k(a); see also United States v. Winthrop Towers, 628 F.2d 1028, 1036 (7th Cir.1980). The Court believes that this goal is not only furthered when HUD grants mortgages, but also when HUD coinsures *356 mortgages. Thus, even though HUD was not the mortgagee in the case at bar, the Court concludes that HUD's coinsuring the mortgage is a sufficient federal interest warranting the protections of federal law. See Butner, 440 U.S. at 55, 99 S.Ct. at 918; Landmark Park & Assocs., 795 F.2d at 683.
Continuing, the Court finds that the cases cited by the Debtor miss the mark. Debtor's Brief at 7-11; see also Prudential Ins. Co., 159 B.R. at 616; In re GOCO Realty Fund I, 151 B.R. 241 (Bankr.N.D.Cal.1993); In re Rancourt, 123 B.R. 143 (Bankr.D.N.H.1991); In re Prichard Plaza Assocs. Ltd. Partnership, 84 B.R. 289 (Bankr.D.Mass.1988). The Debtor points to these cases because state law determined the rights of the parties to the mortgage and security interest. Furthermore, these cases had state agencies as mortgagees, like the MHFA in the case at bar. Unlike the case at bar, however, the Court observes that these cases did not have HUD as a coinsurer. Thus, the courts in the cases cited by the Debtor did not consider whether state or federal law applied when HUD was the coinsurer of a loan.
At bottom, the Court concludes that federal law controls the parties' rights regarding the transferred disbursements.
2. Did the MHFA Perfect Its Interest in the Funds?
Under federal law, unless the security agreement provides otherwise, a creditor's security interest in property is perfected upon the debtor's default. See Landmark Park & Assocs., 795 F.2d at 687; In re Executive House Assocs., 99 B.R. 266, 277 (Bankr.E.D.Pa.1989). The Court does not find, nor does the Debtor assert, any prerequisites to perfection of the security interest.[1] Thus, the Court believes that the MHFA's security interest in the Project funds was perfected upon the Debtor's default. See Landmark Park & Assocs., 795 F.2d at 687; In re Executive House Assocs., 99 B.R. at 277. Therefore, the MHFA had a perfected interest in the Project funds when the Debtor disbursed them.
Succinctly put, the Court finds that HUD's coinsuring the mortgage is a sufficient federal interest warranting the protections of federal law. See Butner, 440 U.S. at 55, 99 S.Ct. at 918. As a result, the Court resolves that the MHFA did not need to possess the property or have a receiver appointed to activate its interest in the Project funds. See Debtor's Brief at 11. Rather, the Court concludes that the MHFA's interest in the Project funds was activated upon the Debtor's default. In re Executive House Assocs., 99 B.R. at 277, citing Landmark Park & Assocs., 795 F.2d at 687. Thus, since the Debtor transferred the disbursements after it had defaulted on the loan, and since the disbursements were Project funds, the Court finds that the MHFA's interest in the funds was superior to that of the transferees.
D. Ramifications of the MHFA's Perfected Interest
Having determined that the MHFA had a perfected, choate interest in the disbursements when the Debtor transferred them, the Court moves to a consideration of the MHFA's rights. The Bankruptcy Court, although never expressly discussing the extent of the MHFA's interest in the disbursements, viewed the Debtor's transfer of funds as incidental since the amount of the MHFA's claim against the Debtor remains the same. Bankruptcy Opinion at 867. The Court respectfully disagrees with the Bankruptcy Court's decision.
Initially, the Court believes that the Bankruptcy Court erred in concluding that the Regulatory Agreement simply protects the note obligation. Bankruptcy Opinion at 867. Rather, the Court sees the Regulatory Agreement in two veins. First, the Court views the Regulatory Agreement, as well as the mortgage and the note, as evidence that HUD was an intentional party to the mortgage arrangement. See Regulatory Agreement at 3; see also MHFA's Brief at 12-13. That is, since the Regulatory Agreement paralleled the provisions of the National Housing Act, the MHFA and the Debtor expressly intended that HUD coinsure the mortgage. *357 See MHFA's Brief at 14, citing 24 C.F.R. 251.505, 251.704(b).
Secondly, and more importantly, the Court believes the provisions of the Regulatory Agreement should be honored. Since the parties availed themselves of the security of HUD's coinsurance, the parties should be forced to stand by their agreement. See Winthrop Towers, 628 F.2d at 1036 (developers who take advantage of HUD coinsured loan programs are presumably sophisticated enough to make agreements they will be able to live with). In response to the Court's position, the Debtor asserts that the Bankruptcy Code expressly grants a debtor the authority to reject burdensome contracts, despite pre-petition contractual obligations. See Debtor's Brief at 17, citing 11 U.S.C. § 365. While the Debtor's assertion may be true, the Court reiterates that the Debtor did not violate the terms of the Regulatory Agreement and mortgage while invoking the protections of 11 U.S.C. § 365. Rather, the Debtor transferred the disbursements before it filed for bankruptcy and, accordingly, before it sought the protections of the Bankruptcy Code. Thus, the Court finds the Debtor's argument unpersuasive.
Furthermore, the Court disagrees with the Bankruptcy Court's statement that with or without conversion of the collateral, the MHFA's claim against the Debtor would be the same. Bankruptcy Opinion at 867-68. Section 506(a) of the Bankruptcy Code provides, in pertinent part, that:
An allowed claim of a creditor secured by a lien on property in which the estate has an interest . . . is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property . . . and is an unsecured claim to the extent that the value of such creditor's interest . . . is less than the amount of such allowed claim. . . .
11 U.S.C. § 506(a). Since the transfer of the funds was a reduction in the value of the MHFA's collateral, the Court believes that the MHFA's secured claim was reduced by the value of the transferred funds $65,000.00. See Bankruptcy Opinion at 867.
Finally, the Court takes issue with the Bankruptcy Court's rejection of a line of cases that ordered the debtor to restore to the estate a pre-petition payment for legal expenses. Bankruptcy Opinion at 868. The Bankruptcy Court was critical of the "assumption" by these other courts that breach of a HUD regulatory agreement created a separate claim enjoying super priority. Id. at 868. Presumably, the Bankruptcy Court was referring to these courts' positions that HUD's interest in the transferred funds was superior to the interest of the recipients of the funds the retained attorneys. See In re EES Lambert Assocs., 63 B.R. 174, 175-76 (N.D.Ill.1986); In re Garden Manor Assocs., 70 B.R. 477, 486 (Bankr.N.D.Cal.1987); In re Hil'Crest Apartments, 50 B.R. 610, 612-13 (Bankr.N.D.Ill.1985). The Court, however, points out that in these cases, HUD's interest in the funds was perfected at the time of transfer. Thus, HUD's interest in the funds did not enjoy "super priority" as the Bankruptcy Court asserted, but simply enjoyed "first in time, first in right" priority. See United States v. McCombs, 30 F.3d 310, 321 (2d Cir.1994). The Court views the MHFA's interest similarly.
E. Restoration of the Disbursements
The Regulatory Agreement provides that the MHFA or HUD may apply to any court for specific performance of the agreement, for an injunction, or for any other appropriate relief. Regulatory Agreement, ¶ C(1)(d). Furthermore, the Regulatory Agreement provides that in the case of unauthorized distributions of Project funds, the damages will be the amount of the unauthorized distributions plus interest. Id. at ¶ C(2)(a). In urging the Court to disregard the Regulatory Agreement, the Debtor argues that there is no provision in the Bankruptcy Code that would allow the Court to compel the Debtor to return the disbursements to the estate. Debtor's Brief at 13. Rather, the Debtor contends that the MHFA should have filed an adversary proceeding alleging conversion of the estate's funds. Id.
The Court disagrees. Section 105 of the Bankruptcy Code provides that a bankruptcy court "may issue any order, process, or judgment that is necessary or appropriate *358 to carry out the provisions of this title." 11 U.S.C. § 105(a). Section 105 gives a bankruptcy court the power "to protect its custody of the estate and the administration thereof." In re International Inst. of the Ams., Inc., 63 B.R. 294, 299 (D.P.R.1986), quoting Hernandez v. Borgos, 343 F.2d 802, 807 (1st Cir.1965). Thus, the Court finds that the Bankruptcy Court has sufficient authority to uphold the provisions of the Regulatory Agreement and order repayment of the funds.
Furthermore, repayment of the Project funds would not undermine the Debtor's rights under the Bankruptcy Code. See Debtor's Brief at 16-17. Rather, the Debtor could still avail itself of the Code's protections. As for retaining bankruptcy counsel, the Debtor is free to do so, just not with Project funds. See In re Westwood Plaza Apartments, Ltd., 154 B.R. at 922; In re EES Lambert Assocs., 63 B.R. at 176.
F. Summary
In sum, the Court concludes that the MHFA's security interest in the disbursements was activated upon the Debtor's default, so when the Debtor transferred the disbursements, the MHFA's interest was superior to that of the transferees. The Court also finds that the Bankruptcy Court has the authority to order repayment of the diverted Project funds. Thus, the Court concludes that the Bankruptcy Court erred by failing to order repayment of the diverted Project funds.
V. CONCLUSION
For the above-stated reasons, the Court hereby REVERSES the Bankruptcy Court's Order of January 6, 1994, and the Court hereby REMANDS the case with instructions that the Bankruptcy Court enter an order compelling the Debtor to restore the distributions diverted from the estate.
It Is So Ordered.
NOTES
[1] Although the mortgage or Regulatory Agreement did not require it, the MHFA gave the Debtor notice of its default. MHFA's Brief at 5-6. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1963716/ | 930 F.Supp. 1269 (1996)
Frank P. ROHDE, Plaintiff,
v.
CENTRAL RAILROAD OF INDIANA, a foreign corp., and CP Rail System-HHUS, a Division of Canadian Pacific Limited, Defendants.
No. 95 C 6307.
United States District Court, N.D. Illinois, Eastern Division.
July 3, 1996.
*1270 John S. Bishof, Jr., Chicago, IL, for Frank P. Rohde.
Thomas F. McFarland, Jr., Stephen C. Herman, Belnap, Spencer, McFarland & Herman, Chicago, IL, for Central Railroad of Indiana.
*1271 Thomas L. Hogan, Soo Line Railroad Company, Chicago, IL, Lisa L. Lantero, Patrick G. Gattari, Canadian Pacific Legal Services, Chicago, IL, for CP Rail System-HHUS.
MEMORANDUM OPINION AND ORDER
BUCKLO, District Judge.
On October 31, 1995, plaintiff, Frank P. Rohde, filed his complaint against defendants Central Railroad of Indiana ("CRI") and CP Rail System-HHUS. In his complaint, Mr. Rohde sets forth the following allegations. CRI employed Mr. Rohde as a conductor-switchman. On November 6, 1992, Mr. Rohde was riding in the brakeman's seat of a CRI locomotive in Greendale, Indiana. The locomotive struck a cattle trailer attempting to cross the tracks. Mr. Rohde was thrown from his seat and into the control panel and, as a result, suffered injuries. Mr. Rohde seeks to hold CRI liable for having negligently caused these injuries. The parties agree that CRI is not an Illinois resident. CRI has filed a motion to dismiss in which it argues that this court lacks personal jurisdiction over it. CRI's motion is granted.
Whether this Court Has Personal Jurisdiction over CRI
As the party seeking to show jurisdiction, Mr. Rohde bears "the burden of establishing a prima facie case for personal jurisdiction." See Michael J. Neuman & Associates, Limited v. Florabelle Flowers, Incorporated, 15 F.3d 721, 724 (7th Cir.1994). A federal district court in Illinois can assert jurisdiction over a nonresident defendant only if Illinois courts would have personal jurisdiction. Id. at 724. The parameters of jurisdiction under the Illinois long-arm statute are contiguous with the requirements of due process under the United States and Illinois Constitutions. Chemical Waste Management, Inc. v. Sims, 870 F.Supp. 870, 873 (N.D.Ill.1994). If the defendant's contacts with Illinois satisfy the requirements of due process, then those contacts also fulfill the requirements of the Illinois long-arm statute.
Under the United States Constitution, I may exercise personal jurisdiction over a nonresident defendant only if the defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citation omitted). A nonresident defendant can establish such minimum contacts only via its purposeful acts. Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir.1990), cert. denied sub nom Humphreys (Cayman) Ltd. v. Wilson, 499 U.S. 947, 111 S.Ct. 1415, 113 L.Ed.2d 468 (1991). The parties agree that Mr. Rohde's cause of action against CRI does not arise out of or relate to CRI's activities in Illinois. Because, therefore, it is CRI's overall activity in Illinois that could serve as the basis for jurisdiction, the assertion of jurisdiction would be termed "general." Id. at 1244. Exercising general jurisdiction over a nonresident defendant is proper when the defendant has maintained "continuous and systematic general business contacts" in Illinois. Id. at 1245 (citation omitted). This standard "is a fairly high [one] in practice." Id. (citation omitted).
CRI, an Indiana corporation with its principal place of business in Kokomo, Indiana, is a common carrier by railroad that operates a line of railroad running from Shelbyville, Indiana to Cincinatti, Ohio. CRI is not registered to do business in Illinois and has no office or employees in Illinois. CRI does not conduct any business in Illinois, have rail lines in Illinois, interchange freight in Illinois, or solicit business in Illinois, by telephone or otherwise. Weller Aff. at ¶¶ 3-8. (Henry E. Weller was Chief Operating Officer of CRI.)
Mr. Rohde argues, however, that I may assert general jurisdiction over CRI on the ground that CRI has received revenue from line hauls on freight traffic that were delivered to a shipper in Illinois. In particular, he argues that CRI admits receiving $50,000 in revenue from one Illinois shipper in 1995. The fact that CRI ships goods that either originate or eventually arrive in Illinois does not provide a sufficient basis for a finding of personal jurisdiction over CRI. "[U]nilateral activity of another party or a third person is not an appropriate consideration *1272 when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction." Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 417, 104 S.Ct. 1868, 1873, 80 L.Ed.2d 404 (1984). Because CRI does not operate any railroad lines in Illinois, it was at most a connecting carrier in Indiana. That some common carrier other than CRI ships the same goods through Illinois that CRI transports does not show that CRI maintains continuous and systematic general business contacts with Illinois.[1]
Mr. Rohde also argues that the fact that other railroads in Illinois repaired CRI leased cars and that CRI was billed for these repairs can serve as grounds for asserting jurisdiction over CRI. When CRI's leased cars leave its lines, CRI has no control over them. Johnson Reply Aff. at ¶ 12. Moreover, as already noted, under the AAR's interchange rules, "when one railroad tenders a car to another railroad, the second railroad must accept it and take it to the next interchange point or to the destination ...." Johnson Reply Aff. at ¶ 3. The AAR further requires that railroads "coming into possession of cars needing repairs ... make the repairs and bill the owning railroad." Id. at ¶ 4. Furthermore,
Due to the vast size and complexity of the national railroad system, normally, the owner of the car does not even know the car is being repaired (subject to the need for notice and authorization on very substantial repairs, which is rare in the case of running repairs) and only finds out when the bill for the repair service is received. Subject to [a] monetary limitation ..., the owning railroad does not have any say in the matter of whether the car is repaired, because the repair is automatically triggered by maintenance standards set forth in AAR-sponsored operating manuals.
Id. at ¶ 6. Thus repairs to CRI leased cars undertaken by Illinois railroads are merely unilateral acts of third parties that cannot serve as grounds for exercising jurisdiction over CRI. See Helicopteros Nacionales de Colombia, 466 U.S. at 417, 104 S.Ct. at 1873.
Mr. Rohde further contends that I have personal jurisdiction over CRI because CRI has an "ongoing arrangement with an Illinois resident for consulting work," "paid an Illinois entity for certification of its engineers in the year 1995," "paid an Illinois law firm consulting fees for assistance in negotiations involving realty located in Indiana in the year 1995," and has three insurance policies either brokered by, underwritten by, or issued by companies located in Illinois. The mere existence of the arrangements that plaintiff lists is not sufficient to establish jurisdiction over CRI. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478, 105 S.Ct. 2174, 2185, 85 L.Ed.2d 528 (1985).
To determine whether CRI's contractual arrangements assist Mr. Rohde in showing that CRI has maintained continuous and systematic general business contacts in Illinois, I am to consider which party solicited the contract, where the party solicited the contract, where the parties negotiated the contract, and where the parties were to perform the contract. Unis International Corporation v. M.L. Marketing Company, No. 93 C 329, 1993 WL 116744, *4 (N.D.Ill. April 14, 1993). The evidence does not show that CRI solicited the arrangements he mentions, or that it did so in Illinois, or that CRI negotiated these arrangements or signed any contracts in Illinois.[2] Moreover, there is uncontradicted evidence that all of the consulting and certification services were performed in Indiana and that the property and assets insured generally remain in Indiana. Morgan Dep. at 75, 77-79; Johnson Reply Aff. at ¶ 15. Consequently, the contractual arrangements *1273 that Mr. Rohde sets forth cannot be grounds for asserting jurisdiction over CRI.
Mr. Rohde argues that I can assert personal jurisdiction over CRI because it leases its railroad cars from two Illinois companies, SIRC and General Electric Railcar Services Corporation ("GE"). The two leases, however, do not represent significant contacts with Illinois. CRI did not travel to Illinois in connection with either lease. Johnson Reply Aff. at ¶ 9. CRI initiated contact with SIRC. Id. at ¶ 7. In the case of the GE lease, CRI approached Chrysler Railcar Leasing Company which sold its interest to GE. GE then contacted CRI. Id. CRI arranged the leases by phone and received the leases by mail. Id. at ¶ 9. CRI signed the leases in Indiana and returned them to SIRC and GE via the mail. Id. Both SIRC and GE delivered the cars to CRI in Indiana. Id. at ¶ 10. Finally, CRI operates the leased cars primarily on its own lines in Indiana and Ohio. Johnson Reply Aff. at ¶ 11; Morgan Reply Aff. at ¶ 5.[3]
Mr. Rohde also contends that choice of law provisions contained in the GE and SIRC leases, which specify Illinois law in cases arising under them, may serve as a basis for exercising personal jurisdiction over CRI. CRI counters by citing to Mr. Johnson's declaration in his affidavit, ¶ 8, that: "In the case of both car leases, the terms of the leases were drafted by the car lessors, the lease terms offered to CRI were standard provisions on preprinted contracts and the choice of law provisions were non-negotiable." "[A choice of law] provision standing alone would be insufficient to confer jurisdiction." Burger King, 471 U.S. at 482, 105 S.Ct. at 2187. Thus the choice of law provisions cannot overcome the paucity of contacts between CRI and Illinois, especially when CRI had to accept those provisions of the contract.[4]
Conclusion
Thus Mr. Rohde has not demonstrated that CRI has maintained continuous and systematic general business contacts in Illinois. Mr. Rohde has, therefore, failed to carry his burden of establishing a prima facie case for personal jurisdiction over CRI. Accordingly, CRI's motion to dismiss is granted.
NOTES
[1] This conclusion is especially reasonable because CRI is subject to rules that require railroads to accept and pass on to the next interchange point, or to the destination, cars tendered by an adjacent railroad. Johnson Reply Aff. at ¶ 3.
Additionally, plaintiff does not seem to argue that the fact that CRI may receive revenue in connection with goods either originating in or delivered to Illinois in itself can serve as basis for exercising jurisdiction over CRI.
[2] Thus it is uncontradicted that "CRI never traveled to Chicago to negotiate the ... insurance contracts, but instead made all arrangements for such insurance over the phone. Those insurance contracts were sent to CRI in Indiana and CRI signed them there and returned them via mail to the brokers." Johnson Reply Aff. at ¶ 15.
[3] Mr. Johnson declares in his affidavit, ¶ 11, that "[t]he SIRC leased cars remain almost exclusively on CRI's lines ... The GE cars are used to serve CRI's customers on its line and the customers load them and decide where they are going to go. In 1995, none of the GE cars transported freight to or from Illinois." Mr. Morgan further declares in his affidavit, ¶ 5, that in 1995, CRI transported 1267 shipments in leased cars. Of that total, only 192 shipments moved off CRI's lines. None of these shipments moved to Illinois.
[4] Mr. Rohde argues that the requirements in the leases for CRI to indemnify, defend, and hold harmless the lessors in actions filed by third parties permits this court to assert personal jurisdiction over CRI. Mr. Rohde does not contend that any third party has filed a lawsuit requiring CRI to fulfill these duties. He also does not explain, and I cannot discern, how the mere fact that CRI has taken on these obligations connects it to Illinois. Neither does the fact that CRI's insurance policies list SIRC and GE as insureds give rise to personal jurisdiction over CRI. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1681239/ | 856 F.Supp. 1576 (1994)
Michael D. RAY, Plaintiff,
v.
UNITED STATES DEPARTMENT OF JUSTICE, IMMIGRATION & NATURALIZATION SERVICE, Defendant.
No. 89-0288-CIV.
United States District Court, S.D. Florida.
July 5, 1994.
*1577 *1578 Neil D. Kolner, Miami, FL, for plaintiff.
Dexter A. Lee, Asst. U.S. Atty., Miami, FL, for defendant.
ORDER
RYSKAMP, District Judge.
THIS CAUSE came before the Court upon Plaintiff's Motion for Attorney's Fees and Costs. (Docket Entry "DE" 59).
THE MATTER was referred to the Honorable Peter R. Palermo, United States Magistrate Judge. The Magistrate Judge has filed a Report and Recommendation dated October 15, 1992 (DE 77). The Plaintiff and the Defendant have filed objections to the Report and Recommendation. (DE 78, 80). In addition, both the Plaintiff and the Defendant have filed responses to the objections of the other party. (DE 81, 82).
I. Background
A. Procedural History
Plaintiff, Michael Ray, filed an action under the Freedom of Information Act, 5 U.S.C.A. § 552 (West 1977) ("FOIA"), requesting that this Court issue an injunction requiring the U.S. Department of Justice, Immigration and Naturalization Service to produce certain agency records relating to the interdictions of six vessels carrying Haitian nationals. After trial in this matter, the Court entered an injunction, requiring the INS to comply with the 10-day time limit set forth in 5 U.S.C.A. § 552(a)(6)(A), (B) and (C). Ray v. U.S. Dept. of Justice, I.N.S., 770 F.Supp. 1544, 1552 (S.D.Fla.1990). In granting the injunction, the Court rejected the Government's argument that the names and addresses contained in the documents were exempt from disclosure under 5 U.S.C.A. § 552(b)(6), relying on Ray v. Dept. of Justice, 908 F.2d 1549 (11th Cir.1990). After the Court granted the injunction, Plaintiff filed the instant motion for attorney's fees.
Subsequently, the Supreme Court, in U.S. Dept. of State v. Ray, 502 U.S. 164, 112 S.Ct. 541, 116 L.Ed.2d 526 (1991), reversed on other grounds Ray v. Dept. of Justice, 908 F.2d 1549 (11th Cir.1990). The Eleventh Circuit then granted the Government's Motion to Vacate and Remand the District Court's Disclosure Order. This Court had to determine whether Plaintiff was entitled to receive the redacted portions of the documents he requested, in light of the Supreme Court's decision in U.S. Dept. of State v. Ray, 502 U.S. 164, 112 S.Ct. 541, 116 L.Ed.2d 526 (1991). This Court mandated disclosure of the majority of the redacted information in Ray v. United States Dept. of Justice, I.N.S., 852 F.Supp. 1558 (S.D.Fla.1994).
*1579 B. Motion for Attorney's Fees and Costs
Plaintiff Ray, an attorney, filed this motion for attorney's fees and costs, claiming that because he had substantially prevailed, the Court should award attorney's fees for his services and those of his attorney, as well as costs.[1] In addition, he argued that the Court should apply an enhancement factor of two, due to the fact that Plaintiff's counsel accepted this case on a contingency basis and he would have received no compensation if Plaintiff had not prevailed. Plaintiff asked this Court to award fees for 72.3 hours of work at $175.00 per hour for his own services and 139.1 hours at $150.00 for the services of his counsel, Mr. Kolner. Applying the enhancement factor, Plaintiff requested a total of $67,035.00 in attorney's fees. Plaintiff also requested costs in the amount of $647.85.
The Government opposed the Plaintiff's motion, arguing that the Court should not award fees and costs because he had not substantially prevailed. In addition, the Government argued that the Court should not apply an enhancement factor.
On October 16, 1992, Magistrate Judge Palermo issued a Report and Recommendation (DE 77). He recommended that the Court award attorney's fees to the Plaintiff for his own services and for those of his attorney in the total amount of $33,517.50, as well as costs in the amount of $647.85. The Magistrate Judge recommended, however, that this Court should not apply an enhancement factor.
Plaintiff objected to the Magistrate Judge's recommendation that this Court should not apply an enhancement factor for his services and for those of his attorney. Plaintiff also asked for fees and costs expended in litigating the fees issue. Defendant objected to the award of attorney's fees for Plaintiff's own services. In addition, Defendant objected to an award of attorney's fees for the time spent preparing a motion for contempt.
By Order dated May 27, 1993, this Court awarded the Plaintiff $19,515.00 in uncontested attorney's fees and $647.85 in uncontested costs. (DE 84). The award included attorney's fees for the services of Plaintiff's attorney, Mr. Kolner, and the requested costs. The interim award excluded any fee award for the Plaintiff's own services. In addition, the fee award did not contain fees for nine hours spent by Mr. Kolner in preparing a motion for contempt.
The issues presently before the Court are whether to award attorney's fees for Mr. Ray's services and the nine hours spent by Mr. Kolner in preparing the motion for contempt, and whether to apply an enhancement factor in calculating the fee award. In addition, the Court must decide whether to award the requested fees and costs incurred in the fees litigation.
II. Analysis
A. Plaintiff's Request for Attorney's Fees for His Own Services
The Court must determine first whether a pro se litigant, who is also an attorney, may recover attorney's fees under FOIA. All Circuits that have considered the issue are in agreement that a pro se litigant who is not an attorney may not recover attorney's fees under FOIA. Benavides v. Bureau of Prisons, 993 F.2d 257, 259 (D.C.Cir.), cert. denied, ___ U.S. ___, 114 S.Ct. 559, 126 L.Ed.2d 460 (1993); DeBold v. Stinson, 735 F.2d 1037, 1042-43 (7th Cir. 1984); Wolfel v. United States, 711 F.2d 66, 68-69 (6th Cir.1983); Clarkson v. I.R.S., 678 F.2d 1368, 1368-1371 (11th Cir.1982), cert. denied, 481 U.S. 1031, 107 S.Ct. 1961, 95 L.Ed.2d 533 (1987); Cunningham v. FBI, 664 F.2d 383, 384-387 (3d Cir.1981); Barrett v. Bureau of Customs, 651 F.2d 1087, 1090 (5th Cir.1981), cert. denied, 455 U.S. 950, 102 S.Ct. 1454, 71 L.Ed.2d 665 (1982); Crooker v. U.S. Dept. of Treasury, 634 F.2d 48, 49 (2d Cir.1980); Burke v. U.S. Dept. of Justice, 559 F.2d 1182 (10th Cir.1977). The four Circuits that have addressed directly the issue of whether a pro se attorney litigant can recover *1580 are split evenly. Aronson v. U.S. Dept. of Housing and Urban Dev., 866 F.2d 1, 5-6 (1st Cir.1989) (pro se attorney litigant may not recover fees); Falcone v. I.R.S., 714 F.2d 646, 647-48 (6th Cir.1983), cert. denied, 466 U.S. 908, 104 S.Ct. 1689, 80 L.Ed.2d 162 (1984) (pro se attorney litigant may not recover fees); Cazalas v. U.S. Dept. of Justice, 709 F.2d 1051, 1056-57 (5th Cir.1983) (pro se attorney litigant may recover fees); Cuneo v. Rumsfeld, 553 F.2d 1360, 1366 (D.C.Cir.1977) (pro se attorney litigant may recover fees).
Neither the Eleventh Circuit nor the Supreme Court has considered directly whether a pro se litigant who is an attorney may recover attorney's fees under FOIA.[2] In Duncan v. Poythress, 777 F.2d 1508 (11th Cir.1985), cert. denied sub nom., Poythress v. Kessler, 475 U.S. 1129, 106 S.Ct. 1659, 90 L.Ed.2d 201 (1986), the Eleventh Circuit held that a pro se attorney litigant could recover fees in a civil rights case under 42 U.S.C. § 1988. In analyzing the issue presented in that case, the Eleventh Circuit stated that § 1988 and FOIA are not distinguishable in terms of the need to compensate pro se attorney litigants. 777 F.2d at 1512 n. 11. This dicta seems to imply that pro se attorney litigants are entitled to attorney's fees in FOIA cases, under the same rationale as in § 1988 cases. However, the Supreme Court's decision in Kay v. Ehrler, 499 U.S. 432, 111 S.Ct. 1435, 113 L.Ed.2d 486 (1991), undermines any argument based on the implications of the Duncan dicta.
In Kay v. Ehrler, 499 U.S. 432, 111 S.Ct. 1435, 113 L.Ed.2d 486 (1991), the Supreme Court held that an attorney who represented himself in a civil rights case could not recover attorney's fees under 42 U.S.C. § 1988, directly negating the Eleventh Circuit's holding in Duncan. The Kay Court agreed with the Sixth Circuit's finding that "the overriding statutory concern is the interest in obtaining independent counsel for victims of civil rights violations." 499 U.S. at 437, 111 S.Ct. at 1437. The Supreme Court reasoned that Congress was concerned with ensuring the effective prosecution of meritorious claims. Id. The Court explained:
Even a skilled lawyer who represents himself is at a disadvantage in a contested litigation. Ethical considerations may make it inappropriate for him to appear as a witness. He is deprived of the judgment of an independent third party in framing the theory of the case, evaluating alternative methods of presenting witnesses, formulating legal arguments, and in making sure that reason, rather than emotion, dictates the proper tactical response to unforeseen developments in the courtroom. The adage that "a lawyer who represents himself has a fool for a client" is the product of years of experience by seasoned litigators.
Id. at 437-38, 111 S.Ct. at 1438 (footnote omitted). A rule that would allow pro se litigants, who are attorneys, to recover attorney's fees would create a disincentive to hire counsel whenever such a plaintiff felt competent to litigate on his or her own behalf. Id. at 438, 111 S.Ct. at 1438. The Court concluded that such a rule would not foster the "statutory policy of furthering the successful prosecution of meritorious claims." Id.
In reaching its holding, the Kay Court noted that the district court relied on a FOIA case, Falcone v. I.R.S., 714 F.2d 646 (6th Cir.1983), cert. denied, 466 U.S. 908, 104 S.Ct. 1689, 80 L.Ed.2d 162 (1984), in denying attorney's fees under § 1988. Kay, 499 U.S. at 434-35, 111 S.Ct. at 1435-37. In Falcone, the Sixth Circuit held that a FOIA plaintiff who was an attorney was not entitled to a fee award for his own services. Falcone, 714 F.2d at 648. The Sixth Circuit provided three justifications for the denial of attorney's fees.
First, Congress intended the FOIA fee provision "to relieve plaintiffs with legitimate claims of the burden of legal costs." Id. at 647. The provision "was not intended as a *1581 reward for successful claimants or as a penalty against the government." Id. The Sixth Circuit reasoned that because an attorney plaintiff did not face the burden which the fee-shifting provision was designed to relieve, a fee award would be inappropriate. Id.
Second, the fee provision was intended to encourage potential claimants to seek legal counsel before initiating litigation. Id. Creating an incentive to seek legal counsel might help prevent unnecessary litigation, and would help ensure that an attorney with a "detached and objective perspective" handled the case. Id. A final reason for denying attorney's fees is the fear that pro se attorney plaintiffs might use FOIA as a way of generating fees, instead of vindicating claims. Id. at 648.
In the instant case, Defendant argues that Kay prohibits Mr. Ray from recovering attorney's fees for his own services. Although Kay considered attorney's fees under 42 U.S.C. § 1988, Defendant argues that the rationale underlying Kay is applicable to FOIA cases, especially in light of the fact that the district court in Kay, relied on Falcone, a FOIA case.
Plaintiff, however, argues that Kay does not preclude an award of attorney's fees for his services, and that Falcone is inapplicable. Plaintiff claims that the instant case is distinguishable from Kay because in the instant case, although Mr. Ray represented himself, he also hired counsel to represent him. Plaintiff argues that because he hired counsel he avoided the shortcomings of "total" self representation. Plaintiff's Reply in Support of Motion for Attorney's Fees (DE 65) at 5. Plaintiff argues that Falcone is inapplicable to the instant case for the same reason because he never "chose" to represent himself, but hired counsel. Id.
The Court finds that although Kay was decided in the context of a fee request under § 1988, the reasoning also applies to the instant fee request under FOIA. As the District of Columbia Circuit has noted, the Kay Court implicitly rejected the argument that the fee-shifting provisions of FOIA and § 1988 were designed to serve different purposes. See Benavides v. Bureau of Prisons, 993 F.2d 257, 259-60 (D.C.Cir.), cert. denied, ___ U.S. ___, 114 S.Ct. 559, 126 L.Ed.2d 460 (1993) (citing Kay, 499 U.S. at 433-45, 111 S.Ct. at 1436 n. 4). "[T]he primary purpose of the FOIA attorney fee provision is virtually identical to the purpose underlying section 1988: `the fundamental purpose of section 552(a)(4)(E) [is] to facilitate citizen access to the courts to vindicate their statutory rights.'" Id. (citing Nationwide Bldg. Maintenance, Inc. v. Sampson, 559 F.2d 704, 715 (D.C.Cir.1977)) (emphasis in original).[3] The fact that the attorney's fee provision of FOIA may help promote compliance by the government "is only a serendipitous by-product of encouraging aggrieved individuals to obtain an attorney." Id.
In addition, the Benavides Court noted that the Kay Court cited Falcone with apparent approval. Id. at 259. "In discussing Falcone, the Supreme Court in Kay says absolutely nothing to suggest that the rationale given to support the holding in Falcone was wanting or that the considerations affecting the disposition of fee claims under FOIA and section 1988 should be viewed differently." Benavides, 993 F.2d at 260.
Plaintiff's argument that Kay and Falcone are inapplicable to the instant case *1582 because he hired an attorney and, thus, avoided the problems associated with "total" self-representation, is unavailing. A rule that would allow plaintiffs to recover attorney's fees for their own services, as long as they retained counsel to assist them, would not create an incentive for attorney plaintiffs to hire counsel who would actually litigate their cases. The ruling for which Plaintiff argues would allow attorney plaintiffs to circumvent Kay by merely hiring an attorney, regardless of whether it was the Plaintiff or the hired attorney who actually handled the case. Such a rule would not ensure that an objective attorney handled the case. See Kay, 499 U.S. at 437-38, 111 S.Ct. at 1437-38.
The Court also finds persuasive the Falcone reasoning that FOIA's fee-shifting provision was designed "to relieve plaintiffs with legitimate claims of the burden of legal costs." Falcone, 714 F.2d at 647. The result for which Plaintiff argues would not further this purpose since he has not incurred legal costs for his own services. Thus, in the instant case, like Falcone, "[s]ince the plaintiff never assumed the burden which Congress intended to ease, an award of fees is inappropriate." Id. In addition, as the Supreme Court noted, Congressional use of "the word `attorney' assumes an agency relationship," in an attorney's fee provision. Kay, 499 U.S. at 435-36, 111 S.Ct. at 1437.
As a final note, the Court will address briefly the Magistrate Judge's conclusion that Kay and Falcone do not apply to the instant case. The Magistrate Judge found that those cases do not apply because in this case, Mr. Ray was merely an incidental Plaintiff. See Report and Recommendation (DE 77) at 7. The Magistrate Judge reasoned that the primary beneficiaries of Mr. Ray's requests would be the Haitian interdictees, not Mr. Ray himself. Id.
The Court finds that the Magistrate Judge's posited distinction is undermined by the fact that the plaintiff in Falcone brought the action in his own name, acting as a private attorney general. Falcone v. I.R.S., 535 F.Supp. 1313, 1313 (E.D.Mich.1982), aff'd 714 F.2d 646 (6th Cir.1983), cert. denied, 466 U.S. 908, 104 S.Ct. 1689, 80 L.Ed.2d 162 (1984). Mr. Falcone, like Mr. Ray, made the request in his own name on behalf of a client.[4]Id. Thus, the two cases are indistinguishable in this regard.
The Court finds that the reasoning of Kay[5] and Falcone is applicable to the instant case. Accordingly, the Court denies Plaintiff's request for attorney's fees for his own services.[6]
*1583 B. Plaintiff's Request for the Application of an Enhancement Factor
Having found that Plaintiff may not recover attorney's fees for his own services, the Court only need consider whether to apply an enhancement factor to the fee award for the services of Mr. Kolner. Magistrate Judge Palermo recommended that this Court deny Plaintiff's request for an enhancement in light of City of Burlington v. Dague, ___ U.S. ___, 112 S.Ct. 2638, 120 L.Ed.2d 449 (1992). The Magistrate Judge found that the Dague Court rejected the two grounds upon which Plaintiff relied that the Court should apply an enhancement because of the risk inherent in taking a case on contingency and because an enhancement is necessary in order to entice competent counsel to undertake these types of cases. Report and Recommendation (DE 77) at 11-12.
In his Objections, Plaintiff argues that the Magistrate Judge failed to consider his third argument that his "exceptional" success in this case warrants an enhancement. Plaintiff contends that Norman v. Housing Authority of City of Montgomery, 836 F.2d 1292 (11th Cir.1988), allows the Court to award the requested enhancement. Plaintiff's Objections (DE 78) at 1-4. Defendant responds that even if the Court found "exceptional" success, Dague similarly would preclude any enhancement because an enhancement for exceptional success would duplicate factors already encompassed in the lodestar approach. Defendant's Response to Plaintiff's Objections (DE 81) at 1-3.
In Norman, the Eleventh Circuit stated that "[i]f the results obtained were exceptional, then some enhancement of the lodestar might be called for." 836 F.2d at 1302 (citing Pennsylvania v. Delaware Valley Citizen's Council for Clean Air, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986)). Although Dague calls into question the applicability of an enhancement for contingency cases,[7] the Court finds it unnecessary to address whether Dague prohibits the award of an enhancement based on an "exceptional" success argument. Even if the Court can award, consistent with Dague, an enhancement for "exceptional" success, the Court finds that this case does not merit such an enhancement. As the Eleventh Circuit explained in Norman:
Exceptional results are results that are out of the ordinary, unusual or rare. Ordinarily, results are not exceptional merely because of the nature of the right vindicated or the amount recovered. The law is usually faithful to its teachings, and so an outcome that is not unexpected in the context of extant substantive law will not ordinarily be exceptional.
Id.
In the instant case, the Court does not find that the result was "out of the ordinary, unusual or rare," or "unexpected in the context of extant substantive law." The Court merely ordered the INS to comply with the mandates of FOIA. Accordingly, the Court declines to award an enhancement.
C. Motion for Contempt
Defendant argues that Plaintiff's counsel should not recover fees for the nine hours spent preparing a motion for contempt. Defendant, relying on Weisberg v. U.S. Dept. of Justice, 745 F.2d 1476, 1499 (D.C.Cir. 1984), claims that the Court should not compensate Plaintiff for this "nonproductive time." Defendant asserts that the events surrounding the filing of the motion for contempt[8] show that the time spent on the *1584 motion for contempt was "nonproductive time."
In his Report and Recommendation, Magistrate Judge Palermo found that the time spent on the motion was reasonable, because Plaintiff chose the method that he thought would force the Government to comply with this Court's Final Judgment. Report and Recommendation (DE 77) at 10-11. The Magistrate Judge reasoned that at the time that Plaintiff filed the motion for contempt, he did not know that this Court later would grant a stay of the Final Judgment. Id.
The Court affirms the Magistrate's Report and Recommendation on this issue. Plaintiff is entitled to fees for the nine hours that Mr. Kolner spent preparing the motion for contempt, at the rate of $150.00 per hour.
D. Plaintiff's Request for Additional Fees
In his Objections to the Report and Recommendation, Plaintiff requested that the Court award additional fees and costs for the time spent litigating the fees issue. Plaintiff's Objection (DE 78) at 5-6. Defendant responded, arguing that any additional award of fees and costs must be reduced for the time expended in litigating the contingency enhancement since the Plaintiff did not prevail on that issue. Defendant's Response to Plaintiff's Objections (DE 82) at 7-10.
Plaintiff's request for additional fees and costs presents three issues whether Plaintiff may recover attorney's fees for his own services, whether he may recover fees for his counsel's services, and whether he may recover the costs requested. First, Plaintiff's request for fees for his own services is governed by the finding above that he may not recover fees for his own services under FOIA. Accordingly, the Court denies Plaintiff's request for additional fees for his own services.
Mr. Kolner's services, however, are compensable. In calculating a reasonable fee for his services the Court applies the lodestar method.[9] Mr. Kolner has submitted an affidavit and time records indicating that he performed 34.3 hours of work relating to the fees litigation. Plaintiff has requested that the Court compensate Mr. Kolner at a rate of $150 per hour. The Court finds that the number of hours and the rate are reasonable, and will award fees in the amount of $5,145.00 for Mr. Kolner's services.
Plaintiff also requested $1,475.00 in costs for expert witness fees. The Government has objected to these fees, arguing that the expert witness in question testified regarding Plaintiff's entitlement to an enhancement. Because Plaintiff lost on this issue, the Government argues that his recovery should be reduced in accordance with the reasoning of Commissioner, INS v. Jean, 496 U.S. 154, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990). The Court finds that it is unnecessary to consider Defendant's argument under Jean because this issue is governed by 28 U.S.C.A. § 1920 (West 1994) and 28 U.S.C.A. § 1821(b) (West 1994).
Section 1920 provides that courts may tax as costs a number of specific items, including witness fees. 28 U.S.C.A. § 1920(3) (West 1994). Section 1821(b) limits the amount of fees that a court may award: "A witness shall be paid an attendance fee of $40 per day for each day's attendance." 28 U.S.C.A. § 1821(b) (West 1994).
In Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987), the Supreme Court held "that absent explicit statutory or contractual authorization for the taxation of the expenses of a litigant's witness as costs, federal courts are bound by the limitations set out in 28 U.S.C.A. § 1821 and § 1920." 482 U.S. at 445, 107 S.Ct. at 2499. In discussing whether Federal Rule of Civil Procedure 54(d)[10]*1585 granted district court's discretion to award expert witness fees in excess of the amount provided in § 1821, the Court explained: "We will not lightly infer that Congress has repealed §§ 1920 and 1821, either through Rule 54(d) or any other provision not referring explicitly to witness fees." Id. at 444-45, 107 S.Ct. at 2498-99 (citations omitted) (emphasis added).
In Glenn v. General Motors Corp., 841 F.2d 1567 (11th Cir.1988), cert. denied, 488 U.S. 948, 109 S.Ct. 378, 102 L.Ed.2d 367 (1988), the Eleventh Circuit recognized the broad sweep of Crawford Fitting. In Glenn the Eleventh Circuit found, in light of Crawford Fitting, that a litigant seeking expert fees in an action brought pursuant to the Equal Pay Act, 29 U.S.C. § 206(d)(1), was limited to the recovery set forth in §§ 1920 and 1821. The fee-shifting provision of the Equal Pay Act contains language that is similar to the FOIA provision: "[t]he court, in [an Equal Pay Act] action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action." 29 U.S.C.A. § 216(b) (West Supp. 1994). Thus, it follows that the FOIA fee-shifting provision, which allows recovery for "attorney's fees and other litigation costs reasonably incurred," would not allow the court to award expert witness fees in excess of the limit set by § 1821. See 5 U.S.C.A. § 552(a)(4)(E) (West 1977).
The Supreme Court's later decision in West Va. Univ. Hospitals v. Casey, 499 U.S. 83, 111 S.Ct. 1138, 113 L.Ed.2d 68 (1991), supports the Eleventh Circuit's interpretation of the reach of Crawford Fitting. In Casey, the Supreme Court considered whether a plaintiff could recover expert witness fees in excess of the § 1821 limit under 42 U.S.C.A. § 1988 (West 1981). Section 1988 permitted the award of "a reasonable attorney's fee as part of the costs." 42 U.S.C.A. § 1988 (West 1981).[11] The Court ultimately held that § 1988 conveyed no authority to shift expert witness fees in excess of the amount provided in § 1821. 499 U.S. at 101, 111 S.Ct. at 1148. In reaching that holding, the Court listed a number statutes that explicitly provided for an award of expert witness fees.[12]Id. at 88-89 & n. 4, 111 S.Ct. at 1141-42 & n. 4. The Court reasoned that if Congress had wanted to include a mechanism for shifting expert witness fees, it would have done so. "Congress could easily have shifted `attorney's fees and expert witness fees,' or `reasonable litigation expenses,'[13] as it did in contemporaneous statutes; it chose instead to enact more restrictive language, and we are bound by that restriction." Id. at 99, 111 S.Ct. at 1147. Based on the foregoing analysis, the Court finds that Plaintiff is limited in his recovery of expert witness fees to $40.00, as provided by 28 U.S.C.A. § 1821(b). Accordingly, it is hereby
ORDERED AND ADJUDGED that United States Magistrate Judge Palermo's Report and Recommendation be, and the same is, hereby ADOPTED IN PART, REJECTED IN PART. Plaintiff shall not recover attorney's fees for his services. Plaintiff shall recover fees for the time spent by his counsel preparing the motion for contempt (9.0 hours at a rate of $150.00 per hour). In addition, Plaintiff shall recover fees for his *1586 attorney's services in connection with the fees litigation (34.3 hours at a rate of $150.00 per hour). Accordingly, Plaintiff shall recover from Defendant attorney's fees in the total amount of $6,495.00. Plaintiff is not entitled to an enhancement of the fee award. Plaintiff shall recover costs in the amount of $40.00.
DONE AND ORDERED.
NOTES
[1] FOIA provides in pertinent part that "[t]he court may assess against the United States reasonable attorney fees and other litigation costs reasonably incurred in any case under this section in which the complainant has substantially prevailed." 5 U.S.C.A. § 552(a)(4)(E) (West 1977).
[2] The Eleventh Circuit has noted that precedent establishing that a lay pro se litigant cannot recover necessarily did not preclude an award of attorney's fees to a pro se attorney litigant. Clarkson v. I.R.S., 678 F.2d 1368, 1371 n. 3 (11th Cir.1982), cert. denied, 481 U.S. 1031, 107 S.Ct. 1961, 95 L.Ed.2d 533 (1987) (citing Cazalas v. U.S. Dept. of Justice, 660 F.2d 612, 623 n. 13 (5th Cir.1981)). This dicta leaves open the possibility of an attorney's fee award to a pro se attorney litigant, but does not decide the issue directly.
[3] The Fifth Circuit has stated that FOIA's fee provision also serves "a deterrent, and, to a lesser extent, a punitive purpose." Cazalas v. United States Dept. of Justice, 709 F.2d 1051, 1057 (5th Cir.1983). The Fifth Circuit cited legislative history supporting this assertion. See id.
Some courts, however, have rejected the notion that the fee-shifting provision serves as a deterrent or a punishment. See, e.g., Aronson v. U.S. Dept. of Housing and Urban Dev., 866 F.2d 1 (1st Cir.1989) ("[W]e disagree with the Fifth Circuit that the purpose of the fee provision of FOIA is to deter and punish the government for unnecessarily withholding information."); Falcone, 714 F.2d at 647 (citing Wolfel v. United States, 711 F.2d 66, 68 (6th Cir.1983) for the proposition that the fee provision was not designed as a penalty against the government). Whether or not the FOIA fee provision was designed to serve deterrent and punitive functions, the courts seem to agree that the primary purpose of the fee-shifting provision is to facilitate citizens' access to the courts to vindicate their rights. See, e.g., Aronson, 866 F.2d at 5 (citing Crooker v. U.S. Dept. of Justice, 632 F.2d 916, 921 (1st Cir. 1980)); Falcone, 714 F.2d at 647; Cuneo v. Rumsfeld, 553 F.2d 1360 (D.C.Cir.1977)).
[4] The Haitian interdictees in the instant case are not necessarily Mr. Ray's clients. The point is that Mr. Ray apparently made the request in his own name for the benefit of the Haitian interdictees.
[5] The Court also notes that in his Response to Defendant's Objection to the Magistrate's Report and Recommendation, Plaintiff argued that Kay should not be applied retroactively to bar his claim for attorney's fees. The Court is unpersuaded by Plaintiff's argument.
Generally, courts apply the law in effect at the time they decide a case. Ackinclose v. Palm Beach County, Fla., 845 F.2d 931 (11th Cir.1988) (citations omitted). The "strong presumption" in favor of retroactivity, however, can be overcome. Camden I. Condominium Ass'n Inc. v. Dunkle, 805 F.2d 1532, 1533 (11th Cir.1986), cert. denied, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 765 (1987) (citations omitted). The party seeking to avoid retroactive application bears the burden of persuasion. Id.
The Supreme Court has enunciated a three-part test for determining whether a decision should not be applied retroactively. See Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). The first of these criteria is that "the decision to be applied nonretroactively must establish a new principal of law; either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed." 404 U.S. at 106, 92 S.Ct. at 355 (citation omitted). As the Court noted above, neither the Eleventh Circuit nor the Supreme Court has addressed directly whether an attorney pro se litigant can recover attorney's fees under FOIA. As such, Kay did not establish a "new principal of law" with respect to FOIA, and the Plaintiff's nonretroactivity argument must fail.
[6] In determining whether to award attorney's fees, the Magistrate Judge performed the two-part analysis set forth in Clarkson v. I.R.S., 678 F.2d 1368, 1371 (11th Cir.1982), appeal after remand, 811 F.2d 1396 (11th Cir.), cert. denied, 481 U.S. 1031, 107 S.Ct. 1961, 95 L.Ed.2d 533 (1987). Because the Court found that pro se attorney litigants may not recover fees under FOIA, the two-part test is not implicated with respect to fees for Plaintiff's services. The Court, however, adopts the Magistrate Judge's analysis under the Clarkson test to the extent that it affects the fee award for the services of Plaintiff's counsel. See Report and Recommendation (DE 77) at 4-9.
[7] The Dague Court held that no contingency enhancement was compatible with the fee-shifting statute at issue in that case. Dague, ___ U.S. at ___, 112 S.Ct. at 2643-44. Although in Dague, the Supreme Court was interpreting the fee-shifting provision found in 42 U.S.C. § 6972(e) and 33 U.S.C. § 1365(d), the Court stated "our case law construing what is a `reasonable fee' applies uniformly to [other similar federal fee-shifting statutes]." Id. at ___, 112 S.Ct. at 2641.
[8] After this Court entered Final Judgment on December 17, 1990, Defendant filed a motion for stay pending decision on appeal. On April 4, 1991, Plaintiff filed a motion for contempt based on Defendant's failure to comply with the December 17 Final Judgment. On June 20, 1991, this Court granted Defendant's motion to stay and denied Plaintiff's motion for contempt.
[9] Plaintiff did not request an enhancement for the time spent litigating the fees issue. Plaintiff's Objections (DE 78) at 6.
[10] Federal Rule of Civil Procedure 54(d) provides in pertinent part:
Except when express provision therefor is made either in a statute of the United States or in these rules, costs shall be allowed as of course to the prevailing party unless the court otherwise directs; but costs against the United States, its officers, and agencies shall be imposed on the extent permitted by law....
[11] The Court notes that post-Casey § 1988 was amended to provide specifically for expert fees. See 42 U.S.C.A. § 1988 (West Supp.1994).
[12] Although Casey focused on whether expert witness fees could be recovered under the statutory authorization for "attorney's fees," it does not appear that the outcome would be different if the Court had considered the expert witness fees as a component of "costs." The Court notes that in Glenn, the Eleventh Circuit considered the expert fee issue as part of an award for expenses, separate and apart from attorney's fees. Glenn, 841 F.2d at 1573-74.
[13] The words "reasonable litigation expenses" must be read in conjunction with the Casey Court's discussion of the contemporaneous statutes. See 499 U.S. at 88-89 & n. 4, 111 S.Ct. at 1141-42 & n. 4. Those statutes all specifically referred to expert witness fees. See id. (citing for example, the Endangered Species Act of 1973, 16 U.S.C. § 1540(g)(4), allowing "costs of litigation (including reasonable attorney and expert witness fees"). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2528946/ | 370 F.Supp.2d 441 (2005)
Serguei DANILOV, Plaintiff,
v.
Eduardo AGUIRRE, Jr., et al., Defendants.
No. CIV.A. 1:05CV101.
United States District Court, E.D. Virginia, Alexandria Division.
May 26, 2005.
*442 Serguei Danilov, McLean, VA, pro se.
R. Joseph Sher, United States Attorney's Office, Alexandria, VA, for Defendants.
MEMORANDUM OPINION
ELLIS, District Judge.
In this statutory action, an impatient applicant for naturalization seeks injunctive relief to prod the defendants into (presumably favorable) action with respect to his naturalization application, or in the alternative to have his application adjudicated here. Defendants seek dismissal on jurisdictional grounds and have provided plaintiff with the requisite Roseboro[1] notice. Plaintiff has not responded within the allotted time and oral argument is dispensed with as the facts and legal contentions are adequately set forth in the existing record and oral argument would not aid the decisional process. For the reasons that follow, plaintiff's action fails at this time for lack of subject matter jurisdiction.
I.[2]
Plaintiff is a citizen of Russia and a lawful permanent resident of the United States. The complaint alleges that plaintiff applied for naturalization as a citizen of the United States on February 18, 2003, and that he was thereafter interviewed by officials from the United States Citizenship and Immigration Services (CIS), a division of the Department of Homeland Security (DHS),[3] on or about January 9, 2004. *443 Plaintiff contends this January 2004 interview triggered the running of the statutory 120 day period which must expire before a civil suit seeking judicial review of a pending application for naturalization may be brought under 8 U.S.C. § 1447(b). He thus seeks injunctive relief to require CIS to act on his naturalization petition or in the alternative to have the matter determined here. Defendants disagree, pointing out that the law requires that the Federal Bureau of Investigation (FBI) complete a background investigation of an applicant before the statutorily-required "examination" occurs. In this regard, according to the Declaration of Michael A. Cannon, the Section Chief of the National Name Check Program Section at the FBI, CIS requested that the FBI complete a background investigation on plaintiff on March 7, 2003. This background investigation was subsequently completed on March 23, 2005, at which point it was promptly forwarded to CIS on March 24, 2005. All parties agree that no final action has yet been taken on plaintiff's application for naturalization.
II.
Analysis properly begins with 8 U.S.C. § 1447(b), which provides that a district court has jurisdiction to hear suits to compel agency action on a naturalization application or to adjudicate an application "[i]f there is a failure to make a determination under § 1446 of this title before the end of the 120 day period after the date on which the examination is conducted under this section...." 8 U.S.C. § 1447(b). More specifically, the analysis must focus on the nature and scope of the "examination" required under 8 U.S.C. § 1446. Plaintiff contends that the examination consists of the interview and that the 120 day period thus began to run in his case on January 9, 2004, the date he was interviewed by CIS officials. Defendants, in response, contend that the 120 day period began to run no earlier than March 24, 2005, the date CIS received plaintiff's FBI background investigation. The question presented, therefore, is at what point may it be said that the statutorily-required "examination" is completed so as to trigger the commencement of the 120 day period.
The answer to this question is found in the statute itself, as elucidated in the CIS implementing regulations. To begin with, § 1446(b) makes clear that an examination is not a single event, but instead is essentially a process the agency follows to gather information concerning the applicant. Thus the statute provides that an "examination" may include the issuance of subpoenas to compel the attendance and testimony of witnesses and the production of relevant papers, books and documents and the taking of testimony concerning any matter touching or affecting the admissibility of any applicant for naturalization.[4] 8 U.S.C. § 1446(b). Significantly, Congress, more recently, has *444 added another, very important requirement for the examination process: Effective beginning in fiscal year 1998, Congress now requires completion and review of an FBI criminal background investigation of the applicant as part of the examination process. See Public Law 105-119, Title I, Nov. 26, 1997, 111 Stat. 2448.[5] To implement this additional requirement, the responsible agency adopted a regulation requiring that the FBI complete a criminal background investigation of an applicant before the examination may be completed. See 8 C.F.R. § 335.2.[6] And, importantly, these regulations are entitled to Chevron deference as an authoritative interpretation of the statute unless, as is not true here, it appears from the statute or its legislative history that the agency's interpretation is not one that Congress would have sanctioned.[7]
From this, it follows, as the defendants correctly contend, that the interview of plaintiff that occurred in January 2004 did not end the statutorily-required "examination" and thus trigger the running of the 120 day period, since the interview occurred long before CIS received plaintiff's FBI background investigation. Rather, the January 2004 interview is merely a part of the overall examination process, as is a review of plaintiff's FBI background investigation, and the 120 day period does not begin to run until these and all other aspects of the examination process are completed. In this case, therefore, the 120 day period began to run, at the earliest, on March 24, 2005, the date on which CIS received the FBI background investigation of plaintiff.
Perhaps anticipating this result, plaintiff has sought to invoke two additional *445 potential sources of subject matter jurisdiction in this case by requesting, in the alternative, (i) a motion to compel or for other relief under the Administrative Procedure Act (APA), 5 U.S.C. § 706 et seq. or (ii) a petition for a writ of mandamus under 28 U.S.C. § 1361 (providing that "[t]he district courts shall have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or any agency thereof to perform a duty owed to the plaintiff"). Significantly, these additional jurisdictional sources are, at best, general grants of subject matter jurisdiction, in sharp contrast to the specific grant of subject matter jurisdiction set forth in 8 U.S.C. § 1447(b). In these circumstances, it is well settled that general grants of jurisdiction may not be relied upon to expand a very specific statute that either grants or limits jurisdiction.[8] It follows therefore that plaintiff's invocation of these general grants of subject matter jurisdiction is to no avail and that this matter is controlled by the specific grant of subject matter jurisdiction set forth in 8 U.S.C. § 1447(b).
Moreover, even assuming that the § 1447(b) specific jurisdictional grant does not trump any general statutes, neither of the cited general grants the APA or mandamus are applicable in the instant circumstances. The APA permits judicial review of agency action "unlawfully withheld or unreasonably delayed." 5 U.S.C. § 706(1). Yet here, any delay in the processing of plaintiff's naturalization application was not the result of any inaction or unreasonableness on the part of governing agency; instead, it was the result of the legal requirement that CIS await receipt of the FBI's completed criminal background investigation before acting on plaintiff's application. The mandamus statute, in turn, only provides a remedy to a plaintiff who has exhausted all other avenues of relief and only then if the defendant owes him a clear, non-discretionary duty. See Kerr v. United States District Court, 426 U.S. 394, 402-03, 96 S.Ct. 2119, 48 L.Ed.2d 725 (1976) (recognizing that "[t]he remedy of mandamus is a drastic one, to be invoked only in extraordinary situations"). This clearly is not the case here, as CIS did not owe plaintiff a duty to act on his application for naturalization prior to completion and receipt of the required FBI criminal background check.
III.
In sum, since the statutory 120 day period has not yet expired, the conclusion compelled by the instant facts is that there is no subject matter jurisdiction to entertain plaintiff's action at this time. For these reasons, this action must be dismissed for lack of subject matter jurisdiction consistent with Rule 12(h)(3), Fed.R.Civ.P.
An appropriate Order will issue.
NOTES
[1] See Roseboro v. Garrison, 528 F.2d 309 (4th Cir.1975).
[2] The following recitation of facts is derived from the parties' pleadings and the Declaration of Michael A. Cannon submitted by defendants. Although defendants moved alternatively for judgment on the pleadings or for summary judgment, their motion is appropriately considered and disposed of under Rule 12(h)(3), Fed.R.Civ.P., since the lack of subject matter jurisdiction is apparent from the record. See Ruhrgas AG v. Marathon Oil Co. 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (recognizing that subject matter delineations must be policed by courts on their own initiative).
[3] In 2002, Congress abolished the former Immigration and Naturalization Service (INS) and transferred its functions to several successor agencies located largely within the DHS. See 8 U.S.C. § 1551, Historical and Statutory Notes.
[4] Specifically, the statute provides, in pertinent part, as follows:
The Attorney General shall designate employees of the Service to conduct examinations upon applications for naturalization...[and] [f]or such purposes any such employee so designated is authorized to take testimony concerning any matter touching or in any way affecting the admissibility of any applicant for naturalization, to administer oaths, including the oath of the applicant for naturalization, and to require by subpena [sic] the attendance and testimony of witnesses, including applicant, before such employee so designated and the production of relevant books, papers, and documents, and to that end may invoke the aid of any district court of the United States....
8 U.S.C. § 1446(b).
[5] That provision provides, in pertinent part, as follows:
During fiscal year 1998 and each fiscal year thereafter, none of the funds appropriated or otherwise made available to the Immigration and Naturalization Service shall be used to complete adjudication of an application for naturalization unless the Immigration and Naturalization Service has received confirmation from the Federal Bureau of Investigation that a full criminal background check has been completed, except for those exempted by regulation as of January 1, 1997.
Public Law 105-119, Title I, Nov. 26, 1997, 111 Stat. 2448.
[6] Specifically, the applicable regulation provides, in pertinent part, that the "Service will notify applicants for naturalization to appear ... for initial examination on the naturalization application only after the Service has received a definitive response from the Federal Bureau of Investigation that a full criminal background check of an applicant has been completed." See 8 C.F.R. § 335.2. Although at first glance it may appear that CIS violated this regulation by conducting an interview of plaintiff in January 2004 before the required FBI background investigation had been completed, this single interview did not constitute the "initial examination" contemplated by the regulation. Instead, as previously noted, the required "examination" is a process, not an isolated event, which necessarily may include one or more in-person interviews, as well as other activities including (i) the issuance of subpoenas, (ii) the taking of under oath testimony by the applicant and other individuals, and (iii) the production and review of relevant documents. See 8 U.S.C. § 1446(b).
[7] See Chevron U.S.A. Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984); Asika v. Ashcroft, 362 F.3d 264, 267-70 (4th Cir.2004) (discussing Chevron deference). Under Chevron, courts must apply essentially a two-step process in determining whether to give deference to an agency's interpretation of the statutes it was created to enforce. Specifically, a court must first determine whether the applicable statutory language is sufficiently clear such that any alternative agency interpretations must be rejected. If, however, the statutory language is ambiguous, the court must then proceed to step two of the Chevron analysis to accept any reasonable agency interpretations of the statute. See generally Note, "How Clear is Clear" in Chevron's Step One?, 118 HARV. L. REV. 1687 (2005) (discussing Chevron).
[8] See United States v. Fausto, 484 U.S. 439, 448-49, 108 S.Ct. 668, 98 L.Ed.2d 830 (1988) (providing that where a specific statute both provides subject matter jurisdiction and sets out the conditions under which substantive relief may be available, resort should not be made to the general federal question statute); Pulido v. Bennett, 848 F.2d 880 (8th Cir.1988) (stating that "[i]t is well established that when a statute specifically provides for exclusive jurisdiction in one court, the specific grant of jurisdiction takes precedence over a general grant of jurisdiction") (citations omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1983068/ | 98 B.R. 553 (1989)
In re KNIGHTS ATHLETIC GOODS, INC., Debtor.
BOARD OF COUNTY COMMISSIONERS OF SALINE COUNTY, KANSAS, Plaintiff,
v.
KNIGHTS ATHLETIC GOODS, INC., Defendant.
Bankruptcy No. 87-11122, Civ. No. 88-1537-K.
United States District Court, D. Kansas.
March 23, 1989.
Daniel K. Diederich, Salina, Kan., for debtor.
William B. Sorensen, Jr., Morris, Laing, Evans, Brock & Kennedy, Wichita, Kan., trustee of Bankruptcy Estate of Knights Athletic Goods, Inc.
Kim I. Martin, Asst. U.S. Atty., Wichita, Kan.
Michael A. Montoya, Achterberg & Neustrom, Salina, Kan., for Board of County Com'rs.
Patricia A. Reeder, Eidson, Lewis, Porter & Haynes, Topeka, Kan., for Kansas Bankers Ass'n, amicus curiae.
Steven R. Wiechman, Topeka, Kan., for Kansas Ass'n of Counties.
*554 MEMORANDUM AND ORDER
PATRICK F. KELLY, District Judge.
This is an appeal by the Board of County Commissioners of Saline County ("County") from an order of the bankruptcy court overruling the County's objection to the disbursement of proceeds from the sale of personal property of the debtor. The County contends the bankruptcy court erred when it held the County's claim for unpaid property tax did not have priority over the prior perfected security interest of the Small Business Administration.
The court heard oral argument on this appeal on January 11, 1989, and reserved ruling at that time. After reviewing the briefs and arguments made by counsel for the parties, as well as amicus curiae briefs filed by the Kansas Association of Counties and the Kansas Bankers Association, the court is now prepared to rule.
In reviewing the findings of the bankruptcy court, this court may set aside findings of fact only if they are clearly erroneous. Conclusions of law, however, are subject to de novo review. In re Blehm Land & Cattle Co., 859 F.2d 137 (10th Cir.1988); In re Herd, 840 F.2d 757, 759 (10th Cir. 1988).
The relevant facts are not in dispute. On March 20, 1980, the debtor, Knights Athletic Goods, Inc., executed a promissory note in the amount of $250,000.00 to Planters State Bank and Trust Company ("Planters"). Simultaneously, the debtor executed a security interest to Planters covering its current and after-acquired business machinery, equipment, furnishings, furniture, inventory, contract rights, accounts receivable and general intangibles. Planters perfected the security interest on the same date by filing a financing statement with the Secretary of State.
The debtor subsequently became delinquent in the payment of personal property taxes to the county for taxes assessed January 1, 1985 and January 1, 1986. The total personal property tax due is $7,018.68.
On February 27, 1986, the security agreement and financing statement were assigned to the Small Business Administration ("SBA").
Debtor filed a Chapter 7 Petition in Bankruptcy on April 22, 1987. The County filed a proof of claim in the bankruptcy proceedings on July 2, 1987.
Pursuant to an order of the bankruptcy court entered May 27, 1987, which authorized the sale of personal property on limited notice, the trustee sold the retail inventory, furnishings and equipment of the debtor for the aggregate sum of $14,340.50. The trustee filed a motion for authorization to disburse funds on September 21, 1987.
On October 10, 1987, the County objected to the disbursement of proceeds, claiming that the County was entitled to priority on its claim of $7,018.68 for personal property taxes due.
The bankruptcy court overruled the County's objection on August 31, 1988. The County appeals from that order.
The issue on appeal is whether Kansas law grants a priority to the County to the extent of the personal property tax due and thus subordinates, pursuant to 15 U.S.C. § 646, the SBA's security interest by the amount of the taxes due. This is a legal question subject to de novo review by this court.
The parties agree that 15 U.S.C. § 646, which requires a reference to applicable state law, controls this action. That statute provides:
Any interest held by the [Small Business] Administration in property, as security for a loan, shall be subordinate to any lien on such property for taxes due on the property to a State, or political subdivision thereof, in any case where such lien would, under applicable State law, be superior to such interest if such interest were held by any party other than the United States.
(Emphasis added.)
Thus, the bankruptcy court, and this court upon review, must look to state law to determine whether the County's claim has priority over the SBA's security interest.
*555 The focus of the court's review is K.S.A. 79-2020 (1988 Supp.). That statute provides:
If any owner of personal property surrenders or transfers such property to another after the date such property is assessed and before the tax thereon is paid, whether by voluntary repossession or any other voluntary act in reduction or satisfaction of indebtedness, then the taxes on the personal property of such taxpayer shall fall due immediately, and a lien shall attach to the property so surrendered or transferred, and shall become due and payable immediately. Such lien shall be in preference to all other claims against such property. . . .
By its terms, K.S.A. 79-2020 (1988 Supp.) creates a lien on personal property for unpaid taxes assessed prior to the owner's surrender or transfer of the property to another. Once that lien is created, it subordinates all other claims.
The SBA argues, and the bankruptcy court held, that the filing of a Chapter 7 bankruptcy petition by the owner of personal property does not constitute a "surrender or transfer" of property to the bankruptcy trustee. While the bankruptcy court recognized that upon the filing of bankruptcy the property of the debtor passes to the estate by operation of law and the trustee in bankruptcy succeeds to all legal and equitable interests of the debtor, the court nevertheless held that no "surrender or transfer" occurs because the trustee does not take title to the assets.
The County contends, however, that the fact that the trustee does not actually take title to the property is of no consequence since at the time the debtor filed bankruptcy it "surrendered" all of its right, title and interest in the property to the bankruptcy estate, thereby giving the trustee the authority to dispose of the property of the estate. The County reasons that it is this surrender of property by the "owner" which brings the bankruptcy filing within the operation of K.S.A. 79-2020.
The SBA points out, however, that K.S.A. 79-2020 was enacted in response to the Kansas Supreme Court's ruling in Robbins-Leavenworth Floor Covering, Inc. v. Leavenworth National Bank & Trust Co., 229 Kan. 511, 625 P.2d 494 (1981), and reasons the statute's application must therefore be limited to the situation before the court in that case.
In Robbins, the owner of three vehicles which were subject to a security agreement held by the defendant bank voluntarily surrendered possession of the vehicles to the bank. The bank subsequently sold all three vehicles to the plaintiff without paying the delinquent personal property taxes on the vehicles. Thus, when the new owner attempted to register and purchase tags for the vehicles, the county asserted a claim for the delinquent taxes and refused to issue the tags. The county argued that at the time the property was surrendered to the creditor, a lien attached to the property, securing the payment of the unpaid personal property taxes.
The Kansas Supreme Court, in Robbins, first reviewed K.S.A. 79-2109 and 79-2110, two statutes existing at that time which created liens against the owner's personal property for unpaid taxes, and determined that neither of these statutes applied to the facts before the court. The court reasoned that 79-2109 and 79-2110 applied only to sales of personal property by the debtor, and not to situations in which the owner transfers the property to a creditor and the creditor in turn sells the property to a third party. The court also considered the potential application of K.S.A. 79-2111, which provides for the attachment of a tax lien to personal property when the property is seized by legal process. In determining that this statute also did not apply, the court held, "a voluntary surrender of property does not comport with the concept of a seizure." 229 Kan. at 515, 625 P.2d 494.
Thus, with the enactment of K.S.A. 79-2020 in 1985, the legislature responded to the "tax loophole" recognized by the Kansas Supreme Court in Robbins by providing for the attachment of a tax lien on personal property when the owner voluntarily "surrenders or transfers such property to another." The court cannot agree, however, that 79-2020 is applicable only in *556 the case where the owner voluntarily relinquishes property to a creditor which in turn sells the property to a third party.
Rather, the court finds that the language of K.S.A. 79-2020 is broad enough to encompass the situation presented here i.e., where the debtor files bankruptcy, thereby "surrendering" or "transferring" all of his assets to the bankruptcy estate. This holding is supported by the provisions of the Bankruptcy Code itself. 11 U.S.C. § 541 provides that the commencement of a case "creates an estate." The bankruptcy estate is comprised of all legal and equitable interests of the debtor in property at the time of the commencement of the case. While title does not vest in the trustee under the code, the trustee is given full authority to represent the estate and to dispose of all property which comprises the estate under § 541. 4 COLLIER ON BANKRUPTCY ¶ 541.02, pp. 541-14, 541-15 (L. King, 15th ed. 1988).
While it represents dicta, the court's analysis is also aided by the language of the bankruptcy court in In re White Hat Feed, Inc., 67 B.R. 851 (Bankr.D.Kan.1986). The issue in White Hat, as in the instant case, was whether the filing of a bankruptcy petition creates a lien on property for unpaid personal property taxes. Although K.S.A. 79-2020 had been adopted and was in effect at the time of the White Hat decision, the court was not asked to decide the applicability of that statute. Rather, the County argued that a lien attached to the property pursuant to K.S.A. 79-2109 or 79-2111.
Relying on Robbins, the bankruptcy court in White Hat held that 79-2109 was inapplicable, because it requires that the seller of the property also be the owner of the property. In holding that 79-2111 was inapplicable, the court reasoned as follows:
The question is: Did the trustee as seller of the property acquire the property as a result of seizure by legal process? The answer can only be: No. The debtor's petition in bankruptcy was, in essence, a voluntary surrender of the collateral. Here, instead of a voluntary surrender directly to the secured creditor as in Robbins, the debtor voluntarily surrendered the property to the trustee with full knowledge that the property would in turn be voluntarily distributed either in cash or in kind, among the various secured or unsecured creditors, whichever the case may be. Indeed, the policy behind the bankruptcy process is that the debtor is entitled to a "fresh start" in exchange for the voluntary surrender of all non-exempt property which is to be used as far as possible for the satisfaction of creditor's claims.
67 Bankr. at 854-55.
The language utilized by the court in White Hat, though dicta, is relevant because of its concise description of the policy behind the bankruptcy process and its repeated use of the term "surrender" to describe the action taken by the debtor upon the filing of the bankruptcy petition.
Thus, in the instant case, the "owner" of the property, by filing its petition in bankruptcy, voluntarily "surrendered" its property to "another" [the trustee], thereby authorizing the trustee to sell or otherwise dispose of the property. At the time the property was "surrendered," the property tax had been assessed, but was unpaid. The court therefore finds the facts presented herein clearly fit within the terms of K.S.A. 79-2020, and that upon the filing of the bankruptcy petition, a lien attached to the property for the unpaid taxes. Pursuant to the statute, the County's lien had preference over all other claims against the property, including the perfected security interest of the SBA.
IT IS ACCORDINGLY ORDERED this 22 day of March, 1989, that the bankruptcy court's order overruling the County's objection to the disbursement of proceeds from the sale of the personal property of the debtor is reversed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1976135/ | 53 F.Supp. 772 (1943)
UNITED STATES
v.
251 LADIES DRESSES et al.
No. 177.
District Court, S.D. Texas, Brownsville Division.
August 6, 1943.
Douglas W. McGregor, U. S. Atty., and W.F. Leigh, Asst. U. S. Atty., of Houston, Tex., and Charles C. Bowie, Asst. U. S. Atty., of Brownsville, Tex., for the United States.
J. T. Canales and O. B. Garcia, both of Brownsville, Tex., for claimants.
KENNERLY, District Judge.
This is a suit by the United States of America under the Act of June 15, 1917, 40 Stat. 223 et seq., and Amendments, Sections 401 to 410, 22 U.S.C.A., to condemn 251 Ladies Rayon Dresses (Synthetic Textiles) and one three-quarter ton 1941 Ford Pickup Truck, seized in this District and Division May 6, 1942, under such act and amendments. Fortunato Ramirez has intervened, claiming the dresses, and Refael Ramirez has intervened, claiming the truck.
The case has been heard on stipulation, with some oral and documentary evidence. The facts shown by the stipulation are as follows:
(a) "It is agreed that the 251 Dresses mentioned in the libel were dresses of all sizes, but all made of rayon.
"It is agreed that at the time that Claimant Fortunato Ramirez purchased said dresses in Laredo, they were intended to be exported to Mexico.
"It is agreed that at the time the dresses were seized by the officers, the same were being transported from Laredo, in Webb County, Texas, to El Fronton Ranch, in Starr County, where the claimant resides, and the goods were to be taken to his home, to be stored, to be later taken from said El Fronton Ranch to Monterey, Mexico, *773 and that the goods were seized at or about one o'clock p.m. on a road leading from the highway from Roma to Laredo to the El Fronton Ranch and a short distance from the claimant's home.
"It is agreed that claimant Rafael Ramirez is the owner of the truck sought to be forfeited and that such truck was being used in the transportation of said merchandise from Laredo to El Fronton Ranch at the time of seizure.
"The foregoing stipulation is hereby entered into by and between the attorneys of record for the United States of America and for the claimants in said Civil Action, and that such stipulation may be filed in said action in the trial of this cause by either party."
In addition, the evidence shows:
(b) That there was an understanding or agreement between Rafael Ramirez, the owner of the truck, and Fortunato Ramirez, the owner of the dresses, that the dresses would be transported from Laredo, Texas, to the home of Fortunato Ramirez or Rafael Ramirez, or other suitable place, in Texas, but near the border (Rio Grande) between the United States and Mexico, and then smuggled into Mexico, i.e., taken out of the United States without declaring same and without a license or other permit and in violation of the Laws and Executive Regulations of the United States.
Also it was shown that at the time the dresses were seized, they were in such truck, and Fortunato Ramirez and Rafael Ramirez were then and there attempting to carry out, and in the act of carrying out, such arrangement and agreement.
1. The Act of July 2, 1940, 54 Stat. 712 et seq., was enacted at a time when war was imminent, and shows on its face that it was "To expedite the strengthening of the national defense." Section 6 thereof is as follows: "Whenever the President determines that it is necessary in the interest of national defense to prohibit or curtail the exportation of any military equipment or munitions, or component parts thereof, or machinery, tools, or material, or supplies necessary for the manufacture, servicing, or operation thereof, he may by proclamation prohibit or curtail such exportation, except under such rules and regulations as he shall prescribe. Any such proclamation shall describe the articles or materials included in the prohibition or curtailment contained therein. In case of the violation of any provisions of any proclamation, or of any rule or regulation, issued hereunder, such violator or violators, upon conviction, shall be punished by a fine or not more than $10,000, or by imprisonment for not more than two years, or by both such fine and imprisonment. The authority granted in this section shall terminate June 30, 1942, unless the Congress shall otherwise provide."
The purpose of Section 6 was to prevent the exportation of certain articles needed here in the national defense, or which if exported could be used against or in an attack upon the nation. It was left for Executive decision as to what articles came within the bounds of Section 6. The Government says that Ladies Rayon (Synthetic) Dresses are within such bounds, and that the President could under such Act lawfully prohibit or curtail their exportation. This, claimants deny.
From an examination of the various Proclamations and Orders of the President and Orders issued by others by and under authority of the President based on the Act of July 2, 1940,[1] it appears that the exportation of substantially all Synthetic Textiles, including dresses, was prohibited or curtailed at the time of the seizure of the dresses involved herein. And I think such Proclamations and Orders are valid and are well within the bounds of the Act.
The Law is so well and clearly stated by Judge Campbell in a case somewhat similar to this and which arose under such Act (United States v. Rosenberg, D.C., 47 F. Supp. 406, 408) that I quote therefrom:
"In our consideration of this question, we must not forget that there is a wide difference between the grant of power to the President in matters that are of internal control, and those affecting our dealings as a nation with foreign nations, where the President is the representative of this nation, and who could more properly decide, for our national defense, which of certain articles described by the Congress, *774 should not be exported or their exportation curtailed, than the Commander in Chief of our Army and Navy?
"The defense of this country must not be required to await armed attack, but must be prepared for when we are threatened.
"That was the purpose of the Congress, which stated its policy, established the standards, and made a complete plan, and did not grant legislative powers to the President, but only the power to determine as a fact which of the articles described by the Congress should not be exported or their exportation curtailed."
2. But claimants say that the authority granted the President under Section 6 of the Act of July 2, 1940, terminated June 30, 1942, and that the property involved herein should for that reason have been and should now be surrendered to claimants. Claimants' position, however, is without support when there is examined the plain provisions of the Act of June 30, 1942, 50 U.S.C.A. Appendix § 701,[2] amending Section 6 of the Act of July 2, 1940, and continuing it in force. United States v. Rosenberg, supra.
3. Claimants also say that both the Act of July 2, 1940, and the Act of June 30, 1942, carried penalties for their violations, i.e., a fine of not more than $10,000, or imprisonment for not more than two years, or both such fine and imprisonment, and that Congress did not intend that property seized under violations of such acts should be forfeited, and that same may not be forfeited under the Act of June 15, 1917, and amendments, Sections 401 to 410, 22 U.S.C.A., under which this suit is brought.
I think it is clear that Congress intended that the Act of July 2, 1940, and the Act of June 30, 1942, amendatory of Section 6 thereof, should be construed together and with the Act of June 15, 1917, and amendments, Sections 401 to 410, 22 U.S.C.A. And that where, as here, an attempt is made to export, ship from, or take out of the United States articles, the exportation of which is prohibited or curtailed under the Acts of July 2, 1940, and June 30, 1942, and Proclamations and Orders issued thereunder, same may be seized and forfeited under Sections 401 to 410, 22 U.S.C.A.
The only doubt is the contention of able counsel for claimants with respect to the meaning and scope of the opinion in United States v. Fernandez, 5 Cir., 254 Fed. 302, 303. In that case, the Government sued under Title VII of the Act of June 15, 1917, and not under Title VI of such Act, which is now, with amendments, Sections 401 to 410, 22 U.S.C.A., under which, as stated, this suit was brought. I think United States v. Fernandez, if applicable, is not controlling here.
From what has been said, it follows that the two hundred and fifty-one (251) Ladies Rayon (Synthetic) Dresses and the truck in which same were being transported should have been seized and should *775 now be forfeited in this suit to the United States of America.
Let a decree be drawn and presented accordingly.
NOTES
[1] Some of these are 6 Fed.Reg., pg. 1501 and pg. 4231. 7 Fed.Reg. pgs. 1492 and 1493. Comprehensive Export Control Schedules No. 5, pg. 62 (January and February 1942), No. 6, pg. 62 (March and April 1942), and No. 7, pg. 63 (May and June 1942).
[2] The Act of June 30, 1942, 56 Stat. 463, is as follows:
"An Act
"To further expedite the prosecution of the war by authorizing the control of the exportation of certain commodities.
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Section 6 of the Act of July 2, 1940 (54 Stat. 714) is hereby amended to read as follows:
"`Sec. 6. (a) The President is hereby authorized to prohibit or curtail the exportation of any articles, technical data, materials, or supplies, except under such rules and regulations as he shall prescribe.
"`(b) Unless the President shall otherwise direct, the functions and duties of the President under this section shall be performed by the Board of Economic Warfare.
"`(c) In case of the violation of any provision of any proclamation, rule, or regulation issued hereunder, such violator or violators, upon conviction, shall be punished by a fine of not more than $10,000, or by imprisonment for not more than two years, or by both such fine and imprisonment.
"`(d) The authority granted by this section shall terminate on June 30, 1944 or upon any prior date which the Congress by concurrent resolution, or the President, may designate; except that as to offenses committed, or rights or liabilities incurred prior to such date, the provisions of this section and such rules, regulations, and proclamations shall be treated as remaining in effect for the purpose of sustaining any suit, action, or prosecution with respect to such right, liability, or offense.'
"Approved, June 30, 1942.' | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2574724/ | 451 F. Supp. 2d 360 (2006)
Edward GRAHAM, Plaintiff,
v.
BOEHRINGER INGELHEIM PHARMACEUTICALS, INC. & Dennis Cadden, Defendants.
No. 3:04cv1858 (MRK).
United States District Court, D. Connecticut.
September 6, 2006.
*361 *362 John R. Williams, New Haven, CT, for Plaintiff.
David A. Kulle, Erin O'Brien Choquette, Robinson & Cole, Hartford, CT, for Defendants.
MEMORANDUM OF DECISION
KRAVITZ, District Judge.
Plaintiff Edward Graham brings this action under the Americans with Disabilities Act ("ADA") 42 U.S.C. §§ 12111-12117, alleging that he was fired after twenty-four years of employment with Boehringer Ingelheim Pharmaceuticals, Inc. ("Boehringer") because the company erroneously perceived that he was disabledin particular, that he was suffering from a mental illness. In addition to his federal claim, Mr. Graham also asserts causes of action under state antidiscrimination, defamation, and contract law. Boehringer and Mr. Graham's former supervisor Dennis Cadden have now moved for summary judgment, see Motion for Summary Judgment [doc. # 37].
As is described below and as the Court stated at oral argument on the summary judgment motion, this litigation is most regrettable. For it seems to the Court that Mr. Graham's termination was not in the best interests of either party to this action. Boehringer lost a valued and valuable employee; Mr. Graham lost a job that by all accounts he had performed well and enjoyed. So, one must ask, why did this occur? From the record developed during discovery, it appears to the Court that the fault lies with everyone involvedBoehringer, which might have conducted a more thorough investigation of the charges leveled against Mr. Graham; Mr. Graham, who could have been less stubborn and more willing to do what was needed to return to work; and two particularly headstrong psychologists, who, in the Court's view, allowed their own egos to get in the way of commonsense and good judgment, all to the detriment of those they were charged with servingBoehringer and Mr. Graham. However, none of this imprudence, lack of perspective, and unwillingness to compromise on the part of the participants in this unfortunate series of events establishes a violation of the ADA, the only federal claim in this lawsuit. Therefore, for the reasons explained below, *363 the Court GRANTS judgment for Defendants on Mr. Graham's ADA claim. Having disposed of the only federal claim in this case, the Court declines to exercise supplemental jurisdiction over his state law claims, which are therefore DISMISSED without prejudice to renewal in state court.
I.
The summary judgment standard is a familiar one. Summary judgment is appropriate only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(b). A genuine issue of fact exists when "a reasonable jury could return a verdict for the nonmoving party," and "[a] fact is `material' . . . if it `might affect the outcome of the suit under the governing law.'" Holtz v. Rockefeller & Co, 258 F.3d 62, 69 (2d Cir.2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). "[A]ctual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248, 106 S. Ct. 2505. The moving party bears the burden of demonstrating that no genuine issue exists as to any material fact, Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986), and the Court must draw all ambiguities and inferences in favor of the plaintiff, see Anderson, 477 U.S. at 255, 106 S. Ct. 2505. Although courts must exercise caution in granting summary judgment to the defendant in employment discrimination cases where the employer's intent is in question, Schwapp v. Town of Avon, 118 F.3d 106, 110 (2d Cir.1997), "[s]ummary judgment is appropriate even in discrimination cases." Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir.2000). "[S]ummary judgment may not be granted simply because the court believes that the plaintiff will be unable to meet his or her burden of persuasion at trial," Danzer v. Norden Sys., Inc., " 151 F.3d 50, 54 (2d Cir.1998), but "a plaintiff must provide more than conclusory allegations of discrimination to defeat a motion for summary judgment." Schwapp, 118 F.3d at 110. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S. Ct. 2505. In brief, to survive summary judgment, "the plaintiffs admissible evidence must show circumstances that would be sufficient to permit a rational finder of fact to infer that the defendant's employment decision was more likely than not based in whole or in part on discrimination." Stern v. Trustees of Columbia Univ., 131 F.3d 305, 312 (2d Cir.1997).
II.
The following forms the factual background to Mr. Graham's claim of perceived disability discrimination. As is required on a motion for summary judgment, the Court relates the facts in the light most favorable to Mr. Graham. See Jeffreys v. City of N.Y., 426 F.3d 549, 553 (2d Cir. 2005).
On October 10, 2002, Mr. Graham, a long-time Boehringer employee, was transferred to a new department, the informatics group, as part of the company's reorganization efforts. Defendants' Memorandum in Support of Motion for Summary Judgment [doc. # 37] Ex. 3 at 49, 55-56. Following his transfer, Mr. Graham would be supervised by Frank Wang, Dennis Cadden, and John Omasta. Id. On the day of the transfer, Mr. Graham expressed to Messrs. Wang and Cadden misgivings about working under Mr. *364 Omasta since Mr. Graham believed that. Mr. Omasta had prevented him from receiving an earlier promotion. Id. Ex. 3 at 40. On the following day, October 11, Mr. Cadden reported to Mr. Omasta and Darlene Russell, the Human Resources representative assigned to the department, that he had overheard Mr. Graham make a verbal threat the day before that he would "go postal." Id. Ex. 1 at 17-18, 22-23. Mr. Graham asserts in his summary judgment papers that Mr. Cadden fabricated his report of the threat in retaliation for Mr. Graham previously reporting Mr. Cadden for ethical violations. See Plaintiffs Local Rule 56 Statement [doc. # 39] at 12-13; Plaintiffs Memorandum in Opposition to Motion for Summary Judgment [doc. # 39] at 16. Mr. Graham does not deny that on October 10 a remark about "going postal" was made, but he asserts that the remark was made to him by another employee and that it was stated in a jocular context. Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] Ex. 3 at 82. Regardless of the truth of Mr. Graham's allegations about " Mr. Cadden's motivations and about what actually occurred on October 10, there is no dispute that Mr. Cadden did in fact report to the company that Mr. Graham had made a verbal threat to "go postal."
At the time of the alleged threat, Boehringer had in place a written Workplace Violence Policy (the "Policy"), which included a mandatory protocol for responding to workplace threats. Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 4. The Policy required that an investigation take place and warned that a workplace threat could lead to termination. Id. The Policy also stated that employees who commit threats of violence or who pose a threat of violence may be required to participate in a "fitness for duty evaluation." Id.[1] In light of the Policy and Mr. Cadden's report, Mr. Omasta and Ms. Russell met with Mr. Graham on October 14 and placed him on administrative leave with full pay and benefits. Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] Ex. 3 at 82-83. At the time, Ms. Russell promised Mr. Graham that she would thoroughly investigate the charges. See Graham Deposition at 79. Ms. Russell also instructed Mr. Graham to contact Boehringer's Employee Assistance Program ("EAP"), a third-party provider, to receive a referral to a therapist outside of the company for a professional assessment. See Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 8. Mr. Graham did so and elected to see the closest available therapist, Stephen Knezek. See Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doe. # 39] Ex. 3 at 85. Mr. Graham proceeded to attend three sessions with Mr. Knezek over the following two weeks. Id. Boehringer intended Mr. Knezek to conduct a fitness for duty evaluation of Mr. Graham to determine if he could return to work, but discovered, after Mr. Graham had completed the three sessions, that a fitness for duty evaluation was outside the scope of the EAP's duties. See Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 11.
In order to obtain a fitness for duty evaluation, Boehringer then required Mr. Graham to see Dr. Joseph Zacker, a psychologist who had previously consulted for Boehringer. Graham Dep. at 91-92. After meeting with Mr. Graham and administering multiple psychological assessment tests, Dr. Zacker reported to Boehringer in his Fitness for Duty Evaluation, Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. *365 # 37] Ex. 13, that Mr. Graham demonstrated poor anger management skills and manifested some preoccupation with death and a willingness to consider seeking revenge. There is also no dispute that Dr. Zacker reported to Boehringer that he could not rule out the possibility of violence and advised the company that it was inappropriate for Mr. Graham to return to work at that time. Id. Dr. Zacker further recommended that Mr. Graham consult with a specialist in anger management. Id.
After speaking with Ms. Russell, Mr. Graham elected to see Dr. Martin Rosmarin, another psychologist who specialized in anger management and whom. Dr. Zacker approved. See Graham Dep. at 109; Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 12 at 2-3. On December 11, 2002, Ms. Russell sent Mr. Graham a letter stating that Mr. Graham must meet with a therapist for a minimum of four sessions[2] and confirming Mr. Graham's choice to work with Dr. Rosmarin. Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 14. In addition, Ms. Russell informed Mr. Graham that he was being placed on short-term disability, id, which allowed. Mr. Graham to continue to receive his full salary. See Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] Ex. 3 at 83. During this period, Ms. Russell had agreed to conduct a thorough investigation of the allegations against Mr. Graham. Id. Ex. 7 at 99. From the limited record before the Court, a reasonable jury could conclude that her investigation of Mr. Cadden's charges was rather cursory and that Ms. Russell elected to convey only one side of the story (the side unfavorable to Mr. Graham) to Dr. Zacker. See id. at 32-33, 82-100.
After meeting with Mr. Graham for three sessions, Dr. Rosmarin sent a letter on December 23 to Boehringer stating that he found "no significant evidence to suggest that Mr. Graham presents any harm of threat to others:" Id. Ex. 26. Mr. Graham claims that he asked Dr. Rosmarin to see him for a fourth session in order to complete Dr. Zacker's protocol but that Dr. Rosmarin would not allow a fourth session. See Graham Dep. at 141-42. Regardless, there is no dispute that Dr. Zacker was unsatisfied with Dr. Rosmarin's report and with the fact that Dr. Rosmarin had met only three times with Mr. Graham. Dr. Zacker therefore informed Boehringer that Mr. Graham needed to comply with the protocol detailed in his report before Dr. Zacker would give his approval for Mr. Graham to return to work. Defs.' Mem. in Supp. of Mot. for Summ. J. [doe. # 37] Ex. 12 at 4. Complicating the situation was Dr. Rosmarin's apparent refusal to discuss his assessment of Mr. Graham with Dr. Zacker or to provide any further detail to Boehringer outside of the letter he sent on December 23. See id. Ex. 17. Mr Graham recalled a conversation in late December with Virginia Leo, a nurse in Boehringer's Occupational Health Services (OHS) Department, when he attempted to facilitate contact between the two psychologists and she told him there was nothing else he could do. See Graham Dep. at 130.
On January 8, 2003, Ms. Russell sent a letter to Mr. Graham stating that, in accordance with the requirements of the company's Workplace Violence policy, Dr. Zacker had designed a protocol, with which Mr. *366 Graham must comply to Dr. Zacker's satisfaction, before Mr. Graham could return to work. The letter recited some of the disagreement between Dr. Rosmarin and Dr. Zacker and stated that "your physician's continued failure to cooperate with the protocol established by Dr. Zacker and/or to satisfy the reasonable requests of OHS for medical information supporting your leave of absence is your responsibility and will result in disciplinary action, up to and including termination of your employment." Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 18. The letter concluded as follows: "Thank you for your attention and anticipated cooperation. It would be most unfortunate if your employment were to be terminated due to a lack of cooperation with our policies." Id.
Over the course of January and February 2003, Mr. Graham and his attorney exchanged letters with Boehringer discussing the conditions set by Dr. Zacker that were preventing Mr. Graham from returning to work. Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Exs. 18-27. Boehringer instructed Mr. Graham to arrange for Dr. Rosmarin to talk with Dr. Zacker or to select a new therapist and attend four more sessions with the new therapist in order to satisfy Dr. Zacker's protocol. See id. Ex. 20. On February 5, 2003, Mr. Graham's attorney sent Boehringer a letter containing a copy of therapy notes made by Mr. Knezek, whom Mr. Graham had seen pursuant to the EAP referral. See id. Ex. 25. Prior to this time, Boehringer had neither seen nor had access to Mr. Knezek's records. See id. Ex. 11. Boehringer forwarded Mr. Knezek's notes to Dr. Zacker who remained dissatisfied, since he found no evidence that Mr. Knezek had evaluated Mr. Graham's anger management skills. See id. Ex. 12. In a letter to Mr. Grahaas attorney dated February 20, Boehringer reported that Dr. Zacker was not satisfied by Mr. Knezek's notes and still required Mr. Graham to seek out a new therapist of his choice to fulfill Dr. Zacker's conditions. See id. Ex. 26. Boehringer informed Mr. Graham that if he did not comply, he would be laid off administratively. Id.
Frustrated by what he perceived to be unreasonable conditions, Mr. Graham elected not to seek out another therapist. Graham Dep. at 143-44. Following this decision, Boeheringer sent a letter to Mr. Graham on March 4, informing him that he had been administratively laid off as of March 3. See Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 28. The letter stated, "[k]eep in mind, that given your skill set and our needs for this position, we would greatly have preferred to have been able to bring you back to work following your compliance with policy. However, given your refusals, we cannot treat you differently than others under our policy and your actions have served to tie our hands and to require your separation from employment." Id. The letter urged Mr. Graham to reconsider, comply with the conditions set by Dr. Zacker, and to "seek re-employment with the Company." Id.
On April 8, Boehringer sent Mr. Graham a letter informing him that he may qualify for longterm disability benefits since he was terminated while on short-term disability. See id. Ex. 30. Boehringer says that after short-term disability benefits end, the company automatically sends an application for long-term disability and makes no determination as to whether or not the employee is actually disabled. See id. Ex 31. The letter included instructions on how to apply to the third-party provider of disability benefits but disclaimed any guarantee of receiving longterm disability benefits. Id. Boehringer included with the letter several forms that Mr. Graham needed to complete in order *367 to apply to the third-party provider for disability benefits. One form required certain information from the employer that Boehringer had already completed. See id. Ex. 32. This form included only factual information about Mr. Graham's employment and insurance coverage and did not require the employer to offer any information about the relevant disability. Id.
Mr. Graham originally filed suit against Boehringer and Mr. Cadden in state court on April 8, 2004. See Ruling on Motion to Remand [doc. # 12]. At that time, Mr. Graham only filed claims under state law. Mr. Graham later amended his complaint to include an ADA claim on October 22, 2004, and Boehringer timely removed the action to this Court. See Notice of Removal [doc. # 1].[3] In addition to Mr. Graham's ADA claim, his state causes of action include claims that Boehringer violated the Connecticut Fair Employment Practices Act and breached its contract with him. Mr. Graham also brought a defamation claim against Mr. Cadden, who is not a defendant in the other claims, for falsely reporting to Boehringer that Mr. Graham had made a threat.
III.
The ADA prohibits discrimination against any "qualified individual with a disability because of the disability of such individual in regard to . . . discharge of employees." 42 U.S.C. 12112(a). Employment discrimination claims under the ADA are subject to the familiar McDonnell Douglas burden-shifting analysis: A plaintiff must establish a prima facie case; the employer must come forward with a legitimate non-discriminatory reason for the termination; and the plaintiff must then produce evidence and carry the burden of persuasion that the proffered reason is a pretext and that the real reason for the termination was an unlawful one. Sista v. CDC Ixis N. Am., Inc., 445 F.3d 161, 169 (2d Cir.2006). "Although intermediate evidentiary burdens shift back and forth under this framework, [t]he ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 143, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000) (internal quotation marks omitted; alteration in original). "The ultimate question is whether the employer intentionally discriminated, and . . . [i]t is not enough . . . to dis believe the employer; the factfinder must believe the plaintiffs explanation of intentional discrimination." Id. at 147, 120 S. Ct. 2097. While the parties dispute some facts related to the motivation of certain Boehringer employees, the Court finds that summary judgment is appropriate on Mr. Graham's ADA claim because "upon review of the record as a whole, [] there [are] no genuine issues of material fact in the instant casethat is, that even after drawing all inferences in the light most favorable to [Mr. Graham], no reasonable jury could [] issue[] a verdict in his favor" on his ADA claim. Jeffreys v. City of N.Y., 426 F.3d 549, 554 (2d Cir. 2005).
A. Prima Facie Case of Discrimination
To establish a prima facie case of disability discrimination, a plaintiff typically must prove that: (1) the employer is subject to the ADA; (2) the plaintiff is disabled within the meaning of the ADA; *368 (3) the plaintiff was otherwise able to perform the essential functions of his job, with or without accommodation; and (4) the plaintiff suffered an adverse employment action because of the disability. See, e.g., Giordano, 274 F.3d at 747. However, the ADA also recognizes a cause of action for plaintiffs who are not in fact disabled, but claim that they were erroneously "regarded as having such an impairment," and discriminated against on that basis. 42 U.S.C. § 12102(2)(C). That is what Mr. Graham has alleged in this case, and therefore, his burden on the second prong of his prima facie case is to show that Boehringer "regarded [him] as disabled within the meaning of the ADA." Giordano, 274 F.3d at 748 (emphasis in original).
The reason for the emphasis on the words "within the meaning of the ADA" in the preceding sentence is that it is not enough for an employee to show that the employer regarded him as disabled. Instead, the employer must regard the employee as disabled within the meaning of the ADA, meaning that the employer must have "regarded the [employee] as having an impairment that substantially. limits a major life activity." Colwell v. Suffolk County Police Dept., 158 F.3d 635, 646 (2d Cir.1998) (emphasis added). Moreover, under the ADA, for an impairment to substantially limit a major life activity, its impact must "be permanent or long term." Toyota Motor Mfg., Kentucky, Inc. v. Williams, 534 U.S. 184, 198, 122 S. Ct. 681, 151 L. Ed. 2d 615 (2002). "[T]emporary, non-chronic impairments of short duration, with little or no long term or permanent impact, are usually not disabilities." 29 C.F.R. app. § 1630.2(j). The Supreme Court has also instructed that "[a] person whose physical or mental impairment is corrected by medication or other measures does not have an impairment that presently `substantially limits' a major life activity." Sutton v. United Air Lines, Inc., 527 U.S. 471, 482-83, 119 S. Ct. 2139, 144 L. Ed. 2d 450 (1999). In this case, the major life activity at issue is that of working. See Pl's Opp'n to Mot. for Summ. J. [doc. # 39] at 9. In sum, to satisfy the "regarded as disabled" prong of his prima facie case, Mr. Graham must show that Boehringer "perceived [him] to be incapable of working in a broad range of jobs suitable for persons of [his] age, experience, and training," Colwell, 158 F.3d at 647 (internal quotation marks omitted), as a result of a chronic mental impairment that was not correctable by medication or other measures.
The Court recognizes full well that a plaintiffs burden in establishing a prima facie case of discrimination is de minimis. Kerzer v. Kingly Mfg., 156 F.3d 396, 401 (2d Cir.1998). Nonetheless, the Court has serious reservations about the sufficiency of Mr. Graham's proof that Boehringer perceived him as disabled within the meaning of the ADA. Taking the evidence in the light most favorable to Mr. Graham, the Court does not believe that he has produced any evidence that Boehringer perceived him to be permanently incapable of work as a result of a chronic mental impairment that was not correctable by medication or other measures. To the contrary, the letter Boehringer sent Mr. Graham notifying him of his termination expressly stated that the company wanted Mr. Graham to return to his former position following completion of the therapy sessions that Dr. Zacker required. See, e.g., Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Exs. 14, 18, 28. Indeed, Boehringer, even after laying off Mr. Graham, encouraged him to re-apply for the same position if he changed his mind and completed the treatment regimen prescribed by Dr. Zacker. See id. Ex. 28. If true, Boehringer would not *369 have perceived Mr. Graham to be disabled as defined by the ADA. Cf. Pollard v. High's of Baltimore, Inc., 281 F.3d 462, 471 n. 5 (4th Cir.2002) (finding an employee was not disabled under the ADA due to a nine month recovery from an operation in part because the "work limitations were temporary and [the employee] would eventually, if not soon, return to her former duties"). In Ryan v. Grae & Rybicki, P.C., for example, the Second Circuit held that a plaintiff did not meet her prima facie burden in a "perceived as disabled" ADA case in part because the employer offered to give the employee a good recommendation, suggesting that the employer "did not perceive her as being unable to perform related jobs." 135 F.3d 867, 873 (1998).
For these reasons, the Court has serious doubts that Mr. Graham has met the requirements of a prima facie case of disability discrimination. However, recognizing the "minimal requirements" of a prima facie case, see St. Mary's Honor Center v. Hicks, 509 U.S. 502, 506, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993), the Court prefers not to resolve this case on the basis of the prima facie case and will instead move on to the second and third prongs of the McDonnell Douglas test.
B. Legitimate, Non-Discriminatory Rationale of Employer
Assuming arguendo that Mr. Graham has established a prima facie discrimination case for a "regarded as" disability, the burden shifts to Boehringer to articulate a legitimate nondiscriminatory reason for terminating Mr. Graham's employment. Sista, 445 F.3d at 169. This burden is one of production, not persuasion; it "can involve no credibility assessment." St. Mary's Honor Center, 509 U.S. at 509, 113 S. Ct. 2742. According to Boehringer, the company was obliged to discharge Mr. Graham because it believed that he had made a threat of violence against a supervisor and then failed to complete the steps necessary to allow a consulting psychiatrist to certify that Mr. Graham did not pose a danger to his fellow employees. Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 26.
Given the report Boehringer received of Mr.Graham's alleged threata report that Mr. Graham does not deny was made-Boehringer reasonably decided to refer Mr. Graham for a fitness for duty evaluation pursuant to its established Workplace Violence Policy. Furthermore, Mr. Graham does not dispute that Dr. Zacker refused to clear Mr. Graham to return to work and that the psychologist also warned the company of Mr. Graham's potential for violence. Any reasonable company would be concerned about its own exposure to liability (let alone the safety of its employees) should it choose to overrule an independent mental health expert whom the company asked to perform a fitness for duty evaluation of a company employee. See Merheb v. State Toll Highway Auth., 267 F.3d 710, 713-14 (7th Cir. 2001) (noting that the prevalence of workplace violence justifies "management in treating threatening behavior with exemplary severity"); Palmer v. Circuit Court, 117 F.3d 351, 352 (7th Cir.1997) ("The [ADA] does not require an employer to retain a potentially violent employee. Such a requirement would place the employer on a razor's edgein jeopardy of violating the Act if it fired such an employee, yet in jeopardy of being deemed negligent if it retained him and he hurt someone."). Boehringer's requirement that Dr. Zacker clear Mr. Graham before he could return to work, the company's deference to the judgment of the mental health professional, and Mr. Graham's acknowledged failure to comply with Dr. Zacker's protocol constitute legitimate, non-discriminatory *370 reasons for terminating Mr. Graham and thus satisfy the company's burden under the McDonnell-Douglas framework.
C. Proffered Reason for Termination is Pretextual and the Real Reason Was Unlawful
Once the company offers a legitimate, non-discriminatory reason for its action, a plaintiff must then produce evidence and ultimately carry the burden of persuasion that the proffered reason is a pretext for unlawful discrimination. Sista, 445 F.3d at 169. Such a pretext "may be demonstrated either by the presentation of additional evidence showing that the employer's proffered explanation is unworthy of credence, or by reliance on the evidence comprising the prima facie case. . . ." Heyman v. Queens Vill. Comm. for Mental Health for Jamaica Cmty. Adolescent Program Inc., 198 F.3d 68, 72 (2d Cir.1999) (quotations omitted). Establishing that the stated rationale is pretextual, however, is not alone sufficient to carry a plaintiff's burden. The plaintiff must also demonstrate that the real reason for the company's action was unlawful, see, McPherson v. N.Y. City Dept. of Educ., 457 F.3d 211, 214-15 (2d Cir.2006) ("In a discrimination case, however, we are decidedly not interested in the truth of the allegations against plaintiff. We are interested in what 'motivated the employer . `"), though in some cases, evidence of pretext can also be used to establish discriminatory motive. See Reeves v. Sanderson Plumbing Prod., Inc. 530 U.S. 133, 147, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000) ("In appropriate circumstances, the trier of fact can reasonably infer from the falsity of the explanation that the employer is dissembling to cover up a discriminatory purpose.").
Mr. Graham alternates between two theories regarding Boehringer's motivations for his termination. On the one hand, he argues that the company knew all along that Mr. Cadden's allegations of a threat were false and that the company seized upon the false threat as a way to fire Mr. Graham by putting him through an endless series of requirements that the company never intended to allow him to fulfill. At other points, however, Mr. Graham argues that Boehringer did in fact perceive him to be disabled and fired him not, as the company claims, because of his failure to comply with Dr. Zacker's protocol, but rather because the company regarded him as disabled and wanted to get rid of him for that reason.
At the outset, the Court can dispose of Mr. Graham's first theory, to which he dedicated a substantial portion of his brief and oral argument. According to Mr. Graham, Mr. Cadden lied when reporting the alleged threat and the company knew that Mr. Cadden was lying. Thus, in his brief, Mr. Graham asserts there was "overwhelming evidence that the defendant Cadden was lying about the plaintiff and that the employer . . . intentionally and knowingly covered up the truth. . . ." Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] at 13. But if Mr. Graham's theory is correct, his ADA claim is necessarily doomed. For if, as he claims, Mr. Cadden lied about Mr. Graham's threat and Boehringer employees were complicit in Mr. Cadden's false allegations or attempted to cover Mr. Cadden's lie, then the company could not possibly have regarded Mr. Graham as disabled within the meaning " of the ADA, as is required for his ADA claim. Indeed, on this view of the case, the company knew that Mr. Graham had not threatened anyone, knew that he was not subject to the Workplace Violence Policy, knew he did not need to see any physicians for any reason, and also knew that he did not pose a threat to any employees. *371 In sum, the company knew he was not disabled. While such assertions, if proved, might provide a basis for his state law claims, they decidedly do not provide proof of a "regarded as" disabled claim under the ADA.
Mr. Graham's alternative theory of the case fits (as a matter of logic) within the context of a "regarded as" disabled ADA claim. However, this theory ultimately falters because Mr. Graham has not provided evidence that would permit a reasonable jury to conclude that Boehringer's asserted justifications for his termination were pretextual and that the real reason for the company's action was that it regarded him as disabled within the meaning of the ADA.
Turning first to the issue of pretext, Mr. Graham claims that, at some point after Mr. Cadden made his allegations against Mr. Graham, Boehringer employees decided that Mr. Graham was disabled and would have dismissed him for this disability, regardless of whether he complied with Dr. Zacker's protocol or whether Dr. Zacker cleared him to return to work. However, there is absolutely no evidence (beyond Mr. Graham's rank speculation) to suggest that Boehringer would not have permitted Mr. Graham to return to work had he completed the counseling sessions required by Dr. Zacker. See Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 200 (2d Cir.2004) ("[T]he non-moving party may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that its version of the events is not wholly fanciful.") (quotations omitted). It is undisputed that Boehringer repeatedly told Mr. Graham in writing that if he complied with Dr. Zacker's requirements and was cleared to return to work, he would be allowed do so. See id. Exs. 14, 18, 28. It is undisputed that Mr. Graham never complied with Dr. Zacker's requirements and that Dr. Zacker never cleared Mr. Graham to return to work. Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 12. There is no evidence that Dr. Zacker and Boehringer were involved in some joint effort or conspiracy to ensure that Mr. Graham could never return to work.[4] Rather, all evidence suggests that Mr. Graham was terminated for precisely the reasons stated by Boehringernamely, that he failed to complete the treatment protocol demanded by an independent physician and as a result, he was not cleared to return to work. Regardless of whether Dr. Zacker's demands were reasonable or not, there is no evidence to suggest that Boehringer's reliance on Dr. Zacker to clear Mr. Graham for return to work was pretextual in any way.
Beyond failing to establish pretext, Mr. Graham has also failed to proffer evidence that would permit a reasonable jury to conclude that the real reason for his dismissal was because he was regarded as disabled within the meaning of the ADA. To establish that Boehringer perceived him to be disabled within the meaning of the ADA, Mr. Graham alleges that Boehringer terminated him because of a "yet-undiagnosed psychiatric condition which made him an immediate risk to the lives of others." Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] at 9. In support of *372 this claim, Mr. Graham relies on the following facts: (1) Boehringer insisted that Mr. Graham submit to psychological evaluations; (2) Boehringer placed him on short-term disability; and (3) Boehringer suggested that he file for long-term disability. See id. at 10-11.
Boerhringer's efforts in accordance with its Workplace Violence Policy to have Mr. Graham tested by an independent mental health expert to determine his fitness for duty and its requirement that Mr. Graham comply with the recommendations of the examining psychologist would not permit a jury to conclude that Boehringer regarded Mr. Graham as disabled within the meaning of the ADA. Courts have repeatedly held that requiring mental and physical examinations to determine fitness for duty are not enough to suggest that an employee is regarded as mentally disabled. For example, in Colwell v. Suffolk County Police Dept., 158 F.3d 635 (2d Cir.1998), the Second Circuit held that the requirement that employees submit to physical exams to determine their fitness for duty suggested "no more than that their physical condition was an open question." Id. at 647; see also Sullivan v. River Valley School District, 197 F.3d 804, 810 (6th Cir.1999) (requiring examinations to determine fitness for duty is insufficient to suggest employee is regarded as mentally disabled); Cody v. CIGNA Healthcare of St. Louis, 139 F.3d 595, 599 (8th Cir.1998) (a request for evaluation is not equivalent to treatment as disabled). At most, such evidence suggests that the company regarded Mr. Graham's mental condition as an open question that required assessment by a professional.
Similarly, merely requiring Mr. Graham to follow Dr. Zacker's advice to seek anger management counseling before returning to work also fails to demonstrate that Boehringer considered Mr. Graham to be disabled under the ADA. See Buhlmann v. Ulster County Dept. of Soc. Servs., 234 F. Supp. 2d 140, 177 & n. 18 (N.D.N.Y.2002) (granting medical leave of absence for mental health concerns does not suggest an employer considered an employee to be disabled under the ADA) (citing Kramer v. Hickey-Freeman, Inc., 142 F. Supp. 2d 555, 560 (S.D.N.Y.2001)); Johnson v. Boardman Petroleum, 923 F. Supp. 1563, 1568 (S.D.Ga.1996) (suggesting that an employee take time off and seek professional counseling did not demonstrate that the employer considered the employee to be disabled under the ADA). As more than one court has noted, to accept Mr. Graham's contention that, in requiring a mental examination and brief counseling regimen, Boehringer demonstrated that it considered Mr. Graham to be disabled would "discourage[] employers from taking such preliminary or temporary steps to keep their employees happy for fear that showing concern for an employee's alleged medical problems could draw them into court facing an ADA claim based on a perceived disability." Kramer, 142 F.Supp.2d at 560 (quotations omitted).
Similarly, placing Mr. Graham on short-term disability did not demonstrate that Boehringer considered Mr. Graham to be disabled. See Ward v. U.S. Surgical Div. of Tyco Healthcare Group, No. 3:03CV1326 (WWE), 2005 WL 2972974 at *12 (D.Conn. Sept.16, 2005) (recommending that an employee apply for short-term disability benefits does not demonstrate that the employer believed the employee was disabled under the ADA); Chubirka v. Intl Paper/xpedx Paper & Graphics, No. Civ.A.04-5010, 2005 WL 1840170 at *4 (E.D.Pa. Aug.2, 2005) (granting summary judgment in favor of employer for ADA claims even though employee was provided short-term disability benefits); Summers v. Middleton & Reutlinger, P.S.C., 214 *373 F.Supp.2d 751, 756 (W.D.Ky.2002) (placing employee on short-term disability "does not establish [that the employer] regarded [the employee] as disabled."). As discussed above, "[t]emporary, non-chronic impairments of short duration, with little or no long term or permanent impact, are usually not disabilities" within the meaning of the ADA. 29 C.F.R. app. § 1630.2(j).
Finally, no reasonable jury could conclude that Boehringer's forwarding long-term disability benefit forms demonstrated that Boehringer regarded Mr. Graham as disabled under the ADA. Boehringer stated that it routinely sent information about long-term disability benefits to any employee who had been on short-term disability for three months. Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 31. Mr. Graham has not submitted any evidence to rebut Boehringer's assertion. Moreover, both parties agree that the long-term disability benefits were provided by a third party and that Boehringer had no authority to determine who qualified for long-term disability benefits. Defs.' Local Rule 56(a)(1) Statement of Undisputed Facts [doc. # 37] para. 78-80. Given the undisputed facts about the non-discretionary manner in which Boehringer distributes long-term disability information to employees, the receipt of such information by Mr. Graham does not create a genuine issue of material fact that would permit a jury to conclude that Boehringer regarded Mr. Graham was disabled as defined by the ADA. See Greene v. UPS, 125 F. Supp. 2d 517, 523-24 (M.D.Ga.2000) (granting summary judgment to employer after determining that sending long-term disability benefit information to employee did not demonstrate that employer believed employee was disabled under the ADA).
Mr. Graham relies heavily upon Howell v. New Haven Bd. of Educ., 309 F. Supp. 2d 286 (D.Conn.2004), in support of his claim that sufficient material facts exist to defeat a motion for summary judgment. The facts in Howell, however, are easily distinguishable from those presented here. In Howell, the court found sufficient evidence to support the claim that a high school principal, knowing of a school teacher's disability, made a false accusation against the teacher, which resulted in the teacher's termination. Mr. Graham, on the other hand, has produced no evidence that Mr. Cadden's allegedly false accusation was motivated by Mr. Cadden's belief that Mr. Graham was disabled. To the contrary, Mr. Graham asserts that the motivation for Mr. Cadden's allegations was that Mr. Graham had previously accused Mr. Cadden of ethical violations. Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] at 16. Moreover, unlike in Howell, Mr. Graham alleges that Boehringer began to regard him as disabled only after Mr. Cadden's false accusation.
Given the lack of evidence that Boehringer perceived Mr. Graham to be disabled as defined by the ADA, the refusal of Dr. Zacker to clear Mr. Graham to return to work, and the logical inconsistencies in Mr. Graham's theories of liability, the Court finds that Boehringer is entitled to summary judgment on his ADA claim. See Sista v. CDC Ixis N. Am., Inc., 445 F.3d 161, 174 (2d Cir.2006) (granting motion for summary judgment in ADA case after finding insufficient evidence to override employer's proffered justification).
IV.
In light of the Court's dismissal of the only federal cause of action pled in the complaint, the Court, exercising its discretion under 28 U.S.C. § 1367(c)(3), declines to exercise supplemental jurisdiction over the remaining state causes of action. While it is true that the Court may exercise supplemental jurisdiction over Mr. *374 Graham's state law claims under 28 U.S.C. § 1367, the Second Circuit has advised district courts that "`in the usual case in which all federal-law claims are eliminated before trial, the balance of factors to be considered under the [supplemental] jurisdiction doctrine judicial economy, convenience, fairness, and comity-will point toward declining to exercise jurisdiction over the remaining state-law claims.'" Valencia ex rel. Franco v. Lee, 316 F.3d 299, 305 (2d Cir.2003) (quoting Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108 S. Ct. 614, 98 L. Ed. 2d 720 (1988)). This is the "usual case" envisioned in Valencia. All that remains in this case are claims that involve complex issues of state law. Therefore, in the interests of judicial economy, convenience, fairness, and comity, the Court declines to exercise supplemental jurisdiction over Mr. Graham's claims for violations of the Connecticut's Fair Employment Practices Act, breach of contract, and defamation.
V.
In sum, the Court GRANTS IN PART Defendants' Motion for Summary Judgment [doc. # 37]. The Court directs the Clerk to: (1) enter judgment for Defendant and against Plaintiff on Count Two of the Complaint, which alleges an ADA violation; and (2) dismiss for lack of jurisdiction Counts One, Three and Four of the Complaint, which allege a violation of Connecticut's Fair Employment Practices Act, breach of contract, and defamation, respectively. Plaintiff will be free to re-file his state law claims in state court. Each side shall bear its own costs and attorneys' fees.
The Clerk is directed to close this file.
IT IS SO ORDERED.
NOTES
[1] Mr. Graham does not recall whether he received a copy of or reviewed the Policy. See Defs.' Mem. in Supp. of Mot. for Summ. J. [doc. # 37] Ex. 5;. Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] Ex. 3 at 21-22.
[2] In a letter to Mr. Graham, Ms. Russell stated that Dr. Zacker required Mr. Graham to attend at least four sessions with a therapist, see Defs.' Mem. In Supp. of Mot. for Summ. J. [doc. # 37] Ex. 18, but Dr. Zacker does not refer to a specific number of required sessions in his evaluation. See id. Ex. 13 at 5.
[3] Mr. Graham moved to remand the case to state court on the ground that the removal was untimely, see Motion to Remand [doc. # 7], an argument that the Court rejected. See Ruling on Motion to Remand [doc. # 12].
[4] Mr. Graham alleges that Boehringer employees withheld information from Dr. Zacker that Mr. Graham did not make the threatening statements and that this withholding of information influenced Dr. Zacker's views of Mr. Graham. See Pl.'s Mem. in Opp'n to Mot. for Summ. J. [doc. # 39] at 7. As noted above, however, those allegations, if credited, are logically inconsistent with his ADA claim. To the extent that Boehringer employees did not believe Mr. Graham made the statements, they could not have perceived Mr. Graham to be disabled. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4149083/ | FILED
NOT FOR PUBLICATION
FEB 28 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
NATHALIE THUY VAN, Nos. 15-15070
15-15571
Plaintiff-Appellant, 15-16029
v. D.C. No. 5:08-cv-05296-PSG
WAL-MART STORES, INC.,
MEMORANDUM*
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Paul S. Grewal, Magistrate Judge, Presiding
Submitted February 24, 2017**
San Francisco, California
Before: THOMAS, Chief Judge, and HAWKINS and McKEOWN, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Nathalie Thuy Van (“Van”) appeals the judgment, entered after a jury trial,
against Wal-Mart Stores, Inc. (Wal-Mart”). We have jurisdiction over this appeal
pursuant to 28 U.S.C. § 1291, and we affirm.
I
The district court did not abuse its discretion by excluding Van’s medical
bills and Wal-Mart’s financial documents. The district court found that her failure
to disclose particularized medical expenses and financial documents supporting her
punitive damages computation was both untimely and prejudicial to Wal-Mart.
The record supports the district court’s conclusion. Van did not provide the
disclosure within the discovery deadline established by the court, nor did she
supplement her discovery answers, as she was obligated to do. Fed. R. Civ. P.
26(e)(1)(A). “If a party fails to provide information or identify a witness as
required by Rule 26(a) or (e), the party is not allowed to use that information or
witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure
was substantially justified or is harmless.” Fed. R. Civ. P. 37(c)(1). “Rule 37(c)(1)
is a ‘self-executing,’ ‘automatic’ sanction designed to provide a strong inducement
for disclosure.” Goodman v. Staples the Office Superstore, LLC, 644 F.3d 817,
827 (9th Cir. 2011) (citing Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d
2
1101, 1106 (9th Cir. 2001); Fed. R. Civ. P. 37 advisory committee’s note to 1993
amendment).
Van has not shown that her untimely disclosure was either substantially
justified or harmless, Fed. R. Civ. P. 37(c)(1), so the district court did not abuse its
discretion in excluding the tendered evidence pursuant to Rule 37(c)(1).
II
The district court did not err in instructing the jury on the definition of false
imprisonment or by supplementing a jury instruction in response to a jury question.
The false imprisonment instruction given to the jury by the magistrate judge
tracked almost verbatim the California pattern instruction and was a correct
statement of California law. Moreover, the instruction was agreed to by Van’s
counsel and presented to the district court in the parties’ joint proposed jury
instructions.
The district court did not err in its response to two jury questions. After
consulting with counsel, the judge instructed the jury that “[e]ach of these
questions is for you to decide,” and provided the jury with the language of the
relevant statute. The supplemental instruction was neither confusing nor
prejudicial. The district court did not abuse its discretion.
III
3
The district court did not err in granting Wal-Mart Rule 68 post-offer-of-
judgment costs. “Under Rule 68, if a plaintiff rejects a defendant’s offer of
judgment, and the judgment finally obtained by plaintiff is not more favorable than
the offer, the plaintiff must pay the costs incurred subsequent to the offer. The
award is mandatory; Rule 68 leaves no room for the court’s discretion. ” United
States v. Trident Seafoods Corp., 92 F.3d 855, 859 (9th Cir. 1996) (citing Liberty
Mutual Ins. Co. v. EEOC, 691 F.2d 438, 442 (9th Cir. 1982) (footnote omitted)).
Before trial, Wal-Mart served an offer of judgment on Van in an amount that
exceeded the ultimate jury verdict. Van rejected the offer of judgment. Therefore
Wal-Mart was entitled to post-offer costs. The district court concluded that Wal-
Mart was entitled to reasonable costs under Rule 68, but it found the majority of
Wal-Mart’s claimed costs to be unjustified. After subtracting the costs it found to
be unjustified, the district court awarded Wal-Mart $1,736.81 in post-offer-of-
judgment costs. Van has not demonstrated the district court erred in any respect by
doing so.
IV
The remainder of Van’s arguments on appeal were either raised in her briefs
but not identified in her notices of appeal, or identified in the notices of appeal but
abandoned in her briefs. Because Rule 3(c)(1)(B) of the Federal Rules of
4
Appellate Procedure requires the notice of appeal to “designate the judgment,
order, or part thereof being appealed,” and since “we will not ordinarily consider
matters on appeal that are not specifically and distinctly argued in appellant’s
opening brief,” Kim v. Kang, 154 F.3d 996, 1000 (9th Cir. 1998) (internal
quotation marks and citation omitted), we decline to address the merits of Van’s
remaining arguments.
AFFIRMED.
5 | 01-03-2023 | 02-28-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/2986135/ | August 27, 2013
JUDGMENT
The Fourteenth Court of Appeals
DERRICK W. PARKER, Appellant
NO. 14-12-00085-CV V.
BRITTANI A. DENNIS, Appellee
________________________________
This cause, an appeal from the judgment in favor of appellee Brittani A.
Dennis signed, January 18, 2012, was heard on the transcript of the record. We
have inspected the record and find no error in the judgment. We order the
judgment of the court below AFFIRMED. We order appellant Derrick W. Parker
to pay all costs incurred in this appeal. We further order this decision certified
below for observance. | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2689914/ | [Cite as State ex rel. Pence v. Indus. Comm., 107 Ohio St. 3d 286, 2005-Ohio-6507.]
THE STATE EX REL. PENCE, APPELLANT, v. INDUSTRIAL
COMMISSION OF OHIO ET AL., APPELLEES.
[Cite as State ex rel. Pence v. Indus. Comm.,
107 Ohio St. 3d 286, 2005-Ohio-6507.]
Workers’ compensation — Court of appeals’ judgment affirmed.
(No. 2005-0230 — Submitted October 25, 2005 — Decided December 28, 2005.)
APPEAL from the Court of Appeals for Franklin County,
No. 04AP-124, 2004-Ohio-7052.
__________________
{¶ 1} The judgment of the court of appeals is affirmed consistent with
the opinion of the court of appeals.
MOYER, C.J., RESNICK, PFEIFER, LUNDBERG STRATTON, O’CONNOR,
O’DONNELL and LANZINGER, JJ., concur.
__________________
Law Offices of Thomas Tootle Co., L.P.A., and Thomas Tootle, for
appellant.
Jim Petro, Attorney General, and Shawn M. Wollam, Assistant Attorney
General, for appellee Industrial Commission of Ohio.
Lane, Alton & Horst, L.L.C., and Barbara K. Letcher, for appellee Jet
Corr, Inc.
______________________
1 | 01-03-2023 | 08-01-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2689931/ | [Cite as State ex rel. Brown v. Rhodes, 112 Ohio St. 3d 153, 2006-Ohio-6523.]
THE STATE EX REL. BROWN, APPELLANT, v. RHODES, APPELLEE.
[Cite as State ex rel. Brown v. Rhodes, 112 Ohio St. 3d 153, 2006-Ohio-6523.]
Public records — Mandamus sought to compel respondent to release public
records to inmate — Court of appeals’ judgment affirmed on the authority
of State ex rel. Russell v. Thornton.
(No. 2006-1549 — Submitted November 14, 2006 — Decided
December 27, 2006.)
APPEAL from the Court of Appeals for Hancock County,
No. 5-05-25, 2006-Ohio-3394.
__________________
{¶ 1} The discretionary appeal is accepted on Proposition of Law Nos. I
and III.
{¶ 2} The judgment of the court of appeals is affirmed on the authority
of State ex rel. Russell v. Thornton, 111 Ohio St. 3d 409, 2006-Ohio-5858, 856
N.E.2d 966.
MOYER, C.J., RESNICK, LUNDBERG STRATTON, O’CONNOR, O’DONNELL
and LANZINGER, JJ., concur.
PFEIFER, J., dissents.
__________________
Frank C. Brown Jr., pro se.
______________________
1 | 01-03-2023 | 08-01-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1461621/ | 920 F. Supp. 825 (1996)
UNITED STATES of America
v.
Yohann Renwick NELSON.
No. 3:95-00084.
United States District Court, M.D. Tennessee, Nashville Division.
March 8, 1996.
Carl Douglas Thoresen, Federal Public Defender's Office, Nashville, TN, for Yohann Renwick Nelson.
Mercedes C. Maynor-Faulcon, Office of the United States Attorney, Nashville, TN, for U.S.
MEMORANDUM AND OPINION
WISEMAN, Senior District Judge.
On August 16, 1995, two men walked into the Citizens Bank, 2013 Jefferson Street, Nashville. They wore masks and carried loaded 9mm semi-automatic pistols. They announced their intention to rob the bank. They pointed their weapons at a bank teller and ordered those inside to the floor. Before they could complete their plan, an off-duty Nashville police officer working as a security guard shot and killed one of the masked men, Terrance Hogan. The other would-be robber ran away.
The United States now charges Yohann Renwick Nelson as the surviving thief-to-be. Nelson's indictment charges him with four crimes: attempted bank robbery with a dangerous weapon; attempted bank robbery with a forced accomplice; attempted bank robbery resulting in a death; and use of a firearm in committing a violent crime.
Nelson has moved the Court to dismiss counts two and three. Nelson claims the Constitution bars the Government's attempt to charge him in Count Three with attempted bank robbery resulting in death. He also argues Count Two should be dismissed for lack of evidence.
DEFENDANT'S MOTION TO DISMISS COUNTS 2 & 3
In Count 2, The Government accuses Nelson of violating 18 U.S.C. § 2113(e) by forcing *826 Hogan to accompany him in the attempted robbery of the Citizens Bank. Conviction on this count carries a minimum penalty of ten years imprisonment. Count 3 also alleges that Nelson violated § 2113(e) and that "as a result the death of said Terrance Hogan occurred." If convicted of Count 3, Nelson faces life in prison.
In pertinent part, Section 2113(e) provides: Whoever, in committing any offense defined in this section ... kills any person, or forces any person to accompany him without the consent of such person, shall be imprisoned not less than ten years, or if death results shall be punished by death or life imprisonment.
18 U.S.C. § 2113(e).
Count 2: Forced Accompaniment
Count 2 of the indictment alleges Nelson "did force Terrance Hogan to accompany him without the consent of said Terrance Hogan. In violation of Title 18, United States Code, Section 2113(e)." Nelson's motion raises the question of the meaning of the statutory phrase "forces any person to accompany him without the consent of such person." The Sixth Circuit has addressed the meaning of this language once:
The statutory language itself suggests that part of the congressional purpose was to provide protection to those who aid law enforcement in apprehension of bank robbers, by providing a federal penalty for anyone who kidnapped or killed such a person. Further, the statute clearly envisages making it a federal crime to kill or kidnap anyone in an attempt to escape arrest or imprisonment for bank robbery.
United States v. Etheridge, 424 F.2d 951, 962 (6th Cir.1970).
Etheridge's references to kidnapping are in keeping with the traditional interpretation of § 2113(e). Most courts considering the question have held that "force" tracks the elements of the federal kidnapping statute, 18 U.S.C. § 1202. United States v. Marx, 485 F.2d 1179, 1186 (10th Cir.1973); United States v. Sanchez, 782 F. Supp. 94, 95 (C.D.Cal.1992). These courts have examined the legislative history of the 1934 bank robbery act and found "it was enacted to combat the multitude of murders and kidnappings occurring during attempts by bank robbers to flee the scene of the crime." Marx, 485 F.2d at 1186.
More recently, the Seventh Circuit has rejected the kidnapping analogy, holding "there is nothing in the text of the statute that requires that the element of a federal kidnapping or any other crime be satisfied. The statute simply requires what it says: forced accompaniment without consent." United States v. Davis, 48 F.3d 277, 279 (7th Cir.1995).
Both interpretations have led to bizarre results.
In Davis, the defendant pointed a gun at a teller in a credit union parking lot and forced her to open the building so he could rob it. Rejecting the kidnapping analogy, the Seventh Circuit said this satisfied § 2113(e) and affirmed his conviction. Id. at 278-79. In Sanchez, the defendant held a knife to a bank teller's throat for approximately 10 seconds while he moved through the bank to make his escape. Applying the kidnapping analogy, Judge Tashima found no violation of § 2113(e) and acquitted the defendant in a bench trial. Finally, in Marx, the defendants forced their way into a bank president's home, tied one bomb to his chest and another under a bed to which the president's family was tied. They then forced the president to go to his bank and cash a forged cashier's check. Applying the kidnapping analogy, the Tenth Circuit found no violation of § 2113(e) and reversed the defendant's convictions. Marx, 485 F.2d at 1181-82, 1186.
Marx clearly points out the problem inherent in trying to tie one standard of criminal conduct to another. No review of the facts of that case can lead a reasonable person to any conclusion other than the bank president was forced without his consent to accompany the thieves and follow their instructions. Yet, as the Tenth Circuit held, Marx' facts did not fit the federal kidnapping statutory requirement of an "unlawful seizure and holding followed by interstate transportation." Marx, 485 F.2d at 1186. Under some sets of facts, the kidnapping analogy might *827 be appropriate. In this case, however, the defendant is not charged with kidnapping a hostage "in an attempt to escape arrest or imprisonment for bank robbery." Etheridge, 424 F.2d at 962. Instead, the government alleges he coerced a member of his own street gang to assist him in robbing a bank, with proceeds presumably split between the two would-be robbers. Marx illustrates why, in this case, the kidnapping test is unwieldy and inappropriate.
The more appropriate definition of forced accompaniment without consent in 2113(e) cases is the test the Sixth Circuit already applies when a criminal defendant asserts a duress defense. "To provide a legal excuse for any criminal conduct ... the compulsion must be present and immediate and of such a nature to induce a well-founded fear of impending death or serious bodily injury." United States v. Martin, 740 F.2d 1352, 1361 (6th Cir.1984). This duress definition serves three useful purposes:
1. It permits the enhanced penalties of § 2113(e) to come into play when a bank robber forces someone to unwillingly aid in his theft or flight.
2. It provides a workable test with which courts are already familiar.
3. Finally, it places the proper fact-finding focus on both the actions of the compeller ("force") and the response of the compellee ("without the consent"), more closely tracking the terms of the statute than the kidnapping analogy.
In this case, the Government apparently plans to offer no evidence that Nelson physically forced Hogan, by use or threat of immediate violence, to participate in the Citizens Bank robbery. Instead, the Government says in its pleadings it will offer proof that Nelson threatened Hogan with reprisal from his fellow gang members if he didn't go along with the robbery.
As evidence, the Government has proffered a videotaped interview Nelson gave Nashville police the day of his arrest. Nelson admits in the interview that he and Hogan belonged to the same Los Angeles-based gang, the Rolling '90s. Nelson states that he happened upon Hogan in Nashville soon after arriving in town and that within two weeks, they attempted the Citizens Bank robbery.
The interview is, however, inconclusive as to the allegation of forced accompaniment. At the beginning of his confession, Nelson immediately volunteers that "I made him [Hogan] go with me, man. I made him go. He didn't want to do it at first." He later offered:
NELSON: I forced him to come with me. He didn't want to come.
OFFICER: What do you mean, you forced him? Forced him from where?
NELSON: You know, I made him. I'm like, you wanna make some f--in' money, you know what I'm saying? I'm the one who forced the issue up on him to go, you know, go up there, get us some money so we could get back to California.
. . . .
OFFICER: Well, how did you force him? You couldn't really force him.
NELSON: Well, I told him, you know, you don't go in there and do this bank with me, you know, we get back where we staying at, you know, I'll have the homies rush you and beat you up.[1] He didn't wanna go back with that type, you know, that type of jacket on, his jacket, you know what I'm saying?
OFFICER: OK, so you more or less threatened him?
NELSON: Mmm-hmm.
These statements, however, are contradicted by other statements Nelson makes in the same interview. First, Nelson says Hogan alone voluntarily procured the guns and the getaway car for the robbery and that Hogan drove the car to the Citizens Bank because Nelson couldn't drive the straight-shift vehicle. Though Nelson says he placed Hogan in front of him as they entered the bank, he also says Hogan carried a loaded 9mm pistol, just as he did, and that the robbery plan *828 called for Hogan alone to be armed while Nelson gathered the bank's cash into a plastic bag. Further, it appears from the interview that Nelson is unaware that Hogan is dead ("You know, I'm gonna take all the blame for all that sh--, you know. Is he shot bad?"). A factfinder might conclude that Nelson's statements were designed to protect the 17-year-old Hogan, who Nelson refers to at one point as "my youngster."
Even applying the Martin duress standard for 2113(e), as this Court will instruct the jury it must, there remains a factual dispute whether Hogan was compelled by a present and immediate "well-founded fear of impending death or serious bodily injury." Martin, 740 F.2d at 1361. "`No matter how conclusive the evidence may be in a criminal case on a controverted material fact, the trial judge cannot make the finding or withdraw the issue from the jury.'" United States v. Yannott, 42 F.3d 999, 1005 (6th Cir.1994) (quoting United States v. McKenzie, 301 F.2d 880, 882 (6th Cir.1962)). The factual question of whether Nelson forced Hogan to accompany him in the bank robbery is properly decided by a jury. Id.
For these reasons, Nelson's motion to dismiss Count 2 is hereby DENIED.
Count 3: "If Death Results"
Nelson's motion as to Count 3 requires first-impression analysis as to Congress' intent in amending the sixty-year-old bank robbery statute by the Violent Crime Control and Law Enforcement Act of 1994 ("the 1994 Act"), Pub.L. 103-322, 108 Stat.Ann. 1796 (1994).
The federal bank robbery statute remained unchanged for sixty years after its passage in 1934. Section 2113(e) provided that when the defendant killed someone or forced someone to accompany him in the process of robbing a bank, a jury could, in its discretion, sentence the defendant to death. That changed with Furman v. Georgia, 408 U.S. 238, 92 S. Ct. 2726, 33 L. Ed. 2d 346 (1972), which found such discretion in giving death sentences unconstitutional. Congress did not reinstate the death penalty for § 2113(e) violations until, in the largest-ever expansion of the federal death penalty, it passed the Violent Crime Control and Law Enforcement Act of 1994 ("the Act"):
BANK ROBBERY. Section 2113(e) of title 18, United States Code, is amended by striking "or punished by death if the verdict of the jury shall so direct" and inserting "or if death results shall be punished by death or life imprisonment."
Pub.L. 103-322, § 60003(a)(9), 108 Stat.Ann. 1796, 1969 (1994). Nelson argues that § 2113(e) is unconstitutionally vague as applied to him because it fails to draw a causal nexus between his conduct and the death of Terrance Hogan sufficient to permit criminal prosecution. He argues the lack of such a nexus violates his constitutional rights to due process and to be free of cruel and unusual punishment. On this ground, he seeks dismissal of Count 3.
The Government asserts the 1994 Act simply broadened the scope of the "felony murder" aspect of § 2113. "If Congress had intended to limit the clause `if death results' to apply only to persons killed by the defendant, then there would have been no need to add the clause, since the statute contains language to this effect." Response to Motion to Dismiss at 5.
In order to assess these arguments, it is necessary to analyze what federal felony murder requires and whether amended § 2113(e) meets those requirements as to, specifically, an actus reus and proximate cause.
The Sixth Circuit has held that one who commits the acts specifically proscribed in § 2113(e) killing or forcing someone to accompany him without consent has committed a unique offense distinguishable from the simple bank robbery prohibition of § 2113(a). United States v. Poindexter, 44 F.3d 406, 408-09 (6th Cir.1995); Etheridge, 424 F.2d at 962. Poindexter likened § 2113(e) to felony murder in holding that prosecutors need not prove a defendant possessed a specific mens rea to kill in § 2113(e) cases. Id. at 409.[2]*829 But both Poindexter and Etheridge specifically analyze whether the defendant committed one of the two acts criminalized by § 2113(e). See Poindexter, 44 F.3d at 408 (quoting Black's Law Dictionary "that `to kill' is `[t]o deprive of life, to destroy the life of an animal or person'"). The Government concedes in this case, as it must, that Nelson has not killed according to Poindexter's definition.
The Government, therefore, asks the Court to shift its focus from actus reus to what it characterizes as the statute's prohibited result: a death of a person.
There is constitutional precedent for transferring the guilt for another's act to an accomplice under a felony murder theory. Tison v. Arizona, 481 U.S. 137, 158, 107 S. Ct. 1676, 1688, 95 L. Ed. 2d 127 (1987). Yet, Count 3 goes beyond Tison. In Tison, the Supreme Court let stand a felony murder conviction under Arizona law of two sons who helped their father escape from prison. The father executed hostages taken along the way with no immediate assistance from the sons. Id. at 140-41, 107 S.Ct. at 1679. Nevertheless, the Supreme Court held that the Tisons' major personal involvement in the felony and their reckless indifference to human life (if proven on remand) was sufficient to permit their convictions and death penalties under Arizona felony murder law. Id. at 158, 107 S.Ct. at 1688.
Tison satisfied the actus reus requirement by transferring culpability for an act from one guilty party to another. Neither the Sixth Circuit nor any other federal court, however, has authorized prosecution if a death results from a cause other than a culpable party's "killing." Further, research finds no case under the federal murder statute, 18 U.S.C. § 1111, or any of the several "if death results" statutes in which a federal court has permitted prosecution for a killing when a law enforcement officer pulled the trigger and a co-felon was the victim.[3]
Courts generally do not apply felony murder to third-party killings because the defendant's acts do not rise to another necessary element of criminal culpability: proximate cause. "[A] felon is not responsible for a homicide caused by some other person. It is not the purpose of the felony murder rule to foist authorship of a homicide upon a felon; the purpose is merely to clothe the felon's act of killing with malice." 2 Wharton's Criminal Law § 151 315-16 (15th ed. 1994); State v. Severs, 759 S.W.2d 935, 938 (Tenn.Ct. Crim.App.1988) (holding "the theory of proximate cause in relation to felony-murder is limited to acts committed by the accused or his accomplices which actually produce his death"); but c.f. United States v. Martinez, 16 F.3d 202, 207 (7th Cir.1994) (Posner, C.J., noting and criticizing this rule in dicta as "los[ing] sight of the deterrent function" of felony murder).
The government's position Nelson committed a felony, someone died, hence criminal liability essentially writes the probable cause requirement out of § 2113(e). The Eighth Circuit, sitting en banc, has rejected such an argument in a case involving an analogous provision, 18 U.S.C. § 844(i),[4] which makes the death penalty or life imprisonment available "if death results" from an *830 arson. United States v. Ryan, 41 F.3d 361, 367 (8th Cir.1994). Ryan affirmed jury instructions requiring the government to prove that the defendant's "conduct was a proximate cause of [the victims'] deaths" and that "the defendant's conduct has such an effect in producing the deaths as to lead a reasonable person to regard his conduct as a cause of the deaths." Id.
Therefore, if Nelson is correct, § 2113(e) is unconstitutional as applied to him. There is, however, a reading of the statute more in tune with Congress' apparent intent in amending § 2113(e) that does not require the Court to reach the constitutional question. See Ashwander v. Tennessee Valley Authority, 297 U.S. 288, 346, 56 S. Ct. 466, 482, 80 L. Ed. 688 (1936).
The majority of circuits that recently have examined "if death results" clauses hold that such clauses do not create independent criminal offenses; instead, they enhance penalties for extant offenses. United States v. Rivera-Gomez, 67 F.3d 993, 1000 (1st Cir.1995); United States v. Oliver, 60 F.3d 547, 551-54 (9th Cir.1995); United States v. Williams, 51 F.3d 1004, 1011 (11th Cir.1995) (all three interpreting 18 U.S.C. § 2119(3)); United States v. Patterson, 38 F.3d 139, 143-44 (4th Cir.1994) (interpreting 21 U.S.C. § 841(b)(1)(C)); United States v. Ryan, 9 F.3d 660, 667-69 (8th Cir.1993) (interpreting 18 U.S.C. § 844(i)), aff'd 41 F.3d 361 (8th Cir.1994) (en banc).[5] These circuit courts have examined the statutory text as well as relevant legislative history to determine whether Congress enacted a substantive offense or a penalty enhancement by an "if death results" clause. McMillan v. Pennsylvania, 477 U.S. 79, 85, 106 S. Ct. 2411, 2415-16, 91 L. Ed. 2d 67 (1986); Oliver, 60 F.3d at 552.
The structure of § 2113(e) runs as follows. First, the statute identifies the parties within its scope: "Whoever, in committing any offense defined in this section, or in avoiding or attempting to avoid apprehension for the commission of such offense, or in freeing himself or attempting to free himself from arrest or confinement for such offense...." Next, the statute identifies the actus reus required for violation: "... kills any person, or forces any person to accompany him without the consent of such person." Finally, § 2113(e) sets out the penalties incurred by eligible persons who commit the prohibited acts: "... shall be imprisoned not less than ten years, or if death results shall be punished by death or life imprisonment" (italics added to identify 1994 amendment).
This structural analysis of § 2113(e) persuasively suggests the 1994 amendment acts as a penalty enhancer, Oliver, 60 F.3d at 553 (finding "if death results" provision did not "redefine the essential elements of carjacking" and that it could not stand alone as a separate offense); Ryan, 9 F.3d at 667, with the "if death results" factor to be determined at sentencing for possible application of a death sentence or life imprisonment.[6]See Pub.L. 103-322, § 60002, 108 Stat.Ann. 1796, 1964-66, codified at 18 U.S.C. § 3593 (1994) (providing procedures for bifurcated post-conviction penalty hearing when government seeks death penalty).
*831 The legislative history of the 1994 amendment to § 2113(e) also indicates Congress intended merely to enhance the penalties for bank robbery. H.R. 4032, the death penalty legislation eventually incorporated into the 1994 Act, "authorizes capital punishment for many other offenses and creates several new criminal offenses for which the death penalty is permitted.... The remainder of the offenses for which this legislation authorizes capital punishment are those in which a death results." Judiciary Committee Report at 12. The Judiciary Committee listed "new" offenses for which H.R. 4032 authorized the death penalty, such as murder by a federal prisoner, 18 U.S.C. § 2119, and drive-by shootings resulting in death, 18 U.S.C. § 922, while listing "bank robbery where death results" among the already-existing offenses.
Finally, the lengthy Congressional debates surrounding passage of the 1994 Act emphasize time and again that lawmakers believed they were expanding the federal death penalty, not creating new federal offenses. See, e.g., 140 Cong.Rec. E1851-01 (daily ed. Sept. 13, 1994) (speech of Rep. Rostenkowski) ("The death penalty is expanded to include over 60 violent crimes....").
Courts properly have worried whether interpreting such statutes as penalty-enhancers begs other issues, principally the constitutionality of lowering the burden of proof by trying the critical proximate cause question under a preponderance standard at sentencing rather than under a reasonable-doubt standard at trial. "[T]he lagniappe might begin to overwhelm the main course. In all probability, there are constitutional limits on the way sentencing factors can be deployed in the punishment of a substantive offense." Rivera-Gomez, 67 F.3d at 1001. This case does not yet reach such a limit. The Government is statutorily barred from seeking the death penalty for Nelson. 18 U.S.C. § 3591(a)(2)(D). As for a potential life sentence, Nelson's previous criminal record (he says was in Tennessee fleeing a California parole violation), his alleged use of a dangerous weapon in committing these offenses, and the fact that he faces a mandatory minimum of 15 years in prison if convicted of counts 2 and 4 suggest that while Rivera-Gomez' concerns are real, in this case, they are not present.
Nonetheless, in order to avoid having to declare § 2113(e) unconstitutional as applied, to follow precedent, and to be true to the statutory structure and legislative history, the Court holds that the "if death results" clause of § 2113(e) serves to enhance the penalty for bank robberies where death is proximately caused by the defendant's acts. Congress did not create the offense of "bank robbery where death results" in 1994.
Therefore, Nelson's motion as to Count Three is granted and the charge DISMISSED.
It is so ORDERED.
ORDER
For the reasons stated in the accompanying Memorandum and Opinion:
1. Defendant's motion to dismiss Count Two of the indictment in the above-styled action is hereby DENIED;
2. Defendant's motion to dismiss Count Three of the indictment in the above-styled matter is hereby GRANTED and Count Three DISMISSED.
It is so ORDERED.
NOTES
[1] The Government indicates it plans to call a Los Angeles police detective as an expert witness to "define the term `force' as it relates to gang activity and gang relationship of street crimes, i.e., crips."
[2] Other courts have noted this aspect of § 2113(e), permitting prosecutions despite a lack of proof as to a bank robber's specific intent to kill. United States v. Jones, 678 F.2d 102, 106 (9th Cir.1982); United States v. Delay, 500 F.2d 1360, 1362-64 (8th Cir.1974).
[3] A paucity of precedent holds criminal liability is appropriate for killings of accomplices, United States v. El-Zoubi, 993 F.2d 442, 449 (5th Cir. 1993) (apparently the only federal appellate court to so hold), even by law enforcement officers, see, e.g., Commonwealth v. Thomas, 382 Pa. 639, 117 A.2d 204 (1955), overruled, Commonwealth v. Redline, 391 Pa. 486, 137 A.2d 472 (1958), but these cases have been roundly criticized. See People v. Washington, 62 Cal. 2d 777, 44 Cal. Rptr. 442, 445, 402 P.2d 130, 133 (1965) (Trainor, C.J.); Recent Development, Felony-Murder Rule Felon's Responsibility for Death of Accomplice, 65 Colum.L.Rev. 1496, 1497 (1965).
[4] maliciously damages or destroys, or attempts to damage or destroy, by means of fire or explosive, any building, vehicle, or other real or personal property used in interstate or foreign commerce or in any activity affecting interstate or foreign commerce shall be imprisoned for not more than ten years or fined not more than $10,000, or both; ... and if death results to any person ... shall also be subject to imprisonment for any term of years, or to the death penalty or to life imprisonment as provided in § 34 of this title.
18 U.S.C. § 844(i).
[5] The Fifth Circuit, apparently alone, has held that an "if death results" clause creates a unique offense. United States v. Triplett, 922 F.2d 1174 (5th Cir.1991). Like Ryan, Triplett involved the federal arson statute, which provides for the death penalty or life imprisonment "if death results to any person." 18 U.S.C. § 844(i). The Fifth Circuit found the "if death results" clause gave rise to a separate offense, requiring the Government to prove beyond a reasonable doubt that "the fire resulted in the death of a person." Triplett, 922 F.2d at 1177. In Triplett, prosecutors met their burden and the Fifth Circuit affirmed Triplett's conviction under 18 U.S.C. § 844(i). Id. at 1176.
[6] The new federal death penalty procedural scheme resolves some of these questions in capital cases. In § 2113(e) capital prosecutions, the government will have to prove "the defendant, as determined beyond a reasonable doubt at the [sentencing] hearing under § 3593" caused the death of the person in question. 18 U.S.C. § 3591(a)(2). The sentencer also must find at least one of the aggravating factors listed in 18 U.S.C. § 3592 to sentence the defendant to die. The Supreme Court may have signaled that the 1994 Act's sentence-enhancing provisions and procedural scheme are constitutional when it held recently that the use of "offender-specific information at sentencing without the procedural protections attendant at a criminal trial" did not offend the Double Jeopardy Clause. Witte v. United States, ___ U.S. ___, 115 S. Ct. 2199, 2201, 132 L.Ed.2d. 351, 364 (1995). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580435/ | 122 F.Supp.2d 335 (2000)
Mildred GONZALEZ, Plaintiff,
v.
NEW YORK STATE DEPARTMENT OF CORRECTIONAL SERVICES FISHKILL CORRECTIONAL FACILITY, Corrections Officer Herbert Reilly, Sergeant Mann, Captain Ercole, Deputy Superintendent of Security Clark as aiders and abettors, Defendants.
No. 00-CV-0632.
United States District Court, N.D. New York.
November 29, 2000.
*336 *337 Law Offices of Moran & Gottlieb, Kingston, NY (Steven Gottlieb, of counsel), for Plaintiff.
*338 Office of Attorney General, Albany, NY (Krista Zinser, Asst. Atty. Gen., of counsel), for Defendants.
MEMORANDUMDECISION & ORDER
McAVOY, District Judge.
Plaintiff Mildred Gonzalez commenced the instant action pursuant to Title VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000e, et seq., and 42 U.S.C. § 1983 contending that she was discriminated against with respect to the terms and conditions of her employment on account of her gender, race, color, and national origin. Presently before the Court are: (1) Defendants' motion pursuant to FED. R. CIV. P. 12(b)(6) seeking to dismiss the Complaint for failure to state a claim; and (2) Plaintiff's cross-motion for leave to file an amended complaint.
I. BACKGROUND
Because this matter is before the Court on Defendants' motion pursuant to FED. R. CIV. P. 12(b)(6), the following facts elicited from the Complaint are accepted as true and presented in the light most favorable to Plaintiff.
Plaintiff is a Hispanic female employed by the New York State Department of Correctional Services ("DOCS") at the Fishkill Correctional Facility ("Fishkill") in the City of Beacon, County of Dutchess, State of New York. Defendant Herbert Reilly ("Reilly") was also employed as a corrections officer at Fishkill. Defendants Sergean Mann ("Mann"), Captain Ercole ("Ercole"), and Deputy Superintendent of Security Services Clark ("Clark") are Plaintiff's superiors and supervisors.
In January 1996, Plaintiff's husband, Jose Gonzalez, who also is a corrections officer at Fishkill, wrote an affirmative action report stating that Reilly created an offensive and hostile work environment on account of race, color, and national origin. Shortly thereafter, Reilly filed an internal complaint against Plaintiff claiming that she was after his job and that she abused male inmates.
On February 2, 1996, Plaintiff complained to her supervisor, Ercole, that Reilly had been taunting her, making faces at her, and throwing papers at her desk. Plaintiff told Ercole that Reilly had stated that "I would have liked to marry you, if your husband wasn't around." Plaintiff also complained to Ercole that "based on the sexually harassing actions that she had experienced and the ongoing, retaliatory and hostile behaviors of Herbert Reilly towards her, that Herbert Reilly was going to `Do something to her.'" Compl. at ¶ 23. Ercole took no action on Plaintiff's complaint.
Following Plaintiff's meeting with Ercole, she began to experience increased problems with Reilly. Reilly entered Plaintiff's job area daily and constantly taunted her with looks, threw paper at her, and dumped trash in her area. On numerous occasions (on February 9, 1996, February 27, 1996, February 29, 1996, April 16, 1996, August 22, 1996, and May 5, 1997), Reilly and the other Defendants refused to respond to Plaintiff's requests for assistance when dealing with inmates, thereby putting her into a life-threatening and dangerous situation. Mann and Ercole knew of the situation and did nothing in response. Moreover, male officers received assistance when they asked for it, but she, as a female, did not.
On February 27, 1996, Reilly intentionally bumped into Plaintiff with great force and then stated "Don't say anything" in a threatening tone. Later that day, Reilly shoved Plaintiff.
On March 4, 1996, Plaintiff discovered that her locker had been defaced, that her name had been crossed off of it, and that it was filled with trash. Based on Reilly's actions that day, Plaintiff believed this to be Reilly's doing.
On May 19, 1996, Plaintiff changed her work area location, purportedly because of the hostile work environment created by *339 Defendants. On August 22, 1996, ninety inmates were put under Plaintiff's single control. When Plaintiff contacted Mann for aid, he instructed Reilly to assist Plaintiff. Reilly refused. Mann refused to write up Reilly for insubordination.
Reilly frequently used derogatory terms and profanity, such as "Niggers" and "Spics," in Plaintiff's presence and often referred to women as "bitches" despite Plaintiff's requests that he discontinue the use of such language. Reilly also often used other profane language, in spite of Plaintiff's requests that he stop doing so.
In or about May 1997, Plaintiff complained to Mann about Reilly, but Mann declined to take any action. Also in May 1997, Reilly threatened Plaintiff in the presence of other corrections officers saying something to the effect of "Gonzalez is going to pay for this."
On June 12, 1997, Plaintiff received a package at her home addressed to Darnell Broom. Broom was an inmate in Plaintiff's work area at Fishkill. Plaintiff brought the package to Ercole who opened the box and found a book entitled "Secrets to a Better Sex Life." Plaintiff contends that Reilly was the likely source of the package. Ercole investigated the matter and determined that Broome did not send the book to Plaintiff. Neither Ercole nor Mann took any further action with respect to the package or investigated Reilly.
On June 25, 1997, Plaintiff received a subscription to "Penthouse" at her home addressed to Mitchell York, another inmate in her area. An identical incident occurred shortly thereafter, when Plaintiff received another "Penthouse" subscription at her home addressed to Angel Figuerca, another inmate in her work area. Plaintiff obtained copies of the subscription orders from the magazine's publishers and contends that the writing on those forms matches Reilly's handwriting.
Thereafter, Plaintiff filed a criminal complaint with the New York State Police. Reilly was arrested on charges of aggravated harassment. Reilly admitted to the police that he sent the subscriptions. Plaintiff obtained a protective order against Reilly lasting until December 22, 1997.
On July 24, 1997, Defendants suspended Reilly from his position because of his arrest. On October 5, 1997, Mann informed Plaintiff that both she and Reilly would be taking the sergeant's exam at Fishkill. Plaintiff objected and stated that she had an order of protection against Reilly. Ercole also telephoned Plaintiff to tell her that Reilly would be taking the test with her. Ercole apparently stated that he would not preclude Reilly from taking the exam notwithstanding the protective order.
On the morning of the exam, Plaintiff learned that Reilly was going to take the exam at another facility. She also learned that Reilly was transferred to another facility.
On November 28, 1997, Plaintiff filed a charge of discrimination with the New York State Division of Human Right ("DHR"). On February 8, 2000, she received a right to sue letter from the Equal Employment Opportunity Commission ("EEOC"). Plaintiff then commenced the instant action pursuant to Title VII and 42 U.S.C. § 1983 claiming discrimination on account of her gender, race, color, and national origin. Presently before the Court are Defendants' motion to dismiss the Complaint and Plaintiff's cross-motion to amend the Complaint.
II. DISCUSSION
A. Rule 12 Standard
As the Second Circuit has stated:
Dismissal of a complaint pursuant to FED. R. CIV. P. 12(b)(6) for failure to state a claim upon which relief can be granted is not warranted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. The task of the court in ruling on a Rule *340 12(b)(6) motion is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof. The court is required to accept as true all factual allegations in the complaint and to consider documents attached to or incorporated by reference in the complaint. Although bald assertions and conclusions of law are insufficient, the pleading standard is nonetheless a liberal one.
Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir.1998) (internal quotations and citations omitted). "The review of such a motion is limited, and the issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Recovery may appear remote and unlikely on the face of the pleading, but that is not the test for dismissal. Furthermore, the standard is applied with even greater force where the plaintiff alleges civil rights violations." Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir.1996) (internal quotations, citations, and alterations omitted). With this standard in mind, the Court will now address Defendants' motion to dismiss.
B. Eleventh Amendment
Defendants move to dismiss all state law causes of action against DOCS and Fishkill because the Eleventh Amendment bars such an action in federal court. It is well-settled that states may not be sued in federal court absent a clear congressional abrogation of their immunity or the state's express consent. See Richardson v. New York State Dept. of Correctional Service, 180 F.3d 426, 448 (2d Cir.1999). Here, Congress has not abrogated New York State's Eleventh Amendment immunity as to the state law causes of action and the State has not consented to such suits. Accordingly, because Fishkill and the DOCS are arms of the state, the state law causes of action against them must be dismissed. See id. at 449.
C. Failure to Serve Defendant Clark
Defendants move to dismiss the action against Clark because Plaintiff has failed to serve him in accordance with FED. R. CIV. P. 4(m). As will be discussed infra at § II(f), Plaintiff's opposition papers are being stricken for failure to comply with FED. R. CIV. P. 11(a). Thus, Plaintiff has failed to demonstrate any cause for the failure to serve Clark. Even considering Plaintiff's defective opposition papers, her only excuse is that Defendants would not accept service on Clark's behalf and that "despite diligent efforts," she has obtained only a post office box as a new address for Clark. However, there is no indication of what "diligent" efforts Plaintiff undertook to serve Clarke and Plaintiff has not requested additional time within which to serve Clark. Accordingly, Plaintiff's Complaint against Clark is dismissed without prejudice pursuant to FED. R. CIV. P. 4(m).
D. Individual Liability Under Title VII
Defendants correctly note that individuals may not be held liable under Title VII. See Wrighten v. Glowski, 232 F.3d 119 (2d Cir.2000); Whidbee v. Garzarelli Food Specialties, Inc., 223 F.3d 62, 74 (2d Cir.2000). Accordingly, the Title VII claims against the individual Defendants are dismissed.
E. Timeliness
Pursuant to 42 U.S.C. § 2000e-5(e), a charge of discrimination must be filed within 300 days "after the alleged unlawful employment practice occurred." Quinn v. Green Tree Credit Corp., 159 F.3d 759, 765 (2d Cir.1998). "This requirement functions as a statute of limitations in that discriminatory incidents not timely charged before the EEOC will be time-barred upon the plaintiff's suit in district court." Id. (internal citations omitted).
Because Plaintiff filed her charge of discrimination with the DHR on November 28, 1997, her Title VII cause of action will not include any incidents that occurred *341 prior to February 2, 1997 unless she can demonstrate that she falls under the continuing violation exception.
"The continuing violation doctrine allows a plaintiff in certain circumstances to recover on the basis of an ongoing policy or practice of illegal activity initiated prior to the limitations period." Pollis v. New Sch. for Soc. Research, 132 F.3d 115, 118 (2d Cir.1997). "The continuing-violation exception `extends the limitations period for all claims of discriminatory acts committed under an ongoing policy of discrimination even if those acts, standing alone, would have been barred by the statute of limitations.'" Quinn, 159 F.3d at 765 (quoting Annis v. County of Westchester, 136 F.3d 239, 246 (2d Cir.1998)). "[M]ultiple incidents of discrimination, even similar ones, that are not the result of a discriminatory policy or mechanism do not amount to a continuing violation.'" Id. (quoting Lambert v. Genesee Hosp., 10 F.3d 46, 53 (2d Cir.1993), cert. denied, 511 U.S. 1052, 114 S.Ct. 1612, 128 L.Ed.2d 339 (1994)). "However, a continuing violation may be found `where there is proof of specific ongoing discriminatory polices or practices, or where specific and related instances of discrimination are permitted by the employer to continue unremedied for so long as to amount to a discriminatory policy or practice.'" Id. (quoting Cornwell v. Robinson, 23 F.3d 694, 704 (2d Cir.1994)). The continuing violation doctrine is disfavored and will be applied only upon a showing of compelling circumstances. See Findlay v. Reynolds Metals Co., 82 F.Supp.2d 27, 37 (N.D.N.Y.2000) (McAvoy, J.) (and cases cited therein).
Liberally read, the Complaint alleges a pattern of discriminatory conduct beginning in January 1996 and extending until October 1997 that DOCS and Fishkill permitted to continue unremedied. The acts are purported to be part of a single discriminatory or retaliatory scheme and consist of similar, related incidents. This is sufficient at this early stage of the litigation to keep in all of Plaintiff's claims notwithstanding the 300 day bar. Defendants may, of course, later move for summary judgment on this issue after there has been discovery.
F. Failure to State a Claim
Defendants next move to dismiss claiming that the Complaint fails to state a claim against the DOCS or Fishkill. Defendants contend that there are no facts in the Complaint suggesting that Plaintiff was discriminated against on account of her gender, race, color, or national origin. Defendants further assert that the incidents alleged in the Complaint are insufficient as a matter of law to constitute a hostile work environment. As to the retaliation claim, Defendants assert that Plaintiff has failed to properly allege adverse employment action or sufficient facts demonstrating a causal connection between her alleged protected activity and any adverse employment action.
Plaintiff's response consists of an unsigned attorney's affidavit along with supporting exhibits. This presents numerous problems. First, it is well-settled that in acting upon a motion to dismiss, the Court is not to consider materials outside of the pleadings. See, e.g., Friedl v. City of New York, 210 F.3d 79, 83 (2d Cir.2000). Plaintiff is apparently proceeding upon the mistaken belief that Defendants filed a motion for summary judgment pursuant to FED. R. Civ. P. 56. Defendants' notice of motion, however, makes it clear that they are moving pursuant to Rule 12(b) to dismiss the Complaint for failure to state a claim upon which relief may be granted. Accordingly, the Court will consider only the pleadings.
Second, pursuant to the Court's local rules, Plaintiff was required to submit a memorandum of law, which she did not, and was not permitted to submit an affidavit, which she did. See N.D.N.Y.L.R. 7.1(a). The affidavit submitted contains legal argument in violation of the local rules. See id. at 7.1(a)(2).
*342 Third, pursuant to FED. R. CIV. P. 11(a), "[a]n unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to the attention of the attorney for party." Defendant's reply papers dated November 6, 2000 point out Plaintiff's counsel's failure to sign his opposition papers. To date, Plaintiff's counsel has failed to correct this error. Accordingly, the Court strikes Plaintiff's opposition papers from the record (docket # 21). The Court will now turn to the merits of Defendant's motion to dismiss.
To state a claim under Title VII, Plaintiff must show that she is (1) a member of a protected class, (2) qualified for and satisfactorily performing her job, (3) subjected to an adverse employment decision, and that (4) this adverse decision occurred under circumstances giving rise to an inference of discrimination. Tarshis v. Riese Organization, 211 F.3d 30, 36 (2d Cir.2000).
A plaintiff alleging racial or gender discrimination ... must do more than recite conclusory assertions. In order to survive a motion to dismiss, the plaintiff must specifically allege the events claimed to constitute intentional discrimination as well as circumstances giving rise to a plausible inference of racially discriminatory intent.... Therefore, a complaint consisting of nothing more than naked assertions, and setting forth no facts upon which a court could find a violation of the Civil Rights Acts, fails to state a claim under Rule 12(b)(6).
Yusuf v. Vassar College, 35 F.3d 709, 713 (2d Cir.1994) (internal quotations and citations omitted).
The Complaint clearly satisfies the first element (protected class) because Plaintiff alleges that she is a Hispanic female. Although the Complaint does not specifically address the issue of job qualification, the second element, this element is not at issue here. In any event, there is no suggestion that Plaintiff was not qualified for, or otherwise did not satisfactorily perform, her job.
The third and fourth elements are claimed to be satisfied because of the alleged hostile work environment in which Plaintiff was forced to work that adversely impacted the terms and conditions of her employment. See Harris v. Forklift Systems, Inc., 510 U.S. 17, 114 S.Ct. 367, 370, 126 L.Ed.2d 295 (1993); see also Burlington Indus. Inc. v. Ellerth, 524 U.S. 742, 118 S.Ct. 2257, 2272, 141 L.Ed.2d 633 (1998) (Thomas, J. dissenting); Adams v. New Jersey Transit Rail Operations, 2000 WL 224107, at * 10 (S.D.N.Y.2000). Thus, the Court will now address the hostile work environment claim.
1. Hostile Work Environment
Defendants assert that Plaintiff's Complaint fails to state a claim for a hostile work environment because most of the alleged incidents are non-sexual in nature, there is no indication that any of the actions taken by Defendants were on account of Plaintiff's gender, and, at most, Plaintiff was subjected to isolated incidents of harassment insufficient to rise to the level of a hostile work environment.
Title VII is violated when sexual harassment is so severe or pervasive as to alter the conditions of the Plaintiff's employment and create an abusive working environment. See Faragher v. City of Boca Raton, 524 U.S. 775, 118 S.Ct. 2275, 2283, 141 L.Ed.2d 662 (1998) (citing Meritor Savings Bank v. Vinson, 477 U.S. 57, 106 S.Ct. 2399, 2405-06, 91 L.Ed.2d 49 (1986)); Brennan v. Metropolitan Opera Ass'n, Inc., 192 F.3d 310 (2d Cir.1999); Richardson, 180 F.3d at 436. "Title VII affords employees the right to work in an environment free from discriminatory intimidation, ridicule, and insult." Meritor, 106 S.Ct. at 2404 (1986); see also Williams v. County of Westchester, 171 F.3d 98, 100 (2d Cir.1999).
To be actionable, "[t]he conduct alleged must be severe and pervasive *343 enough to create an environment that `would reasonably be perceived, and is perceived, as hostile or abusive.'" Schwapp v. Town of Avon, 118 F.3d 106, 110 (2d Cir.1997); see also Faragher, 118 S.Ct. at 2283; Brennan, 192 F.3d at 318. In determining whether an environment is sufficiently hostile or abusive, courts examine the totality of the circumstances, see Richardson, 180 F.3d at 437, including: (1) the frequency of the discriminatory conduct; (2) its severity; (3) whether it is physically threatening or humiliating or a mere offensive utterance; (4) whether it unreasonably interferes with an employee's work performance; and (5) what psychological harm, if any, resulted. See Faragher, 118 S.Ct. at 2283; Richardson, 180 F.3d at 437.
"Simple teasing, offhand comments, and isolated incidents (unless extremely serious), will not amount to discriminatory changes in the terms and conditions of employment." Id. (internal citations and quotations omitted); see also Richardson, 180 F.3d at 437. "In order to meet [her] burden, the plaintiff must show `more than a few isolated incidents of [gender or race-based] enmity,' `there must be a steady barrage of opprobrious [gender or race-based] comments,' evidence solely of `sporadic [gender or race-based] slurs' does not suffice." Williams, 171 F.3d at 100 (quoting Snell v. Suffolk County, 782 F.2d 1094, 1103 (2d Cir.1986); Schwapp, 118 F.3d at 110); see also Brennan, 192 F.3d at 318; Richardson, 180 F.3d at 437. Title VII is not to be used as "a general civility code," but is actionable only for conduct sufficiently "extreme to amount to a change in the terms and conditions of employment." Williams, 171 F.3d at 100. Pervasiveness and severity are independent and equal grounds on which to support violations of Title VII. See Faragher, 118 S.Ct. at 2283 (extremely serious isolated incidents may be actionable); Harris v. Forklift Systems, Inc., 510 U.S. 17, 114 S.Ct. 367, 370, 126 L.Ed.2d 295 (1993) (there must be conduct that is "sufficiently severe or pervasive"); see also Witt v. Roadway Express, 136 F.3d 1424, 1432 (10th Cir.), cert. denied, 525 U.S. 881, 119 S.Ct. 188, 142 L.Ed.2d 153 (1998); Quinn, 159 F.3d at 768; Tomka, 66 F.3d at 1305; Torres v. Pisano, 116 F.3d 625, 631 n. 4 (2d Cir.), cert. denied, 522 U.S. 997, 118 S.Ct. 563, 139 L.Ed.2d 404 (1997).
To establish a hostile work environment claim, "[a] plaintiff must also demonstrate that she was subjected to the hostility because of membership in a protected class. In other words, an environment which is equally harsh for both men and women [or for all races] ... does not constitute a hostile working environment under the civil rights statutes." Brennan, 192 F.3d at 318.
The Complaint clearly alleges inappropriate conduct by Reilly towards Plaintiff. The Complaint alleges that Reilly frequently used the terms "niggers," "spics," and "bitches," and other offensive language, that he frequently glared at her, that he often dumped trash in her work area, that he defaced her locker and filled it with trash, that, on several occasions, he made physically inappropriate contact with Plaintiff, that he refused to assist her when she needed aid thereby jeopardizing her safety, and that he sent sexual literature to her home on more than one occasion. The Complaint also claims that Reilly assisted the male corrections officers when they called for aid, but that he refused to assist her in the same situations. Further, the Complaint alleges that Reilly did not dump trash in the male corrections officers' work areas. All of this conduct is alleged to have occurred during the approximately 22 month period from January 1996 to October 1997.
These allegations in the Complaint, which the Court must accept as true, are sufficiently pervasive and severe to state a hostile work environment claim. The Complaint alleges that Reilly engaged in an ongoing pattern or harassment and discrimination and that some of the alleged conduct occurred on a "daily basis." See *344 Compl. at ¶ 25. This satisfies Plaintiff's pleading obligations as to the pervasiveness element. See Schwapp, 118 F.3d at 111 (ten racial incidents over a 20 month period sufficient to defeat motion for summary judgment).
The Complaint's allegations of Reilly's continual use of foul language, sending sexually explicit magazines and books to Plaintiff's home, refusing to assist Plaintiff in potentially dangerous situations, and intentionally bumping into Plaintiff on at least two occasions also is sufficient to plead severity. These allegations suggest that Reilly subjected Plaintiff to more than mere insults or simple humiliation, but potentially physically threatening conduct. Furthermore, such allegations are sufficient to demonstrate conduct that would unreasonably interfere with one's job performance and could result in psychological harm. It would be reasonable for Plaintiff to find it difficult to perform her job duties if, for example, she was subjected to offensive physical contact by Reilly or he refused to assist her in overseeing inmates. See Jemmott v. Coughlin, 85 F.3d 61, 67 (2d Cir.1996). In short, if the facts alleged in the Complaint are proven to be true, they would be sufficient to establish "a series of incidents ... sufficiently continuous and concerted to have altered the conditions of her working environment." Cruz v. Coach Stores, Inc., 202 F.3d 560, 570 (2d Cir.2000) (internal quotation marks omitted).
An important remaining question, however, is whether the Complaint sufficiently alleges facts tending to suggest that Reilly's actions were based on Plaintiff's membership in a protected class. See Brennan, 192 F.3d at 318. Indeed, the allegations in the Complaint linking Reilly's behavior to Plaintiff's membership in a protected class are weak. As Defendants point out, there are plausible explanations for Reilly's behavior other than her membership in a protected class, such as retaliation for Plaintiff's husband's having filed an affirmative action report against Reilly. The Court's function in ruling on a 12(b)(6) motion, however, is not to weigh evidence, but merely to ascertain whether the Complaint sufficiently alleges facts that, if proven to be true, would entitle Plaintiff to relief. See Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir.1998). Given the liberal standard with which Courts are to interpret Complaints, see id., the Court finds that the Complaint sufficiently alleges facts that, if proven true, would permit a finding of discrimination on account of Plaintiff's membership in a protected class.
First, the Complaint alleges that Plaintiff is a Hispanic female and that Reilly is a white male. The Complaint also references Reilly's use of race-based derogatory terms such as "nigger" and "spic" in Plaintiff's presence. See Torres, 116 F.3d at 632 (use of work "spic" reasonably considered to be race-based offensive conduct); see also Richardson, 180 F.3d at 439. The Complaint similarly alleges that Reilly often referred to women as "bitches," a clearly gender-oriented term. See Burns v. McGregor Electronic Industries, Inc., 989 F.2d 959, 964 (8th Cir.1993) (noting that use of "bitch" to woman was harassment based on her sex); Winsor v. Hinckley Dodge, Inc., 79 F.3d 996, 1000 (10th Cir.1996) (noting that "bitch" is a "sexual epithet[ ] that ha[s] been identified as `intensely degrading' to women."); Jugmohan v. Zola, 2000 WL 222186, at *3 (S.D.N.Y.2000); Dyke v. McCleave, 79 F.Supp.2d 98, 100 (N.D.N.Y.2000). It is of no moment that these remarks may not have been directed at Plaintiff specifically, particularly when the comments are alleged to have been made in her presence and after she requested Reilly to stop using such in appropriate language. See Whidbee, 223 F.3d at 70-71; Schwapp, 118 F.3d at 111 ("[A] a racial epithet need not be directed at a plaintiff in order to contribute to a hostile work environment."); Black v. Zaring Homes, Inc., 104 F.3d 822, 826 (6th Cir.1997) (emphasizing "that sex-based comments need not be directed at a plaintiff in order to constitute conduct *345 violating Title VII"), cert. denied, 522 U.S. 865, 118 S.Ct. 172, 139 L.Ed.2d 114 (1997). Furthermore, the allegation in the Complaint that Reilly stated to Plaintiff that "I would have liked to marry you, if your husband wasn't around" would likely only be directed to a female and, thus, constitutes a factual allegation suggesting gender-based discrimination. Certainly, Reilly's sending "how to" sex books and "Penthouse" magazine subscriptions can reasonably be considered to be gender-based conduct. Moreover, the Complaint alleges that Reilly would not dump trash in the work areas of male officers and that Reilly would assist male officers who requested help. While Plaintiff could have done more to plead facts tying her allegations to her membership in a protected class, viewing the Complaint liberally as the Court is required to do, the Court finds that it sufficiently alleges facts demonstrating discriminatory conduct on account of Plaintiff's membership in a protected class. Defendants' arguments that the facts of this matter do not sufficiently rise to the level of a hostile work environment and that Reilly's actions were not on account of Plaintiff's membership in a protected class are better left for a motion for summary judgment or for trial. For the instant purposes, the Complaint sufficiently states a hostile work environment claim.
G. Employer Liability
Regardless of whether Plaintiff was actually subject to a hostile work environment, DOCS and Fishkill can only be liable for the hostile work environment claim if there is a basis for imputing Title VII liability to them. Here, a co-employee is alleged to have engaged in the conduct giving rise to the hostile work environment. "When a `co-employee'as distinct from a supervisoris alleged to have engaged in harassing activity, the `employer will generally not be liable unless the employer either provided no reasonable avenue of complaint or knew of the harassment but did nothing about it.'" Quinn, 159 F.3d at 766 (quoting Tomka, 66 F.3d at 1305); see also Richardson, 180 F.3d at 441.
The Complaint alleges numerous instances where Plaintiff reported Reilly's conduct to her supervisors, but that they took no action. For example, Plaintiff reported Reilly's conduct to her supervisors as early as February 1996, but Defendants failed to take action. The Complaint specifically alleges that "[d]uring an official meeting on Feb 2 1996, Plaintiff ... told Captain Ercole that based on the sexually harassing actions that she had experienced and the ongoing, retaliatory and hostile behaviors of Herbert Reilly towards her, that Herbert Reilly was going to `[d]o something to her.'" Compl. at p. 23. The Complaint contends that "Captain Ercole did not consider Plaintiff's concerns for her safety on the job to be actionable and did nothing to protect her, nor did he or Defendant Sergeant Mann speak with or reprimand in any way Defendant Herbert Reilly." Compl. at ¶ 24. The Complaint also alleges that, in or about May 1996, Plaintiff requested that her position be changed, apparently so she could get away from Reilly, but that "her supervisors refused to help her change positions." Compl. at ¶ 34. Similarly, the Complaint alleges that in August 1996, Mann refused to write up Reilly for insubordination and told Plaintiff to leave her personal problems at home. See Compl. at ¶¶ 35, 36. In addition, the Complaint alleges that it was common knowledge that Plaintiff's supervisors refused to assist Plaintiff regarding her complaints about Reilly. See Compl. at ¶ 40. The Complaint also alleges that Plaintiff's supervisors did not contact or reprimand Reilly after he sent sexually oriented literature and periodicals to her home. See Compl. at ¶ 49. According to the Complaint, it was not until after Reilly was arrested that Defendants took any action in this matter. See Compl. at ¶ 54. Even after Reilly's arrest, the Complaint alleges that Plaintiff's supervisors contemplated allowing Reilly to take an exam alongside Plaintiff. These facts, if *346 true, demonstrate that Defendants were aware of the harassment but failed to take reasonable action in response thereto and, thus, are sufficient to impose liability upon Defendants. See Richardson, 180 F.3d at 426; Murray v. New York University College of Dentistry, 57 F.3d 243, 249 (2d Cir.1995) (and cases cited therein).
Although Defendants contend that they reasonably investigated Plaintiff's complaint and took proper remedial action, such arguments go to the ultimate merits of Plaintiff's Complaint; not whether she has pled sufficient facts entitling her to relief. Moreover, contrary to Defendants' contentions, as detailed above, the Complaint alleges that Plaintiff complained to her superiors about sexual harassment on several occasions, but that they failed to act for over a year. See Compl. at ¶¶ 21-24, 54. Thus, these arguments do not form a basis for dismissal at this stage of the litigation.
H. Retaliation
Next, Defendants move to dismiss Plaintiff's retaliation claim. "To establish a prima facie case of retaliation a plaintiff must show (1) participation in a protected activity that is known to the defendant, (2) an employment decision or action disadvantaging the plaintiff, and (3) a causal connection between the protected activity and the adverse decision." Richardson, 180 F.3d at 443.
Here, the Complaint alleges that Plaintiff complained to her supervisors about discriminatory harassment by Reilly. This constitutes protected activity. See id. at 443. There are, however, no facts alleged in the Complaint that Plaintiff suffered adverse employment action or that Defendants took action against Plaintiff because of such complaints. Although an employer's permitting retaliatory co-worker harassment may subject the employer to liability, see id. at 446, that is not what is alleged here. Rather, the Complaint alleges an ongoing course of discriminatory treatment by Reilly, which began before she ever complained about his conduct and continued thereafter, and the failure of DOCS and Fishkill to take appropriate remedial action. There simply are no factual allegations that Reilly, DOCS, or Fishkill acted, or failed to act, because Plaintiff complained about Reilly.
The Complaint does allege that Reilly retaliated against Plaintiff because her husband filed an affirmative action report against Reilly. Several circuit courts have held that, when spouses work for the same employer, a Plaintiff does not have standing to claim retaliation when she suffers adverse employment action because of the protected activity of her spouse. As the Eighth Circuit has held, "in order to establish a prima facie case of discrimination, the employee must have engaged in statutorily protected activity." Smith v. Riceland Foods, Inc., 151 F.3d 813, 818 (8th Cir.1998); see also Holt v. JTM Indus., Inc., 89 F.3d 1224, 1226-27 (5th Cir.1996), cert. denied, 520 U.S. 1229, 117 S.Ct. 1821, 137 L.Ed.2d 1029 (1997); See Kern v. City of Rochester, 93 F.3d 38, 44 (2d Cir.1996) (noting that a plaintiff must ordinarily assert her own rights and interests and cannot rely on the legal interests or rights of others), cert. denied, 520 U.S. 1155, 117 S.Ct. 1335, 137 L.Ed.2d 494 (1997). The Eighth Circuit continued to state:
We believe the rule advocated by [plaintiff] that a plaintiff bringing a retaliation claim need not have personally engaged in statutorily protected activity if his or her spouse or significant other, who works for the same employer, has done so, is neither supported by the plain language of Title VII nor necessary to protect third parties, such as spouses or significant others, from retaliation.
Smith, 151 F.3d at 819.
While the Second Circuit has not yet decided this issue, it did recently affirm a district court case where the court permitted a plaintiff to proceed with a retaliation claim on the basis that the plaintiff was *347 retaliated against for a charge of discrimination filed by her sister. See Thomas v. American Horse Shows Assoc., Inc., 1999 WL 287721, at *11 (E.D.N.Y.1999), aff'd, 205 F.3d 1324 (2d Cir.2000). Unfortunately, that case is of little precedential value because the district court ultimately found that the plaintiff failed to demonstrate the required causal connection and, in affirming the district court's decision, the Second Circuit plainly noted that "this Circuit has not yet decided whether a cause of action exists under Title VII for the third-party retaliation claims." Thomas, 205 F.3d 1324 (table).
Arguably, the Sixth Circuit's decision in E.E.O.C. v. Ohio Edison, Co., 7 F.3d 541, 542 (6th. Cir. 1993), stands for the proposition that one employee may bring a Title VII claim when he is retaliated against for the actions of another employee. However, that decision's holding is limited to the situation where "an employee, or his representative, has opposed any practice made an unlawful employment practice." Ohio Edison, 7 F.3d 541, 545; see also Baird ex. rel. Baird v. Rose, 192 F.3d 462, 471 n. 10 (4th Cir.1999) (plaintiff could maintain retaliation claim where her mother engaged in protected activity on plaintiffs behalf). In Holt, the Fifth Circuit noted that, absent a representative capacity, a plaintiff does not have automatic standing to assert a retaliation claim when he suffers adverse employment consequences because of his wife's protected activity. See Holt, 89 F.3d at 1227 n. 2.
Although, strictly read, 42 U.S.C. § 2000e-3(a) provides a cause of action to the person who actually engaged in the protected activity, as many district courts have recognized, such a result would contravene Title VII's enforcement provisions. See E.E.O.C. v. Nalbandian Sales, Inc., 36 F.Supp.2d 1206, 1212 (E.D.Cal.1998); Murphy v. Cadillac Rubber & Plastics, Inc., 946 F.Supp. 1108, 1118 (W.D.N.Y. 1996); Thurman v. Robertshaw Control Co., 869 F.Supp. 934, 941 (N.D.Ga.1994); Mandia v. ARCO Chemical Co., 618 F.Supp. 1248, 1250 (W.D.Pa.1985); De Medina v. Reinhardt, 444 F.Supp. 573 (D.D.C.1978); Asklar v. Honeywell, Inc., 95 F.R.D. 419, 424 (D.Conn.1982); see also Wu v. Thomas, 863 F.2d 1543 (11th Cir. 1989). In the relatively rare situation where a husband and wife work together, prohibiting the retaliated against spouse from maintaining an action would provide a means for an employer to circumvent Title VII's remedial scheme. Title VII should not be construed so narrowly. In fact, strictly construing the language of Title VII would preclude former employees from suing under Title VII because they are no longer an "employee" or "applicant for employment," 42 U.S.C. § 2000e-3, an argument that has been held to be contrary to Title VII's overall purpose. See Robinson v. Shell Oil Co., 519 U.S. 337, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). In one sense, Plaintiff would be asserting her husband's legal rights and, thus, she would not be entitled to proceed. In another sense, Plaintiff was the person actually injured by the type of conduct Title VII seeks to eradicateretaliation for the filing of a charge of discrimination. Cf. Kern, 93 F.3d at 44 (denying standing to a plaintiff because she did not allege that she was personally retaliated against). The Court finds this latter reasoning to be more persuasive and, therefore, holds that, because Plaintiff alleges to have suffered adverse employment action by Defendants because of her husband's complaints of discrimination, she has standing to assert a Title VII retaliation claim.
The next question is whether Plaintiff suffered adverse employment action. "An employee could suffer a materially adverse change in the terms and conditions of her employment if her employer knew about but failed to take action to abate retaliatory harassment inflicted by co-workers." Richardson, 180 F.3d at 446. Here, the Complaint alleges that Reilly engaged in a pattern of harassing conduct after her husband filed an affirmative action report against him. The Complaint further alleges *348 that Reilly's conduct persisted despite Plaintiff's complaints to her superiors. As previously discussed supra with respect to Plaintiff's hostile work environment claim, the Complaint sufficiently alleges conduct by Reilly that could have adversely affected the terms and conditions of her work environment and that Defendants permitted this harassment to continue despite Plaintiff's complaints. Accordingly, the Complaint sufficiently alleges adverse employment action.
The last question is whether the Complaint sufficiently alleges facts supporting a causal connection between the alleged adverse employment action and the protected activity. The Complaint alleges that Reilly's conduct commenced shortly after (within a month) her husband filed the affirmative action report against Reilly. See Compl. at ¶¶ 19-21. The Complaint further alleges that Plaintiff immediately complained of Reilly's conduct, but that no action was taken. This temporal proximity and Defendants' alleged failure to act are sufficient indicia of causation to withstand Defendant's motion to dismiss. See, e.g., Quinn, 159 F.3d at 769; Colon v. Coughlin, 58 F.3d 865, 872 (2d Cir.1995).
The Court is mindful that Plaintiff also asserts claims pursuant to 42 U.S.C. § 1983, although the statutory and/or constitutional bases for such claims is unclear from the Complaint itself. If Plaintiff intends to assert retaliation claims on any other grounds, see, e.g., Adler v. Pataki, 185 F.3d 35, 41-43, she should move to amend her Complaint accordingly so Defendants would have fair notice of all claims she intends to assert.
I. Equal Protection Claim
Defendants next assert that, because Plaintiff has failed to allege facts that Defendants acted with discriminatory intent, her § 1983 claim should be dismissed. Defendants also argue that a § 1983 claim may not be based upon the alleged violations of Title VII. For the reasons previously discussed, however, the Court finds that Plaintiff has sufficiently pled facts describing harassment on account of her gender by Reilly and that DOCS and Fishkill permitted such harassment to continue. Furthermore, the Second Circuit has rejected Defendants' argument that a § 1983 claim may not be based on facts giving rise to a Title VII claim. See Annis v. County of Westchester, 36 F.3d 251, 254-55 (2d Cir.1994); Gierlinger v. New York State Police, 15 F.3d 32, 34 (2d Cir.1994). Thus, the Complaint adequately states an Equal Protection violation.
J. Qualified Immunity
Next, Defendants contend that they are entitled to qualified immunity because the Complaint fails to allege a clearly established right alleged to have been violated. Contrary to Defendants' assertion, freedom from discrimination on account of gender and race, which are plainly alleged in the Complaint, are clearly established rights. See Jemmott, 85 F.3d at 67; Annis, 36 F.3d at 254. Accordingly, Defendants are not entitled to qualified immunity on this ground.
K. Plaintiff's Cross-Motion to Amend the Complaint
Plaintiff cross-moves to amend her Complaint to assert claims for violation of N.Y. EXEC. LAW § 296 (the "Human Rights Law" or "HRL"), the intentional infliction of emotional distress, and negligent supervision against Mann and Ercole.
FED. R. CIV. P. 15(a) provides that leave to amend "shall be freely given when justice so requires." Such leave should be denied, however, when it would be futile, cause undue delay or prejudice, or when it is sought in bad faith. Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962).
Defendants allege that allowing the proposed amendments would be futile because: (1) there is no evidence that Defendants intended to discriminate against *349 Plaintiff; (2) the DHR did not dismiss the charge of discrimination for administrative convenience and, thus, she is precluded from maintaining a court action; (3) the tort claims are barred by the Eleventh Amendment; and (4) the intentional infliction of emotional distress claim is time-barred.
Defendants' first argument is without merit for the reasons discussed supra and, thus, warrants no further discussion.
Defendants' second argument is more persuasive. As the Second Circuit recently discussed:
Subsection 9 of [Executive Law] § 297 provides a cause of action to any person claiming to be aggrieved by an unlawful discriminatory practice. That same subsection, however, precludes a cause of action if the person has filed a complaint with any local commission on human rights. We hold that the prohibition against filing in state court after a complaint has been filed with the Division of Human Rights applies to state law claims in federal courts as well.
Whidbee, 223 F.3d at 75. Subsection 9 of § 297 provides, however, that "where the [DHR] has dismissed such complaint on the grounds of administrative convenience, ... [the] person shall maintain all rights to bring suit as if no complaint had been filed with the division." N.Y. EXEC. LAW § 297(9).
The evidence before the Court on this issue reveals that Plaintiff filed a charge of discrimination with the DHR in November 1997. In September 1999, the DHR found probable cause to believe that Defendants engaged in unlawful discriminatory conduct and recommended that matter for public hearing. The DHR has not dismissed the matter for administrative convenience. The Court recognizes that the EEOC did issue a right to sue letter upon Plaintiff's request. The EEOC, however, is not the same as the DHR. Because the matter is still before the DHR, Plaintiff is precluded from maintaining an action against Defendants pursuant to the HRL. Thus, permitting an amendment on this ground would be futile.
For the reasons discussed supra, it would be futile for Plaintiff to amend her Complaint to assert negligence causes of action against DOCS and/or Fishkill because of their Eleventh Amendment immunity.
As to Defendant's fourth argument, that the intentional infliction of emotional distress claim is time-barred, the last date referenced in the Complaint is October 1997. Because the statute of limitations for intentional infliction of emotional distress claims in New York is one year and the Complaint was not filed until the year 2000, such a claim would be time-barred. See N.Y.C.P.L.R. § 215; Bardi v. Warren County Sheriff's Dep't., 260 A.D.2d 763, 764, 687 N.Y.S.2d 775 (3d Dep't 1999). Accordingly, permitting this amendment would be futile.
Defendants have not set forth any reasons why it would be futile for Plaintiff to amend her Complaint to add a cause of action of negligent supervision against Mann and Ercole. Accordingly, Plaintiff's motion for leave to amend to add this negligence cause of action is granted.
III. CONCLUSION
For the foregoing reasons, Plaintiff's opposition papers (docket no. 21) are stricken from the record, Defendants' motion to dismiss is GRANTED IN PART, and Plaintiff's cross-motion for leave to amend the complaint is GRANTED IN PART. The Complaint is DISMISSED IN ITS ENTIRETY as to Defendant Clark. Plaintiff's Title VII claims against the individual Defendants (Reilly, Mann, and Ercole) and her state law causes of action against Defendants DOCS and Fishkill are DISMISSED. Plaintiff may amend her Complaint to assert a cause of action for negligent supervision against Mann and Ercole only. In all other respects, Defendants' *350 motion and Plaintiff's cross-motion are DENIED.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1971573/ | 950 F.Supp. 519 (1997)
Patricia GERESSY and Patricia Geressy as Administratrix of the Estate of Thomas Geressy, Jeannette Rotolo and John William Rotolo, and Jill M. Jackson and Thomas M. Farrell, Plaintiffs,
v.
DIGITAL EQUIPMENT CORPORATION, Defendant.
No. 94-CV-1427 (JBW).
United States District Court, E.D. New York.
January 13, 1997.
*520 Kenneth J. King, Craig M. Deitelzweig, Beatie, King & Abate, New York City, for Defendant.
Steven Phillips, Stephenie Lannigan, Levy Phillips & Konigsberg, New York City, for Plaintiffs.
MEMORANDUM ON THE JURY CHARGE ON PUNITIVE DAMAGES
WEINSTEIN, Senior District Judge:
I. INTRODUCTION
Both defendant and plaintiffs seek post-verdict relief. In this memorandum, only the punitive damage issue is addressed. Over the course of almost four weeks, a jury heard evidence and arguments in a case involving three plaintiffs who had allegedly suffered from repetitive stress injuries as a result of using defendant's computer equipment. Defective design and failure to warn were the bases for the suit. Their spouses filed independent loss of consortium claims.
The case was divided into two independent phases, before the same jury, one for compensatory damages and one for punitive damages.
The jury returned substantial compensatory verdicts for plaintiffs on the failure to warn and loss of consortium claims. The second phase began at once with brief evidence presented on defendant's value and business losses. A short argument and charge followed.
Recent developments in the law of damages and a lack of clarity as to the appropriate standard of proof in New York for punitive damages required a modification of the New York punitive damage charge, New York Pattern Jury Instruction 2:275. See Appendix for the punitive damage charge used.
II. BMW OF NORTH AMERICA v. GORE
Interpreting federal constitutional limitations on state punitive damage awards, the Supreme Court in BMW of North America v. Gore, ___ U.S. ___, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), set out three factors for determining whether a punitive damage award violates "[e]lementary notions of fairness enshrined in our constitutional jurisprudence," Gore, supra, ___ U.S. ___, ___, 116 S.Ct. 1589, 1598:
Three guideposts ... [are used to determine whether a punitive damage award] is grossly excessive: the degree of reprehensibility of the nondisclosure; the disparity between the harm or potential harm suffered by [the plaintiff] and his punitive damages award; and the difference between this remedy and the civil penalties *521 authorized or imposed in comparable cases.
Gore, supra, ___ U.S. ___, ___, 116 S.Ct. 1589, 1598. These three Gore factors reprehensibility, disparity between harm and the punitive damage award, and civil and criminal remedies available for similar actions are now the touchstone in evaluating a punitive damage award under the Constitution.
An additional independent limitation on punitive damage awards flows from a principle of our federal system that state legislation, state policy, and judicial development of state law can only be directed at activity within the state. A "State may not impose economic sanctions on violators of its laws with the intent of changing the tortfeasers' lawful conduct in other states." Gore, supra, ___ U.S. ___, ___ - ___, 116 S.Ct. 1589, 1596-97 (citations omitted). Thus punitive damage can not be awarded to punish or deter acts in other states which do not affect the forum state.
In developing a charge a primary question is whether to present the Gore factors to jurors to guide them, or to use Gore only to review a jury punitive damage award, if any, after the fact. In Lee v. Edwards, 101 F.3d 805 (2nd Cir.1996), the Second Circuit, relying both on Gore, and Gasperini v. Center for Humanities, Inc., ___ U.S. ___, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996), implied that whether or not a punitive damage award is excessive is a question of law for the courts. Quoting Gasperini, the Second Circuit noted that,
`[S]urely there must be an upper limit [to punitive damage awards], and whether that has been surpassed is not a question of fact with respect to which reasonable men may differ, but a question of law.'
Lee, supra, 101 F.3d 805, 808-09 (quoting Gasperini v. Center for Humanities, Inc., ___ U.S. ___, ___ - ___, 116 S.Ct. 2211, 2223-24, 135 L.Ed.2d 659 (1996), quoting Dagnello v. Long Island R.R. Co., 289 F.2d 797, 806 (2d Cir.1961)) (emphasis added). The Second Circuit went on to explain that the "three [Gore] guideposts ... should assist us in application of our standard by which we deem excessive a punitive damage award ... `shocks our judicial conscience.'" Lee, supra, 101 F.3d 805, 808-09 (citations omitted).
The Second Circuit's approach to the Gore factors, as well as its conclusion that whether a punitive damage award is excessive is "a question of law," does not require district courts to ignore the Gore factors in charging the jury. If the jury is to accomplish its task under the Seventh Amendment, it is entitled to be informed of its role.
The charge should therefore, arguably, include all three Gore factors (reprehensibility; disparity between harm and the punitive damage award; and civil and criminal remedies available for similar actions). Nevertheless there are too many complicating and prejudicial factors in asking a lay jury to consider the third element, potential legal penalties in other civil and criminal actions. Reference to possible criminal (and even administrative penalties such as those of the Occupational Safety and Health Act (OSHA) of which the jury was aware) and to other civil awards, were therefore omitted from the Gore portion of the charge. On this point it was simplified to read:
In fixing the amount, if any, you may consider the assets of defendant, what is reasonably required to vindicate New York State's legitimate interests in punishment and deterrence, if any, above the amount of civil damages awarded, the degree of reprehensibility, if any, the disparity between the harm or potential harm suffered by plaintiffs and the difference between punitive damages and the civil awards in this case, and how egregious the conduct of defendant was compared to that of others in its position.
This language adequately expresses the law as set out in BMW of North America v. Gore, ___ U.S. ___, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996), without requiring the jury to make complex determinations and calculations involving civil and criminal law.
At the request of defense counsel, and in light of the Gore Court's discussion of the importance of concerns of state sovereignty (BMW of North America v. Gore, ___ U.S. *522 ___, ___ - ___, 116 S.Ct. 1589, 1596-97, 134 L.Ed.2d 809 (1989)), the court told the jury that punitive damages could only be awarded to further the interests of people within the state of New York. Immediately following the passage from the jury charge quoted above, the court instructed the jury that it was "not authorized to impose punitive damages to protect people outside of the State of New York."
III. NEW YORK LAW
In this diversity action, New York substantive law controlled. The Gore factors were therefore melded into the standard New York punitive damage jury charge set out in the New York Pattern Jury Instruction 2:275, based on New York's substantive law.
A. Burden of Proof
New York law on burden of proof in deciding punitive damages is unclear. Many New York courts have described the conduct that merits the imposition of punitive damages without deciding what is the necessary burden of proof for determining whether such conduct existed. In Home Insurance Company v. American Home Products Corp., 75 N.Y.2d 196, 550 N.E.2d 930, 551 N.Y.S.2d 481 (1990), for example, the court described "the conduct which justifies an award of punitive damages" as "conduct having a high degree of moral culpability which manifests a `conscious disregard for the rights of others or conduct so reckless as to amount to such disregard,'" Home Insurance, supra, 75 N.Y.2d 196, 203, 550 N.E.2d 930, 933, 551 N.Y.S.2d 481, 485 (1990) (citations omitted); see also Kramer v. Showa Denko K.K., 929 F.Supp. 733, 742 (S.D.N.Y.1996) (quoting the same passage). Such language suggests a relatively high substantive standard, but does not determine the level of burden of proof.
Courts that have addressed the burden of proof question directly have tended to support a preponderance standard. The Second Circuit has written that,
though we have not explicitly ruled in the past that a "preponderance" burden of proof satisfies due process, we believe that our toleration of that burden in numerous punitive damages cases makes it inappropriate for us to discard it now on constitutional grounds, just as we declined to abandon traditional formulations of the standards governing punitive damage awards in Racich.
Simpson v. Pittsburgh Corning Corp., 901 F.2d 277, 282-283 (2nd Cir.1990) (citations omitted). See also United States of America v. Hooker Chem. & Plastics, 850 F.Supp. 993, 1003 (W.D.N.Y.1994); In re Seventh Judicial District Asbestos Litigation, 190 A.D.2d 1068, 1068, 593 N.Y.S.2d 685, 686 (4th Dept 1993).
This preponderance standard is appropriate since the substantive standard for punitive damages is already so high. Placing a higher than preponderance standard on a rule already heavily balanced against such damages would be analogous to wearing both suspenders and a belt not necessarily a bad idea even if it is less than sartorially or legally elegant. In addition, since the jury has already been instructed on the preponderance standard in the compensation phase of the trial, it is less likely to be confused about the applicable burden.
Nevertheless because of the lack of clarity in New York law on the burden of proof standard, the jury was first charged with a clear and convincing standard. It was then asked to deliberate a second time applying a preponderance of the evidence standard. Under both standards, the jury decided that punitive damages were not warranted.
IV. TAX CONSEQUENCES
The federal government does not tax compensatory damage awards. 26 U.S.C.A. § 104(a)(2). The jury was made aware of the effect of this provision in the initial charge:
If your verdict is in favor of any of the plaintiffs, she (or they) will not be required to pay income taxes on the awards and you must not add to or subtract from any award any amount on account of income tax.
Because plaintiffs' counsel believed that a punitive award, in contrast, might be subject to federal and state taxes, he asked that the *523 jury be so instructed. The court declined to do so.
A few days after this court charged the jury on punitive damages, the Supreme Court resolved a circuit split in favor of the majority position that punitive damage awards are taxable under 26 U.S.C. § 104(a)(2) (1988). O'Gilvie v. United States, ___ U.S. ___, ___ - ___, 117 S.Ct. 452, 454-58, 136 L.Ed.2d 454 (1996).
In New York, 20% of punitive damage awards were payable to the state under section 8701 of New York's Civil Practice Law and Rules which was in effect from April 10, 1992 until April 1, 1994. This New York provision is no longer operative.
Compensatory and punitive damages serve distinct functions and therefore require different treatment in jury charges. With a compensatory damage award, the focus is on the plaintiff; the compensatory damage award compensates the plaintiff with money damages and (theoretically) places that plaintiff in the same position monetarily that he or she would have been in had the tortfeasor not committed the wrong. A court charging a jury on such damages appropriately gives the jury information that will help the jurors in determining the amount of money that a plaintiff is due, including whether the award is taxable.
Punitive damages, in contrast, are directed at actual and potential egregious wrongdoers. The New York Court of Appeals recently explained the legal principle behind New York punitive damage awards:
We have consistently adhered to the view that the purpose of punitive damages is solely to punish the offender and to deter similar conduct on the part of others. Punitive damages are not intended to compensate or reimburse the plaintiff.
Zurich Ins. Co. v. Shearson Lehman Hutton, Inc., 84 N.Y.2d 309, 316, 618 N.Y.S.2d 609, 612, 642 N.E.2d 1065, 1068 (1994) (citations omitted). See also Home Ins. Co. v. American Home Prods. Corp., 75 N.Y.2d 196, 203, 551 N.Y.S.2d 481, 485, 550 N.E.2d 930, 934 (1990) (punitive damages "are intended as punishment for gross misbehavior for the good of the public.... [they are not awarded] because the plaintiff has suffered any monetary damage for which he is entitled to reimbursement"); Hartford Accident and Indem. Co. v. Village of Hempstead, 48 N.Y.2d 218, 226, 422 N.Y.S.2d 47, 53, 397 N.E.2d 737, 743 ("the purpose of punitive damages ... is to punish and to deter others from acting similarly").
In calculating a punitive damage award, the jury only needs information on the defendant and the defendant's wrongdoing, in addition to what it has already heard in the compensatory phase of the trial. The tax consequences of a punitive award for the plaintiff or whether the state will share in this amount are irrelevant in determining an appropriate award. If, as in the instant case, the punitive damage issue is kept from the jury until the compensatory issues are decided, there is no basis for arguing that a portion of the punitive award was intended to make up for sparse compensatory damages.
V. CONCLUSION
No new trial on punitive damage issues is warranted. If there is a reversal on the compensatory damage issue, a new trial on punitive damages should not be granted. See Fed.R.Civ.P. 50(a)(1).
APPENDIX
Charge on Punitive Damages
Ladies and Gentlemen of the jury:
In addition to damages compensating a plaintiff for her injuries, you may, but are not required to, allow plaintiff punitive damages. The purpose of punitive damages is to punish the defendant for its conduct and to deter defendant and others from committing similar acts. You need not award punitive damages if you find these purposes would not be advanced in this case.
Imposition of punitive damages is entirely discretionary, that means you do not have to award them unless you believe the facts require them.
Do not award punitive damages unless plaintiff has proven by [clear and convincing/a preponderance of the] evidence that Digital's conduct in failing to warn was wanton *524 and reckless or activated by an evil or reprehensible motive. An act is wanton and reckless when it is done in such a manner and under such circumstances as to show heedlessness and utter disregard of the effect on the rights and safety of others flowing from the act, as I have defined act in the main charge which is still before you.
If you determine punitive damages are appropriate, and I am not suggesting that result, you should look to the reprehensibility of the defendant's conduct, whether there was concealment, the duration of the conduct and the existence and frequency of similar past conduct.
In fixing the amount, if any, you may consider the assets of defendant, what is reasonably required to vindicate New York State's legitimate interests in punishment and deterrence, if any, above the amount of civil damages awarded, the degree of reprehensibility, if any, the disparity between the harm or potential harm suffered by plaintiffs and the difference between punitive damages and the civil awards in this case, and how egregious the conduct of defendant was compared to that of others in its position. You are not authorized to impose punitive damages to protect people outside the State of New York.
In the event that you decide to award punitive damages, the lowest amount necessary to accomplish the purposes of punitive damages should be awarded.
If punitive damages are awarded, only a single dollar amount should be found by you. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2660151/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
____________________________________
)
CHARLENE JOHNSON, )
Parent and Next Friend of F.J., a minor, and )
)
F.J., )
Individually, ) Civil Action No. 12-0352 (RBW)
)
Plaintiffs, )
)
v. )
)
THE DISTRICT OF COLUMBIA, )
A Municipal Corporation, )
)
Defendants. )
____________________________________ )
MEMORANDUM OPINION
Plaintiffs Charlene Johnson, on behalf of her minor child, F.J., and F.J. individually,
bring claims under the Individuals with Disabilities Education Act (the “IDEA”), 20 U.S.C. §§
1400–1491 (2012), alleging that the District of Columbia failed to provide F.J. with a free
appropriate public education and seeking reimbursement for all expenses arising from F.J.’s
placement at a private school. Complaint for Declaratory Judgment & Inju[n]ctive and Other
Relief (“Compl.”) ¶¶ 23–39. Currently before the Court are the parties’ cross motions for
summary judgment. After carefully considering the parties’ submissions and the administrative
record in this case, 1 the Court concludes for the reasons below that it must grant the defendant’s
motion for summary judgment.
1
In addition to the filings already referenced, including the Administrative Record (“A.R.”), the Court considered
the following documents in rendering its decision: (1) the Plaintiffs’ Memor[an]dum of Points and Authorities In
Support of Plaintiffs’ Motion for Summary Judgment (“Pls.’ Mem.”); (2) the Memorandum in Support of
Defendant’s Cross Motion for Summary Judgment and Opposition to Plaintiffs’ Motion for Summary Judgment
(continued . . . )
I. Statutory Background
Under the IDEA, states and territories, including the District of Columbia, that accept
federal educational funds must provide a free appropriate public education (“FAPE”) to students
with disabilities residing within their borders. See 20 U.S.C. § 1412(a)(1)(A). The IDEA
defines a FAPE as an education which is “[(A)] provided at public expense, under public
supervision and direction, and without charge; (B) meet[s] the standards of the State educational
agency; (C) include[s] an appropriate preschool, elementary school, or secondary school
education in the State involved; and (D) [is] provided in conformity with the individualized
education program required” under other provisions of the IDEA. Id. § 1401(9). Once a student
is deemed eligible to receive services under the IDEA, a team which includes the parent or
parents of the student, certain teachers, and a representative of the local educational agency
develops an individualized education program (“IEP”) for the student in accordance with the
requirements of the IDEA. Id. §§ 1414(d)(1)(A), (B). In addition to developing the IEP, the
student’s team determines an appropriate educational placement for the student. See id. §
1414(e).
The IDEA provides that a parent may present a complaint to an educational agency “with
respect to any matter relating to the identification, evaluation, or educational placement of the
child, or the provision of a free appropriate public education to such child” and receive a hearing
on the complaint conducted by an independent hearing officer. Id. §§ 1415(b)(6), (f). A party
who is dissatisfied with the decision of the hearing officer may file a civil action in federal
( . . . continued)
(“Def.’s Mem.”); (3) the Plaintiffs’ Memorandum of Points and Authorities in Opposition to the Defendant’s Motion
for Summary Judgment and in Reply to the Defendant’s Opposition to Plaintiffs’ Motion for Summary Judgment
(“Pls.’ Opp’n”); and (4) the Defendant’s Reply to Plaintiffs’ Opposition to Defendant’s Cross Motion for Summary
Judgment (“Def.’s Reply”).
2
district court seeking review of the hearing officer’s decision. Id. § 1415(i)(2)(A). If the hearing
officer or district court determines that the agency failed to provide the student with a FAPE, the
officer or court may require the agency to reimburse the parents of the child for the cost of
enrollment at a private institution. Id. § 1412(a)(10)(C)(ii).
II. Factual Background
F.J. is a fourteen-year-old child who has been deemed eligible to receive services under
the IDEA, having been diagnosed “as a student with an emotional disturbance,” A.R. at 19, and
she was therefore receiving services through the District of Columbia Public Schools (“DCPS”)
until the 2011–12 school year, see Pls.’ Mem. at 4; Def.’s Mem. at 4–5. During the immediately
preceeding school year, F.J. attended Hamilton Center at the recommendation of her IEP team
(“Team”). A.R. at 47. On April 27, 2011, F.J.’s Team developed her current IEP, see Pls.’
Mem. at 4; Def.’s Mem. at 4; see also A.R. at 67, which requires F.J. to receive thirty-one hours
per week of “[s]pecialized [i]nstruction” and one hour per week of “[b]ehavioral [s]upport
[s]ervices” in an “[o]utside [g]eneral [e]ducation” setting, A.R. at 73.
At a Team meeting on June 9, 2011, the plaintiffs were advised that Hamilton Center was
closing and that DCPS proposed placing F.J. in the program for students with emotional
disturbance at Ballou Senior High School (“Ballou”). See Pls.’ Mem. at 4; Def.’s Mem. at 5;
A.R. at 85, 253. Both Ms. Johnson and F.J.’s advocate objected to the proposed placement at
Ballou. A.R. at 86. Their objections notwithstanding, DCPS issued a written notice assigning
F.J. to Ballou for the 2011–12 school year. See A.R. at 87–88. The plaintiffs rejected Ballou as
an appropriate placement, and Ms. Johnson instead unilaterally placed F.J. at the Accotink
Academy (“Accotink”), for the 2011–12 school year. Pls.’ Mem. at 4; Def.’s Mem. at 5; see
A.R. at 260.
3
The plaintiffs filed an administrative complaint with DCPS on September 22, 2011,
alleging that the District failed to provide F.J. with a FAPE in violation of the IDEA and seeking
reimbursement for F.J.’s placement at Accotink. A.R. at 89–91. At the administrative hearing,
the plaintiffs argued that Ballou was not an appropriate placement because it is unable to provide
the thirty-one hours of specialized instruction required by F.J.’s IEP, and because the school
lacks properly certified teachers to allow F.J. to earn all of the credits needed to graduate. 2 A.R.
at 90, 150–51.
The hearing officer rejected the plaintiffs’ arguments, finding that DCPS’ proposed
placement at Ballou was appropriate because Ballou “can substantially implement [F.J.’s] IEP by
providing a full-time out of general education separate [emotional disturbance] program with
approximately 28.25 hours per week of instruction,” and therefore, the plaintiffs were not
entitled to reimbursement for the cost for F.J. attending Accotink. A.R. at 7–8. The hearing
officer “acknowledge[d] that [F.J.’s] IEP calls for 31 hours of specialized instruction per week,”
but found that “the difference between what the IEP requires and what [Ballou] can offer is de
minimis under the circumstances . . . since [F.J.] would be placed in the full-time out of general
education setting her IEP team envisioned.” A.R. at 7.
The plaintiffs subsequently sought review of the hearing officer’s decision before this
Court, see Compl. ¶¶ 23–39, and the parties have now both moved for summary judgment.
2
During the administrative hearing, the plaintiffs also presented several arguments regarding F.J.’s use of a
dedicated aide. See, e.g., A.R. at 395 (arguing that Accotink is a less restrictive environment than Ballou because
F.J. does not require a dedicated aide at Accotink, but, the plaintiffs argued, would likely need one if she attended
Ballou because she used an aide when she attended Hamilton). The plaintiffs have not sought review of the hearing
officer’s rulings on the use of an aide, however, and thus the Court need not address the hearing officer’s
determinations on this point.
4
III. Standard of Review
Summary judgment is proper when the moving party “shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). In IDEA cases in which “neither party seeks to present additional evidence, a
motion for summary judgment ‘operates as a motion for judgment based on the evidence
comprising the record.’” Parker v. Friendship Edison Pub. Charter Sch., 577 F. Supp. 2d 68, 72
(D.D.C. 2008) (citations omitted).
A district court reviewing the findings and decision of an administrative hearing officer
“(i) shall receive the records of the administrative proceedings; (ii) shall hear additional evidence
at the request of a party; and (iii) basing its decision on the preponderance of the evidence, shall
grant such relief as the court determines is appropriate.” 20 U.S.C. § 1415(i)(2)(C). Under this
standard, the reviewing court owes the hearing officer “‘less deference than is conventional’ in
administrative proceedings.” Reid ex rel. Reid v. Dist. of Columbia, 401 F.3d 516, 521 (D.C.
Cir. 2005) (quoting Kerkam v. McKenzie, 862 F.2d 884, 887 (D.C. Cir. 1989) (“Kerkam I ”)).
And “a hearing decision ‘without reasoned and specific findings deserves little deference.’” Id.
(quoting Kerkam v. Superintendent, D.C. Pub. Schs., 931 F.2d 84, 87 (D.C. Cir. 1991) (“Kerkam
II ”)).
Nevertheless, “the provision that a reviewing court base its decision on the
‘preponderance of the evidence’ is by no means an invitation to the courts to substitute their own
notions of sound educational policy for those of the school authorities which they review.” Bd.
of Educ. of Hendrick Hudson Cent. Sch. Dist., Westchester Cty. v. Rowley, 458 U.S. 176, 206
(1982) (internal citations omitted). Rather, the party challenging a hearing officer’s
determination must “at least take on the burden of persuading the court that the hearing officer
5
was wrong, and . . . a court upsetting the officer’s decision must at least explain its basis for
doing so.” Reid, 401 F.3d at 521 (quoting Kerkam I, 862 F.2d at 887). Moreover, “‘[f]actual
findings from the administrative proceeding are to be considered prima facie correct.’” Roark ex
rel. Roark v. Dist. of Columbia, 460 F. Supp. 2d 32, 38 (D.D.C. 2006) (quoting S.H. v. State–
Operated Sch. Dist. of the City of Newark, 336 F.3d 260, 270 (3d Cir. 2003)). And a court must
“defer to the [hearing officer’s] factual findings unless it can point to contrary nontestimonial
extrinsic evidence on the record.” Savoy v. Dist. of Columbia, 844 F. Supp. 2d 23, 30 (D.D.C.
2012) (quoting S.H., 336 F.3d at 270).
IV. Legal Analysis
Because the plaintiffs are entitled to reimbursement for F.J.’s education at Accotink
only if the defendant has deprived F.J. of a FAPE, the Court begins its analysis with that
assessment. See 20 U.S.C. §§ 1412(a)(10)(C)(ii). In order to provide a student with a FAPE, the
student’s education must be “provided in conformity with the IEP” developed for her, and
therefore, the educational agency must place the student in a setting that is capable of fulfilling
the student’s IEP. See id. § 1401(9); 34 C.F.R. § 300.116 (2012) (providing that a child’s
educational placement “[i]s based on the child’s IEP”); O.O. ex rel. Pabo v. Dist. of Columbia,
573 F. Supp. 2d 41, 53 (D.D.C. 2008) (citing § 1401(9)).
As an initial matter, the parties disagree as to the standard the Court must apply in
assessing the plaintiffs’ claim that DCPS deprived F.J. of a FAPE. Citing Hinson v. Merritt
Educational Center, 579 F. Supp. 2d 89 (D.D.C. 2008), the plaintiffs assert that “the Hearing
Officer incorrectly imported the standard applicable to claims of a failure to implement an IEP,”
and assessed whether Ballou was able to substantially implement the IEP, whereas “the proper
standard . . . is whether or not it can implement the IEP as written.” Pls.’ Mem. at 8–9. The
6
defendant, on the other hand, urges the Court to apply the same standard used by the hearing
officer and to require the plaintiffs to show “‘more than a de minimis failure to implement all
elements of [the] IEP’” in order to succeed on their claim. Def.’s Mem. at 13–14 (quoting
Catalan ex rel. E.C. v. Dist. of Columbia, 478 F. Supp. 2d 73, 75 (D.D.C. 2007)). The Court
agrees with the defendant.
The plaintiffs have misread Hinson v. Merritt Educational Center as requiring that a
student’s placement conform to the IEP “as written.” See Pls.’ Mem. at 7–9; Pls.’ Opp’n at 5–6.
To be sure, in Hinson, another member of this Court held that the appropriateness of the
student’s placement must be evaluated with reference to the IEP “as written,” Hinson 579 F.
Supp. 2d at 104, but the plaintiffs’ interpretation of this phrase is incorrect when the Court’s
words are placed in context. In Hinson, the plaintiff argued that the school designated by DCPS
was an inappropriate placement because it could not meet the plaintiff’s proposed standards for
her child’s IEP. Id. The Court’s conclusion that “to show that placement is inappropriate,
plaintiff must show that [the school] is unable to implement the IEP as written,” therefore refers
to evaluating a placement from the standpoint of how the IEP is actually drafted, and not from
the perspective of how a parent believes the IEP ought to be written. Id. Hinson does not, as the
plaintiffs suggest, support the proposition that a proposed placement is appropriate only if the
school is capable of fulfilling every requirement of the IEP exactly as written. The plaintiffs cite
to no other authority to support their argument that a placement must be able to satisfy all of the
requirements of the IEP “as written,” and the Court’s research has found none.
The standard used by the hearing officer and pressed by the District is the standard
formulated by the Fifth Circuit for failure-to-implement claims in Houston Independent School
District v. Bobby R., 200 F.3d 341 (5th Cir. 2000), and widely adopted by other federal courts.
7
See, e.g., Sumter Cnty. Sch. Dist. 17 v. Heffernan, 642 F.3d 478, 484 (4th Cir. 2011); Van Duyn
ex rel. Van Duyn v. Baker Sch. Dist. 5J, 502 F.3d 811, 821–22 (9th Cir. 2007); Melissa S. v.
Sch. Dist. of Pittsburgh, 183 F. App’x 184, 187 (3d Cir. 2006); Garmany v. Dist. of Columbia,
__ F. Supp. 2d __, __, 2013 WL 1291289, at *3 (D.D.C. 2013); Savoy, 844 F. Supp. 2d at 31.
This standard requires that a plaintiff “must show more than a de minimis failure to implement
all elements of [the student’s] IEP, and instead, must demonstrate that the school board or other
authorities failed to implement substantial or significant provisions of the IEP” in order to prevail
on a failure-to-implement claim. Catalan, 478 F. Supp. 2d at 75 (quoting Bobby R., 200 F.3d at
349), aff’d sub nom. E.C. ex rel. Catalan v. Dist. of Columbia, No. 07-7070, 2007 U.S. App.
LEXIS 21928 (D.C. Cir. Sept. 11, 2007). Courts applying this standard “have focused on the
proportion of services mandated to those actually provided, and the goal and import (as
articulated in the IEP) of the specific service that was withheld.” Wilson v. Dist. of Columbia,
770 F. Supp. 2d 270, 275 (D.D.C. 2011) (citations omitted).
The defendant’s view finds support in both logic and case law. In order to provide a
FAPE, after an IEP is designed, the District “must . . . implement the IEP, which includes
placement in a school that can fulfill the requirements set forth in the IEP.” Pabo, 573 F. Supp.
2d at 53 (citing § 1401(9)); see also Savoy, 844 F. Supp. 2d at 31 (characterizing the plaintiff’s
claims that the school to which the student was assigned after he aged out of his prior placement
“failed to provide the number of hours and types of services required by [the student’s] IEP” as
failure-to-implement claims). At bottom, an allegation that a student’s placement is not
appropriate because the school cannot implement one or more provisions of that student’s IEP is
a claim that the educational authority has failed to properly implement the student’s IEP by
placing the student at a school which is capable of implementing it. The fact that the plaintiffs’
8
claim here is a “prospective” challenge, which arises “at [a] different point[] in the process of
implementing and developing an IEP” from a claim which alleges that a school has failed to
implement a student’s IEP during the student’s attendance there, Pls.’ Opp’n at 5, is a distinction
without a difference. The Court sees no logical reason to require perfect compliance with a
student’s IEP in determining an appropriate placement when, as the plaintiffs concede, imperfect
compliance with the IEP would be permissible once the student begins attending the school. See
id. Accordingly, because placing a student in an appropriate educational setting is an element of
implementing the IEP, the Court will assess the appropriateness of F.J.’s proposed placement at
Ballou by determining whether Ballou was capable of substantially implementing F.J.’s IEP.
The plaintiffs contend that F.J.’s placement at Ballou is inappropriate because Ballou is
incapable of providing F.J. with the thirty-one hours of specialized instruction required by her
IEP and does not have the necessary staff to provide adequate instruction in Spanish and physical
education, both required for F.J. to receive a diploma. Pls.’ Mem. at 8–10. Shamele Straughter,
Ballou’s Special Education Coordinator, confirmed that students in Ballou’s program are in
school for a total of 32.5 hours each week but receive only 28.25 hours per week of actual
instruction after breaks are subtracted. See A.R. at 363–64. Ms. Straughter testified, however,
that “when individuals create IEPs that are 32 hours, what they are actually trying to do is ensure
that [the students] do not engage with their non-disabled peers during non-instructional time[,]
which include[s] lunch and transition.” A.R. at 359–60. The plaintiffs attempt to discredit this
testimony by arguing that such an interpretation is inconsistent with the generally understood
meaning of “instruction” and noting that Ms. Straughter was not part of the Team that developed
F.J.’s IEP, see Pls.’ Opp’n at 2–3, but they failed to offer any evidence that contradicted Ms.
Straughter’s hearing testimony.
9
In any event, even if F.J.’s IEP is read as calling for precisely thirty-one hours of
instructional time, the difference between thirty-one and a little over twenty-eight does not
constitute a material deviation from the requirements of the IEP. Admittedly, a deviation in
hours of instruction can, in certain circumstances, be a substantial deviation resulting in the
denial of a FAPE. See, e.g., Van Duyn, 502 F.3d at 823 (finding that a 50% deprivation of hours
was material); see also Heffernan, 642 F.3d at 481 (finding that providing seven and a half to ten
hours of the required fifteen hours, in combination with the school’s failure to use the teaching
method specified in the IEP, was material). However, a comparison of the hours that would have
been provided by Ballou with the hours mandated by the IEP reveals that the deviation alleged
here is relatively slight, as Ballou was capable of providing F.J. with 91% of the hours of
specialized instruction required by her IEP. Other members of this Court have reached the same
conclusion when faced with similar deviations. See, e.g., Savoy, 844 F. Supp. 2d at 34 (finding
that a difference of less than one hour per week was not material); Catalan, 478 F. Supp. 2d at 76
(holding that failure to receive “a handful of sessions” of therapy and therapist’s shortening of
several other sessions was not material). The situation here is in stark contrast to the losses in
Sumter (50–67% of the hours required by the IEP per week) and Van Duyn (50% of hours
required by the IEP). Moreover, the Court notes that the private placement selected for F.J.
(Accotink), provides similar hours as Ballou—30.5 hours of school per week and 28.33 hours of
actual instruction. A.R. at 187–88. While not dispositive, the fact that F.J. received less than the
number of specialized instruction hours called for by the IEP at Accotink and approximately the
same number of hours she would have received at Ballou, is proof that the discrepancy in hours
Ballou would have provided is not material.
10
In addition to the deprivation in hours of specialized instruction, the plaintiffs contend
that Ballou was an inappropriate setting because it cannot provide specialized instruction in
Spanish and physical education, two classes F.J. will need to take to earn her high school
diploma, neither of which she is currently enrolled in. Pls.’ Mem. at 10. During the
administrative hearing, Ms. Straughter testified that F.J. will need to take a foreign language
class and physical education in order to earn her high school diploma, but that she is not
currently eligible to take either class. A.R. at 358. She admitted that Ballou does not currently
have a special education teacher for the Spanish or physical education classes, but stated that the
general education teachers who teach those courses consult with special education teachers “to
ensure that accommodations are being made,” and that they are currently hiring for an additional
special education teacher. A.R. at 357–59. Relying on Ms. Straughter’s testimony, the hearing
officer found that “all of [the emotional disturbance students at Ballou] are on a diploma track”
and that although Ballou does not currently have special education teachers for Spanish and
physical education, “there are plans to eventually get a special education teacher for those
classes.” A.R. at 6. The hearing officer also credited Ms. Straughter’s testimony that F.J. is not
currently eligible to take either class. Id.
The plaintiffs have proffered nothing to contradict Ms. Straughter’s testimony or the
hearing officer’s conclusions on this point, and, indeed, expressly concede that F.J. is not
currently enrolled in either class. Pls.’ Mem. at 10. The Court has found no evidence in the
record that would cause it to doubt the veracity of Ms. Straughter’s statements regarding hiring
plans for the Ballou program or F.J.’s current eligibility to take Spanish and physical education.
Consequently, the Court cannot conclude at this time that Ballou’s failure to provide a special
education teacher for these two courses constitutes a failure to implement F.J.’s IEP because it is
11
likely that Ballou will be able to provide specialized instruction in these courses by the time F.J.
is able to take them. 3
V. Conclusion
For the foregoing reasons, the Court concludes that the discrepancy between the amount
of specialized instruction offered by Ballou and the amount required by F.J.’s IEP is not material
and that Ballou’s lack of specialized instruction in Spanish and physical education does not
render it an inappropriate placement at this time. Thus, the Court finds that DCPS provided F.J.
with a FAPE in accordance with its obligations under the IDEA. Consequently, the plaintiffs are
not entitled to reimbursement for F.J.’s placement at Accotink. See 20 U.S.C. §
1412(a)(10)(C)(ii); Florence Cnty. Sch. Dist. Four v. Carter , 510 U.S. 7, 15 (1993) (citation
omitted) (holding that parents “are entitled to reimbursement only if a federal court concludes
that both the public placement violated IDEA and that the private school placement was proper
under the Act” and those who “unilaterally change their child’s placement . . . do so at their own
financial risk”). Accordingly, the defendant’s motion for summary judgment is granted and the
plaintiffs’ motion for summary judgment is denied.
SO ORDERED this 27th day of August, 2013. 4
REGGIE B. WALTON
United States District Judge
3
The Court finds that Ballou’s lack of specialized instruction in Spanish and physical education does not constitute
a denial of a FAPE at this time because F.J. is not currently eligible to take either class. Whether a deficiency in
resources which prevents a student from earning a high school diploma violates the IDEA, however, presents an
entirely different question that must be left for another day, should the District fail to follow through with its hiring
plans once F.J. is eligible to take these courses.
4
The Court will contemporaneously issue an Order consistent with this Memorandum Opinion.
12 | 01-03-2023 | 04-03-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1769682/ | 421 F. Supp. 355 (1976)
Hughette THEODORE, Plaintiff,
v.
ELMHURST COLLEGE, an Illinois Corporation, Defendant.
No. 76 C 2283.
United States District Court, N. D. Illinois, E. D.
September 15, 1976.
*356 Frances X. Riley, Chicago, Ill., for plaintiff.
Andrew Kramer, Sandra P. Zemm, Raymond J. Kelly, Chicago, Ill., for defendant.
MEMORANDUM OPINION
FLAUM, District Judge:
This cause is before the court on plaintiff's motion for preliminary injunctive relief pursuant to rule 65(a) of the Federal Rules of Civil Procedure. For the reasons set forth infra, plaintiff's motion is denied.
The verified complaint in this action alleges that plaintiff, a tenured employee at Elmhurst College, a private nonprofit educational institution, was illegally terminated in her employment because of her race in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a)(1), as amended. Plaintiff alleges that subsequent to an aborted attempt in 1973 to discharge her, defendant altered its procedure for determining seniority so that plaintiff was "demoted" from a senior status over at least two members of the faculty in her department to the bottom of the seniority ladder. After administrative review, defendant notified the plaintiff that because of economic reasons her employment would be terminated effective August 15, 1976. Plaintiff asserts, however, that the true reason for the changes in the seniority criteria and for her ultimate dismissal was that she was black. Plaintiff seeks reinstatement as well as damages resulting from her wrongful discharge.
At this stage of the litigation, plaintiff is seeking a preliminary injunction prohibiting the defendant from terminating her employment and discontinuing those benefits accruing to plaintiff as a tenured employee of Elmhurst College.[1] The factors relevant to the determination of a request for preliminary injunctive relief in a Title VII employment discrimination case have recently been articulated by the Seventh Circuit. In Washington v. Walker, 529 F.2d 1062 (7th Cir. 1976), the court stated:
The appropriateness of granting or denying a preliminary injunction "depends upon a balancing of several factors, including the likelihood of success on the merits, the lack of adequate remedy at law, the prospect of irreparable harm if the injunction is not issued and a comparison of the relative hardships imposed on the parties."
Id. at 1065, quoting Banks v. Trainor, 525 F.2d 837, 841 (7th Cir. 1975), cert. denied, 424 U.S. 978, 96 S. Ct. 1484, 47 L. Ed. 2d 748 (1976). While the parties dispute whether all four of the abovementioned factors have been satisfied, this case revolves about whether the plaintiff has established that she will be irreparably harmed by this court's failure to enjoin the defendant from terminating her employ.
*357 Before proceeding it should be noted that this court is aware of those cases in which it has been held that irreparable harm is presumed in a motion for a preliminary injunction in Title VII cases when the plaintiff has established a likelihood of success on the merits of the complaint. Murry v. American Standard, Inc., 488 F.2d 529 (5th Cir. 1973); Culpepper v. Reynolds Metals Co., 421 F.2d 888 (5th Cir. 1970); Manhart v. City of Los Angeles, 387 F. Supp. 980 (C.D.Cal.1975); Held v. Missouri Pac. R. R., 373 F. Supp. 996 (S.D.Tex.1974); United States v. Virginia Electric & Power Co., 327 F. Supp. 1034 (E.D.Va.1974). However, in Washington v. Walker, supra, the Seventh Circuit indicated that a positive showing of irreparable harm is required in Title VII employment discrimination cases. This requirement is shown by the court's discussion of how the plaintiff in that case had failed to show irreparable injury, 529 F.2d at 1065-66, and by the court's citing with approval Oburn v. Shapp, 521 F.2d 142 (3d Cir. 1975), a case in which the Third Circuit required a positive showing of irreparable injury in a Title VII action. 521 F.2d at 150-51, 145-46 n.7. See also Jerome v. Viviano Food Co., 489 F.2d 965 (6th Cir. 1974). Moreover, the recent decision by the Fifth Circuit in Parks v. Dunlop, 517 F.2d 785 (5th Cir. 1975) (per curiam), casts doubt on the validity of the "presumptive" irreparable injury doctrine as enunciated in Culpepper and Murry. Therefore, in order for the plaintiff to succeed on her motion for preliminary injunctive relief she must establish that she will suffer irreparable injury if she loses.
In support of her claim that she will suffer irreparable injury if the defendant is allowed to dismiss her, plaintiff argues that she will be without funds to support herself or to properly prosecute her complaint. Moreover, plaintiff contends that her professional reputation will be injured by this firing and that she will be unable to obtain employment during the pendency of this suit.
It should be noted that plaintiff's entire proof of irreparable injury consists of one paragraph in her verified complaint in which she states that, "She will have no means of supporting herself here . . .. Her whole offensive struggle will be irreparably strangled and frustrated. Her whole future will be irreparably damaged."
The court finds that this showing is completely insufficient to establish irreparable injury to the plaintiff. No further evidence is presented to support the broad and conclusory statements made by plaintiff. For instance, no evidence is presented to show that the plaintiff will in fact be unable to obtain employment during the pendency of this action. Plaintiff offers no evidence of jobs she has applied for and been refused. Moreover, in plaintiff's own complaint she admits that, "The college has never at any time, in any place questioned plaintiff's ability or integrity . . .." This admission mitigates against a finding that plaintiff's reputation has been injured because of her dismissal.
But, even if plaintiff could have shown that the loss of her job would have left her in deep financial problems, this court, on the basis of Sampson v. Murray, 415 U.S. 61, 94 S. Ct. 937, 39 L. Ed. 2d 166 (1974), would have been constrained to hold that a showing of irreparable injury had not been made. In Sampson, a probationary federal employee sought interim injunctive relief to prevent her discharge which she claimed was not done in conformity with the applicable Civil Service Regulations. One of the grounds the Supreme Court used to reverse the court of appeals affirmance of the district court's granting of a preliminary injunction was that, "the temporary loss of income, ultimately to be recovered, does not usually constitute irreparable injury." Id. at 90, 94 S.Ct. at 953. Thus, because the plaintiff in Sampson could have recovered any loss of pay because of her wrongful discharge, money damages could have made her whole and no irreparable injury was caused by being discharged until the ultimate determination of her cause. And, in response to plaintiff's argument that until a decision on the merits *358 she would be able to secure work and be destitute, the Court responded:
We recognize that cases may arise in which the circumstances surrounding an employee's discharge, together with the resultant effect on the employee, may so far depart from the normal situation that irreparable injury might be found. Such extraordinary cases are hard to define in advance of their occurrence. We have held that an insufficiency of savings or difficulties in immediately obtaining other employment external factors common to most discharged employees and not attributable to any unusual actions relating to the discharge itself will not support a finding of irreparable injury, however severely they may affect a particular individual.
415 U.S. at 92 n.68, 94 S.Ct. at 953.
In the case at bar, not only can this court grant back pay to make plaintiff whole, but reinstatement as well as any other appropriate relief can be awarded. 42 U.S.C. § 2000e-5(g). Therefore, since the plaintiff in this motion has merely alleged injuries which flow in all cases when an individual is discharged from employment, the reliefs available upon the determination of this cause can remedy any wrong that may have been committed against her. That in the interim she may suffer hardship from her discharge has been made insufficient by Sampson to support a finding of irreparable injury necessary to the issuance of a preliminary injunction.
Plaintiff would have this court distinguish Sampson on the ground that Sampson was a separation of powers case involving the court's reluctance to force upon a federal agency an unwanted probationary employee. But, while several district courts have so distinguished Sampson, see Assaf v. University of Texas System, 399 F. Supp. 1245, 1251 (S.D.Texas 1975); American Federation of Government Employees, Loc. 1858 v. Callaway, 398 F. Supp. 176 (N.D.Ala. 1975),[2] this court is of the opinion that the Sampson decision was based upon and delineated those general equitable principles to be considered in all requests for preliminary relief in employment discrimination cases. This broadness of the Sampson ruling is shown by the court's reliance on Virginia Petroleum Jobbers Assn. v. FPC, 104 U.S.App.D.C. 106, 259 F.2d 921 (1958), for the proposition that, "`Mere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay, are not enough [for a preliminary injunction].'" 415 U.S. at 90, 94 S.Ct. at 953, quoting Virginia Petroleum Jobbers Assn. v. FPC, supra at 925. Moreover, two courts of appeals which have considered the matter after Sampson have interpreted the extent of the ruling beyond the narrow facts of that decision. Parks v. Dunlop, 517 F.2d 785 (5th Cir. 1975); Soldevila v. Secretary of Agriculture, 512 F.2d 427 (1st Cir. 1975).
Therefore, this court finds that as a matter of fact and law the plaintiff has failed to show irreparable harm justifying an injunction pendente lite. Plaintiff's motion is hereby denied.
It is so ordered.
NOTES
[1] On June 29, 1976, this court denied plaintiff's motion for a temporary restraining order in which plaintiff sought the continuation of certain insurance benefits provided by defendant to its tenured employees scheduled to terminate on June 30, 1976.
[2] It should be noted that in the Assaf and Loc. 1858 cases cited in the text, there were other factors which would support a finding of irreparable injury external to the mere loss of employment. In Assaf, the plaintiff lost the use of research resources vital to the continuation of his work. 399 F.Supp. at 1251. In Loc. 1858, not all members of the class could have received back pay or damages at a later date. 398 F.Supp. at 194. Furthermore, in Johnson v. University of Pittsburgh, 359 F. Supp. 1002 (W.D.Penn.1973), the case principally relied on by the plaintiff, not only was this case decided before Sampson, but it also contained the fact that if the plaintiff was discharged she would have lost a research grant which could not have been recovered. Id. at 1004. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1881229/ | 958 F. Supp. 1401 (1997)
DREAM TEAM COLLECTIBLES, INC., Plaintiff,
v.
NBA PROPERTIES, INC. and USA Baskerball, Inc., Defendants.
NBA PROPERTIES, INC., et al., Counter-Plaintiffs,
v.
DREAM TEAM COLLECTIBLES, INC., Counterclaim-Defendant.
No. 4:95CV945-DJS.
United States District Court, E.D. Missouri, Eastern Division.
April 7, 1997.
*1402 *1403 Frederick H. Mayer, Andrew B. Mayfield, John H. Quinn, III, Richard B. Scherrer, Bryan K. Wheelock, Carol A. Platt, Armstrong and Teasdale, St. Louis, MO, for Dream Team Collectibles, Inc.
David W. Harlan, Michael A. Kahn, Gallop and Johnson, St. Louis, MO, Salvatore Rotella, Jr., S. William Livingston, Jr., Michael J. Francese, Bingham B. Leverich, Covington and Burling, Washington, DC, for NBA Properties, Inc., Atlanta Hawks, Ltd., Celtics Ltd. Partnership, George Shinn Sports, Inc., Chicago Professional Sports Ltd. Partnership, Gund Business Enterprises, Inc., Dallas Basketball Ltd., The Denver Nuggets Ltd. Partnership, Detroit Pistons Basketball Co., CC Partners, Rocket Ball, Ltd., Pacers Basketball Corp., The Los Angeles Lakers, Inc., Miami Heat Ltd. Partnership, Milwaukee Bucks, Inc., Minnesota Timberwolves Basketball *1404 Ltd. Partnership, Meadowlands Basketball Associates, Orlando Magic, Ltd., The Philadelphia 76ers Basketball Club, Inc., Trail Blazers Inc., Sacramento Kings Ltd. Partnership, L.P., San Antonio Spurs, Ltd., Seattle Supersonics, Inc., Capital Bullets Basketball Club, Inc.
Gene J. Brockland, Jr., Lawrence E. Evans, Jr., Herzog and Crebs, St. Louis, MO, for USA Basketball, Inc.
MEMORANDUM AND ORDER
STOHR, District Judge.
Dream Team Collectibles, Inc. ("DTC") filed its second amended complaint against defendants NBA Properties, Inc., ("NBAP")[1] and USA Basketball, Inc. ("USAB").[2] DTC alleges that defendants' unauthorized use of the DREAM TEAM mark to refer to the USAB teams of NBA superstars who played in the 1992 and 1996 Olympics and the 1994 World Championship of Basketball created "reverse confusion" and constituted trademark infringement, unfair competition, false advertising and dilution in violation of §§ 32 and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a), Missouri statutory law and common law. DTC seeks monetary damages, injunctive relief, and various other remedies.
NBAP and the other counterclaim-plaintiffs[3] ("counter-claimants") filed their third amended counterclaims against DTC seeking monetary damages, injunctive relief (Counterclaims I-VII) and cancellation of DTC's federal registration of its DREAM TEAM trademark (Counterclaim X).[4] Counterclaimants allege that DTC's unauthorized use of the trademarks and trade dress of NBA teams constituted trademark infringement, unfair competition, false advertising and dilution in violation of §§ 32 and 43(a) & (c) of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a) & (c), Missouri statutory law and common law. Counterclaimants further allege that DTC's unlawful use of its DREAM TEAM trademark on collages containing "counterfeit" trading cards warrants cancellation of the mark.
Pending before the Court are defendants' motions for summary judgment as to DTC's second amended complaint [Docs. # 156 and 160], counterclaimants' motion for summary judgment as to Counterclaims I, II, VI, VII and X [Doc. # 157], and DTC's motion for summary judgment as to Counterclaim X [Doc. # 161].
A. Undisputed Facts
DTC'S USE OF DREAM TEAM
In 1986, DTC began utilizing the DREAM TEAM mark on framed and unframed collages of sports trading cards. By January of 1987, DTC was selling its collages in interstate commerce. DTC also applied the DREAM TEAM mark to other sports-related merchandise, including apparel, however *1405 this constituted a very small percentage of DTC's sales.
DTC displays its trading card collages on matboards which are either shrink-wrapped or framed for sale. DTC's collages usually contain licensed trading cards. Sometimes the collages contain unlicensed trading cards and licensed or unlicensed photographs of an individual athlete. Some of DTC's collages have contained trading cards depicting NBA players and/or photographs of NBA players. The logo and/or trademark of the individual trading cards are plainly visible in the collages.
DTC's promotional materials and collages contain a logo which contains the words DREAM TEAM. DTC has utilized two different DREAM TEAM logos. See Court's Exhibit 1 attached hereto. DTC's basketball collages do not contain a disclaimer advising consumers that the collages are not licensed products of the NBA, NBAP, USAB or NBA teams. Although DTC collages vary in numerous respects, a photocopy example of a DTC basketball collage is attached hereto as Court's Exhibit 2.
On May 21, 1990, DTC filed an application for federal registration of the DREAM TEAM trademark in International Class 16 (publications and printed materials). DTC sought registration of DREAM TEAM as a word mark. In its application, DTC stated that it had adopted and was using the DREAM TEAM mark for framed and unframed sports collages. On November 6, 1990, the United States Patent and Trademark Office ("PTO") refused DTC's registration based on a prior registration by Charlico, Inc. ("Charlico") for the mark AMERICAN DREAMTEAM for posters in International Class 16. The PTO stated that "[b]ecause of the similarity of the marks and the similar nature of the goods namely both applicant's and registrant's goods are art work, intend to be mounted on a wall and the fact that the goods are likely to move in the same channels of trade, the consumer may be confused as to the source of the goods." Mem. in Opp. (Complaint),[5] Exh. 3. DTC sought and ultimately obtained the cancellation of Charlico's registration. The PTO then permitted DTC's application to proceed and, subsequently on September 26, 1995, the PTO issued a certificate of registration to DTC for the DREAM TEAM trademark in International Class 16. Mem. in Opp. (Complaint), p. 5, Exh. 10. On August 8, 1995, the Missouri Secretary of State's Office issued a registration certificate to DTC for its DREAM TEAM mark. Mem. in Opp. (Complaint), Exh. 11.
In some of DTC's trading card collages, what appear to be licensed trading cards are not trading cards at all, but color photocopies of the front sides of trading cards. The back sides of the photocopies are blank.[6] DTC's president, Ed Gaines, stated that on some occasions DTC utilized photocopies of trading cards for inclusion in collages labelled as reprints. DTC made the color photocopies at a Kwik Kopy store in Creve Coeur, Missouri. Disputes of fact exist as to the number of photocopies made, the number of photocopies incorporated into collages, and the number of photocopies actually sold.[7] Gaines *1406 estimates that the majority of trading cards which were photocopied were cards that DTC had obtained from sources that had "gone out of business." DTC's Reply Mem. in Supp. (Counterclaims), p. 7. DTC copied only baseball and football trading cards except for one instance where DTC copied a Magic Johnson basketball trading card, not for use in a collage, but to "show reps and customers what it looked like." DTC's Reply Mem. in Supp. (Counterclaim), p. 8; Depo. of E. Gaines, pp. 685-87.
A significant number of the cards which DTC copied contained a trademark and/or copyright symbol. The manufacturers and/or distributors of the trading cards which DTC photocopied did not authorize anyone associated with DTC to make or sell color photocopies of the trading cards. As of November, 1996, DTC was no longer making color photocopies or using color photocopies of trading cards in its collages.
DTC is a Missouri Corporation. DTC has sold its products in retail outlets (including kiosks) in St. Louis, Missouri and in other areas of the country. DTC has also sold its products, through various distribution channels including department stores, sports retail outlets, grocery/drug chains, and gift shops. Affidavit of E. Gaines. From its inception in 1986 through 1995, DTC sales have been under $7 million. DTC's average annual gross sales from 1987 through 1995 were $661,506. DTC's average annual advertising expenditures from 1987 through 1995 were approximately $2,700.
DEFENDANTS' USE OF DREAM TEAM
Prior to the 1992 Olympics, the USAB men's basketball team that represented the United States ("U.S.") in the Olympics was made up solely of amateur (college) players. In 1990, the international governing body for basketball competitions changed its eligibility guidelines which made it possible for USAB to field a team of professional players. USAB and the NBA decided that the 1992 U.S. men's Olympic basketball team would be comprised primarily of star NBA players ("the 1992 USAB Olympic team"). Mem. in Supp. (Complaint), p. 5.
This decision was widely publicized. The February 18, 1991 Sport Illustrated cover featured a photograph of Magic Johnson, Michael Jordan, Charles Barkley, Patrick Ewing and Karl Malone wearing USAB uniforms under the heading DREAM TEAM. The magazine featured a six-page article by Jack McCallum entitled "Lords of the Rings." This article, which does not contain the phrase DREAM TEAM, examined the likelihood that these five NBA players would comprise the 1992 USAB Olympic team. It was McCallum's idea to refer to these five players as a DREAM TEAM. Affidavit of J. McCallum. The management of Sports Illustrated made the decision to put the words DREAM TEAM on the magazine's cover. Id.
In March of 1991, NBAP entered into an agreement with USAB wherein NBAP became USAB's exclusive marketing agent and representative for the licensing, marketing and commercial exploitation of USAB's marks. Mem. in Support (Complaint), pp. 4-5. On April 7, 1991, a number of NBAP executives and managers met to discuss how to implement this agreement and maximize gross revenues. Around that same time, NBAP began developing a proposal package designed to sell sponsorships for the 1992 USAB Olympic team. NBAP utilized a copy of the February 18, 1991 Sports Illustrated cover as the cover page for its initial proposal package. Mem. in Opp. (Complaint), p. 13, Exhs. 33-34.
Sometime in April of 1991, an NBAP officer instructed Terese Cohen, NBAP's outside trademark counsel, to "follow-up" on a suggestion he had received that NBAP obtain a trademark for DREAM TEAM "for licensing opportunities, etc." On April 30, 1991, Cohen obtained a cursory trademark search report for the DREAM TEAM mark. The report identified DTC's pending federal trademark application for DREAM TEAM in International Class 16, as well as other pending federal applications and registrations of *1407 marks containing the words "dream" and "team." Mem. in Opp. (Complaint), p. 11, Exh. 24. On June 14, 1991, NBAP filed its federal trademark "intent to use" application for DREAM TEAM in International Classes 16 (publications and printed materials), 25 (clothing), and 28 (toys and sporting goods). NBAP sought registration of DREAM TEAM as a word mark, as had DTC. The PTO refused NBAP's registration, citing DTC's pending application. Mem. in Opp. (Complaint), p. 12, Exh. 28.
By at least July of 1991, defendants were, through the media, referring to the 1992 USAB Olympic team as the DREAM TEAM. On July 15, 1991, NBAP, USAB and the National Broadcasting Company ("NBC") issued a joint press release regarding the NBC live television presentation scheduled for September 21, 1991. The press release referred to the one hour television special during which the NBA players for the 1992 USAB Olympic team would be named. The press release included a reference to the "Dream Team." Mem. in Opp. (Complaint), Exh. 36. Subsequently, on September 21, 1991, USAB issued a press release entitled "1992 USA BASKETBALL `DREAM TEAM' UNVEILED." This September press release stated that the USAB Basketball national men's team was "appropriately coined the `Dream Team'" and that "The `Dream Team' 10 are virtually a Who's Who in the NBA." Mem. in Opp. (Complaint), Exh. 37.
In 1991 and 1992, NBAP mentioned DREAM TEAM in its licensing agreements. During that same time, NBAP also asserted rights in the DREAM TEAM mark against third parties. For example, in 1991, USAB and NBAP entered into an agreement with Kraft General Foods ("Kraft") which stated that Kraft "may use `Dream Team' in reference to the USA Basketball team ... however, this is not a protected name." Mem. in Opp. (Complaint), p. 14, Exh. 38. Kraft used the DREAM TEAM mark on posters. In 1991, pursuant to a similar license agreement, McDonald's used the phrase DREAM TEAM on caps. On August 19, 1992, USAB's General Counsel warned a Swedish company to abandon plans to market a basketball calendar using photographs of the USAB team and bearing the DREAM TEAM mark because "[USAB] has secured the rights to all player likenesses as well as to the phrase `Dream Team', and both are protected properties." Mem. in Opp. (Complaint), pp. 14-16, Exh. 44. On September 3, 1992, USAB's General Counsel objected to the use of DREAM TEAM in an advertisement by MGM Grand Air, stating that the proposed ad "would support, at the very least, an unfair competition argument." Id. Exh. 45.
In October of 1993, NBAP developed a DREAM TEAM II logo for use by sponsors and licensees in connection with the 1994 World Championship of Basketball. In 1995, NBAP developed another DREAM TEAM logo that it licensed for use by sponsors and licensees in connection with the 1996 U.S. men's Olympic basketball team. Mem. in Supp. (Complaint), p. 10. See Court's Exhibit 1 attached hereto. The PTO cited DTC's application and subsequent registration of DREAM TEAM in its refusal of NBAP's attempted registration of DREAM TEAM II and DREAM TEAM 96. Mem. in Opp. (Complaint), p. 13, Exhs. 29-30.
B. Summary Judgment Standard
This Court must grant summary judgment if, based upon the pleadings, admissions, depositions, and affidavits, there exists no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986). The moving party must initially demonstrate the absence of an issue for trial. Id. at 323, 106 S.Ct. at 2552-53. Any doubt as to the existence of a material fact must be resolved in favor of the party opposing the motion. "The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 2513, 91 L. Ed. 2d 202 (1986). Nevertheless, once a motion is properly made and supported, the nonmoving party may not rest upon the allegations in its pleadings but must instead set forth specific facts showing that there is a *1408 genuine issue of material fact for trial. Fed. R.Civ. P. 56(e). Summary judgment must be granted to the movant if, after adequate time for discovery, the nonmoving party fails to produce any proof to establish an element essential to the party's case and upon which it bears the burden of proof at trial. Celotex Corp., 477 U.S. at 322-24, 106 S.Ct. at 2552-53. For "a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. at 2552.
C. Reverse Confusion
In its second amended complaint, DTC pleads a theory of reverse confusion. The Court is not aware of any case in which the Eighth Circuit has recognized a theory of reverse confusion,[8] thus, its threshold analysis is whether DTC's claims of reverse confusion are cognizable in the Eighth Circuit.
The traditional pattern of classic "forward confusion" occurs when customers mistakenly think that the junior user's goods or services are from the same source as or are connected with the senior user's goods or services. Customers want to buy the senior user's product and because of the similarity of marks, mistakenly buy the junior user's product instead. In "reverse confusion," customers purchase the senior user's goods under the mistaken impression that they are getting the goods of the junior user. That is, reverse confusion occurs when the junior user's advertising and promotion so swamps the senior user's reputation in the market that customers are likely to be confused into thinking that the senior user's goods are those of the junior user: the reverse of traditional confusion.
J. Thomas McCarthy, 3 McCarthy on Trademarks and Unfair Competition § 23:10, p. 23-22 (4th ed. 1996) ("McCarthy on Trademarks"). If a consumer is under the misimpression that the junior user is the source of the senior user's goods, the consumer may consider the senior user the unauthorized infringer, thus the junior user's use of the mark may injure the senior user's reputation and impair its goodwill. Id.
All U.S. Courts of Appeals which have considered claims of reverse confusion have accepted the doctrine. See, e.g., Big O Tire Dealers, Inc. v. Goodyear Tire & Rubber Co., 561 F.2d 1365, 1372 (10th Cir.1977) (not recognizing reverse confusion would result in "immunization from unfair competition liability of a company with a well established trade name and with the economic power to advertise extensively for a product name taken from a competitor"); see generally Thad G. Long & Alfred M. Marks, Reverse Confusion: Fundamentals and Limits, 84 Trademark Rep., 1, 4 (1994). This Court concludes that the Eighth Circuit Court of Appeals would recognize that the likelihood of confusion language of § 32(1) of the Lanham Act is broad enough to encompass reverse confusion.
D. Defendants' Motions for Summary Judgment as to DTC's Second Amended Complaint[9]
Defendants move for summary judgment as to DTC's second amended complaint on three grounds.[10] First, defendants argue that DTC does not have trademark rights in DREAM TEAM that preclude defendants *1409 from licensing the mark to sponsors and licensees who wish to associate their goods and services with the USAB basketball teams. Relying upon Illinois High School Ass'n v. GTE Vantage, Inc., 99 F.3d 244 (7th Cir.1996), cert. denied, ___ U.S. ___, 117 S. Ct. 1083, 137 L. Ed. 2d 218, (1997) ("IHSA v. GTE"), defendants argue that the media's widespread use of the term DREAM TEAM to refer to the team of NBA superstars who played for USAB in the 1992 Olympics (and subsequently in the 1994 World Championship of Basketball and the 1996 Olympics) created superior rights in defendants to use the DREAM TEAM mark for goods and services sold in association with those teams. Next, defendants argue that there is no likelihood of confusion between defendants' use of the DREAM TEAM mark and DTC's use of the DREAM TEAM mark. Finally, defendants argue that DTC's claims are barred by its own unclean hands because DTC has sold "counterfeit" trading cards in collages which bear its DREAM TEAM mark and because DTC has failed to include a disclaimer in its collages advising consumers that the collages are not licensed products of the NBA, NBAP, USAB or NBA teams.
i. Whether the media is responsible for the public's association of DREAM TEAM with the USAB teams
Defendants argue that the media's widespread use of the term DREAM TEAM to refer to the USAB teams of NBA players created superior rights in NBAP to use the term for goods and services sold in association with those teams. In briefing this issue, both NBAP and DTC cite extensively to IHSA v. GTE wherein the Seventh Circuit faced "a novel issue of trademark law." Id. at 245.
In IHSA v. GTE, the Illinois High School Association had used the trademark MARCH MADNESS since the early 1940s to designate the Illinois high school basketball tournament held every year in March and sometimes broadcast nationally. In 1982, CBS television broadcaster Brent Musburger used the term MARCH MADNESS to designate the NCAA's Final Four college basketball championship games. "The term caught on and is now widely used by the media and the public to denote this [NCAA] basketball tournament as well as IHSA's." Id. at 245. In 1993 or 1994, over ten years after the media had created public association of the term MARCH MADNESS with the NCAA tournament, the NCAA began to license use of the term MARCH MADNESS to companies that wished to associate their goods and services with the NCAA tournament. Id. In 1996, the Illinois High School Association brought its trademark infringement suit against defendant GTE Vantage, Inc., a licensee of the NCAA. GTE was using the term MARCH MADNESS to promote a CD-ROM game called "NCAA Championship Basketball." The Illinois High School Association proceeded on a theory of reverse confusion, claiming that its customers would mistakenly believe that its trademark affixed to its own merchandise referred to the NCAA tournament, and that this confusion would impair its ability to make money by licensing its trademark on merchandise. Id. at 246.
The district court held that the Illinois High School Association did not have a trademark that the law would protect, at least "so far as the use of the term MARCH MADNESS in connection with the NCAA tournament is concerned." Id. at 246. The Seventh Circuit agreed, finding that "[a] trademark owner is not allowed to withdraw from the public domain a name that the public is using to denote someone else's good or service, leaving that someone and his customers speechless." Id. at 247. Judge Posner, writing for a unanimous panel, went on to state:
It [a trademark] is mainly just a designation of source, 15 U.S.C. §§ 1114(1), 1125(a), and dies when it ceases to designate, for whatever reason other than the culpable conduct of the defendant. * * * Were NCAA responsible for blotting out the exclusive association of "March Madness" with the Illinois high school basketball tournament, IHSA might have a remedy on a theory of reverse confusion, though probably not an injunctive remedy since that would promote confusion among consumers, most of whom now identify the term with the NCAA tournament. But *1410 IHSA blames CBS, which is not a defendant, rather than NCAA, much less Vantage [a licensee] for the blotting out.
Id. at 246-47.
The principles enunciated in IHSA v. GTE do not entitle defendants to summary judgment. In IHSA v. GTE it was undisputed that the media, not the NCAA, had created the public's association of the term MARCH MADNESS with the NCAA basketball tournament. Here, a genuine issue of material fact exists as to whether defendants, not the media, are responsible for the public's association of the DREAM TEAM mark with the USAB teams of NBA players.[11]
Defendants vigorously argue that it is undisputed that the media is responsible for the public's use of DREAM TEAM to refer to the USAB teams. To support this claim, defendants state that between the February 18, 1991 publication of the Sports Illustrated cover containing the DREAM TEAM heading and October of 1993, when NBAP claims it first licensed use of the DREAM TEAM mark, the 1992 USAB Olympic team had been referred to as the DREAM TEAM in more than 5,000 newspaper and magazine articles and the name DREAM TEAM had appeared in the headlines of more than 475 such articles. Mem. in Supp. (Complaint), p. 6; Affidavit of J. Yablon. The Court questions defendants' characterization of the proffered statistics and finds that the statistics fail to address the essential issue: whether defendants, utilizing the media, created this association.
Defendants' compilation of articles is not conclusive evidence that the media created the public's association of the term DREAM TEAM with the USAB team. On the contrary, the compilaetion may actually lend support to DTC's position that defendants created the association. Prior to defendants' press releases in late July and September of 1991 referring to the USAB team as the DREAM TEAM, very few articles utilized the term in that context.[12] On September 21, 1991, NBC aired a one-hour television special during which the NBA players for the 1992 USAB Olympic team were named. On that same day, USAB issued a press release entitled "1992 USA BASKETBALL `DREAM TEAM' UNVEILED." In the following week, twenty-seven articles used DREAM TEAM in connection with the 1992 USAB Olympic team. In the months and weeks following, media references to the USAB DREAM TEAM increased. A reasonable jury could find that the timing of these articles supports, not the media's popularization of the term DREAM TEAM, but defendants' popularization of the term in connection with the 1992 USAB basketball team.
*1411 Although the above facts are not in dispute, the inferences to be drawn from these factswhether the media or defendants caused the public to associate the term DREAM TEAM with the USAB teams remain in dispute. A reasonable jury could find that defendants' decision to use the DREAM TEAM mark in press releases, media guides, television shows and licensing and sponsorship agreements (combined with NBAP's ability to use the media as a promotional tool) created the public's association of the DREAM TEAM mark with defendants. The Court finds that a genuine issue of material fact remains as to whether defendants are responsible for creating the association of DREAM TEAM with the USAB teams comprised of NBA players and thereby essentially blotting out the association of DREAM TEAM with DTC.
ii. Whether DTC has demonstrated a likelihood of confusion
In addition to proving that it has a right in the DREAM TEAM mark that the law will protect, DTC must demonstrate that defendants' use of the mark is likely to cause confusion. Likelihood of confusion is the relevant test for actions brought under §§ 32 and 43(a) of the Lanham Act. In the Eighth Circuit, a Court must consider the following factors when analyzing likelihood of confusion:
(1) the strength of the owner's mark;
(2) the similarity between the owner's mark and the alleged infringer's mark;
(3) the degree to which the products compete with each other;
(4) the alleged infringer's intent to "pass off" its goods as those of the owner;
(5) incidents of actual confusion; and
(6) the type of product, its costs, and conditions of purchase.
Insty* Bit, Inc., v. Poly-Tech Indus., Inc., 95 F.3d 663, 667 (8th Cir.1996) citing Co-Rect Prods., Inc. v. Marvy! Adver. Photography, Inc., 780 F.2d 1324, 1330 (8th Cir.1985) ("Co-Rect"). The Court must consider each factor in turn; no one factor is controlling. Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d 1093, 1096 (8th Cir.1996) ("These factors do not operate in a mathematically precise formula; rather, we use them at the summary judgment stage as a guide to determine whether a reasonable jury could find a likelihood of confusion.") Whether likelihood of confusion exists is ultimately an issue of fact; however, factual disputes regarding a single factor do not preclude a court from entering summary judgment. Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d at 1096.
Categorizing DTC's claims as reverse confusion does not change its burden of proof. The test for infringement remains likelihood of confusion. Nevertheless, the Court's analysis of the Co-Rect factors must be modified, as necessary, in a case of reverse confusion. See, e.g., Fisons Horticulture, Inc. v. Vigoro Indus. Inc., 30 F.3d 466, 479-80 (3d Cir.1994) (recognizing modification to the Third Circuit's ten factor test for likelihood of confusion is necessary in a reverse confusion case); Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 960-61 (7th Cir.1992) (modifying the analysis of the factors used to determine likelihood of confusion in a reverse confusion case).
(1) the strength of the owner's mark
The Court assesses the strength of the DREAM TEAM mark by its degree of inherent distinctiveness and its distinctiveness in the marketplace. The Court will analyze the strength of the DREAM TEAM mark as it relates to DTC[13] as of the time of defendants' initial alleged infringement. See Fisons Horticulture, Inc. v. Vigoro Indus., *1412 Inc., 30 F.3d at 479 (finding that the mark was strong and in active use when the junior user began using the mark); see also Reverse Confusion: Fundamentals and Limits, 84 Trademark Rep., 23 (liability of a junior user should be judged on the strength of the mark as of the time of the initial alleged infringement and not on the basis of strength resulting from the arguably infringing use). DTC asserts that defendants' initial use of the DREAM TEAM mark began in 1991. Defendants argue that they did not permit licensing of the DREAM TEAM mark until 1993. Based upon the record before it, a reasonable jury could find that defendants were promoting use of the DREAM TEAM mark in connection with the USAB team as early as 1991. Thus, the Court will analyze the strength of the DREAM TEAM mark as of that time.
Inherent Distinctiveness
To determine the inherent distinctiveness of the DREAM TEAM mark, the Court must classify the mark as (1) arbitrary or fanciful, (2) suggestive, (3) descriptive, or (4) generic. Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d at 1096. An arbitrary or fanciful mark is the strongest mark and is afforded the highest protection. A generic mark is one used by the general public to identify a category of goods and merits no trademark protection. "Suggestive and descriptive marks fall somewhere in between." Id. A suggestive mark requires some amount of imagination to reach a conclusion regarding the nature of the product. A descriptive mark immediately conveys the nature or function of the product. "[W]hile a descriptive term directly and clearly conveys information about the ingredients, qualities or characteristics of the product or service, the `suggestive' term only indirectly suggests these things." 1 McCarthy on Trademarks § 11:67, pp. 11-109/110.
For the purpose of analyzing defendants' motions for summary judgment, the Court finds that DREAM TEAM is a suggestive mark, inherently distinctive and entitled to protection. It would require some measure of imagination to reach a conclusion that DREAM TEAM refers to sports trading card collages. The mental leap between DREAM TEAM and the attributes of its products, is not, or at least in 1991 was not, instantaneous. Id. In concluding that DREAM TEAM is a suggestive mark, the Court necessarily finds that DREAM TEAM is not a descriptive mark. DREAM TEAM does not describe an intended purpose, function or use of DTC's goods; the size of DTC's goods; the class of users of DTC's goods; a desirable characteristic of DTC's goods; the nature of DTC's goods; or the end effect upon the user of DTC's goods. Id.
Distinctiveness in the Marketplace
In a reverse confusion case, analysis of a mark's distinctiveness in the marketplace its commercial strengthis of considerably less significance than in a forward confusion case.
In forward confusion, the junior user trades on the senior user's good name; it is therefore saved much of the expense of advertising to create market recognition of its mark. In reverse confusion, the junior user is typically a wealthier, more powerful company who can overwhelm the market with advertising. An aggressive junior user may thereby achieve greater commercial strength in a short period of time than the senior user has after years of marketing its product.
Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d at 479. DTC sales from its inception in 1986 through 1995 totalled less than $7 million. DTC spent approximately $2,700 per year on advertising. DTC also promoted its goods and mark through trade shows. To some extent, DTC's products appeared in national mail order catalogs. Affidavit of E. Gaines. Although these facts demonstrate that there was little consumer awareness of DTC's DREAM TEAM mark, the Court will not give considerable weight to the absence of commercial strength. Id.
A reasonable jury could find that the strength and inherent distinctiveness of the DREAM TEAM mark is slightly reduced by the mark's lack of distinctiveness in the marketplace, but that this factor weighs in favor of a finding of likelihood of confusion.
*1413 (2) the similarity between the owner's mark and the alleged infringer's mark
Both DTC and defendants use the identical DREAM TEAM word mark. Use of identical words does not necessarily mean that the two marks are "similar." Duluth News-Tribune v. Mesabi Publ'g Co., 84 F.3d at 1097. "Rather than consider the similarities between the component parts of the marks, we must evaluate the impression that each mark in its entirety is likely to have on a purchaser exercising the attention usually given by purchasers of such products." Id.
Both DTC and NBAP have utilized two different DREAM TEAM logos. See Court's Exhibit 1 attached hereto.[14] The DREAM TEAM words are the prominent feature of each logo. DTC Logo # 1 is green and gold. DTC Logo # 2 is red, white and blue. NBAP Logo # 1 and NBAP Logo # 2 are red, white and blue, however, NBAP permitted licensees to reproduce these logos in black and white. Exhs. l & 2 to Affidavit of S. Rotella, Jr. DTC Logo # 2 incorporates a star. NBAP Logo # 2 incorporates two stars. NBAP Logo # 1 and NBAP Logo # 2 both include a basketball.
The differences in shape and style of these logos, while relevant, do not preclude a finding that the marks are similar. Libman Co. v. Vining Indus. Inc., 69 F.3d 1360, 1362 (7th Cir.1995). The Court is not convinced that a reasonable consumer would distinguish DTC Logo # 2 from NBAP Logo # 1 or NBAP Logo # 2 without a side-by-side comparison. The Court would not reach the same conclusion as to DTC Logo # 1 which adds the words "Collectibles" and "St. Louis." Although defendants state that DTC Logo # 1 is DTC's "primary" logo, Mem. in Supp. (Complaint), p. 27, the record is undeveloped as to what extent DTC utilized each logo. Additionally, defendants initially utilized the DREAM TEAM word mark on television and in press releases.[15] In these instances, defendants' use of DREAM TEAM unaccompanied by any logo is indistinguishable from DTC's DREAM TEAM mark.
Even if a prospective purchaser recognized that DTC's and defendants' logos are distinct, confusion may result if purchasers are likely to assume that the similarities in the designations indicate a connection between the two users. McGregor-Doniger, Inc. v. Drizzle Inc., 599 F.2d 1126, 1134 (1979). The Eighth Circuit has stated, that when evaluating whether marks are similar, the issue "is not whether the public would confuse the marks, but whether the viewer of an [allegedly infringing] mark would be likely to associate the product or service with which it is connected with the source of products or services with which an earlier mark is connected." Mutual of Omaha Ins. Co. v. Novak, 836 F.2d 397, 399 n. 4 (1987) (citation omitted) (emphasis in original)
Defendants assert that their requirement that licensees and sponsors use DREAM TEAM together with the USAB logo decreases any possibility of confusion with DTC's mark. On the contrary, the Court finds that in this reverse confusion context, use of the USAB logo in connection with DREAM TEAM, if relevant at all, may bolster the public's belief that DREAM TEAM is a mark associated with the USAB teams. See Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d at 960 (in a reverse confusion context, the linking of plaintiff's mark with defendant's brand name is an aggravation, not a justification); see also Americana Trading Inc. v. Russ Berrie & Co., 966 F.2d 1284, 1288 (9th Cir.1992) (prominence of a house mark may serve to create reverse confusion).
A reasonable jury could find that DTC's mark and defendants' marks, all of which include the DREAM TEAM word mark as the prominent feature, are confusingly similar in that ordinary consumers would likely conclude that DTC and defendants share a common source, affiliation, connection or sponsorship. See Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d at 477. A *1414 reasonable jury could find that a viewer of DTC's mark would be likely to associate DTC's products with defendants' use of the DREAM TEAM mark to refer to the USAB teams and that this factor weighs in favor of a finding of likelihood of confusion.
(3) the degree to which the products compete with each other
Defendants assert that the products and services sold by NBAP's licensees and sponsors have no competitive proximity to DTC's trading card collages. Although NBAP's licensees and sponsors have used NBAP's DREAM TEAM logo on a myriad of products and services,[16] defendants argue that "[n]o reasonable person could sensibly conclude that products and services such as these are sufficiently related to DTC's collage products as to create a likelihood of confusion." Mem. in Supp. (Complaint), p. 23.
Although the Court must analyze the degree to which goods compete in evaluating the likelihood of confusion, the significance of this factor may decrease in a case of reverse confusion. See Plus Prods. v. Plus Discount Foods, Inc., 722 F.2d 999, 1004 (2d Cir.1983) (finding reverse confusion and stating that "related but non-competing products can become associated in consumers' minds" ... because ... "the functional differences between the products of the parties is immaterial if confusion as to the source of the goods is evident"); but see Harlem Wizards Entertainment Basketball, Inc., v. NBA Properties, Inc., 952 F. Supp. 1084, 1095 (D.N.J.1997) ("Meaningful differences between the products and services are often cited as a factor tending to negate reverse confusion, even when the products are superficially within the same category.")
The large majority of products upon which defendants' license the DREAM TEAM mark do not compete with DTC's products, nevertheless, a jury could reasonably find that defendants' extensive use of the DREAM TEAM mark on these unrelated products caused consumers to associate DTC's mark with defendants. See, e.g., Mem. in Opp. (Complaint), Exh. 67, Affidavit of Tony Pearson.[17]
DTC also argues that although many of its goods may not directly compete with those goods bearing defendants' DREAM TEAM mark, trademark law prohibits the use of a trademark not only on products that directly compete, but also on products that are considered to be closely related to the senior user's. Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d at 958. This rule protects the senior user's "ability to enter product markets in which it does not now trade but into which it might reasonably be expected to expand in the future." Id. Several products which contain defendants' DREAM TEAM mark, such as posters and other wall hangings, are related to DTC's collages. Mem. in Opp. (Complaint), p. 40, Exh. 6 and 7. Additionally, it is reasonable to believe that DTC could expand its line of products to include posters and clothing.[18] Nonetheless, DTC's evidence of potential expansion is limited and defendants have presented evidence that DTC lacked and continues to lack the financial ability to expand its product line. Mem. *1415 in Supp. (Complaint), p. 21, n. 15 (describing DTC's financial condition from 1991 to the present). A reasonable jury could find that DTC's arguments of expansion are speculative.
A reasonable jury could find that the slight extent to which DTC's products compete with those products bearing defendants' DREAM TEAM mark weighs against a finding of likelihood of confusion. Nonetheless, a reasonable jury could find that defendants' use of the DREAM TEAM mark, even on products unrelated to plaintiff's products, contributed to consumers associating DTC's DREAM TEAM mark with defendants. In a reverse confusion case, this fact increases the likelihood of confusion.
(4) the alleged infringer's intent to "pass off" its goods as those of the owner
By definition, in a reverse confusion case, "the junior user does not seek to trade on the good will and name of the senior user; instead he overwhelms it." Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d at 480. Consequently, in this reverse confusion case the Court will apply a modified "relevant intent" inquiry. In Fisons Horticulture, Inc. v. Vigoro Indus., Inc., the court found that the intent inquiry should focus on whether defendants: (1) conducted an adequate name search for other companies marketing similar goods under the mark in question; (2) followed through with their investigation when they found there were such companies; (3) considered the likelihood of confusion with other companies' marks and products; (4) attempted to contact companies using a similar mark, such as plaintiff; and (5) were careless in their evaluation of the likelihood of confusion. But see also Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d at 960 (finding that the "intent" element is essentially irrelevant in a reverse confusion case because "[i]n a reverse confusion case ... the defendant by definition is not palming off or otherwise attempting to create confusion as to the source of his product") (emphasis in original).
The Court finds that defendants purposely utilized the DREAM TEAM mark in connection with the USAB teams with knowledge that DTC had prior rights in the mark on sports related goodscollages of sports trading cards. Although defendants' awareness of DTC's use and pending registration for the DREAM TEAM mark does not necessarily create an inference of bad faith, defendants have presented no evidence that they considered the potential that consumers would be confused by their use of DREAM TEAM in connection with the 1992 USAB Olympic team or that they considered the impact this confusion would have on DTC. To the extent that this factor is relevant, a reasonable jury could find that it weighs in favor of a finding of a likelihood of confusion.
(5) the incidents of actual confusion
Although isolated instances of actual confusion do not preclude entry of summary judgment in favor of defendants, DTC need not show actual confusion to establish likelihood of confusion. SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091 (8th Cir.1980). To establish actual confusion in a reverse confusion case, the Second Circuit has held that the only relevant confusion is a belief by the senior user's purchasers or prospective purchasers that the senior user's product was produced by or affiliated with the junior user. Lang v. Retirement Living Pub. Co., Inc., 949 F.2d 576, 583 (2d Cir.1991). The relevant confusion to be avoided is that which affects purchasing decisions, not confusion generally. Id. at 582-83; see also W.W.W. Pharmaceutical Co., Inc. v. Gillette Co., 984 F.2d 567, 574 (2d Cir.1993).
Other courts have not taken such a limited view of what constitutes evidence of actual confusion. Many courts have found that customer inquiries to the senior user as to whether it was affiliated or connected with the junior user, although perhaps insufficient to prove actual confusion standing alone, are relevant, admissible and should be viewed in conjunction with other evidence of actual confusion. See Country Floors, Inc. v. Gepner and Ford, 930 F.2d 1056, 1064 (3d Cir.1991) (evidence of actual confusion, consisting in part of inquiries about a connection between *1416 the two stores, precluded summary judgment); Coach House Restaurant Inc. v. Coach and Six Restaurants, Inc., 934 F.2d 1551, 1562 (11th Cir.1991) (the Trademark Trial and Appeal Board incorrectly disregarded evidence of actual confusion consisting of inquiries as to the affiliation between the two restaurants); see generally 3 McCarthy on Trademarks § 23:16, pp. 23-38, 39 ("The better view would seem to be that while enquiry evidence is admissible and relevant, standing alone with no other evidence it is insufficient proof of actual confusion.")
Plaintiff's purported evidence of actual confusion consists of the following: testimony from Joe McMyler, a buyer from J.C. Penney, Mem. in Opp. (Complaint), Exh. 70; affidavits from Edward Lekson, Warren Weitzman and Tony Pearson, Mem. in Opp. (Complaint), Exh. 67; and survey results from Dr. Lakshamn Krishnamurthi, Mem. in Opp. (Complaint), Exh. 65.
First, the testimony from Joe McMyler is evidence of actual confusion. McMyler found DTC's use of DREAM TEAM confusing to him as a buyer for J.C. Penney and he felt that it would be confusing to J.C. Penney customers. Depo. of J. McMyler, pp. 34-35. For example, McMyler expressed confusion as to why the DREAM TEAM mark appeared on DTC collages of Roberto Clemente, a baseball player, and Jason Kidd, a professional basketball player who was not a member of any USAB team.
Next, Edward Lekson, an employee of a dealer in official licensed sportswear and memorabilia, inquired at a DTC booth about the connection between DTC and NBAP. Lekson stated that if he had not taken the time to inquire, he would have been hesitant "to do business" with DTC. Affidavit of E. Lekson. Warren Weitzman, president of a company which sells sports plaques, components, photos, and displays, inquired at a DTC booth about the relationship between DTC and defendants. Weitzman was interested in becoming a DTC customer (for resale purposes) and was surprised to learn that DTC, although unrelated to defendants, could use the DREAM TEAM mark. Affidavit of W. Weitzman. Although reasonable minds could differ as to whether the confusion experienced by Lekson and Weitzman directly related to a purchasing decision, this evidence, along with the testimony of Tony Pearson,[19] constitutes inquiry evidence which the Court will view in conjunction with DTC's evidence of actual confusion.
Finally, plaintiff relies upon the survey results of Dr. Lakshamn Krishnamurthi. Dr. Krishnamurthi concluded, in part, that the public associates the DREAM TEAM mark with defendants and believes that "anyone wishing to use the DREAM TEAM mark must get permission to do so." Mem. in Opp. (Complaint), p. 33, Exh. 65. Krishnamurthi's survey results are not highly probative on the issue of actual confusion because they fail to analyze how the purported confusion affects the purchasing and/or selling of any of the goods in question.[20]W.W.W. Pharmaceutical Co., Inc. v. Gillette Co., 984 F.2d at 574. Nonetheless, the Court finds that the portion of the survey which demonstrates a prevalence of the belief that anyone wishing to use the DREAM TEAM mark must obtain defendants' permission to do so constitutes nominal additional evidence of actual confusion. See Anheuser-Busch v. Balducci Publications, 28 F.3d 769, 775 (8th Cir.1994) ("The survey evidence, whether considered as direct or indirect evidence of actual confusion, tilts the analysis in favor of [plaintiff] ... because [o]ver half of those surveyed thought [defendant] needed [plaintiff's] approval to publish the ad.") A reasonable jury could find sufficient evidence of actual confusion to support a finding of a likelihood of confusion.
(6) the type of product, its costs, and conditions of purchase
An analysis of this factor requires the Court to focus on the degree of care reasonably expected of potential customers. Anheuser-Busch, Inc. v. Balducci Publications, *1417 28 F.3d at 774. DTC's collages retail (unframed) at prices in excess of $30.00. Although a customer's degree of care does not depend solely upon price, a purchaser of a low cost item ordinarily exercises minimal care in selecting the item. Nike, Inc. v. Just Did It Enter., 6 F.3d 1225, 1230 (7th Cir. 1993). The Court finds that individual purchasers of a DTC collage are likely to exercise a relatively high degree of care. Additionally, DTC customers who purchase the collages for resale are likely to be specialized and exercise an even higher degree of care in their purchasing decisions.
The Court has located no authority which thoroughly analyzes application of this factor in a reverse confusion context; however, DTC and defendants agree that likelihood of confusion decreases as the degree of care exercised by a purchaser increases. Mem. in Opp. (Complaint), p. 42; Mem. in Supp. (Complaint), pp. 35-36. Based upon its own analysis, the Court finds that the degree of care exercised by consumers of DTC's products, although relatively high, may weigh in favor of a finding of a likelihood of confusion in this reverse confusion context.
A purchaser of a relatively expensive item, who is taking great care in his or her selection, would arguably be more concerned about whether the product is legitimate or an imitation. Ultimately, the purchaser who takes more care may choose not to purchase the product based upon his or her concern that it is the product of an unauthorized infringer, whereas it is likely of little concern to the purchaser of an inexpensive product whether or not the product is that of an unauthorized infringer. The Court's analysis is consistent with prior Eighth Circuit law wherein the Court has found that a high degree of care does not necessarily reduce likelihood of confusion. See Mutual of Omaha Ins. Co. v. Novak, 836 F.2d at 401 n. 7 ("this factor is intended to discern `whether the degree of care exercised by the purchaser can eliminate the likelihood of confusion [that] would otherwise exist.'") (citation omitted); but see Fisons Horticulture, Inc. v. Vigoro Inds. Inc., 30 F.3d at 476 n. 12 (applying the standard forward confusion analysis of "degree of care" in a reverse confusion case).
Although this factor would weigh in favor of defendants in a forward confusion case, the Court finds that the degree of care exercised by potential DTC consumers may increase the likelihood of confusion in this reverse confusion context. Based upon the Court's analysis, a reasonable jury could find that this factor weighs in favor of a finding of a likelihood of confusion.[21]
Based upon its evaluation of each of the six factors, the Court concludes that DTC has created genuine issues of fact such that a reasonable jury could find a likelihood of confusion. Likelihood of confusion is an issue of fact. Because DTC's claims have withstood the challenge of defendants' motions for summary judgment, the jury becomes the finder of fact and the Court's balancing of the factors herein is not binding upon it.
iii. Whether DTC's own unclean hands bar its claims
Defendants argue that DTC's unclean hands should bar it from proceeding on its second amended complaint. Defendants' allegations of unclean hands are essentially two-fold. First, defendants allege that DTC's photocopying and use of the "counterfeit" photocopies of licensed trading cards in its collages constitute unclean hands. In addition, defendants allege that DTC's incorporation of licensed trading cards into its collages without permission or a disclaimer of affiliation constitutes unclean hands. For reasons the Court will discuss, see pp. 39-45, defendants' second allegation of DTC's unclean hands is based upon an erroneous interpretation of the law of repackaging. The Court finds that DTC's lack of a disclaimer of affiliation on its collages is insufficient as a matter of law to constitute unclean hands, thus the Court's analysis will proceed only as to defendants' first allegation.
*1418 No rigid formula exists for the Court to apply the doctrine of unclean hands. It requires the free and just exercise of discretion. Johnson v. Yellow Cab Co., 321 U.S. 383, 387, 64 S. Ct. 622, 624, 88 L. Ed. 814 (1944); K-Mart Corp. v. Oriental Plaza, Inc., 875 F.2d 907, 912 (1st Cir.1989) (a court has wide discretion in deciding whether to impose the severe sanction of barring a party's claims based upon its own unclean hands). Moreover, a party's unclean hands do not always form a complete bar to relief but instead may limit the scope of relief. 4 McCarthy on Trademarks § 31:51, p. 31-85.
Defendants' first allegation of DTC's unclean hands finds some factual support in the record. DTC made color photocopies of sports trading cards and utilized at least some of the photocopies in its collages. The packaging of the collages concealed the fact that one or more of the depicted trading cards were not actually trading cards, but color photocopies. Purchasers of the collages often believed they were purchasing the actual trading cards. Affidavit of R. Fishman.
Nevertheless, the extent of DTC's photocopying is in dispute. DTC characterizes the photocopying as minimal, isolated and accidental, comprising less than one percent of all DTC sales. Defendants characterize the photocopying as pervasive, extensive and continuous, comprising eleven to thirteen percent of all DTC sales. The nature of DTC's photocopying is also in dispute.[22] Defendants have not established that DTC's photocopying amounted to illegal counterfeiting. Moreover, only some of the trading cards which were copied bore copyright notices. Many of the color photocopies which DTC made were never sold or put into collages.
In analyzing defendants' allegation that DTC's "counterfeiting" constitutes unclean hands and thus, should bar DTC's claims, the Court must also consider defendants' conduct. "[A]lleged unclean hands cannot be considered in a vacuum, apart from the nature of [the] conduct which gave rise to the litigation." 4 McCarthy on Trademarks § 31:51, p. 31-86 citing Republic Molding Corp. v. B.W. Photo Utilities, 319 F.2d 347, 349 (9th Cir.1963) ("the court should not automatically condone the defendant's infractions because the plaintiff is also blameworthy, thereby leaving two wrongs unremedied and increasing the injury to the public.... The relative extent of each party's wrong upon the other and upon the public should be taken into account and an equitable balance struck.") As demonstrated by the above analysis of defendants' motion for summary judgment as to DTC's second amended complaint, the Court finds that a reasonable jury could find that defendants' conduct created a likelihood of confusion.
The application of the unclean hands doctrine raises primarily questions of fact. Dollar Systems v. Avcar Leasing Systems, 890 F.2d 165, 172 (9th Cir.1989). Genuine issues of fact exist as to the nature of and extent of DTC's photocopying of trading cards, thus, the Court cannot conclude that DTC's alleged unclean hands, when compared with the wrongs alleged against defendants, rise to a level necessary to bar its claims. DTC's unclean hands, if proven, may be relevant to the scope of relief to which DTC is entitled. 4 McCarthy on Trademarks § 31:53, p. 31-89 ("[U]nclean hands usually means that the plaintiff's fault, like the defendant's, is relevant only to the scope of relief.")
For all of the foregoing reasons, the Court will deny defendants' motions for summary judgment as to DTC's second amended complaint.
E. Counterclaimants' Motion for Summary Judgment as to Counter-claims I, II, VI, and VII
DTC has sold collages which contain basketball trading cards, and in some instances, photographs of NBA players. Often, the name of a particular NBA team *1419 appears in the center of the collage, surrounded by trading cards of players from that particular NBA team. The trading cards themselves, which are incorporated into the collage, contain the trademark of the particular NBA team (or NBAP) and depict an NBA player in his team uniform. See Court's Exhibit 2. DTC's collages do not contain a disclaimer or other explanatory label that the collages are not a licensed product of the NBA, NBAP, USAB or the NBA teams, or that DTC is not affiliated with the NBA, NBAP, USAB or NBA teams. Counterclaimants argue that DTC's failure to include the above-referenced disclaimer or explanatory label constitutes, as a matter of law, a violation of counterclaimants' rights under the Lanham Act (Counterclaims I and II) and common law (Counterclaims VI and VII). Counterclaimants state that "[i]t is well-established that a party seeking to repackage a trademarked good to make it part of a new productas DTC did by putting NBA trading cards into its collage products must include on the product an explanatory label ..." Mem. in Supp. (Counterclaims), p. 7 (emphasis added).
The Court's analysis of counterclaimants' motion begins with the principle that trademark law does not reach the sale of genuine goods bearing a true mark even though the sale is not authorized by the mark owner.
Since 1924, courts have recognized a basic limitation on the right of a trademark owner under the Lanham Act to control the distribution of its own products. Beginning with Prestonettes Inc. v. Coty, 264 U.S. 359, 44 S. Ct. 350, 68 L. Ed. 731 ... (1924), courts have consistently held that, with certain well-defined exceptions, the right of a producer to control distribution of its trademarked product does not extend beyond the first sale of the product. Resale by the first purchaser of the original article under the producer's trademark is neither trademark infringement nor unfair competition.
Sebastian Intern. v. Longs Drug Stores, 53 F.3d 1073, 1074 (9th Cir.1995). This trademark principle is the "first sale" rule. Thus, someone who sells trademarked good without change is not liable for trademark infringement.
A premise of counterclaimants' argument is that DTC did not sell the trademarked cards "without change" but "repackaged" the trading cards, thus making the "first sale" rule inapplicable. The Court finds that DTC has repackaged the trading cards and the first sale rule is inapplicable. See Allison v. Vintage Sports Plaques, No. 95-P-1555-S, 1996 WL 679426, at *4 (N.D.Ala. July 29, 1996) ("This is more appropriately classified as a case of an entrepreneur repackaging or displaying the trading cards in a more attractive way to consumers.")
The sole basis for counterclaimants' motion for summary judgment as to the counterclaims in question is their legal argument that a disclaimer or explanatory label is required when trademarked goods are repackaged. To support this contention, counterclaimants rely upon Prestonettes, Inc. v. Coty, 264 U.S. 359, 44 S. Ct. 350, 68 L. Ed. 731 (1924) ("Coty"), "the landmark case on trademark use in repacking and rebottling goods." McCarthy on Trademarks § 25:35, p. 25-53. In Coty, the defendant purchased genuine Coty toilet powder from plaintiff, subjected the powder to pressure, added a binder and sold the new compound in a metal compact case under the Coty trademark. Coty complained that the defendant had no legal right to use its registered trademark. Id. at 366. The Supreme Court affirmed the trial court's decision which allowed the defendant to sell the toilet powder but ordered the defendant to put labels on the goods which clarified that the items were made by Coty and were independently rebottled by Prestonettes. Id. at 367. In affirming the trial court, the Supreme Court upheld the right of a third-party to use the trademark of a product's manufacturer in connection with the repackaging and resale of such product, provided that use of the trademark does not create confusion as to the source of the repackaged goods. The Eighth Circuit has relied upon Prestonettes v. Coty to support the basic proposition that trademark law is designed to prevent sellers from confusing or deceiving the consuming public about the origin or make of a product and, therefore, *1420 generally does not reach the sale of genuine goods bearing a true mark. See, e.g., Henry v. Chloride, 809 F.2d 1334, 1349 (8th Cir. 1987).
Coty and its progeny do not support counterclaimants' contention that a repackager of trademarked goods has an absolute obligation to include a disclaimer or an explanatory label on its product. To support their argument, counterclaimants rely upon the following sentence from Professor McCarthy:
Under the authority of the Coty case, the courts have required a repacker and rebottler to use a label closely following the label approved in the COTY case.
McCarthy on Trademarks § 25:35, p. 25-55 (footnote omitted). Out of context, this sentence may appear to support counterclaimants' argument that a repackager of trademarked goods "must include an explanatory label on the product." Counterclaimants' Reply Mem. in Supp. (Counterclaims), p. 2. Nonetheless, the Court has carefully analyzed the cases which Professor McCarthy relies upon for this statement (those cases cited in the omitted footnote) and each of the cases counterclaimants rely upon. None stands for the proposition that a repackager of trademarked goods has an absolute obligation to include a disclaimer or an explanatory label on its product. Moreover, none stands for the proposition that likelihood of confusion is assumed in a repackaging case. To prevail on a claim of federal or common law trademark infringement or unfair competition, a party must demonstrate likelihood of confusion. 3 McCarthy on Trademarks § 23.1, p. 23-6; SquirtCo v. Seven-Up Co., 628 F.2d at 1091. "Even repackaging of goods is not trademark infringement if it does not deceive the public or damage the mark owner's goodwill." Polymer Tech. v. Mimran, 975 F.2d 58, 61-62 (2d Cir.1992). This is because the test for trademark infringement is the likelihood that the public will be confused about the source of the product, "which confusion ordinarily does not exist when a genuine article bearing a true mark is sold." NEC Electronics v. CAL Circuit Abco, 810 F.2d 1506, 1509 (9th Cir. 1987). Absent any analysis of a likelihood of confusion by counterclaimants, the Court readily concludes that a reasonable jury could find that DTC's "repackaging" of the trading cards, even without a disclaimer or explanatory label, is not likely to cause confusion.[23]
To the extent that counterclaimants' focus on DTC's use of an NBA team name in the center of a collage, see Court's Exhibit 2, rather than the use of the trading cards themselves, counter-claimants are also not entitled to summary judgment.[24] In many cases, a trademark may be lawfully used simply to describe something, rather than identify its source because in some instances it is virtually impossible to refer to a particular product without using its mark. See, e.g., New Kids on the Block v. New America Pub., Inc., 971 F.2d 302, 306 (9th Cir.1992) ("[O]ne might refer to `the two-time world champions' or `the professional basketball team from Chicago,' but it's far simpler (and more likely to be understood) to refer to the Chicago Bulls.") Again, absent any analysis *1421 of a likelihood of confusion by counterclaimants, the Court readily concludes that a reasonable jury could find that DTC's use of an NBA team name on a collage is not likely to cause confusion, but is simply a way to identify a particular NBA team.
Finally, DTC argues that to the extent any such obligation exists, counterclaimants have waived their right to require an explanatory label. Counterclaimants base this argument upon two statements from Terese Cohen, NBAP's trademark counsel. Mem. in Opp. (Counterclaims), p. 5., Exh. 56. First, on April 20, 1993, in a letter describing a draft settlement agreement, Cohen stated that while "[NBAP do]es not object to your client's product which incorporates our licensed trading cards, we do object to their additional use of our marks as the central prominent focal point of each piece." This letter was apparently written in the context of settlements negotiations and its admissibility is the subject of a pending motion in limine. See Fed.R.Evid. 408. Next, DTC relies upon a July 2, 1991 handwritten note from Cohen which states "His resellingnot problem." Mem. in Opp. (Counterclaims), pp. 5-6, Exh. 54. A dispute of fact exists as to whether this notation reflects settlement discussions. Counterclaimants' Mem. in Supp. (Counterclaims), p. 6; Depo. of Cohen, 102-103; DTC's Sur. Mem. in Opp. (Counterclaims), p. 1. Because the admissibility of the documents which purportedly constitute a waiver is in question, and because the Court will deny the motion for summary judgment on grounds separate from DTC's waiver argument, the Court will not analyze DTC's waiver argument any further at this time.
For all of the foregoing reasons, the Court will deny counterclaimants' motion for summary judgment as to Counterclaims I, II, VI and VII.
F. DTC and counterclaimants' cross-motions for summary judgment as to Counterclaim X
Counterclaimants allege that for the past five years DTC has been making color photocopies of sports trading cards bearing registered trademarks and/or copyrights and has been selling these photocopies as part of collages that bear the DREAM TEAM mark, all without the consent or authorization of the owner of the trademarks and/or copyrights. Counterclaimants allege that DTC's photocopying and use of the photocopies in its collages constitutes "counter-feiting" which requires cancellation of the DREAM TEAM mark. Counterclaimants' Reply Mem. in Supp. (Counterclaims), p. 10.
Although a petition to the PTO is the primary means of securing cancellation of a mark, this Court has concurrent jurisdiction to order cancellation. Lanham Act § 37, 15 U.S.C. § 1119; Ditri v. Coldwell Banker Residential Affiliates, Inc., 954 F.2d 869, 873 (3d Cir.1992). This Court is, however, bound by the grounds for cancellation set forth in § 14 of the Lanham Act. 4 McCarthy on Trademarks § 30:112, pp. 30-185/186. To be entitled to cancellation, counterclaimants must prove that they have standing to petition to cancel in that they are likely to be damaged by the registration and "that there are valid grounds why the registration should not continue to be registered." Id. at § 20:41, p. 20-77. Counterclaimants' arguments are essentially that the Court should cancel DTC's DREAM TEAM registration based upon activities that counterclaimants believe constitute copyright infringement, unfair competition and false advertising.
Allegations that the registered mark has been misused as an instrument of patent infringement, unfair competition, false advertising, or antitrust violation, are not regarded as sufficient grounds to cancel.
3 McCarthy on Trademarks § 20:54, p. 20-95 (footnote and citations omitted). Counterclaimants' allegationsthat in addition to lawful use DTC made "material" unlawful use of the DREAM TEAM markconstitute insufficient grounds to cancel DTC's registration. Counterclaimants have cited no authority to support their proposition that cancellation of a mark is warranted when a party demonstrates some unlawful use of a mark by its owner who, for the most part, is using the mark lawfully. The cases counterclaimants rely upon are inapposite.
The Court will deny counterclaimants' motion for summary judgment as to Counterclaim *1422 X of counterclaimants' third amended counterclaims and grant DTC's motion for summary judgment as to this counterclaim.
Accordingly,
IT IS HEREBY ORDERED that the motion for summary judgment of defendant NBA Properties, Inc. as to plaintiff's second amended complaint [Doc. # 156] is denied.
IT IS FURTHER ORDERED that the motion for summary judgment of defendant USA Basketball, Inc. as to plaintiff's second amended complaint [Doc. # 160] is denied.
IT IS FURTHER ORDERED that the request of plaintiff Dream Team Collectibles, Inc. for the Court to strike the affirmative defense of unclean hands from the amended answer of NBA Properties, Inc. and the answer of USA Basketball, Inc. is denied.
IT IS FURTHER ORDERED that the motion of counterclaim plaintiffs NBA Properties, Inc. and the NBA teams for summary judgment as to Counterclaims I, II, VI, VII and X [Doc. # 157] is denied.
IT IS FURTHER ORDERED that motion by counterclaim-defendant Dream Team Collectibles, Inc. for summary judgment as to Counterclaim X [Doc. # 161] is granted.
*1423
NOTES
[1] NBAP is the licensing arm of the National Basketball Association ("NBA").
[2] USAB is a nonprofit corporation whose mandate is to select, sponsor and support men's and women's basketball teams for international competition, including the Olympic Games ("Olympics")
[3] The other counterclaim plaintiffs ("NBA teams") are as follows: Atlanta Hawks, Ltd. d/b/a the Atlanta Hawks, Celtics Limited Partnership d/b/a the Boston Celtics, Charlotte Hornets NBA Limited Partnership d/b/a the Charlotte Hornets, Chicago Professional Sports Limited Partnership d/b/a the Chicago Bulls, Gund Business Enterprises, Inc. d/b/a the Cleveland Cavaliers, Dallas Basketball Limited d/b/a the Dallas Mavericks, The Denver Nuggets Limited Partnership d/b/a the Denver Nuggets, Detroit Pistons Basketball Company d/b/a the Detroit Pistons, CC Partners d/b/a the Golden State Warriors, Rocket Ball, Ltd. d/b/a the Houston Rockets, Pacers Basketball Corporation d/b/a the Indiana Pacers, The Los Angeles Lakers, Inc. d/b/a the Los Angeles Lakers, The Miami Heat Limited Partnership d/b/a the Miami Heat, Milwaukee Bucks, Inc. d/b/a the Milwaukee Bucks, Minnesota Timberwolves Basketball Limited Partnership d/b/a the Minnesota Timberwolves, Meadowlands Basketball Associates d/b/a the New Jersey Nets, Orlando Magic Ltd. d/b/a the Orlando Magic, The Philadelphia 76ers Basketball Club, Inc. d/b/a the Philadelphia 76ers, Trail Blazers Inc. d/b/a the Portland Trail Blazers, Sacramento Kings Limited Partnership, L.P. d/b/a the Sacramento Kings, San Antonio Spurs, Ltd. d/b/a the San Antonio Spurs, Seattle SuperSonics, Inc. d/b/a the Seattle SuperSonics and Capital Bullets Basketball Club, Inc. d/b/a the Washington Bullets.
[4] On March 25, 1997, counterclaimants dismissed counterclaims VIII and IX.
[5] The Court will use the parenthetical "(Complaint)" to refer to pleadings related to defendants' motions for summary judgment as to DTC's second amended complaint. The Court will use the parenthetical "(Counterclaims)" to refer to pleadings related to counterclaimants' motion for summary judgment as to Counterclaims I, II, VI, VII and X and DTC's motion for summary judgment as to Counterclaim X.
[6] Defendants learned of DTC's photocopying during the course of this litigation. Between January 30, 1996 and April 3, 1996, attorneys for NBAP purchased fourteen trading card collages made with color photocopies of football and baseball trading cards. Counterclaimants' Mem. in Supp. (Counterclaims), p. 4; Affidavit of B. Beatty. Subsequently, DTC made available for inspection 91 DTC collages which contained color photocopies of the front sides of trading cards and approximately 5,200 color photocopies of the front sides of trading cards which were not incorporated into collages. Counterclaimants' Mem. in Supp. (Counterclaims), p. 5; Affidavit of M. Kahn. None of the photocopies were of basketball trading cards.
[7] Counterclaimants argue that based upon the Kwik Kopy records, DTC made over 30,000 color photocopies of sports trading cards. Counterclaimants' Mem. in Opp. (Counterclaims), p. 10 n. 5, Affidavit of K. Sullivan. Counterclaimants originally estimated the number at 70,000. Counterclaimants' Mem. in Supp. (Counterclaims), p. 5. DTC has demonstrated the inaccuracy of even the lower estimate. Moreover, Gaines estimates that not more than one percent of DTC's sales were of collages containing photocopied trading cards.
[8] See Minnesota Pet Breeders, Inc. v. Schell Kampeter, Inc., 41 F.3d 1242, 1246 (8th Cir.1994) (referring to a theory of reverse confusion in dicta).
[9] USAB has adopted and incorporated by reference NBAP's motion for summary judgment, memorandum in support and reply memorandum.
[10] Defendants assert that their arguments apply to all of DTC's claims because the same legal principles govern claims of trademark infringement and unfair competition under Missouri statutory and common law and the Lanham Act. Mem. in Supp. (Complaint), p. 12 n. 9. For the purpose of defendants' motions for summary judgment, the Court will proceed on the assumption that the same legal principles govern all of the DTC's claims. Nonetheless, differences in DTC's claims under the Lanham Act (Counts I, II, VI and VII), Missouri statutes (Counts III and VIII) and common law (Counts IV, V, IX and X) may be relevant at trial. The parties should consider the potential impact of these differences on elements of claims, requirements for proof, and potential relief.
[11] Defendants argue that popularization of the DREAM TEAM term by the media, "even if fostered by defendants," conferred on defendants the right to license the term in connection with goods and services sold in association with the USAB teams because NBAP's conduct was not "unlawful." Reply. Mem. (Complaint), pp. 3, 10 (emphasis added). The holding of IHSA v. GTE does not support defendants' argument. Although the Court in IHSA v. GTE refers to "culpable conduct of the defendant", "culpable" is not the equivalent of "unlawful."
[12] Defendants cite fifteen articles which mention DREAM TEAM from February and March of 1991. Most of these articles refer directly to the February 18, 1991 Sports Illustrated cover. See, e.g., Mike Conklin, "Odds & Ins," Chi. Trib., Mar. 13, 1991, at 7 ("The Sports Illustrated cover that had a U.S. Olympic dream team of Michael Jordan, Magic Johnson, Patrick Ewing, Karl Malone and Charles Barkley never will happen ... "); Mark Heisler, "Big Ben Has to be More Popular in Seattle," L.A. Times, Feb. 24, 1991, at 4 ("Despite posing with Johnson, Barkley, Patrick Ewing and Karl Malone for Sports Illustrated's dream team, Michael said ..."). Defendants cite five articles which mention DREAM TEAM from April of 1991. None refer to the 1992 USAB Olympic team. See, e.g., Virginia Mann, "It's Barney Miller with White Coats," The Record, Apr. 16, 1991, at B08 (mentioning the film "The Dream Team" starring Michael Keaton); Pearl Stewart, "King's X Bar Being Sold Trivia May Stop," San Francisco Chron., Apr. 19, 1991, at A25 ("Fantasy football turns football fans into National Football League general managers who draft dream teams, make trades ..."). Defendants cite ten articles which mention DREAM TEAM from May 1, 1991 through July 14, 1991. Many of these articles are irrelevant and several relate to the use of the term DREAM TEAM by Pinnacle Brands, Inc. (previously known as Score) in connection with non-basketball sports trading cards. DTC is currently in litigation with Pinnacle over Pinnacle's use of the DREAM TEAM mark. That litigation is pending in this district, Cause No. 4:95CV2407-DDN. Mem. in Opp. (Complaint), p. 8.
[13] DTC and defendants have analyzed the strength of the DREAM TEAM mark as it relates to DTC, yet both have mentioned a possibility of analyzing the mark as it relates to defendants. Mem. in Supp. (Complaint), pp. 24-27; Mem. in Opp. (Complaint), pp. 34-37. At least one court has held that the relevant mark to examine in a reverse confusion case is that of the junior user. Sands, Taylor & Wood Co. v. Quaker Oats Co., 978 F.2d 947, 959 (7th Cir.1992). The Court is persuaded that the parties have provided the proper analysis which is to examine the strength of the senior user's mark. See Thad G. Long & Alfred M. Marks, Reverse Confusion: Fundamentals and Limits, 84 Trademark Rep., 1, 23 (1994).
[14] The Court has designated the logos as DTC Logo # 1, DTC Logo # 2, NBAP Logo # 1 and NBAP Logo # 2.
[15] NBAP did not create its first DREAM TEAM logo until October of 1993. Mem. in Supp. (Complaint), p. 10.
[16] These products and services include snack foods, gasoline and motor oil, credit card services, processed foods, watches, telecommunications services, soft drinks, fast food restaurant services, towels, express delivery services, pins, puzzles, backboards, video games and basketballs. Mem. in Supp. (Complaint), p. 23.
[17] Pearson purchased a bottle of Sprite with a DREAM TEAM bottle cap. The inside of the bottle cap indicated that he had won an NBA jersey. Pearson took the winning bottle cap to DTC's retail store located in Union Station in St. Louis, Missouri (Dream Team Collectibles) to receive his NBA jersey. Pearson knew that the DTC store has some items of apparel. The manager at the DTC store informed Pearson that DTC was not affiliated with the NBA and that Pearson could not redeem his winning bottle cap at the store. Pearson then went to the local Coca-Cola distributor to find out where he could redeem his winning bottle cap. A Coca-Cola representative told Pearson to return to the DTC store because all of the DREAM TEAM stores were supposed to redeem the winning bottle caps as part of the Sprite promotion. Pearson returned to the DTC store and was again informed, this time by the manager, that DTC was not affiliated with NBA or the Sprite DREAM TEAM promotion.
[18] To a limited extent, DTC has used its DREAM TEAM mark on other sports-related merchandise, including apparel.
[19] See discussion at footnote 17.
[20] The Court makes no determination whether the survey evidence is relevant to other issues in this case. See generally 4 McCarthy on Trademarks § 32:158, pp. 32-190/192 (survey evidence may be introduced for a variety of purposes).
[21] Applying the standard forward confusion analysis and weighing this factor against a finding of likelihood of confusion would not change the Court's ultimate conclusion that genuine issues of fact exist such that a jury could find a likelihood of confusion.
[22] DTC copied only baseball and football trading cards except for one instance where DTC copied a Magic Johnson basketball trading card, not for use in a collage, but to "show reps and customers what it looked like." DTC's Reply Mem. in Supp. (Counterclaims), p. 8; Depo. of E. Gaines, pp. 685-87.
[23] Although reaching the conclusion that DTC has "repackaged" the trading cards by utilizing them in its collages, the Court finds that this case is factually distinct from Coty and the standard "repackaging" case. NBAP, as the exclusive licensee of the marks and designs of the NBA and the NBA teams, allowed certain card manufacturers (such as Fleer or Topps) to use those marks and designs. Presumably, as a result of those arrangements, NBAP received compensation. In a straight-forward repackaging case, the complaining party is the owner of the goods. In this case, however, the complaining party is not the owner of the repackaged goods, e.g., Fleer or Topps, but the owner of the mark which is embodied on those goods. Neither party has argued that this factual distinction should affect the Court's analysis of NBAP's motion for summary judgment as to Counterclaims I, II, VI and VII. The Court notes, however, that the presence of a manufacturer's logo on the trading cards, e.g, Topps or Fleer, may be an indication of an intermediary's presumably lawful use of the counterclaimants' marks. The presence of a such a logo may tend to lessen the likelihood of confusion a consumer may experience as to whether the collage itself was affiliated with or sponsored by counterclaimants.
[24] Counterclaimants appear to concede that they are not seeking summary judgment on this point. Counterclaimants' Reply Mem. in Supp. (Counterclaims), p. 5, n. 3. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3069711/ | 11TH COURT OF APPEALS
EASTLAND, TEXAS
JUDGMENT
Roy E. Kinsey, Jr., Individually, and * From the County Court at Law
Energrowth, Inc., Midland County,
Trial Court No. CC-14,392.
Vs. No. 11-13-00084-CV * March 31, 2015
Law Offices of Bill Alexander, P.C., * Memorandum Opinion by Wright, C. J.
(Panel consists of: Wright, C.J.,
Willson, J., and Bailey, J.)
This court has inspected the record in this cause and concludes that there
is error in the judgment below. Therefore, in accordance with this court’s
opinion, we set aside the order of the trial court in which it granted Appellee’s
motion for judgment nunc pro tunc, and we render judgment that the nunc pro
tunc judgment entered on December 28, 2012, is void. The costs incurred by
reason of this appeal are taxed against Appellee, Law Offices of Bill
Alexander, P.C. | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2439728/ | 214 F. Supp. 2d 552 (2002)
George JACOBS, Plaintiff,
v.
MALLARD CREEK PRESBYTERIAN CHURCH, INC., Presbytery of Charlotte, Inc., Dr. Alan Elmore, Karen Bohr, Melony Brown and Ramona Suire, Defendants,
No. 3:02CV9-MU.
United States District Court, W.D. North Carolina, Charlotte Division.
June 20, 2002.
*553 Christian R. Troy, W. Frank Porter, Helms & Henderson, P.A., Charlotte, NC, for George Jacobs.
E. Fitzgerald Parnell, III, Parmele P. Calame, Poyner & Spruill, Charlotte, NC, Steven A. Rowe, Poyner & Spruill, L.L.P., Rocky Mount, NC, for Mallard Creek Presbyterian Church, Inc., Karen Bohr, Ramona Suire.
Julian Hugh Wright, Jr., Robinson, Bradshaw & Hinson, P.A., Charlotte, NC, E. Fitzgerald Parnell, III, Parmele P. Calame, Poyner & Spruill, Charlotte, NC, Steven A. Rowe, Poyner & Spruill, L.L.P., Rocky Mount, NC, for Presbytery of Charlotte.
Parmele P. Calame, Poyner & Spruill, Charlotte, NC, John T. Jeffries, Mcangus, Goudelock & Courie, Charlotte, NC, for Alan Elmore.
John T. Daniel, Charlotte, NC, for Melony Brown.
ORDER
MULLEN, Chief Judge.
This matter is before the court upon Defendant Mallard Creek Presbyterian *554 Church's ("Mallard Creek") Motion to Dismiss for lack of subject matter jurisdiction. Defendants move to dismiss Plaintiff's complaint on the grounds that the court is forbidden from inquiring into matters relating to the church's internal government and judicial process pursuant to the First Amendment of the Constitution.
FACTS
Plaintiff Jacobs is a Presbyterian minister who formerly served as the Senior Pastor at Mallard Creek. The church represents but a segment of a large hierarchy headed by the General Assembly for the Presbyterian Church (U.S.A.). Governing all branches of the Presbyterian Church (U.S.A.) is the Book of Order.
Plaintiff Jacobs was employed at Mallard Creek from December 1996 until January 2001. During that time, formal allegations of misconduct, including sexual misconduct, were filed against Jacobs. He denies any involvement. Upon hearing of these allegations,[1] members of the church's investigation committee entered Jacobs's office and attempted to access information on his laptop computer. There is dispute as to whether such information was actually retrieved. Moreover, there is dispute as to the ownership of the laptop computer. The Complaint refers to "the Plaintiff's laptop," where the answer refers to the laptop as "the computer owned by Mallard Creek Presbyterian Church." Furthermore, the Clerk of the Presbytery of Charlotte (the local governing branch of the Presbyterian Church), Dr. Alan Elmore, disclosed the allegations to Plaintiff's wife and noted that a session meeting would be called pursuant to the Book of Order to discuss the allegations brought against Plaintiff.
Mallard Creek announced to the congregation, and soon thereafter published, news of the allegations, without disclosing their contents. On January 2, 2001, Jacobs resigned from his position as Senior Pastor. Mallard Creek accorded Jacobs a severance package. On that same day, two letters, a resignation letter from Jacobs and an accompanying letter penned by Mr. Killian, Clerk of Sessions, was sent to the entire congregation. Mr. Killian's letter further informed the congregation that allegations had been brought against Jacobs, yet refrained from naming them specifically. Killian's letter, like that of Jacobs, stated that Jacobs' resignation was due to illness. It also enumerated the allowances granted by the severance agreement.
Plaintiff contends that Mallard Creek violated the procedural requirements set forth in the Book of Order. Defendants deny these allegations.
Plaintiff Jacobs seeks relief from 1) violation of right to privacy, 2) slander, which subjected him to ridicule, embarrassment and emotional distress and irreparably damaged his reputation, 3) violation of Titles I & II of the Federal Electronic Privacy Act, 4) intentional or negligent infliction of emotional distress, 5) breach of implied contract, and 6) defamation.
The first issue to be addressed deals with the First Amendment's guarantee of religious freedom from governmental interference. The court's scrutiny into matters of church affairs certainly implicates First Amendment analysis. If such inspection is determined to be a violation, then this court is forbidden from hearing the issues raised by the Plaintiff, as to do so would be constitutionally improper.
*555 DISCUSSION
I. Defendants' Motion to Dismiss:
Defendants move to dismiss Plaintiff's Complaint arguing that the court lacks jurisdiction to hear the claims asserted. Defendant first asserts that the court is forbidden from inquiring into matters relating to the church's internal government and judicial process under the Free Exercise Clause of the United States Constitution. Secondly, Defendants note that due to the "inherently religious nature of the decisions at issue," court inquiry into such matters would be violative of the Establishment Clause of the United States Constitution, as such inquiry would result in excessive government entanglement with religion.
a. Free Exercise Clause Analysis
The Free Exercise Clause of the First Amendment promises that government will not prevent or attempt to prevent anyone from practicing his or her religion. Therefore, the civil courts may decide church disputes in some cases, such as in select property and employment discrimination disputes, but are prohibited from "resolving underlying controversies over religious doctrine." The Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 710, 96 S. Ct. 2372, 49 L. Ed. 2d 151 (1976); see Dixon v. Edwards, 290 F.3d 699[2] (4th Cir.2002)("Under the constraints of the First Amendment, when a subordinate in a church hierarchy disputes a decision of the highest ecclesiastical tribunal, the civil court may not constitutionally intervene"). In other words,
The rule of action which should govern the civil courts ... is that, whenever the questions of discipline, or of faith, or ecclesiastical rule, custom, or law have been decided by the highest of those church judicatories to which the matter has been carried, the legal tribunals must accept such decisions as final, and as binding on them, in their application to the case before them.
Id. (quoting Watson v. Jones, 13 Wall. 679, 80 U.S. 679, 20 L. Ed. 666 (1871)).
This is always the case unless the actions of the church are shown to be fraudulent or collusive, which Jacobs did not allege. See Gonzalez v. Roman Catholic Archbishop, 280 U.S. 1, 16, 50 S. Ct. 5, 74 L. Ed. 131 (1929). He does however assert that his claims are sectarian in nature and can be investigated by this court without delving into the religious workings of the church.
Jacobs argues that "the issues presented in this case will not require this Court to review the internal judicial process of the church defendants; they will not require inquiry into the doctrinal reasons and motivations of an ecclesiastical tribunal." (Plaintiff's Reply, 2). However, in Milivojevich, the United States Supreme Court held that there was "no dispute that questions of church discipline and the composition of a church hierarchy are at the core of ecclesiastic concern." 426 U.S. at 717, 96 S. Ct. 2372. That court held that the Free Exercise clause "permit[ted] hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters. [T]he Constitution requires that civil courts accept their decisions as binding upon them." Id. at 724-25, 96 S. Ct. 2372. In this case, as in the Dixon case, the church established an investigation committee as well as a prosecuting committee to deal with the allegations. See Dixon, 290 F.3d 699. The case was ultimately *556 heard by the Permanent Judicial Committee of Presbytery of Charlotte. Plaintiff Jacobs notes, however, that pursuant to the D.C. Circuit case Minker v. Baltimore Annual Conf. of United Methodist Church, 894 F.2d 1354 (D.C.Cir.1990), the court should not prematurely dismiss the case; for the plaintiff, he claims, "need only show that some form of inquiry is permissible and some form of remedy is available." (Plaintiff's Reply, 4).
The Minker court held that the First Amendment did not prevent it from ascertaining whether a contract existed between the parties, although it was prohibited from determining whether plaintiff Minker was personally fit for the pastoral position. In this case, the court would inevitably need look to the content of the Book of Order to make such a determination as to the existence of an implied contract, since the contract is implied by his membership to the organization governed by the document. Such a "detailed review" of the Book of Order coupled with an interpretation of its terms by this court would likely offend the free establishment clause, which dictates that the church maintain its governing autonomy. See Serbian Eastern Orthodox Diocese, 426 U.S. at 718, 96 S. Ct. 2372. In Church of the Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 113 S. Ct. 2217, 124 L. Ed. 2d 472 (1993), the Supreme Court held that "hamper[ing the] church's ability to manage its internal affairs" is violative of the free exercise clause. See also Dixon, 290 F.3d 699 ("It is clear that `a civil court must accept the ecclesiastical decisions of the church tribunals as it finds them,' `on matters of discipline, faith internal organization, or ecclesiastical rule, custom or law'")(quoting Milivojevich, 426 U.S. at 709-10, 96 S. Ct. 2372).
A later case from the Fourth Circuit extended the holding in Milivojevich. See Rayburn v. Gen. Conf. of Seventh-Day Adventists, 772 F.2d 1164 (4th Cir.1985). The Rayburn court employed a balancing test, that is, a weighing of the state's interest against that of he or she "claiming protection under the Free Exercise Clause." Id. at 1168. In that case, the court was to determine whether a female denied employment in a church may sue the church for violation of her civil rights. The court held that she may not. Since she was seeking a pastoral position, "a role so significant in the expression and realization of [the church's] beliefs that state intervention in the appointment process would excessively inhibit religious liberty." Id. That court further held that if the position at issue is "important to the spiritual mission" of the church, the court will not inquire into the reasons behind the church's decisions. Instead, the Rayburn court proclaims, "the free exercise clause of the First Amendment protects the act of a decision rather than the motivation behind it." Id. at 1169.
Read broadly, as Defendants suggest is proper, these cases would prohibit a civil court from examining the church's conduct at all as it relates to the hiring, firing, investigation and disciplining of employees involved in furthering the spiritual mission of the church. Such a broad interpretation warrants dismissal of all Jacob's claims. A narrow reading, which the Plaintiff purports, on the other hand, might simply prohibit the court from looking to the motivations behind the conduct, while the conduct itself and alleged resultant harm is a proper subject for the courts.
Plaintiff's Reply maintains that these causes of action involve the plaintiff's civil, contract and property rights, resolution of which will not require this court to probe into the subjective, spiritual or ecclesiastical matters that the First Amendment prohibits.
*557 However, in Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L. Ed. 666 (1871), the Supreme Court maintained, "All who unite themselves to a [religious] body do so with an implied consent to its government." Thus, in accepting the position of Senior Pastor at Mallard Creek, Jacobs yielded to the jurisdiction of the church. Jacobs was no doubt aware of the hierarchical paradigm on which the Presbyterian church was modeled and governed, given his position.
Each allegation/cause of action relates to the Plaintiff in his capacity as Mallard Creek's senior pastor. Thus, in deciding the issues raised in Plaintiff's Complaint, the court would in essence be made to inquire into the church's decisions regarding its own internal management, and discipline of its clergy. Furthermore, if the court did not agree with the procedure used and the effects therefrom, in holding the church liable, the court would be substituting its laws and disciplinary action for that of the church. Each claim put forth by Plaintiff deals simply with the procedures and consequences resulting from the church performing its function of disciplining its clergy. In other words, although Plaintiff cites to various state courts' opinions which allow court inquiry into church actions that are not religious in nature, the United States Supreme Court and the Fourth Circuit have consistently held that churches must have "the power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine." Kedroff v. St. Nicholas Cathedral, 344 U.S. 94, 73 S. Ct. 143, 97 L. Ed. 120 (1952); see Dixon, 290 F.3d 699. Such disputes regarding church hierarchy are, the Supreme Court said, "the core of ecclesiastical concern." Milivojevich, 426 U.S. at 717, 96 S. Ct. 2372. In fact, the plaintiff recognizes that civil courts are prohibited from inquiring into "ecclesiastical matters concerning religious discipline, faith, custom or law." (Plaintiff's Response 1, 3).
If this court is to inquire into whether the church followed the proper procedure called for by the organization's Book of the Order in going about its investigation of the allegations against Plaintiff, this too would violate the First and Fourteenth Amendments. For, in Milivojevich, the Supreme Court held that such "detailed review[s]" of churches' "highest tribunals" were constitutionally impermissible. See 426 U.S. at 718, 96 S. Ct. 2372; Dixon, 290 F.3d 699. The same is true of Jacobs' other claims. The harm Jacobs claims he suffered as a result of the alleged torts is merely a consequence of the procedural actions taken by the church administration in investigating the allegations made about the Plaintiff. Because of the dictates of the First and Fourteenth Amendments, the court does not have proper authority to inquire any further into the decisions of the church authorities in dealing with such issues of discipline and church law.
b. Establishment Clause Analysis
In Lemon v. Kurtzman, 403 U.S. 602, 613, 91 S. Ct. 2105, 29 L. Ed. 2d 745 (1971), the Supreme Court held that in order to stand, a law or government action has to pass three prongs of analysis. The law or action must 1) have a secular legislative purpose, 2) such purpose must have neither the effect of advancing nor inhibiting religion, and 3) its implementation must not create excessive government entanglement with religion. In Smith v. Raleigh Dist. of N.C. Conf. Of the United Methodist, 63 F. Supp. 2d 694 (E.D.N.C.1999), this court maintained that "many of the establishment clause analyses provided by the courts barring ministers' claims do not differ markedly from the free exercise analysis in those cases. The focus of both is inevitably the degree to which government *558 becomes involved in a particular church's governance and the inappropriateness of such involvement."
The Fourth Circuit held similarly when it ruled that the establishment clause forbade it from inquiring into the hiring decisions of churches. See Rayburn, 772 F.2d at 1170. It stated that government entanglement does not result solely from "situations where there is a state assistance or sponsorship of a religious institution." Id. at 1170 (quoting Walz v. Tax Commission of the City of New York, 397 U.S. 664, 674, 90 S. Ct. 1409, 25 L. Ed. 2d 697 (1970)). Government entanglement with religion is likely to arise when the situation requires continued government surveillance of church activities. See Lemon, 403 U.S at 619, 91 S. Ct. 2105.
For example, Plaintiff Jacobs seeks to have this court consider the contents of the Book of Order to make a determination as to whether the church breached the alleged implied contract between the plaintiff and itself. He claims that Karen Bohr, in her capacity as the chairperson of the investigating committee "failed to follow the rules of The Book of the Order..." Plaintiff's Complaint, para. 33. The case law suggests that a civil court's investigation of such matters as church disciplinary action and church law are forbidden as offensive to the establishment clause, as such inquiry results in excessive governmental entanglement with religion. See Bell v. Presbyterian Church, 126 F.3d 328, 330 (4th Cir.1997). Plaintiff counters by stating, "A court must consider the nature of a particular dispute to determine whether it is ecclesiastical in nature ... or whether it is a case in which it should hold religious organizations liable in civil actions for purely secular disputes involving third parties." Plaintiff Jacobs cites to a variety of state cases which suggest that the courts may inquire, without constitutional violation, into whether the church acted "within the scope of its authority and observed its own organic forms and rules." See Western Conference of Original Free Will Baptists of N.C. v. Creech, 256 N.C. 128, 123 S.E.2d 619, 627 (1962); Western Conference of Original Free Will Baptists of N.C. v. Miles, 259 N.C. 1, 129 S.E.2d 600 (1963); Atkins v. Walker, 284 N.C. 306, 200 S.E.2d 641, 651 (1973). Creech, Miles and Atkins dealt with distribution of church property when the congregation split into two factions of religious belief. Those courts have held that civil courts may inquire into such matters dealing with civil, contract or property rights when disputes arise between members. However, the facts of those cases differ sharply from the case at hand. Where Creech, Miles and Atkins dealt with possession and control of church property when disputes arose among members, this case addresses the issue of internal church governance, and particular methods of investigation chosen by Mallard Creek in the face of allegations of improper conduct of its Senior Pastor. Plaintiff also cite to several Louisiana state cases that support a court's right to inquire into whether proper procedures were followed when a pastor was dismissed. However, Louisiana cases are hardly controlling anywhere save Louisiana and do not trump federal court holdings to the contrary.
In Bell, which is factually similar to this case, the Fourth Circuit dismissed a minister's claims, of, inter alia, breach of contract and intentional infliction of emotional distress as being ecclesiastical in nature and thus the court was barred by the First Amendment from adjudicating the matter. 126 F.3d 328. That court stated, "such a decision about the nature, extent, administration, and termination of a religious ministry falls within the ecclesiastical sphere that the First Amendment protects from *559 civil court intervention." Id. at 333. Otherwise courts would be required to monitor the investigative procedures of churches. Such extensive monitoring clearly results in excessive entanglement of church and state. See Lemon, 403 U.S. at 615, 91 S. Ct. 2105.
IT IS THEREFORE ORDERED that Defendant's Motion to Dismiss their action for lack of subject matter jurisdiction is hereby GRANTED.
NOTES
[1] Jacobs is alleged to have had sex with Melody Brown, a church member. Defendants also allege in their answer that Jacobs was accused of looking at pornography on the laptop computer in his office at the church.
[2] Page references are not yet available for this case. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3861648/ | Argued December 10, 1943.
The Milk Control Commission has appealed from the amended order of the court below, which affirmed the order of the commission, in so far as it revoked the license of John J. Devlin, trading as Langhorne Dairy, but disapproved and ordered to be revoked so much of it as ordered the said milk dealer to pay to the commission the sum of $1,397.14 to be "applied" by it to the milk producers to whom, it found, he had made underpaymentsaggregating that amount, but not finding the amount due each producer.
The order of the commission is claimed to have been based on sections 510, 511 and 1101 of the Milk Control Law of April 28, 1937, P.L. 417, as amended by Act of July 24, 1941, P.L. 443, in connection with section 1 *Page 421
of General Order No. B-1 (promulgated by the commission on May 24, 1937) regulating the production, marketing and distribution of milk and milk products, etc., which reads as follows: "UNACCOUNTED FOR MILK. All milk not accounted for by a milk dealer's records shall be presumed to be Class I milk and producers shall be paid for such milk accordingly."
The court below held, in substance, that the Milk Control Law does not create a presumption or delegate a power to the commission to indulge in the presumption, that unaccounted for milk shall be of a particular grade; and that nothing in the act and its supplements and amendments gives the commission any power to legislate upon, establish or change rules of evidence and proof; and that the commission, being an administrative rather than a legislative body, must have a clear grant of authority from the legislature before it can establish any such presumption, even in a proceeding not in the course of the common law.
In reply to the contention of the commission that the constitutionality of section 1 of General Order No. B-1 had been sustained by the Court of Common Pleas of Dauphin County in the case of L.A. Sterrick v. Milk Control Commission, 126 Commonwealth Docket 1937, the court below stated: "The issues involved in that proceeding were distinctly different from those herein, and, in the absence of a supporting opinion discussing the issues and the reasons for the court's action, we are at a loss to know whether the particular question herein involved, as to the power of the Commission to issue General Orders establishing rules of evidence and proof and what shall constitute a prima facie case, was called to the court's attention."
An examination of the grounds on which the constitutionality of section 1 of General Order B-1 was attacked in the Sterrick case, as contained in appellant's brief, page 11, fails to show that they included *Page 422
any reference to the provision in section 7 of Article III, prohibiting the passage of any special law, "changing the rules of evidence in any . . . . . . inquiry before courts . . . . . . or other tribunals"; and if that question was not raised before the Dauphin County Court, its per curiam order would not be conclusive as to a ground not raised nor before it for decision.
However, it is not necessary for us to decide that matter, for a review of the Milk Control Law and its supplements and amendments fails to disclose to us any grant of authority to the commission, in circumstances similar to this case, to make anyorder requiring the milk dealer, whose license has been revokedto pay to the commission any money to be distributed by it to the milk producers to whom the dealer made underpayments. Section 510 of the amended act provides: "Effect of Order by Commission. — If, by valid formal order refusing, suspending or revoking a license, after hearing with due notice to all those liable on thebond, the commission has found a milk dealer or handler to beindebted thereunder, such order and the findings of fact in support thereof shall be conclusive evidence of the amount dueunder such bond in a suit thereon by the commission, unless an appeal therefrom is pending and a supersedeas granted." (Italics supplied).
The commission is empowered in section 509 to sue on the bond on behalf of producers, which suit may be brought in the name of the Commonwealth upon relation of the commission or of the Attorney General, in such manner as debts are now by law recoverable. And by section 511, the commission is directed to "prescribe the procedure for the payment, out of the proceeds of any bond or collateral required by this article, of the amounts found due to producers or handlers or dealers, based on sales or deliveries of milk by them to a milk dealer or handler who has posted a bond or collateral: Provided, however, That if the proceeds of a bond or of *Page 423
collateral which has been posted by a milk dealer or handler shall be insufficient to pay in full the amounts due to producers who have sold or supplied milk to such milk dealer or handler, the moneys available shall be divided pro rata among such producers."
By these provisions of the act, the commission was authorized, in any valid order revoking the milk dealer's license, entered, after hearing, with notice to the principal and surety on the bond, to find the amount that the milk dealer was indebted, underthe bond, to each or any named producer, handler or other dealer,
which findings would be conclusive evidence of the amounts due such producer, etc. by the milk dealer in any suit by the commission on his bond. But no authority was given in the act to include in its order, revoking the license a further order
directing the milk dealer to pay money to any milk producer, orto pay to the commission any sum found due by him to milk producers, etc. for distribution among them.
The act contemplates the finding by the commission of specificsums due by the milk dealer to the several producers, etc., separately, not a lump sum owing to all his producers as a class. But payment is to be enforced by an action on the bond, as debtsare by law recoverable, not by an order of the commission to pay money, failure to obey which might entail fines, penalties and even imprisonment, following summary proceedings, prosecution for misdemeanor, or decree in equity, under sections 1001-1004 inclusive.
The remedy for recovery of any money due by the appellee to milk producers — none of whom has here complained that he owes them anything, and who seem to be satisfied with their dealings with him — is by an action on the bond, to recover, in the name of the Commonwealth, the aggregate of the respective amounts found to be due by him to the eight producers from whom he bought milk, not exceeding the amount of the *Page 424
bond; not by a summary order requiring him to pay the commission a lump sum for allocation among such producers.
If the amount due the producers respectively has not beenconclusively established by a finding or findings of fact in the order revoking the license, it can be determined, as other debts are, in an action on the bond.
The appeal is dismissed at the costs of the appellant. Judge RENO took no part in the consideration or decision of this case. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1966780/ | 748 F. Supp. 131 (1990)
Rolando CORONADO, Petitioner,
v.
Eugene S. LEFEVRE, Superintendent, Clinton Correctional Facility, Dannemora, New York and Robert Abrams, Attorney General of the State of New York, Respondents.
No. 87 Civ. 2539 (RJW).
United States District Court, S.D. New York.
October 1, 1990.
*132 *133 Rolando Coronado, pro se.
Robert T. Johnson, Dist. Atty. of Bronx County, Bronx, N.Y. (Allen H. Saperstein, of counsel), for respondents.
OPINION
ROBERT J. WARD, District Judge.
Rolando Coronado petitions this Court pro se for a writ of habeas corpus pursuant to 28 U.S.C. § 2254. By order dated April 16, 1987, the petition was referred to the Honorable Joel J. Tyler, United States Magistrate, to hear and report pursuant to 28 U.S.C. § 636(b)(1) and Rule 4 of the Local Rules for Proceedings Before Magistrates. On September 7, 1989, Magistrate Tyler filed a Report and Recommendation (the "Report") in which he recommended that the writ be denied and the petition dismissed. Petitioner filed timely objections to the Report on May 17, 1990.[1] Having reviewed the Report and considered de novo those portions to which petitioner has objected, the Court hereby adopts the magistrate's recommendations, denies petitioner's writ of habeas corpus, and dismisses the petition.
BACKGROUND
Petitioner was convicted, on January 18, 1985, after a two-week bench trial in the Supreme Court of the State of New York, Bronx County, of Murder in the Second Degree and two counts of Criminal Possession of a Weapon in the Fourth Degree (New York Penal Law, §§ 125.25(1) and 265.01) in connection with the death of Sonia Gutierrez ("Gutierrez"), a 13-year old student at Junior High School 52 ("JHS 52") in Manhattan. Gutierrez was found murdered on April 16, 1983, on Boone Avenue in the Bronx. Wrapped around her body was a metallic gold-colored belt.
The evidence implicating petitioner in the murder of Gutierrez originated in part from an assault on Roberto Perez ("Perez") on May 21, 1983. According to Perez, a 17-year old student attending JHS 52, on that night petitioner approached him from behind, put a knife to his back and demanded his wallet. Although Perez offered his wallet to petitioner, Perez testified that petitioner refused to take it. Petitioner instead placed a blindfold on Perez's face, and forced him to walk for "hours" through the streets of the Upper West Side of Manhattan. Before leading Perez into Riverside Park ("the park"), petitioner kicked and hit Perez in an alley, and told him that it was "just a shame that its got to happen again."
Later, while in the park, petitioner asked Perez what school he attended. Perez stated that he went to JHS 52. Petitioner, who had graduated from JHS 52 in 1979, asked Perez if he knew a boy named Danny. Perez told him that he did. Petitioner and Perez then had a conversation regarding Danny, whereupon petitioner inquired whether "anything interesting had happened in the school recently?" Perez responded that a girl had been killed. According *134 to Perez, petitioner then stated: "I want you to know I killed her and if you don't shut up, I'm going to have to kill you too."
Sometime after this conversation, Perez tried to escape. Petitioner grabbed him, stabbed him in the back several times, and left him for dead in the park, discarding the knife in nearby bushes. Perez regained consciousness at Mt. Sinai Hospital ("Mt. Sinai") the following day. There he was examined by a psychiatrist who concluded that Perez was suffering from visual and auditory hallucinations and recommended that he be subjected to further psychiatric evaluation.[2]
Also on May 22, the day after the stabbing, petitioner went to the 20th Precinct to confess to the murder of Perez, believing that he had killed him the night before in the park. The police attempted to confirm the story. However, since no murder had been reported in the park, petitioner was released.
After Perez spoke with the police and confirmed an attack in the park, petitioner was arrested by Detectives Robert Subach ("Subach") and Carlos Rivera ("Rivera") and taken into custody.
At the police station, Subach and Rivera brought petitioner to an interrogation room. Petitioner was read his rights pursuant to Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), whereupon he told Subach and Rivera that he understood his rights and that he wished to speak to them. Subach and Rivera told petitioner that he was being arrested for the stabbing of Perez and that he was under investigation for the murder of Gutierrez. The interrogation lasted approximately nine hours, from 3:00 or 3:30 P.M. on May 31, 1983, to 1:00 or 1:30 A.M. on June 1, 1983, and ended with a videotaped statement by petitioner in the presence of Assistant District Attorneys from both New York and Bronx Counties.
During the interrogation, petitioner made several statements. He confessed to the Perez stabbing, and also to two murders, which police could not confirm. He repeatedly told the detectives that he liked to watch people suffer and enjoyed terrifying others. He stated that he used drugs on a daily basis.[3] Although petitioner continually denied any involvement in, or knowledge of, the murder of Gutierrez, he asked the detectives "how he could drive and hold her [Gutierrez] at the same time," even though the detectives did not tell petitioner that Gutierrez's body had been transported by car to the Bronx. Additionally, when petitioner saw a picture of the deceased he stated, "good-bye Sonia, I guess its all over."[4] Petitioner also suggested that he did not mind telling the police about Perez since they already knew about him, but that they would have to "figure out" what happened to Gutierrez, since they knew nothing about her.
Petitioner pled guilty to charges relating to the assault on Perez, and was sentenced to a term of 8 to 16 years. He was later indicted by a Bronx grand jury for Murder in the Second Degree and two counts of Criminal Possession of a Weapon in the Fourth Degree (one count was later dropped), in relation to the Gutierrez murder.
Prior to trial for the Gutierrez murder, a suppression hearing was held before the trial judge, the Honorable Elbert Hinkson. The prosecution sought the admission of all of petitioner's statements to the detectives, *135 a videotape of the crime scene showing the body of Gutierrez, and the identification of petitioner by Perez and all of petitioner's statements to Perez. Petitioner moved for suppression of the statements he made to the detectives on the ground that they were not made voluntarily; of Perez's testimony and identification on the grounds that Perez was mentally unstable[5] and the identification procedure unduly suggestive; and the videotape of the crime scene due to its highly prejudicial nature and low probative value.
The detectives testified at the hearing that petitioner was always responsive to their questions during the interrogation session, and that he was generally calm. However, they also stated that petitioner seemed to have "severe psychiatric problems," that he seemed to be "missing a few parts" and that he was "crazy as a bed-bug." They stated that there were breaks during the interrogation while petitioner ate dinner, used the bathroom, and watched some television.
Judge Hinkson's ruling on these issues included findings of fact and conclusions of law. He suppressed much of the evidence that was proffered by the prosecution during the course of the hearing,[6] primarily on the ground that its probative value was outweighed by the extreme prejudice that it would cause to the defendant. With respect to the statements made by petitioner to the detectives, the judge found that "the record clearly established that the defendant was fully aware of the statements he was making [to the detectives];" that "he responded to questions in a clear and rational manner," and that "there is no definitive indication of mental disease attributable to the defendant." Judge Hinkson determined that although petitioner was interrogated for nine hours, he was not questioned continuously, for he was fed, went to the bathroom, and watched television for a period of time.
Regarding Perez, the Judge found that he had been hospitalized for physical, and not mental reasons, and that although Perez had hallucinations and his recitation of events were "bizarre," this was "clearly understandable considering the traumatic ordeal he had just experienced." The judge concluded that Perez's "recounting of the ordeal ... [was] at a minimum substantially factual."
After Judge Hinkson announced his decision, petitioner asked that his attorney be relieved since he was urging petitioner to plead guilty on all counts. The Court reserved decision, but later denied the application. Petitioner then requested a non-jury trial, over the vociferous objections of his counsel. The Court again reserved decision, and told petitioner to "discuss the matter very thoroughly with [his] attorney and give it a great deal of thought overnight." The following day, Judge Hinkson warned petitioner of the risks of a non-jury trial. He explained to petitioner the possible prejudice that could occur against him. However, petitioner insisted on waiving his right to a jury trial.
Petitioner's attorney then requested that a competency hearing be held to determine petitioner's mental state.[7] The hearing was held before Judge Hinkson on January 3 and 4, 1985. At the hearing, the prosecution called as witnesses two psychiatrists who had examined petitioner several weeks earlier to evaluate his competency to stand trial. Both testified that it was their opinion that petitioner was competent to stand trial, since he had the ability to assist in his defense and to understand the charges against him. Petitioner did not present any evidence as to his competency at the hearing.
*136 Following the testimony of the witnesses and argument of counsel, Judge Hinkson concluded that petitioner was competent to stand trial and assist in his own defense. He also determined that petitioner had the capacity to understand the consequences of waiving his right to a jury trial, and that there was no evidence of any mental disease. At the close of the hearing, Judge Hinkson again asked petitioner if he wished to waive his right to a jury trial. Petitioner stated that he did. During a colloquy with the court, petitioner said that he understood the effects of his decision, but still wished to waive his right to a jury trial. Judge Hinkson found that petitioner understood what he was doing, and granted petitioner's application. Petitioner then signed a written waiver.
The case was tried before Judge Hinkson. A number of witnesses were called by both the prosecution and the defense.[8] The first significant witness called by the prosecution was Subach. His direct testimony related to the investigation and subsequent interrogation of petitioner. He testified to petitioner's admissions concerning his attack on Perez and to petitioner's statements that linked him to the Gutierrez homicide.[9]
Next to testify was Perez. Perez first recounted the events that occurred the night of May 21, 1983, when petitioner assaulted him in the park, as circumscribed by Judge Hinkson's rulings at the suppression hearing. Perez testified that after they had discussed the murder at JHS 52, petitioner told him that "it was a shame that it had to happen again," and that "I just want you to know that I killed her, and if you don't shut up I'm going to have to kill you too."
The prosecution also called Abigail Alvarez ("Alvarez"), a friend of Gutierrez from JHS 52. Alvarez testified that she had seen Gutierrez with petitioner a few times; that the two had a relationship which was symbolized by the wearing of each other's clothes or jewelry (in this case the gold belt); and that just before Gutierrez was killed, she and petitioner had argued over the fact that her parents would not let her go out on dates.
The defense called Gutierrez's sister as a witness. She testified that although she and Gutierrez had shared a room and did all of their shopping together, she had never seen the gold belt prior to Gutierrez's death. She also testified that while Gutierrez said that a "big boy" was in "love with her," Gutierrez had never mentioned petitioner's name. Additionally, she testified that she had never seen either Alvarez or petitioner previous to that day in court.
Gutierrez's step-mother also testified for the defense. Like Gutierrez's sister, she stated that she had never seen the gold belt, and that Gutierrez had stated before she was killed that an older boy was in love with her. The witness also testified that Gutierrez never asked her if she could go out on a date. In addition, the court reporter who had taken down the grand jury proceedings testified that during the grand jury proceedings Perez had testified that petitioner asked him if he knew a girl named "Dinah" at JHS 52, and not about a girl "dying," and the psychiatrist who had examined Perez following the stabbing testified as to her evaluation of Perez' mental condition at that time.
After hearing closing arguments, the court reserved decision. When it rendered its verdict four days later, the court concluded that "after along [sic] and due deliberation" petitioner is "guilty in the first count of the indictment, the crime of Murder in the Second Degree; under the second count of the indictment the defendant is found guilty of the crime of Criminal Possession of a Weapon in the Fourth Degree." Petitioner was sentenced on February 13, 1985, by Judge Hinkson, to concurrent sentences of 25 years to life, and one year, to be served consecutively to the 8 to 16 year sentence petitioner received for the assault on Perez.
*137 On appeal to the Appellate Division, First Department, petitioner argued that he did not voluntarily, knowingly and intelligently waive his Miranda rights prior to interrogation; that he did not knowingly and intelligently waive his right to a jury trial; that the evidence presented at the trial was insufficient to prove guilt beyond a reasonable doubt; and that the sentence imposed was excessive. The Appellate Division, First Department unanimously affirmed petitioner's conviction without opinion. People v. Coronado, 502 N.Y.S.2d 315, 120 A.D.2d 993 (1986). Leave to appeal to the New York Court of Appeals was denied. People v. Coronado, 506 N.Y.S.2d 1043, 497 N.E.2d 713, 68 N.Y.2d 756 (1986).
After thus exhausting his available state remedies, petitioner brought the instant petition asserting three grounds for relief, as follows:
1) that he did not knowingly, intelligently and voluntarily waive his Miranda rights prior to police interrogation;
2) that he did not knowingly and intelligently waive his right to a jury trial; and
3) that his guilt was not established beyond a reasonable doubt due to the weak and equivocal evidence adduced at trial.
DISCUSSION
To accept the report and recommendation of a magistrate to which no timely objection has been made, a district court need only satisfy itself that there is no clear error on the face of the record. See Rule 72, Fed.R.Civ.P., Notes of Advisory Committee on Rules (citing Campbell v. United States District Court, 501 F.2d 196, 206 (9th Cir.), cert. denied, 419 U.S. 879, 95 S. Ct. 143, 42 L. Ed. 2d 119 (1974)). 28 U.S.C. § 636(b)(1) affords the district court broad latitude in considering a magistrate's recommendation, even if no party objects to it. Grassia v. Scully, 892 F.2d 16, 19 (2nd Cir.1989). However, when timely objection has been made to a portion or portions of a magistrate's report, the district judge must "make a de novo determination ... of any portion of the magistrate's disposition to which specific written objection has been made." Rule 72(b), Fed. R.Civ.P.; See also 28 U.S.C. 636(b)(1). The judge may then accept, reject, or modify, in whole or in part, the magistrate's proposed findings and recommendations. 28 U.S.C. § 636(b)(1).
A district court's obligation to make a de novo determination of properly contested portions of a magistrate's report does not require that the judge conduct a de novo hearing on the matter. United States v. Raddatz, 447 U.S. 667, 676, 100 S. Ct. 2406, 2412, 65 L. Ed. 2d 424 (1980). It is sufficient that the district court "arrive at its own, independent conclusion about those portions of the magistrate's report to which objection is made." Hernandez v. Estelle, 711 F.2d 619, 620 (5th Cir.1983). To this end, the court must "exercise ... sound judicial discretion with respect to whether reliance should be placed on [the magistrate's] findings." American Express Int'l Banking Corp. v. Sabet, 512 F. Supp. 472, 473 (S.D.N.Y.1981), aff'd without opinion, 697 F.2d 287 (2nd Cir.), cert. denied, 459 U.S. 858, 103 S. Ct. 129, 74 L. Ed. 2d 111 (1982).
In the instant case, petitioner filed timely objections to the magistrate's Report. The Court has reviewed de novo those portions of the Report to which petitioner has objected. Petitioner, in his objections, has failed to raise any argument that would justify granting the petition. Thus, the Court hereby adopts the magistrate's recommendations.
1. Waiver of Miranda rights
Petitioner's first ground for relief is that he did not voluntarily, knowingly and intelligently waive his Miranda rights prior to police interrogation. Petitioner claims that he was suffering from mental illness at the time he was interrogated. He relies on certain statements made by the detectives at the suppression hearing, such as "he's [petitioner] missing a few parts" and "he [petitioner] was crazy as a bed-bug." Petitioner also asserts that just before he was interrogated, he swallowed five pills of mescaline. He claims that due to his illness and ingestion of drugs, he *138 was impaired, and thus could not have waived his Miranda rights voluntarily, knowingly and intelligently.
Under 28 U.S.C. § 2254(d), state court findings of fact are given a presumption of correctness in a federal habeas corpus proceeding unless one of eight enumerated exceptions applies. 28 U.S.C. § 2254(d).[10] The presumption of correctness applies to factual determinations made either by a state trial court or an appellate court. Sumner v. Mata, 449 U.S. 539, 544-47, 101 S. Ct. 764, 767-69, 66 L. Ed. 2d 722 (1981). Although a federal court is required to presume a state court's finding of fact to be correct, it is also required to conduct an independent review of any conclusions of law. See Miller v. Fenton, 474 U.S. 104, 106 S. Ct. 445, 88 L. Ed. 2d 405 (1985); Wainwright v. Witt, 469 U.S. 412, 429-30, 105 S. Ct. 844, 854-55, 83 L. Ed. 2d 841 (1985).
It has been noted that it is not always readily apparent whether the resolution of a particular issue turns on a question of fact or one of law. Miller v. Fenton, supra, 474 U.S. at 113, 106 S. Ct. at 451. Although Courts of Appeals in other circuits have disagreed as to whether the determination that a waiver was made voluntarily, knowingly and intelligently is a factual or legal inquiry, compare Bryan v. Warden, 820 F.2d 217, 219 (7th Cir.1987), cert. denied, 484 U.S. 867, 108 S. Ct. 190, 98 L. Ed. 2d 142 (1987) (voluntariness of a waiver of Miranda rights is a question of fact entitled to a presumption of correctness) with Ahmad v. Redman, 782 F.2d 409, 413 (3d Cir.1986), cert. denied, 479 U.S. 831, 107 S. Ct. 119, 93 L. Ed. 2d 66 (voluntariness of waiver is a mixed question of fact and law subject to independent review by federal habeas courts), in this circuit it has been held that a state court's finding that a waiver was voluntary, knowing and intelligent is a legal inquiry subject to de novo review. Toste v. Lopes, 861 F.2d 782, 783 (2d Cir.1988), cert. denied sub nom. Toste v. Meachum, ___ U.S. ___, 109 S. Ct. 3170, 104 L. Ed. 2d 1032 (1989) ("[t]he validity of a waiver is a matter for independent federal determination") (quoting Brewer v. Williams, 430 U.S. 387, 403-04, 97 S. Ct. 1232, 1241-42, 51 L. Ed. 2d 424 (1977)). See also Miller v. Fenton, supra, 474 U.S. at 113, 106 S. Ct. at 451 (voluntariness of confession a matter for independent federal review). Nonetheless, subsidiary factual conclusions of a state court must be given a presumption of correctness by a federal court on habeas corpus review. Miller v. Fenton, supra, 474 U.S. at 112, 106 S. Ct. at 450; Ahmad v. Redman, supra, 782 F.2d at 412.
The inquiry into whether a person has voluntarily, knowingly and intelligently waived his Miranda rights "has two distinct dimensions." Moran v. Burbine, 475 U.S. 412, 421, 106 S. Ct. 1135, 1141, 89 L. Ed. 2d 410 (1986) (quoting Edwards v. Arizona, 451 U.S. 477, 482, 101 S. Ct. 1880, 1883, 68 L. Ed. 2d 378 (1981) and Brewer v. Williams, supra, 430 U.S. at 404, 97 S. Ct. at 1242):
First, the relinquishment of the right must have been voluntary in the sense that it was the product of a free and deliberate choice rather than intimidation, coercion, or deception. Second, the waiver must have been made with a full awareness of both the nature of the right being abandoned and the consequences of the decision to abandon it. Only if the "totality of the circumstances surrounding the interrogation" reveal both an uncoerced choice and the requisite level of comprehension may a court properly conclude that the Miranda rights have been waived.
Moran v. Burbine, supra, 475 U.S. at 421, 106 S. Ct. at 1141 (quoting Fare v. C., 442 U.S. 707, 725, 99 S. Ct. 2560, 2572, 61 L. Ed. 2d 197 (1979)).
*139 With respect to the first dimension that of voluntariness the focus of the inquiry is on the conduct of the police. Colorado v. Connelly, 479 U.S. 157, 107 S. Ct. 515, 93 L. Ed. 2d 473 (1986). Coercive police activity is "a necessary predicate" to finding that a waiver of Miranda rights was not voluntary. Id. 479 U.S. at 167, 107 S. Ct. at 522. The fifth amendment privilege is "not concerned with moral and psychological pressures to confess emanating from sources other than official coercion." Oregon v. Elstad, 470 U.S. 298, 304-05, 105 S. Ct. 1285, 1290, 84 L. Ed. 2d 222 (1985). Rather, the voluntariness of a waiver of an individual's Miranda rights has "always depended on the absence of police overreaching. ..." Colorado v. Connelly, supra, 479 U.S. at 170, 107 S. Ct. at 523.
Petitioner claims that he did not voluntarily waive his Miranda rights. The trial court found that although petitioner's interrogation lasted for approximately nine hours, it was not continuous. The detectives fed petitioner, let him use the bathroom, and allowed him to watch television for an extended period of time. It appears that petitioner answered the questions freely, and was described by the detectives as "always responsive." Presuming these subsidiary factual findings to be correct, and having carefully reviewed the record, the Court finds after an independent legal review that no coercion or duress occurred, and that petitioner voluntarily waived his Miranda rights prior to interrogation.
With respect to the second dimension of inquiry whether the waiver was knowing and intelligent the focus is solely on the mental ability of the individual. Perri v. Director, Dep't of Corrections, 817 F.2d 448, 452 (7th Cir.), cert. denied sub nom Perri v. Lane, 484 U.S. 843, 108 S. Ct. 135, 98 L. Ed. 2d 92 (1987). In order for a waiver to be knowing and intelligent, a person must understand and comprehend the right in question as well as the consequences of abandoning that right. Moran v. Burbine, supra, 475 U.S. at 423, 106 S. Ct. at 1141.
However, a full appreciation of all the consequences of a waiver is not necessary for the waiver to be knowing and intelligent. Oregon v. Elstad, supra, 470 U.S. at 316, 105 S. Ct. at 1296; Colorado v. Spring, 479 U.S. 564, 574, 107 S. Ct. 851, 857, 93 L. Ed. 2d 954 (1987). Rather, the suspect need only understand that he has the right to remain silent, the right to request an attorney, and that "anything he says may be used against him." Toste v. Lopes, 701 F. Supp. 306, 312 (D.Conn.1987), aff'd, 861 F.2d 782 (2d Cir.1988), cert. denied sub nom. Toste v. Meachum, ___ U.S. ___, 109 S. Ct. 3170, 104 L. Ed. 2d 1032 (1989).
Once it is determined that a suspect's decision not to rely on his rights was uncoerced, that he at all times knew he could stand mute and request a lawyer, and that he was aware of the State's intention to use his statements to secure a conviction, the analysis is complete and the waiver is valid as a matter of law.
Moran v. Burbine, supra, 475 U.S. at 422, 106 S. Ct. at 1141.
Petitioner does not dispute that he was read his Miranda rights prior to the interrogation. He also concedes that after the detectives had read him his rights, he stated that he understood them and that he still wished to speak with them. The trial court found that "the record clearly established that the defendant was fully aware of the statements he was making. He responded to questions in a clear and rational manner." The trial court also determined that there was no indication of mental disease attributable to petitioner and that his ability to be attentive was unimpaired by drugs. Based on these subsidiary findings of fact, the Court determines that petitioner knowingly and intelligently waived his Miranda rights. Accordingly, petitioner's first ground for relief is rejected.
2. Waiver of jury trial
Petitioner's second ground for relief is that he did not knowingly and intelligently waive his right to a jury trial. He claims that the trial judge should not have granted his request for a bench trial over the vigorous objections of his attorney, and in light of the highly inflammatory evidence *140 that the judge had heard during the suppression hearings.
As previously noted, state court findings of fact must be given a presumption of correctness by a federal habeas court, and must be upheld unless those factual findings are not fairly supported by the record. 28 U.S.C. § 2254(d). See Sumner v. Mata, supra, 449 U.S. at 544, 101 S. Ct. at 767. This mandate, however, applies only to matters of "historical" fact and subsidiary factual determinations drawn from the historical facts; it does not apply to questions of law or mixed questions of fact and law. Id. at 545, 101 S. Ct. at 768.
The Second Circuit has held that a state court's finding that a waiver of a jury trial was knowing and intelligent is a mixed question of fact and law, subject to federal de novo review. Matusiak v. Kelly, 786 F.2d 536, 543 (2d Cir.), cert. dism'd, 479 U.S. 805, 107 S. Ct. 248, 93 L. Ed. 2d 172 (1986).[11]See also United States ex rel. Williams v. DeRobertis, 538 F. Supp. 899 (N.D.Ill.1982), rev'd on other grounds, 715 F.2d 1174 (7th Cir.1983), cert. denied, 464 U.S. 1072, 104 S. Ct. 982, 79 L. Ed. 2d 219 (1984); Phillips v. Murphy, 796 F.2d 1303 (10th Cir.1986).
The right to trial by jury is "fundamental to American criminal jurisprudence." United States v. Martin, 704 F.2d 267, 271 (6th Cir.1983), and is explicitly protected by the Constitution. U.S. Const. Art. III, § 2. Since the right is so fundamental, it is not to be dispensed with routinely. Patton v. United States, 281 U.S. 276, 50 S. Ct. 253, 74 L. Ed. 854 (1930). In order for a waiver of this right to be valid, it must be "express and intelligent," Patton v. United States, supra, 281 U.S. at 276, 50 S. Ct. at 253, and must comport with the waiver standard formulated in Johnson v. Zerbst, 304 U.S. 458, 464, 58 S. Ct. 1019, 1023, 82 L. Ed. 1461 (1938). Adams v. United States, 317 U.S. 269, 275-78, 63 S. Ct. 236, 240-41, 87 L. Ed. 268 (1942). See Schneckloth v. Bustamonte, 412 U.S. 218, 237, 93 S. Ct. 2041, 2052, 36 L. Ed. 2d 854 (1973). To be valid under Johnson v. Zerbst, a waiver of certain constitutional rights must amount to an "intentional relinquishment of a known right or privilege." Johnson v. Zerbst, supra, 304 U.S. at 464, 58 S. Ct. at 1023. "Waivers of constitutional rights must not only be voluntary, but must also be knowing, intelligent acts done with sufficient awareness of the relevant circumstances and likely consequences." Brady v. United States, 397 U.S. 742, 748, 90 S. Ct. 1463, 1469, 25 L. Ed. 2d 747 (1970).
In the instant case, petitioner does not contest the voluntariness of his waiver of a jury trial.[12] Instead, he directs his attack solely at the second dimension of the waiver inquiry, arguing that the waiver was not knowing and intelligent. In order for a waiver to have been knowing and intelligent, the defendant must have understood the "nature of the right" and the consequences of waiving that right. Estrada v. United States, 457 F.2d 255, 256 (7th Cir.), cert. denied, 409 U.S. 858, 93 S. Ct. 143, 34 L. Ed. 2d 104 (1972). See Boykin v. Alabama, 395 U.S. 238, 243-44, 89 S. Ct. 1709, 1712-13, 23 L. Ed. 2d 274 (1969).
Waiver cannot be inferred from a silent record; there must be "an affirmative showing that [the waiver] was intelligent and voluntary." Boykin v. Alabama, supra, 395 U.S. at 242, 89 S. Ct. at 1711. The fact that a defendant has counsel is also relevant to determining whether he knowingly waived his right to a jury trial. United States ex rel. Williams v. DeRobertis, supra, 715 F.2d at 1175. In the instant case, when petitioner first stated his desire for a bench trial, the trial judge told him to discuss the matter very thoroughly with his attorney overnight. The following day, when petitioner continued to *141 insist upon a non-jury trial, the judge explained to him the risks involved.[13] The judge told petitioner that he was giving up the right to have twelve individuals decide his case, and instead was depending solely on the court. The judge also explained to petitioner that he had seen a lot of material that normally would not be submitted to the jury. Additionally, the judge pointed out to petitioner that he was going against the advice of his counsel. Petitioner stated that he understood all of this, and that he nonetheless wished to waive his right to a jury trial.[14]
Although a reviewing court might question the wisdom of petitioner's decision to have his case tried solely to a judge, it appears from the record that petitioner knowingly and intelligently made this choice, informed by both the judge and his attorney of the substantial risks involved. Under these circumstances, the Court finds that petitioner knowingly and intelligently waived his right to a jury trial:
While many factors might enter into a decision to waive the right to trial by jury, and while an attorney's advice concerning the matter may often be followed by a defendant, given the attorney's experience and expertise, the defendant must ultimately decide for himself if he trusts the judgment of his fellow citizens with his fate, or if he would rather entrust it to the judgment of a solitary state judicial officer.
Id. at 1180.
Petitioner further argues that the trial judge erred in accepting his jury trial *142 waiver without making a specific and separate determination that he was competent to waive this right. Although the judge did order a competency hearing to "determine [petitioner's] competency to stand trial ... [along with] [h]is knowledge and understanding of his ability to assist in his own defense," petitioner claims that a stricter standard must be applied when examining a defendant's competence to waive a jury trial.
While a waiver must have been made voluntarily, knowingly and intelligently, it must also have been made competently. Johnson v. Zerbst, supra, 304 U.S. at 465, 58 S. Ct. at 1023; Westbrook v. Arizona, 384 U.S. 150, 86 S. Ct. 1320, 16 L. Ed. 2d 429 (1966). Petitioner relies on Westbrook v. Arizona, 384 U.S. 150, 86 S. Ct. 1320, 16 L. Ed. 2d 429 (1966), to support his assertion that a more stringent standard of competency applies in waiving his jury right. In Westbrook, the Supreme Court held in a brief per curiam opinion that there is a distinction between a defendant's competence to waive the right to counsel at trial and his competence to stand trial. Id. However, the Supreme Court did not define the higher standard, and did not direct the discussion to any other constitutional right besides waiving right to counsel.
The Ninth Circuit in Sieling v. Eyman, 478 F.2d 211 (9th Cir.1973), a guilty plea case, read Westbrook to require a higher standard of competence whenever constitutional rights are waived. Thus, that court held that the standard of competence to plead guilty, and thus waive a jury trial, is higher than that required to stand trial. Id. at 214-15. Other Circuit Courts of Appeals, however, have rejected this reasoning and held that the standard of competence is no different. See United States ex rel. Heral v. Franzen, 667 F.2d 633 (7th Cir.1981); Allard v. Helgemoe, 572 F.2d 1 (1st Cir.), cert. denied, 439 U.S. 858, 99 S. Ct. 175, 58 L. Ed. 2d 166 (1978); United States ex rel. McGough v. Hewitt, 528 F.2d 339 (3d Cir.1975); Malinauskas v. United States, 505 F.2d 649 (5th Cir.1974); United States v. Harlan, 480 F.2d 515 (6th Cir.), cert. denied, 414 U.S. 1006, 94 S. Ct. 364, 38 L. Ed. 2d 242 (1973); Wolf v. United States, 430 F.2d 443 (10th Cir.1970). See also United States v. Valentino, 283 F.2d 634 (2d Cir.1960) (pre-Westbrook).
The Second Circuit has not yet addressed this issue in the aftermath of Westbrook, but has suggested that a higher standard may not be appropriate. See Suggs v. La Vallee, 570 F.2d 1092 (2d Cir.), cert. denied, 439 U.S. 915, 99 S. Ct. 290, 58 L. Ed. 2d 263 (1978). Other courts in this district have rejected the Sieling distinction. See Kelly v. Lefevre, No. 81 Civ. 0491, slip op. (S.D.N.Y. January 13, 1982); Sharp v. Scully, 509 F. Supp. 493 (S.D.N.Y.1981). This Court finds persuasive the reasoning of those courts which have determined that the standard of competence required to waive constitutional rights other than the right to counsel is no higher than that required to stand trial.[15] In any event, the trial judge in the instant case made a specific finding at the conclusion of the competency hearing that petitioner was competent to waive his right to a jury trial. Thus, even were this Court to hold that a more stringent standard of competency should apply to a determination of competency to waive constitutional rights, that higher standard would arguably have been met in this case in light of the findings of the trial court in that regard.
"A trial judge's `finding that a defendant is mentally competent to stand trial satisfies due process when the court finds that the prosecution has carried the burden of proving the defendant's competency by a preponderance of the evidence.'" Baum v. Leonardo, No. 88 Civ. 8181, slip op. at 6-7, 1989 WL 85786 (S.D.N.Y. July 25, 1989) (available on Lexis at 1989 U.S.Dist. *143 LEXIS 8395) (quoting Brown v. Warden, Great Meadow Corr. Facility, 682 F.2d 348, 353-54 (2d Cir.), cert. denied, 459 U.S. 991, 103 S. Ct. 349, 74 L. Ed. 2d 388 (1982)).
Under a preponderance of the evidence standard of proof, in order to find the existence of a disputed fact in favor of the party who has the burden of persuasion, a factfinder is required only to find "`that the existence of [the] fact is more probable than its nonexistence.'"
Id. at 352 (quoting In re Winship, 397 U.S. 358, 371, 90 S. Ct. 1068, 1076, 25 L. Ed. 2d 368 (1970) (Harlan, J., concurring)).
At petitioner's competency hearing, two psychiatrists who had previously examined petitioner testified that they believed him able to understand the nature of the charges against him and to assist meaningfully in his defense. Thus, each opined that he was competent to stand trial. This Court has carefully reviewed the entire transcript of the competency hearing, which consists of over 200 pages of testimony and argument. The testimony of the psychiatrists is troubling. Cross-examination by petitioner's counsel revealed that only a few standard questions were asked by the psychiatrists during the examination, and that in essence the substance of petitioner's answers to those questions was irrelevant to their conclusions of competency. The witnesses had absolutely no independent recollection of the examination, which had occurred only a few weeks prior to the hearing. One of the doctors apparently indicated defense counsel when asked if she recognized petitioner in court. Upon cross-examination, neither witness was able to state with any degree of specificity the basis for their conclusion that petitioner was competent, or to suggest any answer petitioner could have given, or any fact about him they might learn,[16] which would have altered their conclusions. In sum, the transcript of the hearing depicts a largely empty exercise in which no meaningful cross-examination could take place.
However, petitioner offered no evidence regarding his competency at the hearing. In addition, the trial court had the opportunity to observe petitioner's demeanor at the competency hearing as well as at the several prior proceedings that had already taken place. Cf. Baum v. Leonardo, supra, No. 88 Civ. 8181, slip op. at 8 (defendant's demeanor at trial relevant to determination whether competency hearing required). Under these circumstances, this Court must conclude that the prosecution did succeed in proving petitioner's competency by a preponderance of the evidence. Accordingly, petitioner's second ground for relief is denied.
3. Sufficiency of the evidence
Petitioner's final claim is that the evidence adduced at trial was insufficient to support his conviction and thus that his conviction is inconsistent with the due process clause. Petitioner contends that his conviction was based solely on circumstantial evidence, which was "weak and equivocal."
Respondent argues that petitioner's claim that there was only circumstantial evidence is procedurally barred.[17] Petitioner did not raise this claim at trial. The prosecution, in its brief to the Appellate Division, argued that the claim was thus procedurally barred, but also argued that the claim was meritless. The Appellate Division affirmed without opinion.
Where a petitioner has not raised an issue in state court, "a procedural default does not bar consideration of a federal claim on ... habeas review unless the last state court rendering a judgment in the *144 case `clearly and expressly' states that its judgment rests on a state procedural bar." Harris v. Reed, 489 U.S. 255, 109 S. Ct. 1038, 103 L. Ed. 2d 308 (1989) (quoting Caldwell v. Mississippi, 472 U.S. 320, 327, 105 S. Ct. 2633, 2638, 86 L. Ed. 2d 231 (1985) and Michigan v. Long, 463 U.S. 1032, 1041, 103 S. Ct. 3469, 3476, 77 L. Ed. 2d 1201 (1983)). In the instant case, the last state court to render a judgment was the Appellate Division. Since the Appellate Division affirmed without opinion, that court cannot be said to have "clearly and expressly state[d] that its judgment rests on a state procedural bar" as required by the court in Harris. See Matos v. Senkowski, No. 89 Civ. 2961, slip op., 1990 WL 17680 (S.D.N.Y. February 20, 1990); Lopez v. Scully, 716 F. Supp. 736, 738-39 (E.D.N.Y.1989). Accordingly, the Court turns to the merits of petitioner's claim.
The standard of federal review of a habeas claim based on insufficiency of evidence is well-established. A court is not to conduct a de novo determination and is not required to:
`ask itself whether it believes that the evidence at trial established guilt beyond a reasonable doubt.' Instead, the relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. This familiar standard gives full play to the responsibility of the trier of fact fairly to resolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts. Once a defendant has been found guilty of a crime charged, the fact finder's role as weigher of the evidence is preserved through a legal conclusion that upon judicial review all of the evidence is to be considered in the light most favorable to the prosecution.
Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S. Ct. 2781, 2788-89, 61 L. Ed. 2d 560 (1979) (emphasis in original) (citations omitted). See also Reddy v. Coombe, 846 F.2d 866, 869 (2d Cir.1988), cert. denied, 488 U.S. 929, 109 S. Ct. 316, 102 L. Ed. 2d 334 (1988); Mallette v. Scully, 752 F.2d 26, 31 (2d Cir.1984). A petitioner challenging his conviction on this ground faces a heavy burden. Gruttola v. Hammock, 639 F.2d 922, 927 (2d Cir.1981).
In reviewing such a claim, the Court must "credit every inference that could have been drawn in the State's favor, whether the evidence being reviewed is direct or circumstantial." Reddy v. Coombe, supra, 846 F.2d at 869 (citations omitted). The verdict of the jury must be sustained if any "rational trier of fact could properly find or infer that the accused is guilty beyond a reasonable doubt." Mallette v. Scully, supra, 752 F.2d at 31.
A careful review of the trial transcript adequately supports the finding that a rational trier of fact could have found petitioner guilty of murder beyond a reasonable doubt. Viewing the testimony in a light most favorable to the prosecution, as is required, it is clear that the standard in Jackson has been met.
First, Perez testified at trial that petitioner confessed to the murder of Gutierrez during his attack on Perez. Perez also testified that before petitioner led him into the park, he exclaimed that it was "just a shame that its got to happen again." In addition, Alvarez stated that petitioner had had a relationship with Gutierrez before she was killed; that the two symbolized this relationship by wearing each other's clothing, in this case a gold belt; and that this was the same gold belt that was found wrapped around Gutierrez's dead body. Alvarez also testified to the tension between petitioner and Gutierrez that was created by the restraints posed by Gutierrez's parents on Gutierrez's social activities.
Further, petitioner showed a certain familiarity with some of the details of the killing. He told the detectives during his interrogation that he thought it would be impossible to drive and hold the decedent's body at the same time. As noted earlier, the detectives had not told petitioner that the decedent's body had been transported by a car to the Bronx after the murder. He also suggested to the detectives that *145 although he would tell them about Perez, they would have to "figure out" what happened to Gutierrez since they knew nothing about her.
Petitioner contends that many of the prosecution's witnesses were not credible, in particular attacking the truthfulness of Perez and Alvarez.[18] However, assessing the credibility of witnesses at trial is a matter for the fact-finder, not a federal court on habeas corpus review. Thus, viewing all of the evidence in the light most favorable to the prosecution, the Court finds that a rational trier of fact could conclude beyond a reasonable doubt that petitioner murdered Gutierrez.
Finally, petitioner argues that since the case against him relies entirely on circumstantial evidence, a more rigorous standard than "beyond a reasonable doubt" should have been applied. However, on federal habeas corpus review of a state conviction, the same standard applies to cases based on circumstantial evidence as those based on direct evidence. Lee v. Scully, No. 88 Civ. 7217, slip op., 1990 WL 67696 (S.D.N.Y.1990). The Supreme Court has stated that,
circumstantial evidence ... is intrinsically no different from testimonial evidence. Admittedly, circumstantial evidence may in some cases point to a wholly incorrect result. Yet this is equally true of testimonial evidence. In both instances, a jury is asked to weigh the chances that the evidence correctly points to guilt against the possibility of inaccuracy or ambiguous inference. In both, the jury must use its experience with people and events in weighing the probabilities. If the jury is convinced beyond a reasonable doubt, we can require no more.
Holland v. United States, 348 U.S. 121, 140, 75 S. Ct. 127, 137-38, 99 L. Ed. 150 (1954).[19] Thus, petitioner's claim that the evidence was insufficient to support a guilty verdict beyond a reasonable doubt, is denied.
CONCLUSION
The Court has reviewed both Magistrate Tyler's Report and petitioner's objections, and has considered de novo those portions of the Report to which the objections pertain. In accordance with the Magistrate's recommendation, petitioner's application for a writ of habeas corpus is denied. The Report is adopted and the petition dismissed.
Inasmuch as an appeal from this Memorandum Decision would be frivolous, the Court certifies, pursuant to the in forma pauperis provisions of 28 U.S.C. § 1915(a), that such an appeal would not be taken in good faith. Furthermore, as the petition presents no questions of substance for appellate review, see Alexander v. Harris, 595 F.2d 87, 90 (2d Cir.1979), a certificate of probable cause will not issue.
It is so ordered.
NOTES
[1] The Court granted petitioner extensions of time in which to file his objections to the Report.
[2] The psychiatrist based her evaluation on statements made to the doctors at Mt. Sinai. For example, Perez told the doctors that he saw a Hispanic male everywhere he went for four days prior to his admittance into the hospital; that he had discussions about a boy named Danny with this Hispanic male; and that he had been hearing the voice of a female cousin calling his name. At trial, the doctor conceded that her conclusion might be called into question by the fact that Perez had, indeed, been attacked by a hispanic male several days earlier.
[3] Petitioner told the detectives that he ingested five pills of mescaline every day, including the day he was arrested and interrogated.
[4] Petitioner knew that the name of the deceased was Sonia Gutierrez prior to this statement. The detectives told petitioner her name during the interrogation.
[5] Here petitioner is referring to the diagnosis of Perez at Mt. Sinai on May 22.
[6] Judge Hinkson suppressed the entire videotape of the crime scene; the details of petitioner's attack on Perez (except the fact that the attack occurred and the conversations and admissions made by petitioner to Perez); the portions of petitioner's confessions to the detectives dealing with his fascinations with death and violence; his sexual orientation; and those statements referring to other unrelated crimes.
[7] The competency hearing followed a prior examination of petitioner by two psychiatrists on December 18, 1984.
[8] The prosecution called seven witnesses and introduced twelve exhibits, while the defense presented four witnesses and five exhibits.
[9] For example, "how could he drive and hold her at the same time" and that the police should "figure out" what happened to Gutierrez.
[10] 28 U.S.C. § 2254(d) provides in pertinent part:
"In any proceeding instituted in a Federal Court by an application for a writ of habeas corpus by a person in custody pursuant to the judgement of a State court, a determination after a hearing on the merits of a factual issue, made by a State court of competent jurisdiction ... shall be presumed to be correct, unless ...
"(8) ... the Federal court ... concludes that such factual determination is not supported by the record as a whole."
[11] Although this case involved a guilty plea, when a defendant enters a guilty plea he waives several constitutional rights, including the right to trial by jury, the right to confront his accusers, and the privilege against compulsory self-incrimination. Matusiak v. Kelly, supra, 786 F.2d at 543.
[12] The record does not indicate any sign of coercion on petitioner's free will. Thus, had even had petitioner raised such a claim, it would fail.
[13] The trial judge engaged in the following colloquy with petitioner:
Court: Now, there is also an application before me made by the defendant for a non-jury trial. At this time, I would inform the defendant that a non-jury trial, before me, that I now know the defendant's complete record and criminal history, criminal record. I have seen the video tapes and I have listened to this motion for days on end, and I have listened very closely to all of the witnesses. And, I ask this defendant whether or not he still is so inclined to ask for a non-jury trial before me?
Petitioner: Yes, sir ...
Giampa: I strongly oppose the non-jury trial. I believe that my client cannot get a fair trial if he gets a non-jury trial. There has been incredible prejudicial evidence presented before your honor ... I think if my client insists upon it, I must request 730 examination (competency hearing) for him.
Court: Mr. Coronado, will you please tell me why you want a non-jury trial in view of what your counsel has just said and stated on the record?
Petitioner: Well, sir, being that you are the judge, you have the case and you know what's happening with the case. I don't think I need anybody else to judge me. I like for you to prove whether I am innocent or guilty, being that you know the case.
Court: Well, as your counsel has pointed out, I have seen all the video tapes that were involved in this matter, I have heard a lot of extraneous material that normally would not be, because of my rulings, before a jury. I point that out to you and you still feel that I could be fair and impartial?
Petitioner: Yes, sir.
Court: Mr. Coronado, do you realize that by giving up your right to 12 people sitting there and deciding your faith and just depending on me, you are giving up 12 individual people looking at your case and making a decision about your case one way or another, do you realize that?
Petitioner: Yes sir, I understand that.
Court: You still want just me to handle it?
Petitioner: Yes, sir.
Court: Mr. Coronado, you are obviously going in the opposite direction than your counsel. You are going against his advice. You understand that, don't you?
Petitioner: Yes, sir.
Court: But assume that I grant you the waiver, grant your application, assume that I do. Would you cooperate with him in your own defense in the case, would you cooperate with your lawyer?
Petitioner: Well, being that he is my lawyer I have too.
Court: And you would do that?
Petitioner: Of course.
Court: You fully understand what you are doing?
Petitioner: Yes, sir, perfectly.
Court: Under those conditions, that you fully understand and have had a full opportunity to understand, you have had overnight to discuss this with your attorney and to think about it, and having read the statute that permits you to make this application and it is your determination, and I am now satisfied that you know what you are doing, I am granting [your] application.
[14] Although the Second Circuit has not specified what a trial judge must tell a defendant before accepting a waiver of a jury trial, the Seventh Circuit requires that the trial judge explain to the defendant that a jury is composed of 12 members of the community, and that if a defendant waives a jury trial, a judge alone will decide his guilt or innocence. Id.
[15] As the Seventh Circuit noted in Franzen, the standard enunciated by the Ninth Circuit in Sieling has proved rather unworkable, and that court has limited the scope of Sieling to allow the district court to reconstruct the competence of the defendant to plead guilty based upon the evidence presented in connection with determining his competence to stand trial. United States v. Franzen, supra, 667 F.2d at 637, 637-38 n. 4. See Makal v. Arizona, 544 F.2d 1030 (9th Cir.1976), cert. denied, 430 U.S. 936, 97 S. Ct. 1563, 51 L. Ed. 2d 782 (1977).
[16] For example, defense counsel asked the witnesses whether their opinion might be altered if they were told that petitioner had stated that he wanted to kill his mother or that he enjoyed throwing cats and dogs off rooftops to watch them suffer hypothetical questions not without some factual basis in petitioner's case. Both witnesses insisted that these facts would not alter their opinions, but refused to give any example of a fact which would cause them to find incompetency.
[17] There does seem to be some direct evidence here, despite petitioner's claim that there is only circumstantial evidence. Perez testified that petitioner told him that he murdered Gutierrez.
[18] Petitioner claims that Perez and Alvarez are not credible since they have a strong dislike for him, and because they made a number of contradictory statements.
[19] Petitioner cites the standard enunciated in People v. Taddio, 292 N.Y. 488, 489, 55 N.E.2d 749 (1944), as the appropriate standard when a case relies on circumstantial evidence. That case required that, where the evidence against the accused is solely circumstantial, it must point "logically to the defendant's guilt and exclud[e] to a moral certainty every other reasonable hypothesis." Id. This is the standard that is applied under New York State law. See Prince, Richardson on Evidence § 148, at 119-120 (1973). However, it is well-settled that federal courts have no supervisory authority over state courts, Chandler v. Florida, 449 U.S. 560, 570, 582-83, 101 S. Ct. 802, 807, 813-14, 66 L. Ed. 2d 740 (1981), and that federal habeas corpus review of state criminal proceedings under 28 U.S.C. § 2254 is limited to errors of constitutional magnitude. See, e.g., Smith v. Phillips, 455 U.S. 209, 102 S. Ct. 940, 71 L. Ed. 2d 78 (1982); Donnelly v. DeChristoforo, 416 U.S. 637, 642-43, 94 S. Ct. 1868, 1871, 40 L. Ed. 2d 431 (1974); Cupp v. Naughten, 414 U.S. 141, 146, 94 S. Ct. 396, 400, 38 L. Ed. 2d 368 (1973); Petrucelli v. Coombe, 735 F.2d 684 (2nd Cir.1984). Thus, even assuming that the trial judge erred under state law, this claim would fail as it omits to allege a constitutional violation. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3861649/ | Argued March 3, 1930.
Bertha Coleman, one of the plaintiffs, broke her ankle by falling on an icy sidewalk. This action was brought charging that her injuries were due to the negligence of the defendant city.
The learned court below found that negligence was not proven and entered judgment on a motion n.o.v. for defendant. We find no error in so doing.
The Washington Irving School property faces on Emmet Street, in the City of Scranton, which has a grade of five per cent. There is a stone wall extending the length of the yard which at the eastern division line is about flush with the sidewalk, and as the western boundary line is approached, the wall becomes higher. A curb was placed in front of the wall at the eastern end for a distance of eight feet and within two feet of a paved entrance to the school. That left a two-foot opening in the curb. The plaintiffs maintain that the curb held back the surface water and directed it *Page 5
toward this opening. Mr. Pendel, the engineer called by the plaintiffs, testified that the natural drainage of the school yard and the property back of it was toward Emmet Street and that some of the water would escape through the opening complained of and that a little farther to the east the water would flow on the pavement by natural drainage. Mrs. Coleman, who lives immediately east of the school premises, left her home about four o'clock in the afternoon of December 15, 1926, and went in the direction of the school property. She had walked about ten feet beyond her property line, which would place her at the two-foot opening, when she slipped and fell on some smooth ice which had been covered by a light fall of snow.
It is the duty of a municipality to keep its sidewalks in a reasonably safe condition so that pedestrians using them, and exercising care, may do so safely, but a city is not responsible for a slippery condition of the sidewalks caused by recent falling and freezing of rain or snow.
The plaintiffs, in support of their contention that the defendant was guilty of negligence in not requiring the property owner to prevent the drainage of the water on the pavement, call our attention to Decker v. Scranton City, 151 Pa. 241, and Holbert v. Philadelphia, 221 Pa. 266.
In the former case, the road was in a dangerous condition at the time and the place of the accident, which was attributable to the defective construction of the road, in conjunction with the ice which was negligently allowed by the city to form and remain there.
In the Holbert case, the plaintiff slipped on a pavement that was maintained in a tunnel under an overhead bridge. Owing to the grade of the street, water flowed into the tunnel, where it was permitted to accumulate due to insufficient inlets. The court said, "This danger resulted, therefore, from causes under *Page 6
the control of the city and not from natural causes, such as the recent precipitation and freezing of rain or snow upon ordinary sidewalks."
There is no allegation in this case that there was any defect in the sidewalk or that there were insufficient inlets. Undoubtedly, there was a certain amount of seepage and drainage that under natural conditions must have gotten from time to time on the sidewalk, as it was lower than the yard, but there was no proof of an unlawful gathering or disposal of the water, nor that it flowed in such quantity, nor in a way as to charge the city with negligence in failing to control it. It is not practical, and the city is not required to keep all the sidewalks free of water. As Mr. Justice GORDON said in the case of McLaughlin v. City of Corry, 77 Pa. 109, "A municipality cannot prevent the general slipperiness of its streets, caused by the snow and ice during the winter, but it can prevent such accumulations thereof, in the shape of ridges and hills, as render their passage dangerous;" and in Denhardt v. City of Philadelphia, 15 W.N.C. 214, the court said, "Slippery walks in the winter are necessarily incident to this climate. No method known to science can fully prevent the existence or guard against occasional injuries resulting therefrom. It would be a harsh and unjust rule to hold the city liable in damages under the facts in this case."
There is no contention that there were any lumps or ridges of ice allowed to accumulate and remain on the sidewalk so as to become dangerous to travel, as in Marshall v. Levy, 64 Pa. Super. 90; Dean v. City of New Castle, 201 Pa. 51; or Gross v. Pittsburgh, 243 Pa. 525. The ice in this case was smooth and covered by a light coating of snow which had recently fallen. Mrs. Coleman testified that there had been a thaw the day before and during the night the weather got "cold and froze up and it snowed a little that afternoon." It has been definitely determined *Page 7
in this state that a municipality is not required to remove smooth ice from a sidewalk where such condition is not caused by the independent negligence of the municipality. Something more must be shown than that the accident was due to smooth ice on the pavement in order to make the defendant liable: Ingram v. Philadelphia, 35 Pa. Super. 305; Thomas v. City of New Castle, 96 Pa. Super. 251; Manross v. Oil City, 178 Pa. 276.
If we assume such a danger existed on account of formation of ice as to impose a duty on the city to remedy the condition, it was incumbent upon the plaintiffs to show either express or constructive notice thereof to the city; this they failed to do. More time is required to elapse to bring home such a notice to a municipality than to an occupier or owner of a property: Truschine v. Fayette Mfg. Co., 63 Pa. Super. 124. The danger was not so apparent or so notorious, nor did it exist for such a length of time, as to give constructive notice to the city: Burns v. City of Bradford, 137 Pa. 361; Kelchner v. Nanticoke Borough, 209 Pa. 412; Garland v. City of Wilkes-Barre,212 Pa. 151.
Upon a review of all the testimony in this case and under a just and reasonable view of the responsibility of the defendant under the law, the evidence was insufficient in any aspect of this case to hold the defendant liable.
Judgment of the lower court is affirmed. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3288105/ | This is an action to recover possession of an automobile truck. Plaintiff and defendant Abajian had entered into an agreement whereby the former contracted to sell the truck to the latter upon the making of certain payments, delivery to be made to Abajian upon the payment of a certain installment of three hundred dollars. Abajian, claiming to have paid this amount, took possession of the vehicle. Judgment went for defendants and plaintiff appeals. Abajian alone is a party respondent as the other defendants are out of the case.
[1] The trial court found that respondent paid the three hundred dollars to appellant before taking possession of the truck. The sole point made by appellant is that this finding is without support in the evidence. The occurrences bearing on this question transpired in the room of one Beardsley, there being present Abajian, Beardsley, who was assistant manager of appellant's business, one Meisel, who was employed as an automobile salesman by appellant, and one Platt. Abajian testified that the payment was made, but Beardsley, Meisel, and Platt all asserted the contrary. Appellant concedes that this state of the evidence justified the trial court in finding that three hundred dollars was paid by Abajian, but he contends that the entire finding is not supported by the evidence, in that the record is barren of evidence tending to show that the payment was made to appellant. Appellant's point is that the money was passed to Meisel, who had no authority to receive money or payments due appellant, and that it was not paid to Beardsley, who alone possessed such authority. Abajian knew of Meisel's lack of authority in this respect, for after the latter had conducted with Abajian the negotiations leading up to the agreement for the sale of the truck he told Abajian that he had no authority to accept the three hundred dollar payment, but that it must be made to Beardsley. It was for the very purpose of making this payment and closing the contract that Abajian went to Beardsley's room when they two and Meisel and Platt were there together. The record shows the following testimony *Page 487
of Abajian: "Mr. Meisel told me the truck was ready and he sent me down to Mr. Beardsley's office. . . . I then went to Mr. Beardsley's office. While I was there I was talking about the insurance because he was charging me a whole lot of money, too much, and I didn't want to pay that much money. In all we were talking to Mr. Beardsley four or five minutes, something like that, and then he told me, 'Well, just a minute. I am going to call Mr. Meisel,' and said, 'Don't you know him? He knows you because you have been doing business with him.' Mr. Meisel came right into Mr. Beardsley's office and when they were all there Mr. Beardsley says, 'Mr. Meisel, you can talk with Mr. Abajian.' I signed the contract at that time and Mr. Beardsley said I have to sign my bill of sale, whatever it is I have got to sign, and pay money. I don't remember how many papers I signed but there was a few papers. . . . Mr. Beardsley was talking to Mr. Platt and he turned me to Mr. Meisel. They turned around the other way; they started to talk together. After signing the paper I paid money to Mr. Meisel. I paid three hundred dollars, three one hundred dollar bills, and Mr. Meisel got the money. I don't know what he did with it. Q. Did he put it in his pocket or on the table? A. No, no; when he started mentioned money, I says, 'Well, here's the money,' and laid on the desk like this, three hundred dollars; he put the hands on it like this, and that time I think I sign the contract when I give him the money, but I don't remember for sure. I don't remember for sure whether I signed the contract before or after paying the money. I think after I paid. He showed me the contract; Mr. Beardsley was talking with another fellow. I remember I signed the contract, I think after I paid the money. Mr. Meisel gave me the contract. He gave me this paper." Abajian thereupon produced a duplicate of the original contract and the trial judge remarked: "There is no use encumbering the record with two of these long printed things," the original having been already received in evidence; "the only difference is this original white one while signed by Mr. Abajian has not received the signature of Mr. Goodrum, per V. S. B.; while the one in Abajian's possession was completely signed by, as you see, by Goodrum, per V. S. B., meaning Mr. Beardsley. Otherwise the two are exactly the *Page 488
same." We think the record shows sufficient evidence to justify the finding that the three hundred dollars was paid to appellant.
Judgment affirmed.
Finlayson, P. J., and Craig, J., concurred. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3288110/ | [1] The plaintiff has appealed from the judgment and from an order denying its motion for a new trial. As there is no right of appeal from such a motion, the latter appeal will be dismissed.
[2] On the sixth day of April, 1915, Brashear-Burns Company, a corporation, as contractor, entered into an agreement with the California Highway Commission for the construction *Page 550
of a portion of the state highway in Orange County. At the same time, and in connection therewith, the defendant Guardian Casualty Guaranty Company, as surety, together with said contractor as principal, executed a bond to the state for due payment to be made by the principal for all labor, materials, and supplies furnished for the work of construction under the principal contract. This bond was made pursuant to the provisions of an act approved March 27, 1897. (Stats. 1897, p. 201; amended, Stats. 1911, p. 1422.)
On the fourth day of May, 1915, Brashear-Burns Company entered into a subcontract with W. S. Cook for the performance of work which was a part of the principal contract. Thereupon Cook entered into a contract with one W. F. McDowell whereby it was agreed that McDowell would furnish a certain steam shovel to be used in the performance of the work contracted to be done by Cook. That steam shovel was furnished and used in the performance of said work. Thereafter Brashear-Burns Company's contract with the state was duly completed and the work accepted. Thereafter, and within the period limited by said act of 1897, as amended in 1911, plaintiff filed a duly verified statement of claim, stating that such steam shovel was furnished by it to be used and that the same was used in the performance of the work contracted to be done by Cook under his contract with Brashear-Burns Company. This claim was filed with the California Highway Commission and conformed to the requirements of the statute. Thereupon the plaintiff, claiming to be a person coming within the class of persons for whose benefit said statutory bond was given, brought this action to recover from the defendant the amount so set forth in its verified statement of claim.
On the second day of March, 1914, the plaintiff entered into a written contract with W. F. McDowell concerning said steam shovel in substance as follows: It is stated in the instrument of contract that the plaintiff (therein called lessor) leased to McDowell (therein called lessee) the said steam shovel for a term ending February 5, 1915, for the total rental of $4,749, of which $750 was paid in cash on delivery of the steam shovel and the remainder was to be paid in accordance with ten installment notes of which the last was to fall due on the fifth day of February, 1915. It was further *Page 551
agreed as follows: "Lessee covenants that it will keep said steam shovel in first-class repair and working order during the term of this lease; that it will not remove it from the State of California or assign this lease without the consent in writing of the Lessor, and that it will, upon the termination of this lease, return and surrender possession of said steam shovel to Lessor at San Francisco, Cal., in as good condition as when taken, ordinary wear and tear excepted. Lessor agrees that Lessee may, at the expiration of this lease, and within ten days thereafter, provided it shall have promptly and duly paid the entire rental herein specified and shall have performed all the other conditions and covenants hereof, and shall have paid for all extra parts and repairs furnished or made by Lessor during the time hereof, elect to purchase said steam shovel for the sum of One Dollar, and if Lessee so elects and so notifies Lessor, said steam shovel shall, upon payment of said sum, become and be the property of the Lessee and Lessor will execute a bill of sale thereof. In case of any breach of this agreement by the Lessee, arising by failure of said Lessee to pay rent as the same becomes due, or otherwise, the lessor may, at his option, forthwith terminate this lease, and may enter upon the premises of the Lessee and retake possession of the said steam shovel wherever found, and said Lessee hereby agrees to said Lessor's entry and retaking possession, and releases said Lessor from any cause of action which the Lessee might otherwise have on account of said entry or removal or retaking of possession."
It will be noted that in May, 1915, when McDowell agreed with Cook for the furnishing of the shovel to be used in the performance of the Cook contract, the specified term named in the contract between plaintiff and McDowell had expired. McDowell was then delinquent in his payment to plaintiff to the extent of more than one-half of the total rental or price therein named. The evidence further shows, however, that the plaintiff had made no attempt to interfere with McDowell's possession of the shovel and had not given any notice of termination of the lease or contract. Prior to this time and while delinquent in payments on the contract, McDowell had used the shovel on two other contracts. In each of those instances he had made arrangements with the person by whom the shovel was used whereby they made payments *Page 552
to the plaintiff for account of McDowell. That was done with the consent of the plaintiff, although it is not clear from the terms of the contract that any such consent was necessary. In like manner, when McDowell entered into his contract with Cook it was made a part of their agreement that during the time that the shovel was used upon that contract, the Brashear-Burns Company should deduct from the moneys payable to Cook the sum of four hundred dollars per month and pay the same to the plaintiff. Thereupon Cook, on the fifth day of May, 1915, executed a written order to Brashear-Burns Company directing that it pay to the order of the plaintiff the sum of four hundred dollars per month during the time that the shovel was used on the said highway work, said payments to be charged against the money due Cook from Brashear-Burns Company. An acceptance of that order was indorsed thereon, on the same day, signed "Brashear-Burns Company, By F. J. Truman, Secretary." None of the moneys mentioned in this order were paid. The evidence shows without dispute that the reasonable value of the use of the shovel was four hundred dollars per month. The controversy herein relates, not to the amount of the claim, but goes to the question of any liability at all of the defendant as surety on said bond.
The liability of defendant as surety on the bond executed by it cannot be maintained by plaintiff by proving that the shovel, used as it was in the described work, was furnished by McDowell. Yet in fact that is the effect of the evidence. And we think there is no merit in appellant's contention that in bringing the shovel to the place of work, for use therein, McDowell was acting as agent for the plaintiff. Counsel have debated the question whether the "lease" contract between plaintiff and McDowell was a lease, or was a conditional sale. That question need not be decided. If the contract was one of conditional sale, it remained in force by manifest intention of the plaintiff, which had never demanded or attempted to recover possession. If the contract was only a "lease" or bailment, then McDowell was a bailee holding over after expiration of the time limited in the lease, and liable to his lessor as such bailee. Under either interpretation, he held possession of the shovel in his own right and not as agent for the plaintiff. The evidence well supports *Page 553
the court's finding that it was not furnished to Cook by the plaintiff.
The appeal from the order is dismissed. The judgment is affirmed.
Shaw, J., and James, J., concurred.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court December 9, 1919.
All the Justices concurred, except Melvin, J., who was absent. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1461510/ | 920 F. Supp. 370 (1996)
Diane CALABRITTO, Plaintiff,
v.
Nassau County District Attorney Denis DILLON, Defendant.
No. CV 94-0073 (ADS).
United States District Court, E.D. New York.
March 31, 1996.
*371 *372 *373 Gaba & Stober, Mineola, New York (Louis Stober, of Counsel), for Plaintiff.
Bee & Eisman, Mineola, New York (Peter A. Bee, of Counsel), for Defendant.
*374 MEMORANDUM AND ORDER
SPATT, District Judge.
The issues in this case concern a charge of gender discrimination in the setting of the Office of the District Attorney of Nassau County. The plaintiff, an Assistant Detective Investigator II in the Office of the defendant District Attorney, contends that her discharge was motivated by gender discrimination.
BACKGROUND
The plaintiff Diane Calabritto ("the plaintiff" or "Calabritto") was first employed by the defendant District Attorney of Nassau County ("the defendant" or "the District Attorney" or "The Office") as an Assistant Detective Investigator Aide on March 23, 1984. On or about March 27, 1988, Calabritto was promoted to Assistant Detective Investigator I. She was promoted to Assistant Detective Investigator II on or about April 24, 1989. In 1990, the plaintiff was assigned to the United States Customs Task Force ("the Task Force"). The plaintiff was terminated from her employment with the District Attorney on or about January 24, 1992.
The plaintiff filed a discrimination claim against the District Attorney with the United States Equal Employment Opportunity Commission Division of Human Rights, which made a determination that the District Attorney did not violate the Title VII statute, as follows:
Examination of the evidence reveal that Charging Party was terminated as a direct result of budgetary constraints. Charging Party's title was that of `Assistant Detective Investigator I'. On January 17, 1992, Nassau County District Attorney's Office laid of (sic) several persons with the same title as Charging Party. This included two other males and the Charging Party. No persons in the same job title as the Charging Party's job was retained, nor was there anyone hired or re-hired in the job title of Assistant Detective Investigator I since January 17, 1992.
In January 1994, the plaintiff commenced this action alleging employment discrimination, in violation of Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.).
DISCUSSION
I. The Standards in a Title VII Case
A. McDonnell Douglas Burdine Hicks Pretext Cases
"Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U.S.C. § 2000e et seq., makes it an unfair employment practice for an employer to discriminate against any individual with respect to ... the terms and condition of employment because of such individual's race, color, religion, sex, or national origin; or to limit, segregate or classify his employees in ways that would adversely effect any employee because of the employee's race, color, religion, sex, or national origin." Wards Cove Packing Co., Inc. v. Atonio, 490 U.S. 642, 645, 109 S. Ct. 2115, 2118, 104 L. Ed. 2d 733 (1989); Fisher v. Vassar College, 70 F.3d 1420 (2d Cir. 1995); Bridgeport Guardians, Inc. v. City of Bridgeport, 933 F.2d 1140 (2d Cir.), cert. denied, 502 U.S. 924, 112 S. Ct. 337, 116 L. Ed. 2d 277 (1991).
As the Supreme Court observed in Griggs v. Duke Power Co., 401 U.S. 424, 429-30, 91 S. Ct. 849, 853, 28 L. Ed. 2d 158 (1971), "[t]he objective of Congress in the enactment of Title VII ... was to achieve equality of employment opportunities and remove barriers that have operated in the past...." Under Title VII, discrimination can be demonstrated through evidence of either `disparate treatment' or `disparate impact.' To show `disparate treatment,' the plaintiff is "required to prove that the defendant had a discriminatory intent or motive." Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 986, 108 S. Ct. 2777, 2784, 101 L. Ed. 2d 827 (1988). `Disparate impact' is based upon the premise "that some employment practices, adopted without a deliberately discriminatory motive, may in operation be functionally equivalent to intentional discrimination." Id. at 987, 108 S.Ct. at 2785. The evidence in `disparate impact' cases "usually focuses on statistical disparities, rather than specific incidents, and on competing explanations for those disparities." *375 Cosgrove v. Sears, Roebuck & Co., 9 F.3d 1033 (2d Cir.1993).
In this action, in a broadly worded complaint drawn by a pro se plaintiff, who was later represented by counsel, she apparently alleged both a "disparate treatment" and "disparate impact" Title VII claim. To establish a discriminatory treatment claim under Title VII, proof of discriminatory motive is critical. Discriminatory motive can be proved by direct or circumstantial evidence, though most often a Title VII plaintiff "is usually constrained to rely on the cumulative weight of circumstantial evidence." Rosen v. Thornburgh, 928 F.2d 528, 533 (2d Cir.1991).
As stated recently in Fisher v. Vassar College, supra, a Title VII claim, including one alleging discriminatory treatment, is tried by a three-step process. In the seminal case of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), the Supreme Court devised a three-tiered burden shifting framework in Title VII cases. In the first tier, the plaintiff must prove a prima facie case, which, in a gender discrimination case such as this, consists of four elements: (1) that the plaintiff is a member of a protected class; (2) that the plaintiff was qualified for the position she held at the time of her termination; (3) that the plaintiff was terminated from her position; and (4) that her termination occurred in circumstances giving rise to an inference that it was based on the plaintiff's gender.
The next two tiers are described in Fisher, as follows:
If the plaintiff presents a prima facie case, the burden shifts to the employer, who is required to demonstrate "some legitimate, nondiscriminatory reason" for the decision. Id. The employer's burden here is one of production of evidence rather than one of persuasion. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981). The defendant need only articulate but need not prove the existence of a nondiscriminatory reason. Id. at 254-56, 101 S.Ct. at 1094-95.
If the defendant carries this burden of production, the plaintiff then assumes the burden to "show that [the employer's] stated reason for [the plaintiff's] rejection was in fact pretext." McDonnell Douglas, 411 U.S. at 804, 93 S.Ct. at 1825. "The ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff." Burdine, 450 U.S. at 253, 101 S.Ct. at 1093. In St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993), the Supreme Court held that, as to the third prong of the McDonnell Douglas test, it is not enough for a plaintiff to show that the defendant's legitimate, non-discriminatory reason for its employment decision is pretextual; the plaintiff must also prove by a preponderance of the evidence that defendant's stated reason is "a pretext for discrimination." St. Mary's, 509 U.S. at 516, 113 S.Ct. at 2752 (emphasis added). The plaintiff must establish "both that the reason was false, and that discrimination was the real reason."
Id. at 1433 (emphasis in original).
As stated above in Fisher, under the third tier of the McDonnell Douglas pattern, as clarified in St. Mary's Honor Center v. Hicks, 509 U.S. 502, 113 S. Ct. 2742, 2749, 125 L. Ed. 2d 407 (1993), even if the trier of fact rejects the defendant's submission that its reasons were justified, the burden of proving that the motivation for the failure to promote the plaintiff was unlawful remains with the plaintiff. St. Mary's Honor Center v. Hicks, supra, 509 U.S. at 510, 113 S.Ct. at 2749 (1993) ("[T]he Court of Appeals' holding that rejection of the defendant's proffered reasons compels judgment for the plaintiff ... ignores our repeated admonition that the Title VII plaintiff at all times bears the `ultimate burden of persuasion.'") (emphasis in original).
In Hicks, the United States Supreme Court eliminated the uncertainty that had developed as a result of certain lower court decisions as to the plaintiff's burden of proof in a Title VII action after the plaintiff had established "pretext." See id. at 512, 113 S.Ct. at 2750. In so doing, the Court confirmed that a plaintiff cannot merely establish that the employer's "proffered reason *376 was not the true reason for the [challenged] employment decisions" and, without more, expect to prevail. Id. at 508, 113 S.Ct. at 2748 (quoting Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 256, 101 S. Ct. 1089, 1095, 67 L. Ed. 2d 207 (1981)). The Hicks Court went on to state:
We have no authority to impose liability upon an employer for alleged discriminatory employment practices unless an appropriate factfinder determines, according to proper procedures, that the employer has unlawfully discriminated. We may, according to traditional practice, establish certain modes and orders of proof, including an initial rebuttable presumption of the sort we described earlier in this opinion, which we believe McDonnell Douglas represents. But nothing in law would permit us to substitute for the required finding that the employer's action was the product of unlawful discrimination, the much different (and much lesser) finding that the employer's explanation of its action was not believable.
Id. at 514-15, 113 S.Ct. at 2751.
In a series of cases, the Second Circuit has interpreted and clarified the Hicks ruling. For example, in DeMarco v. Holy Cross High School, 4 F.3d 166 (2d Cir.1993), it was stated:
Proof that the employer has provided a false reason for its action permits the finder of fact to determine that the defendant's actions were motivated by an improper discriminatory intent, but does not compel such a finding.
Id. at 170. Recently, these rules were reiterated by Judge Winter in Binder v. Long Island Lighting Company, 57 F.3d 193 (2d Cir.1995), who added:
Resort to a pretextual explanation is, like flight from the scene of a crime, evidence indicating consciousness of guilt, which is, of course, evidence of illegal conduct. In so stating, we do not exclude the possibility that an employer may explain away the proffer of a pretextual reason for an unfavorable employment decision. See Woods v. Friction Materials, Inc., 30 F.3d 255, 260 n. 3 (1st Cir.1994).
Id. at 200. Thus, even if the defendant's reasons are found to be pretextual, the plaintiff must, nevertheless, prove that she was terminated as a result of intentional discrimination. "It is not enough ... to disbelieve the employer: the factfinder must believe the plaintiff's explanation of intentional discrimination." Hicks, 509 U.S. at 519, 113 S.Ct. at 2754. However, this proof may be inferred from proof of the four elements of the prima facie case.
B. Mixed Motives Theory
Employment discrimination cases may fall into one of several categories, including "pretext" or "mixed motive." See Tyler v. Bethlehem Steel Corp., 958 F.2d 1176 (2d Cir.), cert. denied, 506 U.S. 826, 113 S. Ct. 82, 121 L. Ed. 2d 46 (1992). These two approaches involve different analyses. Under a mixed motive theory, a plaintiff "must initially show more than the `not onerous' McDonnell Douglas-Burdine factors." Id. at 1181. If the plaintiff is able to produce evidence to establish that an illegitimate factor played a motivating or substantial role in the challenged employment decision, the defendant is then given an opportunity to prove an affirmative defense, namely, that the defendant "`would have reached the same decision as to [the employee's employment] even in the absence of the' impermissible factor." Id. (quoting Mt. Healthy City Board of Ed. v. Doyle, 429 U.S. 274, 97 S. Ct. 568, 50 L. Ed. 2d 471 (1977) and Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S. Ct. 1775, 104 L. Ed. 2d 268 (1989)).
The question is what does the plaintiff have to show in order for the burden to shift to the defendant. In the Second Circuit, the plaintiff is required to submit "enough evidence that, if believed, could reasonably allow a jury to conclude that the adverse employment consequences were `because of' an impermissible factor." Id. at 1187. The Second Circuit rejected the notion that the plaintiff must introduce "direct" evidence of discrimination (such as an admission by the decisionmaker that "I fired the plaintiff because she was a woman") as opposed to circumstantial evidence. Id. at 1185-87. However, if the plaintiff relies on circumstantial evidence, "that circumstantial *377 evidence must be tied directly to the alleged discriminatory animus." Ostrowski v. Atlantic Mutual Insurance Co., 968 F.2d 171, 182 (2d Cir.1992).
In Ostrowski, Judge Kearse explained that the plaintiff would not be entitled to a `mixed motive' burden shifting instruction based on (1) purely statistical evidence; (2) mere evidence of the plaintiff's qualification for, and the existence of, a certain position; or (3) `stray' remarks in the workplace by persons not involved in the relevant decisionmaking process. Id. at 182. In other words, evidence that would satisfy the requirements of a McDonnell Douglas prima facie case, would not necessarily justify a Price Waterhouse `mixed motive' charge. Statistical evidence that is "directly tied to the forbidden animus, for example policy documents or statements of a person involved in the decisionmaking process that reflect animus of the type complained of in the suit" will entitle the plaintiff to a burden shifting instruction. Id. To qualify for a `mixed motive' instruction, the plaintiff must introduce "evidence of conduct or statements by persons involved in the decisionmaking process that may be viewed as directly reflecting the alleged discriminatory attitude, and that evidence [must be] sufficient to permit the factfinder to infer that the attitude was more likely than not a motivating factor in the employer's decision." Id.
C. A Pattern or Practice Case
There is another method to prove gender discrimination under Title VII. In a so-called "pattern and practice" case, if the plaintiff can establish "that (gender) discrimination was the company's standard operating procedure the regular rather than the unusual practice," see International Brotherhood of Teamsters v. United States, 431 U.S. 324, 336, 97 S. Ct. 1843, 1855, 52 L. Ed. 2d 396 (1977), the burden then shifts to the employer to demonstrate that the plaintiff's proof is "either inaccurate or insignificant." Id. at 360, 97 S.Ct. at 1867. See also Franks v. Bowman Transportation Co., 424 U.S. 747, 772, 96 S. Ct. 1251, 1267-68, 47 L. Ed. 2d 444 (1976); Ottaviani v. State U. of New York at New Paltz, 875 F.2d 365 (2d Cir.1989), cert. denied, 493 U.S. 1021, 110 S. Ct. 721, 107 L. Ed. 2d 740 (1990). If the employer fails to carry its burden in the liability phase of a pattern and practice case, then the individual plaintiff who challenges a decision that was made pursuant to the discriminatory pattern and practice is presumed to have been a victim of discrimination. Teamsters, 431 U.S. at 362, 97 S.Ct. at 1868. "The proof of the pattern or practice supports an inference that any particular employment decision, during the period in which the discriminatory policy was in force, was made in pursuit of that policy." Id. The employer then has the burden to demonstrate that the individual employment decision was made for lawful reasons. Id.
Calabritto argued that this is a "pattern and practice" case, which should be resolved by application of the Teamsters analysis. She further urged the Court that the defendant should bear the burdens of proof and persuasion in rebutting the prima facie showing of discrimination and cites various authority in support of this allocation. See Craik v. Minnesota State Univ. Bd., 731 F.2d 465, 470 (8th Cir.1984) (in pattern and practice case, the employer bears burden of production and persuasion to show that it is more likely than not that it did not discriminate against the individual); see also Cox v. American Cast Iron Pipe Co., 784 F.2d 1546 (11th Cir.1986), cert. denied, 479 U.S. 883, 107 S. Ct. 274, 93 L. Ed. 2d 250 (1986); In re Western Dist. Xerox Litigation, 850 F. Supp. 1079, 1082 (W.D.N.Y.1994).
The defendant challenged the plaintiff's proposed allocation of the burden of proof in a "pattern and practice" case, as well as its applicability to a lawsuit involving the claims of one individual. Applying the Teamsters analysis in a "pattern and practice" case, the Second Circuit commented that "even though the burden of production shifts to the defendants during the second stage of the process, the ultimate burden of persuasion rests always with the plaintiffs to prove their claims of discrimination." Ottaviani, supra, 875 F.2d at 369-70. The Court agrees with the defendants that this case differs from the *378 class action "pattern and practice" cases in which systemic discrimination is shown by the plaintiffs to make out a prima facie case. Indeed, some courts have questioned the applicability of the Teamsters analysis to individual plaintiff discrimination suits. For example, it was noted that
It is also questionable whether it would be appropriate in this litigation to try the pattern and practice issue separately, regardless of the strength of plaintiffs' evidence. Trials of that discrete issue generally occur in the context of class actions or suits brought by the Government which follow the Teamsters paradigm.
Xerox, supra, 850 F.Supp. at 1083; see also Gilty v. Village of Oak Park, 919 F.2d 1247 (7th Cir.1990) (pattern and practice evidence is only collateral to evidence of specific discrimination against individual plaintiffs); Babrocky v. Jewel Food Co., 773 F.2d 857, 866 n. 6 (7th Cir.1985) (pattern and practice argument seems to be misplaced in nonclass suits); Craik, supra 731 F.2d at 471 ("in this case we squarely confront the necessity of distinguishing the analysis required for broad-based class actions from that required for individual, non-class actions"). But see, Cox supra, 784 F.2d at 1559 (where individual plaintiffs demonstrate that they are victims of a discriminatory policy, rather than one instance of unlawful discrimination, "these individuals were in substantially the same position as the Teamsters and Franks plaintiffs").
However, even assuming the applicability of the Teamsters analysis to a single plaintiff discrimination action, it is the Court's view that this case is appropriately resolved by using the three-tiered burden shifting framework set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973).
II. The Trial Findings of Fact
This opinion and order includes the Court's findings of fact and conclusions of law as required by Fed.R.Civ.P. 52(a). See Colonial Exchange Ltd. Partnership v. Continental Casualty Co., 923 F.2d 257 (2d Cir.1991). During this discussion, the Court will make findings of fact, which will be supplemented by additional findings later in the opinion.
The titles of Detective Investigator and Special Investigator in the Office of the District Attorney of Nassau County were created in 1968 as separate titles. At that time it was determined that the Special Investigators performed a highly specialized criminal investigative function with regard to "crime families," distinct and different from the more general criminal investigative function of the Detective Investigator (Plaintiff's Exh. 1C).
Denis Dillon has been the District Attorney of Nassau County since January of 1975. He testified that the main mission of his office is to prosecute criminal cases. Under Dillon in the table of organization in the Office of the District Attorney of Nassau County is Lawrence Leff as Chief Assistant and Patrick McClosky as Executive Assistant for Administration. Leff supervised the investigative bureau and made the final decisions as to whether to hire or promote investigators, subject to Dillon's approval.
Dillon discussed the rationale for the creation of the titles of Assistant Detective, Assistant Detective Investigator I, and Assistant Detective Investigator II, as follows:
There did come a time that I had discussions with Larry Leff about bringing on people who did not have investigative background that could be used for the kinds of investigations that they were doing, and that it would be more economical for the District Attorney's Office not to pay the high salaries we were paying for people with long-time previous investigative experience, such as retired police officers and detectives....
We felt restrained in doing undercover type of investigations we wanted to do. We were doing a lot of investigations into the commercial frauds area, for example. And where we wanted the people who would not be easily recognizable as District Attorney's investigators to be used....
What we were looking for and what we sought to get were women, minorities, young people. (Tr. at 145-146).
*379 On the same subject, Executive Assistant District Attorney for Administration McCloskey stated:
THE COURT: And you say this was designed to get more inexperienced, if I may use that, type of investigators into the system.
Why would you want inexperienced investigators?
THE WITNESS: Mr. Leff could answer it better. But from my vantage point, I believe it was that many of the people who qualified for the Special Investigator title were retired police.
Many of those who applied for the Detective Investigator were also retirees. And it was thought that if we could get some younger people in there of course, the younger people didn't have the experience, so we couldn't hire them that it might give us more versatility with respect to investigative work. That was the thinking of the 80's.
THE COURT: Versatility would include undercover, female undercover?
THE WITNESS: Yes, minority undercover.
THE COURT: And minority undercover?
THE WITNESS: Yes, your Honor. (Tr. at 426-27).
However, there is no doubt that these relatively inexperienced persons discussed above, were the ones who were laid off in the January 1992 terminations and they were never rehired. Dillon testified that the plan in The Office in 1992 and thereafter, was to hire financial investigators, who are primarily retired police officers or federal agents and these investigators are primarily male and not women or minorities.
Diane Calabritto was first employed by the County of Nassau on June 1, 1982 in the office of the Nassau County Department of Motor Vehicles. Despite the plaintiff's testimony that she had prior general investigative experience as a cashier with the Department of Motor Vehicles, the Court finds that the plaintiff has no prior criminal investigative experience. On March 23, 1984 she was hired by the Office of the District Attorney of Nassau County as an Assistant Detective Investigator Aide ("Aide"). This was a permanent appointment after the plaintiff passed a civil service test and served a probationary period.
During the period of 1984 to 1992, the investigators in the District Attorney's Office consisted of the following classifications:
Assistant Detective Investigator Aide, I, II (Pay Grades 6, 9 and 11)
Detective Investigator (Pay Grade 13)
Investigator Coordinator (Pay Grade 14)
Special Investigator I, II (Pay Grades 15, 16)
Financial Investigator I, II (Pay Grades 15, 17)
Environmental Conservation Investigator (Pay Grade 17)
The plaintiff was aware that the various investigative positions within the Office of the District Attorney of Nassau County required different qualifications. In order to take the tests for the various investigative positions, there were different qualifying requirements. For example, Assistant Detective Investigator I had higher requirements than the Aide position; and Detective Investigator had higher qualifications than Assistant Detective Investigator. The same was true going right up the ranks as to Investigator Coordinator, Special Investigator and Financial Investigator. Each successive rank required greater qualifications.
In the same vein, the "training and experience" required for Assistant Detective Investigator II was graduation from high school and two years of general criminal investigation work, while the "training and experience" required for Special Investigator I was graduation from high school and "ten years of experience in criminal investigation work, of which five years must have been in the specialized field of investigation of syndicated organized crime, including narcotics, syndicate operated gambling, bookmaking, policy, loansharking, etc." The "training and experience" required for Financial Investigator I was a bachelor's degree, including courses in accounting and "five years of satisfactory experience in the FBI, IRS or NYS Tax *380 Department investigating financial fraud." (See Defendants' Exh. C).
The plaintiff passed the test for Assistant Detective Investigator I and she was appointed on March 27, 1988. As an Assistant Detective Investigator I, the plaintiff's duties were the same as an Aide, in that she conducted interviews, collected evidence and did undercover surveillance. The plaintiff carried a gun, drove a County car and was considered a police officer. In 1988, the plaintiff attended a peace officer course at the Nassau County Police Academy.
According to the plaintiff, all the Assistant Detective Investigators and the more senior Special Investigators "worked side by side ... (and) we each did the same type of work." (Tr. at 20). However, the plaintiff conceded that as an Assistant Detective Investigator II, her responsibilities increased, she had a greater caseload and she was assigned to the Task Force. In addition, the Court finds that on occasion, the more complex situations would be given to a more experienced investigator. Such an experienced investigator, for example, was Dennis Sheehan, an Investigator Coordinator, who had 38 years of law enforcement experience, including 17 years as a detective in the Police Department.
In 1989, the plaintiff passed the civil service test for Assistant Detective Investigator II and was appointed to that position on April 24, 1989. The plaintiff remained an Assistant Detective Investigator II until her termination on January 24, 1992. In 1990, the plaintiff passed the Detective Inspector Civil Service examination. She was then placed on an eligible list which expired in December, 1994. However, she was never promoted to the position of Detective Investigator. As stated above, the plaintiff testified that her duties as an Assistant Detective Investigator II were the same as an Aide or an Assistant Detective Investigator I. During her tour as an Assistant Detective Investigator, the plaintiff testified at a civil trial in May 1989, and was commended by the Office of the Nassau County Attorney. (Plaintiff's Exh. 1F).
There was another investigative title in the District Attorney's Office in 1989 called a Financial Investigator whose duties were to conduct highly complex financial investigations. However, according to the plaintiff, the Financial Investigators were assigned the same caseload as the other investigators.
As to the method of making assignments to the various investigators, the plaintiff testified that the Chief Investigator made the assignments by a random selection from a list of all the investigators. According to the plaintiff, all of the investigators, regardless of grade, were treated equally with regard to assignments and duties. In a memorandum to Leff dated September 22, 1988, the plaintiff noted that Dillon stated that "persons in both positions perform the same job functions." (Plaintiff's Exh. 29). The Court finds that there was no gender discrimination by the District Attorney in the random assignment of jobs. The plaintiff, herself, testified that the jobs were assigned to all the investigators, regardless of title, in rotation.
In February 1990, the plaintiff was selected for a different assignment, the United States Customs Task Force ("the Task Force"), in Bohemia, New York. Calabritto was selected by Dillon himself, and she was the first woman from the District Attorney's Office assigned to a Task Force. In the Task Force there were detectives from the Nassau County Police Department, the Suffolk County Police Department and Special Agents from the Internal Revenue Service and the United States Custom Service. Of interest, the plaintiff was selected for the Task Force instead of a more experienced male investigator who also applied for the job. This Task Force conducted long-term financial and money laundering investigations. She was the only representative of the Nassau County District Attorney's Office on the Task Force. During the time she served on the Task Force, which was from February 1990 until her discharge in January 1992, she was no longer physically located in the District Attorney's Office but was situated in Bohemia, New York. As a member of the Task Force, the plaintiff attended a cross-designated training school. Her job assignments included conducting surveillances, serving subpoenas on bank records, making *381 arrests and performing detailed analyses of bank and corporate records. In 1990 and 1991, while the plaintiff was on the Task Force, she worked overtime and received approximately $8,000 in overtime payments each year. Her overtime payments were made by the District Attorney's Office and The Office was reimbursed by the U.S. Customs Service. As stated above, the plaintiff remained at the Task Force from February 1990 until the date she was terminated, January 24, 1992.
In March 1991, the plaintiff was advised by Chief Investigator John Murphy that her services were no longer required on the Task Force. In this decision, Murphy said he was acting on behalf of Chief Executive Assistant District Attorney Lawrence Leff. The plaintiff was told that she was being removed from the Task Force because of her overtime payments, in that she "submitted a lot of overtime" (Tr. at 33). At the same time the plaintiff was on the United States Customs Task Force, another District Attorney Investigator Vinnie Martinez, was on the United States DEA Task Force, under a similar overtime arrangement, namely with ultimate reimbursement by the Federal Agency. However, according to the plaintiff, Martinez did not have to go through as complicated a paper trail procedure as she did in order to get paid. The plaintiff asserted that this difference in procedure for obtaining overtime payments, was evidence of gender discrimination. However, the Court finds that the reason for the dissimilar methods of obtaining overtime payments was the difference in the reimbursement routines of the DEA Task Force and the Customs Task Force. With respect to the DEA Task Force, Nassau County was not reimbursed until the end of a quarter; in the case of the Customs Service, the reimbursement period was every two weeks, so that more paperwork was required by the Customs Task Force representative.
The plaintiff then communicated with Leff and reminded him that the United States Customs Task Force was a source of additional funds for the District Attorney's Office in that, if the District Attorney had a member on the Task Force, it would participate in asset sharing in forfeiture proceedings conducted by the Task Force. In addition, she reminded Leff that her overtime payments were fully reimbursed by the Federal Government. Calabritto later received a reprieve and was advised that she could stay on the Task Force. Leff himself explained that he wanted to replace the plaintiff on the Task Force so that other investigators could share in the overtime payments.
In the Fall of 1991, Leff again told the plaintiff that she was no longer to be on the Task Force, this time stating that the change was to give other people a chance. The plaintiff expressed her desire to remain with the Task force. She explained that other people in the District Attorney's Office were assigned to Task Forces for longer periods of time and that she needed additional time to complete certain long-term investigations. Leff then held a meeting with all the investigators and explained that the Task Force would be run on a two-year rotating basis from that time on. Under this policy the plaintiff and Martinez would both be removed from the Task Force in March 1992.
In 1991, the plaintiff became aware that there was a budget crisis in Nassau County. In fact, as the union representative, she attended an emergency union meeting on that subject. In 1991, the District Attorney submitted its 1992 budget proposal to the County Executive. The salaries of the employees in The Office constitute approximately ninety percent of the District Attorney's budget. In the fall of 1991, Dillon was advised by the County Executive of Nassau County that there was an extremely serious fiscal crisis and a shortfall in revenue and that all department heads would have to cut back expenditures. Dillon communicated with his senior staff, Leff, McCloskey and Harvey Levinson, advised them that they would have to be very careful in drawing the budget and told them to propose "a very tight budget." The 1992 budget was markedly reduced by the County Executive and the Board of Supervisors. The County Executive cut the District Attorney's request by 4 million to 5 million dollars, and the Board of Supervisors made further cuts. Keeping in mind the mission of The Office to prosecute criminal *382 cases, Dillon and the senior staff tried to select options which would least inhibit the performance of that mission. Finally, Dillon, Leff and McClosky arrived at a consensus as to what personnel should be asked to leave, taking into consideration the fact that certain people were already leaving at about that time.
In December 1991, Dillon had conversations with Leff and McCloskey to decide what persons to terminate. Dillon testified that in all his conversations with Leff and McCloskey about layoffs, the topic of the sex or gender of any individual employee was not discussed and was not a consideration in formulating the decisions to terminate. He stated that he did not terminate Diane Calabritto because of her sex. In the final analysis, Dillon testified that gender had nothing to do with the layoffs, and, insofar as the investigators are concerned, he laid off two men and one woman, the plaintiff.
Under the figures in the original 18 million dollar budget projected for 1992 no lay-offs would be required. However, the 1992 budget initially adopted by the County Executive and the Board of Supervisors was cut to $14,200,000, requiring the lay-offs made and deficit spending. Ultimately, however, in April 1992, after the plaintiff was terminated, the County Executive and the Board of Supervisors, in various money-raising plans, rescinded all the budget cuts in the 1992 budget.
As a result of the estimated budget deficit, it was decided to terminate nine employees in the office. In addition, four assistant district attorneys who planned to resign, did so, together with another assistant whose resignation was requested. The terminations in January 1992 consisted of fourteen employees in the Office of the District Attorney, of whom seven were males and seven were females. Of greater relevance, three Assistant Detective Investigators were terminated, two, Victor Bartolotto and Douglas Delyra, were male, one, the plaintiff, was a female. (See Defendants' Exh. B). Of the nine persons laid off, Robert Lee, a non-investigator, was rehired as the security control officer; William Dwyer was employed by the County of Nassau and not the District Attorney, and Carol Blumenberg was rehired by the District Attorney as a crime victim's advocate.
On December 19, 1991, the plaintiff was called in by Leff and told that "there was a fiscal crisis and that I was low man on the totem pole and was going to be terminated." Apparently, Leff erroneously thought that her seniority was from 1988, while in actuality it was from the year 1984. The plaintiff responded that she was "far from the low man on the totem pole, and that it didn't make sense to lay me off." She stated that she was one of the lowest paid investigators in the office and was assigned to the Task Force and brought money into the office.
The plaintiff then spoke to McCloskey and three senior investigators to try to save her job. She also spoke directly to District Attorney Dillon. She told Dillon: "that I had nine years and seven months (in), and (was) four months away from being vested. I was a single mother. I had three children. I basically begged to be perfectly honest with you, for him to find another way. I told him that ... the employees had circulated a petition to so the District Attorney could save money, they would be willing to give up a vacation day or a comp day, for the money to go back in the budget. He wasn't interested." McCloskey was more sympathetic but there was nothing he could do.
After the plaintiff's termination, she was replaced on the Task Force by Dennis Sheehan, an Investigator Coordinator, followed by Kenneth Cozza and Ray Lulenski. Also, as a result of her layoff, the plaintiff asserts, without corroboration, that the District Attorney's Office lost forfeiture money. After her discharge, the plaintiff was placed on a preferred civil service list for a period of four years.
At the time of her discharge, the plaintiff, as an Assistant Detective Investigator II was being paid a salary of $33,172. At her termination, she received the sum of $19,432.36 as a total package of severance pay, which included vacation pay, sick leave and longevity pay. In mitigation of her damages, the plaintiff introduced evidence as follows:
*383 In 1992, she received compensation from the County of Nassau, including salary and severance pay of $23,083.92. In 1992, she also received unemployment insurance payments of $6,900. In addition, in 1992, she received other income, as follows:
Compass Advisory Group $9,384.61
Federal Government 8,041.23
In 1992, the plaintiff received income of approximately $47,000, or about $13,000 more than she would have earned in her former position with the District Attorney's office. In 1993, the plaintiff commenced employment as a paralegal with the United States Customs Service, at a salary of $29,602.08. In 1993, she repaid unemployment insurance in the sum of $1200. In 1994, her wages with the U.S. Customs Service was the sum of $10,718.40 since she was out of work for ten months because of medical reasons. In 1995, she returned to work, and her wages to May 13, 1995, was the sum of $13,800. Her annual salary as a paralegal with the U.S. Customs Service is $38,273.
As to the alleged acts of gender discrimination, in general terms the plaintiff complained that (1) female probationary investigators who failed the civil service tests were discharged, while male probationers at higher investigative titles, who failed the tests, were given other jobs (see Tr. 53-64); (2) as to job assignments, the male investigators were assigned to surveillances, some hazardous in nature, which involved overtime pay but the women were not given those assignments; (3) in a reverse discrimination setting, when women investigators were used, it was in "sting" operations, such as driving cars to the target repair shops, while men were never used in those operations, which, according to the plaintiff, illustrated "a feeling that the supervisors in the District Attorney's Office would have, that the suspect would take advantage of a woman rather than a man" (Tr. At 67); (4) it was easier for men to get promotions than it was for women; and (5) male investigators were treated more advantageously than female investigators.
In particular, when the plaintiff was questioned about her claim that male investigators were treated differently than female investigators along the career path, she stated that a male investigator, Gregory Macauley, was given preferential treatment, in that he was hired at a higher grade than she was. However, the plaintiff conceded that Macauley had better qualifications:
THE COURT: Did he have better qualifications than you?
THE WITNESS: Probably, because the qualifications were higher than a for an Assistant Detective Investigator than they were for an aide.
THE COURT: If he had higher qualifications than you why do you say you were treated differently?
THE WITNESS: I am not saying I was treated differently. I am showing different patterns for men than for women.
THE COURT: In what way did he have better qualifications than you did?
THE WITNESS: Prior to being employed in Nassau County, he was at some time a police officer, a police officer in Lansing, Michigan, Police Department. (Tr. at 198).
The plaintiff's contention that Gregory Macauley was given a preference in job promotions that was denied to her, is without merit. The record belies this assertion. Macauley was far more experienced in investigatory work than the plaintiff since he was employed as a police officer in Michigan for approximately eight years and also formerly worked for the Pinkerton Company. In fact, permeating this trial was evidence that the male investigators were promoted to higher investigative positions because they had more experience and prior police work. While on an overall philosophical observation, this could be viewed either as part of a longstanding gender discrimination in the law enforcement field, or as evidence of late entry into the field by females, it certainly is not proof of gender discrimination by the District Attorney of Nassau County.
One of the main contentions of the plaintiff, as to gender discrimination, was the failure to promote women in the investigative positions. The plaintiff testified that men were given the opportunity to quickly advance from Detective Investigator to Special *384 Investigator, and women were not given that opportunity. In this regard, she points to herself and Karen Lutz, who were never promoted to Detective Investigator or Special Investigator, and Pamela Luhrs, who was provisionally promoted to Special Investigator only after being in the office for ten years and after "many arguments" with the Chief Investigator. The plaintiff also asserted that she should have been given the opportunity to be appointed to full Detective Investigator rather than Assistant Detective Investigator II.
The employment record of Karen Lutz reveals that she started as a provisional Assistant Detective Investigator; took the test, passed and was appointed a Detective Investigator; and, in 1995 was provisionally appointed as a Special Investigator. Lutz is still with the Office of the District Attorney. Pamela Luhrs began employment in the District Attorney's Office as a paralegal; was then provisionally appointed as a Detective Investigator; passed the test for Special Investigator and was promoted to Special Investigator II, a position she presently holds.
In January 1992, there were three females on the investigative staff of the District Attorney, the plaintiff, Pamela Luhrs and Karen Lutz. In January 1992, the titles of Assistant Detective Aide, Assistant Detective I and Assistant Detective II were all abolished. After the plaintiff's termination in January 1992, there were no persons in those three titles and they were no longer used. After the plaintiff was terminated in January 1992, there were still two women working at the Office of the District Attorney in investigative titles, Karen Lutz as a Detective Investigator and Pamela Luhrs as a Special Investigator. The Court notes that neither Lutz nor Luhrs ever requested an assignment to a task force.
One of the plaintiff's major claims of gender discrimination was that women who failed examinations or were not reachable, were terminated while men in similar situations were given another position. The plaintiff named four such women, Moira Deiran, Aurea Feliciano, Carol Yevoli and Diana Cirruso. However, further inquiry on cross-examination revealed that all of these women were terminated in 1984, the same year the plaintiff was appointed. All four had left the office by the time the plaintiff was appointed. Further, the plaintiff passed the same test that all four other women had failed. Significantly, after the four females noted above failed the test and were discharged, they were replaced by three other women:
Q Isn't it true that these individuals had to be let go because they failed the test and they had to make room for you to be appointed?
A I don't know that.
Q Well, at least three of these women you identified as having been Aides; is that correct?
A That's correct.
Q And when you were appointed you were appointed as an Aide; is that correct?
A Yes.
Q And who else:
A Leslie Meyer, Meyer or Meyers, I don't recall. And Rachel Braver, B-R-A-V-E-R.
Q So Diane Calabritto strike that.
Diane Calabritto, Leslie Meyers and Rachel Braver, three females were appointed to the position of Aide at or about the same time that three other females, Moira Duran, Aurea Feliciano and Carol Yevoli were let go as Aides?
A That's correct.
Q And you don't know the job title of the fourth female let go; is that correct?
A No, I don't. (Tr. At 277, 278).
It was further established that the three women who failed the test for Aide, would not have been qualified for any other investigative position, and, therefore, had to be discharged. The men who failed tests were in higher investigator positions and were able to drop back in rank.
Q ... Isn't it a fact that the men about whom you testified failed tests for something other than Aide?
A Yes.
*385 Q And had qualifications to be appointed under Civil Service law to some other position in the District Attorney's Office?
A I guess if the position existed, I don't of course, doors open up all the time. You can fail a test and you can be appointed to another position. (Tr. at 279-280).
Moreover, as set forth above, three of the four women were replaced by other women. In the Court's view this situation did not constitute gender discrimination.
The Court notes that in January 1992, in the shadow of the looming budget crisis, three investigators were laid off, two men and one woman, the plaintiff. Of all the District Attorney employees terminated during that period, two were rehired, one man and one woman. Again, in that circumstance the Court finds no evidence of gender discrimination.
In addition, there was evidence adduced that the plaintiff was given assistance and advantages while employed by the District Attorney. Executive Assistant District Attorney McCloskey went out of his way to assist the plaintiff vocationally. Based on his request, the Civil Service examination for Assistant Detective Investigator I was changed from an open competitive to a promotional examination, to assist the plaintiff. In addition, the District Attorney's Office waived the usual probationary period in the plaintiff's case with regard to her promotion to Assistant Detective Investigation I. (See Plaintiff's Exh. 1H).
Another instance in which the hierarchy in the District Attorney's Office went out of their way to help the plaintiff occurred in May 1988. At that time, the office requested that she be allowed to take an examination even though she lacked the required number of months in the title, as shown in the memorandum to the Civil Service Commission, dated May 9, 1988:
Subject: Diane Calabritto Assistant Detective Investigator II
It is our understanding that the above named employee is the only one in the proper title to take this promotional examination. However, she does not have the required number of months in that title.
We are therefore asking that you allow her the take the examination with the understanding that she will not be placed on the list until after she has been in title 6 months.
Thank you for your cooperation. (Plaintiff's Exh. 1E).
During her tenure with the District Attorney, the plaintiff was primarily involved in financial investigations. This is important because, since the plaintiff's layoff in 1992, the District Attorney has hired only financial investigators, three in number. Further, the plaintiff concedes that she does not know if any females applied for the position of financial investigator.
The Court was impressed with the gender fairness of the hiring practices in the Office of the District Attorney of Nassau County. Since 1992, the District Attorney hired sixty Assistant District Attorneys, thirty male and thirty female. Despite the objections of counsel for the plaintiff, in a gender discrimination case, evidence of such a gender neutral hiring record, is admissible as circumstantial evidence on the question of discriminatory intent. See, for example, Frazier v. Rominger, 27 F.3d 828, 833 (2d Cir.1994); Kelber v. Joint Industry Board of Electrical Industry, 27 F.3d 42, 47 (2d Cir. 1994).
The plaintiff's gender discrimination case was supported by the testimony of Karen Lutz, who has been employed by the District Attorney for fifteen years. Lutz had no prior investigative experience. She was first employed on January 30, 1981 as an undercover investigator and in two months was provisionally appointed to the position of Assistant Detective Investigator Aide. In 1985, she was appointed as a Detective Investigator, and in May 1995 was provisionally appointed as a Special Investigator I.
Lutz testified that Gregory Macauley was promoted to provisional Detective Investigator before she was. Lutz questioned this promotion priority to the Deputy Chief Investigator, the Chief Investigator and Leff, but got no "satisfactory answer." Of course, *386 as stated above, there is evidence in the record that Macauley was formerly employed as a police officer in Michigan for eight years and also worked for the Pinkerton Company, while Lutz had no prior experience as a criminal investigator.
The following exchange occurred on this subject:
Q But you did not have any law enforcement investigation experience?
A Right.
Q Is that correct?
A Yes.
Q Are you aware of whether other members of the District Attorney's investigative staff had law enforcement experience prior to joining the District Attorney's staff?
A Some have and some haven't.
Q But in some cases such experience does exist?
A Yes.
Q For example, you indicated that a Mr. Greg Mccauley (sic) became an Assistant Detective Investigator at or about the same time as yourself; is that correct?
A Yes.
Q And Mr. Macauley received a provisional appointment to the title of Detective Investigator before you did?
A Right.
Q And Detective Investigator is a higher grade than Assistant Detective Investigator I?
A Yes.
Q And so, you started at or about the same time, at the same level, but he advanced more rapidly?
A Yes.
Q Do you know whether Mr. Macauley had any law enforcement experience prior to joining the District Attorney's Office?
A Yes, he did.
Q Thank you. (Tr. at 493-94).
In addition, Lutz testified that she noticed differences in the treatment of male and female investigators. She complains of an "attitude." Asked to be more specific, Lutz described a situation where there was a threat against an Assistant District Attorney and his family, and investigators were required to guard the Assistant District Attorney. The two female investigators were the only ones excluded from the list. At first the Chief Investigator said, "you know, we were the women," and then he said it was an oversight and he would correct it with a new roster. There was no new roster but the whole project was abandoned after a day or two, following complaints by the two female investigators. Questioned by the Court as to who made the statement, "you know, we were the women," Lutz, who at first said it was the Chief Investigator, and then said, she thought it was the Deputy Chief "ten years ago." The colloquy is as follows:
THE COURT: Before you get to overtime, you said that that somebody said with regard to this protection for an Assistant District Attorney, that you say that the two females were not put on the roster of protecting investigators; is that correct?
THE WITNESS: Protecting the ADA and his family.
THE COURT: And you said somebody said, I think you said Chief, I am not sure, that we were the women? Is that what you said? We were the women? Did somebody say that?
THE WITNESS: I can't remember the exact quote. But it was why were we complaining? We shouldn't even want this assignment, I guess, or something like that because, you know, we were the women.
When we went to the Chief it was, well, we had to really explain why this was in our minds discrimination. I mean we were detectives. We should be if you are going to assign the whole office to do this we should be assigned this also. If we are not capable we shouldn't be there.
THE COURT: You said who said we were the women? You said you went to the Chief when this was said. Who said that to you?
THE WITNESS: I believe it was the Deputy Chief.
THE COURT: Who was that?
*387 THE WITNESS: Who was the Deputy Chief at that time? I would have to go back and look at the time frame.
THE COURT: When was this?
THE WITNESS: This must have been ten years ago.
Again, I don't want to swear to what time it was, because I would want to check that out.
Q You recall the incident?
A Yes, I do recall the incident.
THE COURT: Approximately when was that? Ten years ago you say?
THE WITNESS: I would say approximately ten years ago. (Tr. at 483-84).
Also, according to Lutz, on surveillances on a case not assigned to a female, only the male investigators were called upon. She made reference to one case, which was a Suffolk surveillance near her home, yet four male investigators were assigned, including two male investigators with no prior police experience and less years in the office than Lutz. According to Lutz, Chief Investigator Dietz said "let the females do this because they are good at paperwork." On cross-examination, Lutz conceded that the remark was that "Pat and Karen are good with paperwork," not that "females" are good at paperwork. The distinction between the two terms is meaningful. However, the Court notes that the very first assignment Lutz received was in an undercover capacity, wearing a wire. In addition, in her first year she was assigned to a complex investigation using audio surveillance techniques, with no prior police experience. These occurrences, in which women were excluded for surveillances, indicating that females should not take an equal part in dangerous assignments, may be viewed as gender discrimination. However, Lutz also testified that, during her fourteen years as an investigator with the District Attorney, she did the same kind of investigations as the other staff investigators.
Further, Lutz testified that "there was a time when there was a big discrepancy between the overtime for male investigators and the female investigators," in that "the male investigators were getting the overtime and the females weren't." This occurred about four years ago, "around 1991." Lutz testified that she complained about this practice to Chief Investigator Dunn, to Assistant District Attorney Steve Irace and to her union representative. Her union representative was Diane Calabritto. Interestingly, Calabritto denied that any such conversation took place. However, in regard to overtime, the Court notes that the plaintiff received overtime payments of approximately $8,000 per year as a member of the Task Force.
Lutz testified that, since 1992, the District Attorney hired only four male investigators, including three financial investigators and one environmental investigator. At the present time Karen Lutz and Pamela Luhrs are the only female investigators on the staff. However, there is also a female investigative accountant, a Ms. Gurien, on the staff, who performs a different kind of investigative function.
As the Chief Assistant District Attorney, Laurence Leff is the number two person in the Office of the District Attorney of Nassau County. He is responsible for supervising the investigative staff in the office. Leff and other witnesses were questioned about a statement Leff made in his deposition. At that time, he was asked about the budget lay-offs in January 1992 and testified, in part, as follows:
Answer: It was paramount that we be able to continue to carry out the missions and responsibilities of the District Attorney's Office, and if we had made what we believe to be a reasonable symbolic commitment to reducing our personnel, we were not going to go beyond that and dismember the office. That was the position and the decision of the District Attorney, which I fully supported. (Emphasis supplied) (Tr. at 520).
Leff further explained that the office was determined not to diminish its mission, which is to prosecute and try criminals. It was determined that, because of the reduction in their budget, causing an "enormous revenue shortfall" and because "some homage would have to be paid to the County's demands," they would eliminate the most junior titles. Among the most junior titles in the office were Assistant Detective Investigator I and *388 Assistant Detective Investigator II, who had no prior law enforcement experience.
The Court finds that the proposed 1992 budget reduction did necessitate reductions in the number of employees in the Office. The Court further finds that the mission of the District Attorney of Nassau County is to prosecute criminal cases in which arrests have already been made by police units. Investigations in most of those cases is done by the Nassau County Police Department. In furtherance of the District Attorney's mission, the Court finds that it was reasonable and justifiable to terminate the most junior investigators in The Office. That task was accomplished by laying off all the Assistant Detective Investigators, regardless of gender. As Leff stated:
Q And in the scheme of priorities could you place for the Court the level of priority assigned to participating with the federal government in the Customs Task Force? A In the scheme of things in my opinion it was a moderate in importance function in the District Attorney's Office.
Since the District Attorney's Office is basically a large law firm, investigative matters in general are supportive of the law firm, but they tend to be the tail of the dog, not the head and the body. And investigations for the federal agencies have a place in the District Attorney's order of priorities. However, we are not a police force. We have at this time few than 20, I believe, or just over 20 investigators. We never had, to my knowledge, more than 30 or so investigators. We can't compete with the 3,000 man Nassau County Police Department, not should we be competing. They have a separate role to play, which is policing the County. The federal agencies have an investigative responsibility for policing interstate commerce, and they tend because of their tentacles in other jurisdictions, to come up with major cases that do not an impact on us, we here in the local scene. So that I probably used a great many words to say that it is not the highest priority. It is certainly not the lowest priority. (Tr. at 564-65).
Leff explained that in late 1991, faced with a budget crisis, he "established the categories of title that would be expendable and permit us to continue to carry out our responsibilities. It was only after those categories were established that the people's incomes became the focus of our attentions." Leff stated that he made the recommendation that Diane Calabritto and the other investigators should be terminated. In January 1992, the office abandoned the titles of Assistant Detective Investigator and Detective Investigator, and has hired no such persons since that time. The only investigators employed since 1992 have been financial investigators and one environmental investigator. Financial investigators are used to investigate "complex white-collar crimes where a great deal of focus is on books and records, and intercorporate affairs with bank accounts being significant."
Leff was questioned about waiving the probationary terms for all of the male investigators in the office. He responded that a probationary term for Diane Calabritto was also waived. Further, Leff testified that, wherever the Civil Service regulations permit a waiver of a probationary period, he has done so.
Q Sir, isn't it in fact true that the employing body, that is, the Nassau County District Attorney's Office, has a right to check off on the Civil Service form, probationary term waived, instead of probationary term 60 days?
A Only under the circumstances that the Civil Service Commission permits. And under one or the other circumstances, Civil Service requires that probation be imposed. We have no discretion in the matter.
Q And, sir, can you tell me what that Civil Service requirement is that you were referring to?
A As I understand it, in either a promotional or in a whatever the other category is, one of them permits discretionary waiver of probation.
To the best of my knowledge throughout the years, anyone already on staff where Civil Service permitted us to, I signed off on waiver. (Tr. at 542-43).
*389 Leff also explained that he tried to keep all the investigators who failed civil service tests, both the male Special Investigators and the female Assistant Detective Investigator Aides. In all instances he called Adele Leonard, the Executive Director of the County Civil Service Commission, for assistance. In the case of the more experienced investigators, he could find other positions for them. However, for the junior inexperienced investigators, there were no other positions available for which those persons could qualify. In sum, the Court credits the testimony of Leff when he stated that the elimination of the Assistant Detective Investigator series had nothing to do with gender:
Q What was your primary concern in selecting the Assistant Detective Investigator series for elimination at that time?
A My primary concern was to be able to continue to run the investigative arm of the District Attorney's Office in a meaningful way, in an effective way. (Tr. at 578).
Leff further testified that during the years 1984 to 1990 there were no female applicants for the positions of Special Investigator or Financial Investigator, probably because of the work experience requirements of ten years prior detective and organized crime work.
Gregory Macauley commenced employment with the District Attorney in March, 1984, as an Assistant Detective Investigator I. He passed both the Aide and the Assistant Detective Investigator I tests. In March 1986 he was provisionally appointed to Detective Investigator. At that time Karen Lutz had more seniority than he did. In addition, even though he was in a higher grade, Macauley was assigned to cases in which Karen Lutz supervised him. At the present time Macauley is a Special Investigator II.
However, Macauley had extensive prior experience in criminal investigation. He was employed as a police officer in the Lansing, Michigan Police Department for eight years. In that position he did plainclothes detective work, crime analyses, detention work and uniform patrol assignments. Then he was employed by the Pinkerton Company for two years. During that assignment, he was the Chief Investigator for the Pinkerton Long Island Bureau. He handled insurance claims investigations, employee background checks, internal theft, and narcotics use investigations at the Pinkerton Company. When Macauley entered the service of the District Attorney as an investigator, he had ten solid years of law enforcement investigatory-related experience. Yet, with all this criminal investigation experience, Macauley was asked to and did accept employment with The Office as a Detective Investigator I. In this Court's view, based on his extensive criminal investigation experience, this male was not propelled forward too rapidly by the District Attorney. When he was promoted over Karen Lutz, Macauley had many more years of active criminal investigative work. This Court finds that the speedier promotion of Macauley over Lutz, was reasonable and was rationally based.
Further, significantly, the Court notes that Macauley applied to be appointed to both federal task forces. With all the prior law enforcement and investigatory experience and his senior position, Diane Calabritto was selected over him for appointment to the Task Force, and to receive the accompanying overtime compensation.
Macauley also made certain observations with the way male and female investigators were treated. First, he stated that female investigators were not given certain assignments. In this regard, he referred to the 1986 protection detail for the threatened Assistant District Attorney, in which the protection detail was made up of only male investigators, even though the original arrest on the case was made by Karen Lutz. Also, in 1988 there was another protection detail for a witness in a narcotics case. The witness protection detail in that matter was also made up only of male investigators. However, Macauley conceded that sometimes it would be appropriate to assign some complex cases to more experienced investigators, and to assign simple cases to junior investigators.
Also, Macauley testified that "there was a paternalistic attitude displayed by the former Chief (Jack Cuddy) and former Deputy Chief Investigators (Jack Fiedler and John Murphy) *390 toward females." While plaintiff's counsel was content to let the matter rest with this statement, the Court asked Macauley to define what he meant by "a paternalistic attitude."
THE COURT: Are you leaving that at this point, that point?
MR. STOBER: Yes. Unless you have some questions.
THE COURT: What is a paternalistic attitude? I don't know what that means. What is that?
THE WITNESS: They seem to display greater care and concern in dealing with female investigators when it came to assignments that were either hazardous or physically demanding.
THE COURT: Care and concern? You call that paternalistic? Care and concern? I don't understand that.
THE WITNESS: They didn't seem to display that same level of care and concern for those hazardous assignments and physically demanding assignments when they were given out to male investigators.
THE COURT: So it is your view that male and female investigators should be treated equally with respect to assignments?
THE WITNESS: Absolutely.
THE COURT: And is it your impression that it was the female investigator's view also?
THE WITNESS: Yes.
THE COURT: And they wanted to be treated equally no matter what the hazardous assignments would be?
THE WITNESS: Yes.
THE COURT: And when you say paternalistic, you meant that for whatever reason, the Chief Investigators wanted to protect the women more than the men?
THE WITNESS: That is correct, that characterization, yes, sir.
THE COURT: All right. (Tr. at 612-16).
Macauley tried to relate the lack of experience generated by this "paternalistic-attitude" to missed valuable job experience and promotions. It is understandable that female investigators would want to share equally in job assignments, even though some are more dangerous than others. Denying women the opportunity to be involved in dangerous investigation assignments could, under certain circumstances, constitute gender discrimination. Especially relevant, in this regard, would be a diminution in promotion opportunities or financial gain as a result of not being able to participate in "dangerous" assignments. However, in this case, the Court finds that there is no proof that this generalized paternalistic attitude resulted in the lack of any valuable experience, promotion-wise, or to anyone's financial detriment. The first incident related by Macauley took place in 1986 and, the investigation lasted only one or two days. The second incident took place in 1988 with unclear circumstances. The Court finds that there is no evidence that these two incidents or the so-called generalized paternalistic attitude constituted a pattern of gender discrimination that contributed in any manner to the plaintiff's termination in 1992. In fact, Macauley described another incident in which a hazardous arrest was made by Karen Lutz. Rather, the Court finds that the plaintiff was laid off, among thirteen other employees, seven male and seven female, solely because of the 1992 budget crisis.
III. Dispositive Additional Findings
A. This is a McDonnell Douglas-Burdine-Hicks Pretext Case
The Court finds that the plaintiff failed to produce evidence to establish that her gender played a motivating or substantial role in her termination on January 24, 1992. The plaintiff failed to adduce evidence that could reasonably allow the court, as a fact-finder, to conclude that Diane Calabritto's termination was "because of" her gender. Further, the plaintiff produced no circumstantial evidence of discrimination directly related to her termination. Nor did the plaintiff adduce any policy documents or statements by persons in the decisionmaking process reflecting gender animus.
Therefore, the Court finds that the plaintiff is not entitled to a the shifting burden advantages of the "mixed motive" discrimination *391 cases. The Court will address the plaintiff's claim in the context of the McDonnell Douglas-Burdine-Hicks pretext cause of action.
B. The Prima Facie Case
The Court finds that the plaintiff Diane Calabritto proved the first three elements of a prima facie case, by a preponderance of the evidence, namely:
1. The plaintiff is a member of a protected class;
2. The plaintiff was qualified for the position of Assistant Detective II, the position she held at the time of her termination; and
3. The plaintiff was terminated from her position on January 24, 1992.
The fourth element that the plaintiff must prove is that her termination occurred in circumstances giving rise to an inference that it was based on the plaintiff's gender. This issue presents a close question. Three Assistant Detective Investigators were terminated, two males and one female. That material circumstance would not lead to an inference of discrimination. However, the burden of proof that must be met with regard to such an inference, at the prima facie stage is de minimis. See e.g., Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d Cir.1994); Dister v. Continental Group Inc., 859 F.2d 1108, 1114 (2d. Cir.1988). "The burden of establishing a prima facie case of disparate treatment is not onerous." Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 253, 101 S. Ct. 1089, 1094, 67 L. Ed. 2d 207 (1981).
In addition, the proof reveals that only male investigators were hired after January 1992; that, generally, all of the investigators perform the same duties; and every female investigator who has failed a Civil Service test was discharged, while every such male investigator was retained in another position. Accordingly, the Court finds that the plaintiff Diane Calabritto has established, by a preponderance of the credible evidence, the four elements of her prima facie case of gender discrimination.
C. The Non-Discriminatory Reason Advanced
The Court finds that the District Attorney of Nassau County has advanced a "legitimate non-discriminatory reason" for its decision to terminate the plaintiff's employment on January 24, 1992. The reason is that, in 1991, the District Attorney was advised by the County Executive of Nassau County and the Board of Supervisors of Nassau County that its proposed 1992 budget would be reduced by a sum of approximately four million dollars. In order to conform to this severe budgetary constraint, the District Attorney was compelled to reduce expenses. Because salaries make up approximately 90% of its operating costs, the decision was made to terminate employees. Among the fourteen employees to be terminated were the most junior investigators. The District Attorney properly determined not to impair its primary mission, to prosecute criminal cases.
The decision by the District Attorney to terminate his junior investigators was a reasonable business judgment, in that they were the non-vital positions least valuable to the defendant. That these lay-offs were caused by the impending budget crisis, is undisputed. Therefore, the defendant has articulated and proved a legitimate, non-discriminatory reason for terminating the plaintiff on January 24, 1992. That additional monies were later allocated to The Office, does not, in any way, obviate the reasonable business judgments made in the face of this fiscal crisis.
D. Was the Stated Reason a Pretext?
The Court finds that the 1992 budget crisis was, in fact, the only reason for the employment decisions of the District Attorney to discharge fourteen employees in January 1992. Reviewing the evidence and the prior findings in this case, the Court finds that the January 1992 termination decisions were not, in any way, based on gender discrimination. Having said that, the Court does find some evidence of gender discrimination by the Office of the District Attorney. The "paternalistic" attitude of the Chief Investigator and the Deputy Chief Investigator, in "sparing" the female investigators from hazardous investigations and protective *392 assignments did constitute a form of gender discrimination. The female investigators, if qualified and willing and these female investigators were qualified and willing had an absolute right to be assigned to hazardous duty. Not only was this a necessary component of their chosen occupation, but it could serve as a method of employment advancement and increased financial remuneration. However, the Court further finds that there is no evidence that the "top four" policy makers, District Attorney Dillon, Chief Assistant District Attorney Leff, Executive Assistant District Attorney McCloskey and Assistant District Attorney Levinson even knew about these discriminatory acts, much less condoned or approved them. In addition, the last act of this "paternalistic" treatment occurred in 1988, four years prior to the employment decisions at issue. Therefore, such discriminatory acts could not be a cause of the termination of the plaintiff. Nor could such practices, limited to two investigations in 1986 and 1988, constitute a pattern or practice that motivated any employment decision in 1991 or 1992.
The other alleged incidents pointed out by the plaintiff and the other witnesses, do not constitute evidence of gender discrimination. The more rapid promotion of experienced police criminal investigators was merit based and proper; the differences in the procedures to obtain overtime payments between the plaintiff and Martinez were trivial and were satisfactorily explained by the varying methods of payment between the United States Customs Task Force and the United States DEA Task Force; the abolition of the position of Assistant Detective Investigator and Detective Investigator was non-gender based and was a non-discriminatory business decision by the District Attorney; the post-1992 hiring of four male investigators, who each had in excess of ten years of law enforcement experience and were qualified as financial investigators, was not based on gender discrimination the Court is reasonably convinced that a qualified woman would have been hired; men who failed Civil Service examinations were retained because they had higher positions to begin with, had greater qualifications and could be placed in another position; the women who failed Civil Service examinations, were in the most junior positions and could not be placed in another position; Macauley advanced faster than Lutz because of his extensive high level criminal, law enforcement and investigatory experience, not because he was a male; the only investigator ever discharged for cause was a male; and when, in January 1992, the time of reckoning approached, the junior investigators, two males and one female, the plaintiff, were terminated.
CONCLUSIONS
The plaintiff Diane Calabritto established a prima facie case in that giving the plaintiff every benefit and every favorable inference, in a burden that is de minimis and not onerous, her termination occurred in circumstances giving rise to an inference that it was based on her gender.
The defendant District Attorney of Nassau County advanced a legitimate non-discriminatory reason for the termination of the plaintiff on January 24, 1992, namely that the severe budget constraints required terminating the most junior investigators in The Office.
The plaintiff failed to prove that the defendant's stated reason for her discharge was a pretext for gender discrimination.
The plaintiff failed to prove that her discharge on January 24, 1992 was in any way motivated by gender discrimination on the part of the Office of the District Attorney.
Accordingly, for the reasons stated, the Court directs the entering of a judgement in favor of the defendant Nassau County District Attorney Denis Dillon dismissing the complaint.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2157170/ | 606 F.Supp. 1548 (1985)
Robert L. DOWELL, et al. Plaintiffs,
v.
BOARD OF EDUCATION of the OKLAHOMA CITY PUBLIC SCHOOLS, et al. Defendants,
Applicant for Intervention: Yvonne Monet Elliot and Donnoil S. Elliot, both minor children, by and through their parent and guardian, Donald R. Elliot; Diallo K. McClarty, a minor child, by and through his parent and guardian, Donna R. McClarty; Donna Chaffin and Floyd Edmun, both minor children, by and through their parent and guardian, Glenda Edmun; Chelle Luper Wilson, a minor child, by and through her parent and guardian, Clara Luper; Donna R. Johnson, Sharon R. Johnson, Kevin R. Johnson, and Jerry D. Johnson, all minor children, by and through their parent and guardian, Betty R. Walker; Lee Maur B. Edwards, a minor child, by and through his parent and guardian, Elrosa Edwards; Nina Hamilton, a minor child, by and through her parent and guardian, Leonard Hamilton; Jamie Davis, a minor child, by and through his parent and guardian, Etta T. Davis; and Romand Roach, a minor child, by and through his parent and guardian, Cornelia Roach.
No. CIV-9452.
United States District Court, W.D. Oklahoma.
April 25, 1985.
*1549 John W. Walker, Little Rock, Ark., Ted A. Shaw, New York City and Lewis Barber, Jr., and Jethro Curry, Oklahoma City, for petitioners.
Ronald L. Day, Oklahoma City, for defendant Bd. of Educ.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
BOHANON, District Judge.
On February 19, 1985, the petitioners filed a Motion to Reopen this desegregation case to challenge the constitutional validity of a recently proposed Student Reassignment Plan which curtails cross-town busing in Oklahoma City of elementary school children in grades one through four. In their motion, petitioners allege that the Oklahoma *1550 City School District has not achieved unitary status, and that the School Board's proposed plan creates racially identifiable neighborhood schools thereby resegregating the Oklahoma City School District.
On March 6, 1985, the defendant School Board filed a Response to Petitioners' Motion alleging the school district became unitary in 1977 and that the proposed plan was justified and constitutional.
On March 13, 1985, the court entered an Order finding that petitioners' Motion and defendants' Response joined the issues, and set the Motion to Reopen down for an evidentiary hearing. The hearing was conducted on April 15 and 16, 1985. At the hearing the petitioners were represented by John W. Walker of Little Rock, Arkansas, Ted A. Shaw of New York City, New York, Lewis Barber, Jr., of Oklahoma City, Oklahoma, and Jethro Curry of Oklahoma City. The defendant Board of Education was represented by Ronald L. Day of Oklahoma City.
Case History
This action was originally commenced in October, 1961, as a class action seeking equitable relief against the Oklahoma City Board of Education for operating a statecompelled dual system of education. In July, 1963, this court handed down its decision finding that the Oklahoma City School Board's refusal to grant a transfer to a black student from a predominantly black school to a predominantly white school constituted unlawful race discrimination. Dowell v. School Board of the Oklahoma City Public Schools, 219 F.Supp. 427 (1963). During the years that followed, this case again came before this court and appellate courts on issues relating to the Oklahoma City School Board's obligation to convert a state-compelled dual school system into a unitary system which would eliminate racial discrimination.
In February, 1972, after conducting many hearings, this court ordered the Oklahoma City School Board to implement what came to be known as the "Finger Plan." Dowell v. Board of Education of the Oklahoma City Public Schools, 338 F.Supp. 1256 (W.D.Okl.1972). Under the Finger Plan, high school attendance zones (grades 9-12) were restructured so that each high school enrolled both black and white pupils. To accomplish this, an elementary school feeder system was used so that students were assigned to a high school based on the elementary school attendance zone in which their home was located. Similarly, middle schools (grades 6-8) were desegregated by the establishment of attendance zones for each school. At the elementary level all majority black schools were converted to fifth year centers, while all other schools were to serve grades 1-4. White students in the group attended their neighborhood school for grades 1-4, and attended the formerly black schools for the fifth grade. Black students formerly assigned to the schools now used as fifth year centers were split up and attended the majority white schools for grades 1-4. Black students in fifth grade attended the fifth grade center which was previously their neighborhood school. Elementary schools located in naturally integrated neighborhoods qualified for an exception to the general plan known as "stand alone" status, a term to be explained further infra, and operated as schools enrolling grades kindergarten through fifth. Kindergartens existed at each elementary school and were permitted to continue without forced desegregation through busing. Parents of kindergarten children were given the freedom to choose the school their child attended. The freedom of choice was justified because it permitted kindergarten children to go to the school in the vicinity of the place where their mother was working, or to walk to kindergarten with other siblings or neighborhood children. Id. at 1267-1268.
The court's decision in February, 1972, implementing the Finger Plan was upheld on appeal. Dowell v. Board of Education of the Oklahoma City Public Schools, 465 F.2d 1012 (10th Cir.1972), cert. denied 409 U.S. 1041, 93 S.Ct. 526, 34 L.Ed.2d 490 (1972).
The Oklahoma City Board of Education implemented and properly operated the *1551 Finger Plan for several years. After the Finger Plan had been in operation for some time, the Board of Education filed a "Motion to Close Case" on the grounds that it "[had] eliminated all vestiges of state-imposed racial discrimination in its school system and [was] ... operating a unitary school system." Thereafter, the court conducted a hearing to receive evidence from plaintiffs and defendants concerning the state of desegregation in the Oklahoma City public schools, and on January 18, 1977, entered an order relinquishing its jurisdiction and terminating this case. The "Order Terminating Case" states in pertinent part as follows:
... [T]he School Board, under the oversight of the Court, has operated the Plan properly, and the Court does not foresee that the termination of its jurisdiction will result in the dismantlement of the Plan or any affirmative action by the defendant to undermine the unitary system so slowly and painfully accomplished over the 16 years during which the cause has been pending before the Court."
. . . . .
Now sensitized to the constitutional implications of its conduct and with a new awareness of its responsibility to citizens of all races, the Board is entitled to pursue in good faith its legitimate policies without the continuing constitutional supervision of this Court....
ACCORDINGLY, IT IS ORDERED:
1. The Biracial Committee established by the Court's Order of December 3, 1971, which has been an effective and valued agency of the Court in the implementation of the Plan, is hereby dissolved;
2. Jurisdiction in this case is terminated ipso facto subject only to final disposition of any case now pending on appeal. (emphasis added)
Plaintiffs did not appeal the Order Terminating Case. To this date the Oklahoma City Board of Education continues to implement the substance of the Finger Plan with minor modifications. There has been no attempt to revive or reopen this case during the eight years which passed from the time this court terminated its jurisdiction until the present contest.
Findings of Fact
1. One of the many elements of the Finger Plan carried forward by the Oklahoma City Board of Education was the provision for kindergarten through fifth grade (K-5) "stand alone" schools. That is, when racial balance in a neighborhood is achieved through natural integration the elementary school qualifies as a K-5 "stand alone" school. When this status is achieved, the fifth grade is returned to the elementary school, and children are no longer bused into or out of the elementary school to achieve racial balance.
2. As the years passed by, more and more neighborhoods in Oklahoma City became naturally integrated. By mid-1984, more than twelve years after the Finger Plan had been in operation, more than a dozen elementary schools were located in neighborhoods with a racial balance that qualified them for "stand alone" school status.
3. In 1984 the Board of Education recognized Bodine Elementary School in southeast Oklahoma City as a K-5 "stand alone" school. In the process, the School Board noticed certain inequities (hereinafter identified) starting to surface with the advent of more and more schools qualifying for K-5 "stand alone" status.
4. On July 16, 1984, the Board of Education appointed a committee to study the school district's K-5 schools, and to report back to the Board with positive recommendations. The committee consisted of three School Board members. Dr. Clyde Muse, who is black and has a Ph.D. in education, chaired the committee. Also on the committee were Mrs. Susan Hermes and Mrs. Betty Hill. Both of these School Board members had prior experience as certified school teachers. The committee frequently called upon the school district's research department for data and statistics needed during the study. During the time the committee was meeting, Dr. Muse traveled *1552 to the Office of Civil Rights in Dallas, Texas, for consultation and advice.
5. On November 19, 1984, the committee presented a report to the entire Board concerning its study on the far-reaching effects of an increased number of K-5 "stand alone" schools, and recommended that the Board adopt a new Student Reassignment Plan which, among other things, eliminated K-5 "stand alone" schools.
6. The committee study revealed that as more neighborhoods become naturally integrated and their schools qualify for K-5 "stand alone" status, the young black students previously bused into those schools would have to be reassigned to other schools. Since most of the naturally integrated schools are centrally located in the City, the reassignment of young blacks would be to schools located further north, west or south. The effect would be to increase the busing burden in terms of time and distance on young black children in the first through fourth grades. Further, the committee pointed out that when a "stand alone" school reacquires its fifth grade, this causes the student population at the fifth year centers located in the northeast quadrant of the district to drop, and the centers to be subjected to closing.
7. Also, the committee was concerned with the decline of parental involvement in the schools, and wanted a plan which would have the effect of increasing parental involvement. Curriculum uniformity was also a consideration of the committee. All fifth year centers have enrichment programs including intramurals, string instruments, the Opening Doors program and special interest sessions. The committee felt it would be increasingly difficult to make these fifth year center programs equally available within the new K-5 "stand alone" schools.
8. After the committee made its report and submitted its recommendation, public hearings were conducted at various schools throughout the community to discuss the proposed plan. Thereafter, a special School Board meeting was conducted on December 10, 1984, so that anyone in the community could state their views and make suggestions about the proposed plan directly to the Board of Education. The Superintendent of Schools sent copies of the proposed plan to the Office of Civil Rights, and invited personnel from the Office of Civil Rights to attend the public hearings where the proposed plan was being discussed.
9. As a result of positive input from the public, the committee recommended that certain specific amendments not affecting the overall character of the plan be made. Thereafter, on December 17, 1984, the Oklahoma City Board of Education unanimously adopted the Student Reassignment Plan which is to go into effect at the commencement of the 1985-86 school year.
10. The fundamental elements of the plan, admitted into evidence as plaintiffs' Exhibit # 1 and incorporated by reference in these findings of fact, are as follows:
(a) The Plan calls for K-4 neighborhood schools throughout the district. This eliminates compulsory busing of young black children, grades 1-4, to elementary schools outside their immediate neighborhood;
(b) An equity officer is to monitor all schools to insure the equality of facilities, equipment, supplies, books and instructors in all schools. An equity committee is to assist the equity officer and recommend ways to integrate students at any racially identifiable elementary schools several times each year;
(c) A "majority to minority" transfer policy will allow elementary students assigned to a school where their race is in the majority to obtain a transfer to a school in which their race will be in the minority. The transfer option is encouraged through district-provided transportation;
(d) All faculties and staff will remain integrated at all schools in the district; and
(e) Fifth year centers will be located in all sections of the school district. All fifth year centers, middle schools, and high schools in the school district will *1553 continue to be racially balanced with the aid of busing.
11. Population changes have occurred in the Oklahoma City School District from the time the Finger Plan was implemented. In 1970, 325,000 people lived in the school district. In 1980, 305,000 people lived in the school district. In 1971, 68,840 students attended school in the district. In 1985, 40,375 students attend school in the district. In 1971, the student population was 23.4% black. In 1985, the student population is 38.3% black. In 1971, the student population was 76.6% white. In 1985, the student population is 49.6% white. (The failure of the 1985 figures to add up to 100% is due to the exclusion of non-black minorities from the figures used to calculate percentages of whites and blacks. This apparently was not done with the figures presented to the court in 1971.)
12. Presently, the racial composition of the faculty and staff serving Oklahoma City Public Schools is as follows:
Teachers 30.4% black
Principals 28.4% black
Other Administrators 35.5% black
Coaches 45.6% black
Counselors 41.3% black
Special Ed. Teachers 30.2% black
Support Personnel 45.9% black
Also, the Oklahoma City Board of Education has in the past and continues to implement and follow an affirmative action plan. At present, racial balance within 15 percentage points of the proportions in the system-wide student population is maintained in all classes in grades 1-12 through busing.
13. Under the Student Reassignment Plan there will be 64 elementary schools. Eleven of those schools will be ninety percent (90%) or more black. Twenty-two of the 64 elementary schools will be ninety percent (90%) or more white and non-black minorities. The remaining 31 elementary schools will be racially mixed between blacks and non-blacks. The Oklahoma City Board of Education has neither altered the boundaries to these elementary schools so as to create a certain number of racially identifiable schools, nor attempted to fix or alter demographic patterns to affect the racial composition of its schools.
14. Under the Student Reassignment Plan the curriculum in all the elementary schools will be the same. The special education programs offered in all schools will be the same. The student-teacher ratio in all schools remain the same. Facilities, equipment, supplies and textbooks will be equal. As was pointed out previously, the faculties and staffs at each elementary school will remain integrated.
15. In the early 1970's, there were approximately 94 parent-teacher associations within the school district with a total membership in excess of 25,000 people. Presently, there are only 14 parent-teacher associations and the membership is less than 5,000. Parental involvement is an essential ingredient to a quality education. The Board of Education previously took steps in an effort to increase parental involvement. An attempt was made to implement a district-wide parents council. School Board meetings were moved out into the community. Buses were sent to certain schools to pick up parents for meetings. However, these efforts failed. The court finds that the degree of parental involvement in the schools is a legitimate concern of the Board of Education, and that the School Board's proposed plan will have the effect of increasing parental involvement at the elementary school level.
16. Student participation in extracurricular activities is also an essential ingredient to a quality education. The School Board's proposed plan will give elementary students a greater opportunity to participate in such activities.
17. The School Board has a genuine concern for maintaining schools in all areas that the school district serves. Also, the amount of time and distance traveled by elementary school children on buses is a genuine concern of the Board of Education.
18. The Board of Education adopted the Student Reassignment Plan for legitimate purposes: to protect against the loss of schools in the northeast quadrant of the district; to maintain fifth year centers *1554 throughout the district; to reduce the busing burden on young black students; to increase parental and community involvement in the schools; and to improve programs and provide elementary children with a greater opportunity for participation in extracurricular activities.
19. The Student Reassignment Plan is not discriminatory, and it was not adopted by the Oklahoma City Board of Education with the intent to discriminate on the basis of race or with a deliberate purpose to affect the racial composition of the schools. Any change in the racial composition of the schools that may be expected to result from the plan is an unintended and largely unavoidable consequence of other objectives sought for the benefit of all students. The court is convinced that the Board of Education is equally concerned about the health, education and well-being of both black students and white students.
20. The School Board members on the committee who recommended the Student Reassignment Plan were qualified by virtue of their educational background and experience to conduct the study and formulate the various components of the Student Reassignment Plan. The Student Reassignment Plan is educationally sound, and when implemented, will accomplish the objectives of the Board of Education.
Conclusions of Law
1. The Supreme Court in Green v. New Kent County School Board, 391 U.S. 430, 437-38, 88 S.Ct. 1689, 1693-94, 20 L.Ed.2d 716 (1968), held that once it is determined that a school district is operating a dual system, then the school authorities are "clearly charged with the affirmative duty to take whatever steps might be necessary to convert to a unitary system in which racial discrimination would be eliminated root and branch." In Green, the Court identified six components of a school system which must be desegregated before the entire system can achieve unitary status: faculty, staff, transportation, extracurricular activities, facilities, and composition of the student body. Id. at 435, 88 S.Ct. at 1692.
2. The specific question of when a district court should declare a school system "unitary" and terminate its remedial jurisdiction has been addressed by the Supreme Court and the Tenth Circuit Court of Appeals. The Supreme Court in Raney v. Board of Education, 391 U.S. 443, 449, 88 S.Ct. 1697, 1700, 20 L.Ed.2d 727 (1968) held that "in light of the complexities inhering in the disestablishment of state-established segregated school systems, Brown II contemplated that the better course would be to retain jurisdiction until it is clear that disestablishment has been achieved." Similarly, in an earlier decision in this very case, the Tenth Circuit Court of Appeals stated that "jurisdiction should be held until such time as the court is satisfied that the decreed unconstitutional practices are eliminated and appellant board is found to be in full compliance with the teachings of the Brown case." Board of Education of Oklahoma City Public Schools v. Dowell, 375 F.2d 158, 168 (10th Cir.1967).
3. This court in its 1972 order directing the implementation of the Finger Plan recognized that the court "was required to retain jurisdiction to evaluate the Plan in practice and to see that state imposed segregation was completely removed." Dowell v. Board of Education of the Oklahoma City Public Schools, 338 F.Supp. 1256, 1258, footnote 1 (W.D.Okl.1972).
4. At the time this court totally relinquished its jurisdiction over this case in 1977, the court was convinced that the Finger Plan had been carried out in a constitutionally permissible fashion and that the School District had reached the goal of being a desegregated non-racially operated and unitary school system. In the Order Terminating Case this court specifically found that the School Board had complied with the requisite constitutional requirements and recognized that a "unitary system" had been "accomplished" over the previous sixteen years. The Order Terminating Case was not appealed, and no attempt to revive or reopen this litigation was made during the eight years which passed from the time the Order was entered *1555 in 1977 until the Motion to Reopen was filed in 1985.
5. The Supreme Court has approved the view that the fact that a case is in the nature of a suit in equity, authorized by 42 U.S.C. § 1983, as is this one, "presents no categorical bar to the application of res judicata and collateral estoppel concepts." Allen v. McCurry, 449 U.S. 90, 97, [101 S.Ct. 411, 416, 66 L.Ed.2d 308] (1980). These concepts were explained by the Court as follows:
Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Cromwell v. County of Sac, 94 U.S. 351, 352 [24 L.Ed. 195]. Under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action involving a party to the first case. Montana v. United States, 440 U.S. 147, 153 [99 S.Ct. 970, 973, 59 L.Ed.2d 210]. As this Court and other courts have often recognized, res judicata and collateral estoppel relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication. Id., at 153-154 [99 S.Ct. at 973-974].
Id. at 94, 101 S.Ct. at 414. In the present case, this court's finding in 1977 that a unitary system had been achieved by the Oklahoma City public schools is res judicata as to those who were then parties to this action. At the time of that Order, the plaintiffs in this action represented the entire class of school-aged black children within the Oklahoma City Public School District, and the present petitioners acknowledge that this class included future black children. At the very least, the present applicants for intervention, appearing through their parents and guardians, seek to represent a similarly-defined class of black children and are themselves members of said class. Though the individual members of this class may have changed with the passage of time, this change cannot defeat the preclusive effect of this court's original finding of unitariness. Courts have held that even when a first case was a so-called "spurious" class action "a public body should not be required to defend repeatedly against the same charge of improper conduct if it has been vindicated in an action brought by a person or group who validly and fairly represent those whose rights are alleged to have been infringed." Bronson v. Board of Education, 525 F.2d 344, 349 (6th Cir.1975) cert. denied, 425 U.S. 934, 96 S.Ct. 1665, 48 L.Ed.2d 175 (1976) (emphasis in original). There has been no showing in this case that the original plaintiffs did not validly and fairly represent all those whose rights are concerned here. The present petitioners are, therefore, collaterally estopped from relitigating the issue of the unitary character of the Oklahoma City Public Schools as of 1977 even if res judicata itself is not strictly applicable to the facts of this attempted class intervention. Id.; see Bell v. Board of Education, 683 F.2d 963 (6th Cir.1982); L.A. Unified School District v. L.A. Branch NAACP, 714 F.2d 935 (9th Cir.1983) (Bronson cited with approval, but res judicata found to be the more applicable doctrine under the circumstances of the case).
6. Furthermore, this court finds that the Oklahoma City School District displays today, as it did in 1977, all indicia of "unitariness." It has now been thirteen years since cross-town busing was introduced and almost twenty-five years since the start of desegregation litigation in Oklahoma City. The evidence in this case demonstrates that the Oklahoma City School District remains unitary today. The School Board, administration, faculty, support staff, and student body are integrated. Further, transportation, extracurricular activities and facilities within the school district are equal and non-discriminatory. This court's finding of unitariness in 1977 was fully justified, and remains a finding which is today fully justified.
7. Supreme Court precedent is clear that once a school system has become *1556 unitary, the task of a supervising federal court is concluded. "Neither school authorities nor district courts are constitutionally required to make year-by-year adjustments of the racial composition of student bodies once the affirmative duty to desegregate has been accomplished and racial discrimination through official action is eliminated from the system." Swann v. Charlotte-Mecklanburg Board of Education, 402 U.S. 1, 31-32, 91 S.Ct. 1267, 1283-1284, 28 L.Ed.2d 554 (1971). Where unitary status has been achieved, district court intervention is normally not necessary unless there is a showing that the school district "has deliberately attempted to fix or alter demographic patterns to affect the racial composition of the schools." Id. at 32, 91 S.Ct. at 1284. "[H]aving once implemented a racially neutral attendance pattern in order to remedy the perceived constitutional violations on the part of the defendants, [a District Court has] fully performed its function of providing the appropriate remedy for previous racially discriminatory attendance patterns." Pasadena City Bd. of Education v. Spangler, 427 U.S. 424, 436-37, 96 S.Ct. 2697, 49 L.Ed.2d 599 (1976).
8. The Tenth Circuit Court of Appeals has recognized "that neighborhood school attendance policies, when impartially maintained and administered, do not violate any fundamental Constitutional principle or deprive certain classes of individuals of their Constitutional rights." Board of Education of Oklahoma City Public Schools v. Dowell, 375 F.2d 158, 166 (10th Cir.1967), cert. denied, 387 U.S. 931, 87 S.Ct. 2054, 18 L.Ed.2d 993 (1967).
9. Also, the Supreme Court has recognized that in a system that has not been deliberately constructed and maintained to enforce racial segregation, "it might well be desirable to assign pupils to schools nearest their homes." Swann, 402 U.S. at 28, 91 S.Ct. at 1282.
10. Congress has also passed legislation recognizing the desirability of neighborhood schools. 20 U.S.C. § 1701 states:
(a) The Congress declares it to be the policy of the United States that
(1) all children enrolled in public schools are entitled to equal educational opportunity without regard to race, color, sex or national origin; and
(2) the neighborhood is the appropriate basis for determining public school assignments.
The fact that the Student Reassignment Plan adopted by the Oklahoma City Board of Education calls for neighborhood schools in grades K-4 does not offend the Constitution.
11. In Swann, the Supreme Court noted that, "the constitutional command to desegregate schools does not mean that every school in every community must always reflect the racial composition of the school system as a whole." 402 U.S. 24, 91 S.Ct. 1280. Furthermore, the existence of some one-race schools within a district "is not in and of itself the mark of a system that still practices segregation by law." Id. at 26, 91 S.Ct. at 1281.
12. The existence of racially identifiable schools is not unconstitutional without a showing that such schools were created for the purpose of discriminating on the basis of race. Keyes v. School District No. 1, 413 U.S. 189, 93 S.Ct. 2686, 37 L.Ed.2d 548 (1973). The presence of discriminatory intent may not be inferred solely from the disproportionate impact of a particular measure upon one race. The Supreme Court has clearly stated that "official action will not be held unconstitutional solely because it results in a racially disproportionate impact." Arlington Heights v. Metropolitan Housing Corp., 429 U.S. 252, 264-65, 97 S.Ct. 555, 562-63, 50 L.Ed.2d 450 (1977); Washington v. Davis, 426 U.S. 229, 96 S.Ct. 2040, 48 L.Ed.2d 597 (1976). The Student Reassignment Plan was not created for the purpose of discriminating on the basis of race.
13. The Supreme Court has recognized the optional majority-to-minority transfer provision as a useful part of a desegregation plan. Swann, 402 U.S. at 26-27, 91 S.Ct. at 1281.
14. The Supreme Court has also acknowledged that:
*1557 An objection to transportation of students may have validity when the time or distance of travel is so great as to either risk the health of the children or significantly impinge on the educational process... [L]imits on time of travel will vary with many factors, but probably with none more than the age of the students involved.
Swann, 402 U.S. at 30-31, 91 S.Ct. at 1283.
15. The decision whether a case should be reopened under Federal Rule 60(b)(6) is discretionary. Special circumstances must be shown in order to justify relief under this rule. Stewart Securities Corp. v. Guaranty Trust Co., 71 F.R.D. 32 (W.D.Okl.1976). The Student Reassignment Plan of the Oklahoma City Board of Education is constitutional, and special circumstances are not present which would justify reopening this litigation.
An appropriate order will accordingly be entered herein.
ORDER
In accordance with the findings of fact and conclusions of law entered herein this day,
IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the Motion to Reopen Case, to Intervene and For Further Relief filed by the applicants for intervention is denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2151044/ | 666 F.Supp. 1454 (1987)
BERNERT TOWBOAT COMPANY, Plaintiff,
v.
USS CHANDLER (DDG 996), in rem, and United States of America, in personam, Defendants.
Civ. No. 86-547-RCB.
United States District Court, D. Oregon.
June 29, 1987.
*1455 *1456 David F. Bartz, Jr., Schwabe, Williamson, Wyatt, Moore & Roberts, Portland, Or., for plaintiff.
Charles H. Turner, U.S. Atty., Jack G. Collins, First Asst. U.S. Atty., Chief, Civ. Div., Portland, Or., Philip A. Berns, Atty. in Charge, West Coast Office, Torts Branch, Civ. Div., Warren A. Schneider, Asst. Atty. in Charge, WCO, Torts Branch, Civ. Div., U.S. Dept. of Justice, San Francisco, Cal., for defendants.
BELLONI, District Judge.
The plaintiff, Bernert Towboat Company, brings this suit for damage to its barge, the B-1, caused by the swell of the USS CHANDLER as the two vessels passed in the Columbia River. Plaintiff asserts that the ship traveled too fast up the river and negligently created a dangerous swell. The government contends that the B-1's unseaworthy condition caused the damage. The principal disputed issues at trial were the situs of the collision, the CHANDLER's speed, whether it is possible for the CHANDLER to produce a dangerous swell, and whether the B-1 is seaworthy.
BACKGROUND
On June 6, 1985 the USS CHANDLER a United States guided missile destroyer (563 feet long, with a beam of 55 feet, twin propellers, and 80,000 horsepower), steamed up the Columbia River from Astoria to Portland, Oregon, for the annual Rose Festival. At the same time the tug MARY B was pushing the barges B-1 and B-22 down river. The barges were loaded with wood chips and lashed together in tandem. The MARY B was tied to the B-1. The plaintiff built the B-1 for hauling wood chips on the Columbia River; its entire business consists of transporting chips on the river. Prior to the encounter with the CHANDLER the plaintiff's vessels made this same round trip voyage 2100 times without serious incident.
Captain Jim Easley has 27 years of experience on the Columbia River. He piloted the MARY B at the time of the accident and is the only eye witness. I find his testimony credible. He testified that the MARY B and the two barges passed four navy ships that day with no problems. Then he met the CHANDLER. Watching the CHANDLER travel up the river he noticed that its swell created a good deal of white water on the Northern end of Martin Island. When the CHANDLER was nearly abeam he saw an unusually large swell coming toward the MARY B. Quickly slowing the engines he shifted the MARY B into neutral and rode over the swell. Captain Easley knew that the swell caused some damage so he called the crew out of the forecastle to attend to the barges. He also called the USS BRONSTEIN, the vessel following the CHANDLER, and asked it to slow because he was having problems.
The crew resecured the two barges and the MARY B continued down river. However the B-1, holed by the swell, filled with water and soon began to list. This list caused much of the B-1's cargo to spill. The crew beached the B-1 on Sandy Island to prevent it from completely sinking. The plaintiff salvaged the remaining cargo, pumped out and patched the B-1, and took it to a shipyard for repair.
I. LIABILITY
The Public Vessels Act provides for in personam admiralty jurisdiction over the United States for damage caused by a public vessel of the United States. 46 U.S.C. § 781 et seq. The USS CHANDLER is a public vessel. This action is within the court's admiralty jurisdiction. 28 U.S.C. § 1333.
Although jurisdiction is in personam, the Public Vessels Act allows recovery on admiralty principals of in rem as well as in personam liability. Canadian Aviator, Ltd. v. United States, 324 U.S. 215, 228, 65 S.Ct. 639, 646, 89 L.Ed. 901 (1945). The Act allows the court to grant judgment on in rem as well as in personam principles, except that the public vessel is not subject to seizure or arrest. Id.
1. Liability is Based on Fault
Collision Liability is based on fault. Therefore negligence must be *1457 shown before liability is imposed. Complaint of McLinn, 744 F.2d 677, 680 (9th Cir.1984). The term "collision" is used in its broadest sense so that it applies to a tug striking a ships wake. See Peoples Natural Gas Co. v. Ashland Oil, Inc., 604 F.Supp. 1517, 1523 (W.D.Pa.1985). The standard of care in collision cases is provided by specific statutory provisions, the concept of reasonable care, and the requirements of good seamanship. Arabian American Oil Co. v. Hellenic Lines, Ltd., 633 F.Supp. 659, 665 (S.D.N.Y.1986). The CHANDLER violated a statutory rule and failed to exercise reasonable care when it created a dangerous swell.
2. The CHANDLER's Duty not to Create a Dangerous Swell
Both the tug and the ship have a right to navigate the Columbia River. The tug has the duty to meet the ordinary risks of navigation and the ship must not injure a seaworthy tow with its swell. The ROBERT FULTON, 187 F. 107, 108 (2nd Cir. 1911). The ship's officers must take all reasonable precautions to insure that the tug and its tow are not injured by the ship's swell. The CHESTER W. CHAPIN, 155 F. 854, 859 (D.C.N.Y.1907). If properly constituted the tug need not warn the ship it may presume the ship will make a safe passing. Id. Ordinary prudence demands that the ship slow down to avoid endangering a seaworthy tow. The COLUMBIA, 61 F. 220 (3rd Cir.1894)[1].
However when the tow is improperly made up or is otherwise unseaworthy there is no liability for swell damage. Alice E. Conway v. United States, 1930 A.M.C. 2013 (E.D.N.Y.1930). The CHANDLER had a duty not to create a dangerous swell.
3. The Inland Rules of the Road Provide a Statutory Standard
The Inland Rules apply to navigation in the Columbia River. 33 U.S.C. § 2001(a). Rule 6, the Safe Speed Rule, is of primary importance here. Rule 6 provides in pertinent part:
Every vessel shall at all times proceed at a safe speed so that she can take proper and effective action to avoid collision and be stopped within a distance appropriate to the prevailing circumstances and conditions.
33 U.S.C. § 2006. In determining a safe speed the vessel must consider: (1) visibility, (2) traffic density, (3) maneuverability of the vessel including stopping distance and turning ability, (4) the state of the wind, sea and current and the proximity of navigational hazards, and (5) the draft in relation to the available depth of water. Id. The CHANDLER was required to travel at a safe speed in order to avoid a collision. Violation of the safe speed rule imposes severe procedural sanctions.
4. The Pennsylvania Rule
When, at the time of a collision, a vessel is in violation of a statutory rule intended to prevent collisions, the burden shifts to the vessel to prove that its fault could not have been a cause of the accident. The Steamship Pennsylvania v. Troop, 86 U.S. (19 Wall.) 125, 136, 22 L.Ed. 148 (1873). The Pennsylvania rule shifts the burden of proof as to causation to the statutory offender, but it does not by itself impose liability. United Overseas Exp. Lines v. Medluck Compania Maviera, 785 F.2d 1320, 1325 (5th Cir.1986). The violator may rebut this presumption by showing that the violation could not have been a contributing cause of the accident. Id. This burden is difficult for the statutory offender to carry and the court of appeals requires strict adherence to the rule. Waterman Steamship Corp. v. Gay Cottons, 414 F.2d 724, 736 (9th Cir.1969).
A violation of the safe speed rule invokes the Pennsylvania rule. See Hercules Carriers, Inc. v. Claimant State of Fla., 768 F.2d 1558, 1567-68 (11th Cir.1985); *1458 Complaint of Magnolia Towing Co., Inc., 764 F.2d 1134, 1136-38 (5th Cir.1985).
DISCUSSION
5. The Situs of the Collision
The location of the collision is important because the CHANDLER kept excellent navigation records, and its speed can be calculated with precision for any segment of its course up the Columbia River.
Commander Natter, the CHANDLER's captain, placed the point of meeting North of Goat Island and South of Sandy Island. But Commander Natter's testimony at trial was vague. In addition he admitted that he had never before transited the Columbia River, and that he had no independent recollection of the meeting point. He relied on the CHANDLER's navigation chart and the engine room log to determine the meeting point. I find that his testimony on the collision location is not credible.
Captain James Easley testified that the collision occurred between light number 62, and buoy number 60. I find his testimony credible. Captain Lloyd Beeler, the MARY B's master, also placed the collision near light number 62. On cross examination Captain Showalter, the Columbia River Pilot aboard the CHANDLER, stated that he did not disagree with Captain Easley's testimony on the location. Captains Easley, Showalter, and Beeler all agreed to the location of the collision and they are all very familiar with the Columbia River. I find that the collision occurred near light number 62 near 45° 57' 30" N, 122° 49' W, and that the collision happened at approximately 1355 hours.
6. The CHANDLER's Speed
The CHANDLER took frequent and accurate position fixes on its trip up the river. These fixes were recorded on the CHANDLER's navigation chart and the time noted by each fix. In addition the engine room keeps a "bell log" that records each engine speed order and the time of the order. Plaintiff's expert, Lieutenant Commander Dietz, USNR, using the CHANDLER's chart and the bell log, calculated the CHANDLER's speed at the time of collision. He conservatively placed the CHANDLER's speed at 20.1 knots over the ground. Plaintiff's other expert, Dr. Bruce Adee, estimated the CHANDLER's speed to be higher.
Pilot Showalter and Commander Natter both placed the CHANDLER's speed when it met the MARY B at between 10 and 15 knots. I reject Pilot Showalter's testimony because it conflicts with the engine room bell log and the position fixes on the CHANDLER's chart. I reject Commander Natter's testimony because he had no independent recollection of where the meeting occurred. He also testified on cross-examination that at the relevant time he had ordered a calibrated engine speed of 26.9 and 25 knots.
Taking into consideration river current and other environmental factors I find that the CHANDLER was traveling at a speed of more than 21 knots over the ground when it passed the MARY B. I also find that under the circumstances this speed is, as a matter of law, a violation of the safe speed rule.
7. The CHANDLER's Swell
Captain Easley testified that he rode over an unusually large swell that was pushed ahead of the CHANDLER. During the trial he drew a picture of this swell and compared it to waves commonly encountered in the Columbia River. The government initially contended that his explanation is physically impossible because a ship's wake is left behind the ship, not pushed ahead. However at trial the government's expert conceded that Captain Easley's explanation is plausible.
Plaintiff's expert, Dr. Bruce Adee, is a Professor at the University of Washington. He is also a naval architect and a hydrodynamicist. He testified that in unrestricted waters a ship creates a transverse wave that makes an angle of about 20° with the ship's centerline. These waves are left behind the ship. However, a ship traveling at high speed in a restricted channel will create a much different wave pattern. The pattern created is a function of the ship's *1459 speed and the water depth. Professor Adee stated that based on the river depth and the ship's speed, the CHANDLER produced a swell that made an angle between 54° and 65° from the ship's centerline. This unusual wave, which is called a soliton, is relatively steep and creates a shelf of water. He estimated the soliton's height at four to six feet.
William G. Day testified for the government on this point. He agreed with Professor Adee on the underlying scientific principles of soliton creation. He said that a soliton wave can be 90° to the ship's centerline and can even be pushed ahead of the ship. He opined that if the CHANDLER traveled faster than 19 knots it could produce a soliton.
I find Captain Easley's and Professor Adee's testimony credible concerning the existence of the soliton. I find that the CHANDLER produced a soliton wave which was higher than five feet. I find that the soliton posed a danger to seaworthy vessels capable of meeting the ordinary risks of navigation on the Columbia River.
8. The B-1's Seaworthiness
The government's main defense is that the B-1's light construction made it unseaworthy because it could not meet ordinary river hazards.
After the accident, Captain Ralph Pruett surveyed the B-1 for the government. The government submitted his testimony by deposition. Surveyor Pruett testified that the B-1's deck fixtures were welded to the deck when they should have been secured through the deck with gussets or bracing. He testified that if the B-1 had proper deck fixtures the accident never would have happened. He said the deck fixtures failed when they were subjected to an overload stress. On cross examination he testified that although he had surveyed 600 barges during his career he had only surveyed one Columbia River chip barge, the B-1. He also admitted that he did not know how the barges were made up that day or the amount of stress placed on the deck fixtures.
Surveyor Terrance Purdom also surveyed the B-1, and the plaintiff submitted his testimony by deposition. He testified that the B-1 was seaworthy. He stated that it is a light barge but that it is sufficient for use on the Columbia River. Barges built for the open sea are built heavier because of the stresses created by running in a seaway. About forty percent of his surveying experience is on the Columbia River. He has surveyed other Columbia River chip barges.
I credit Surveyor Purdom's testimony because he is much more familiar with Columbia River barges than is Surveyor Pruett. Surveyor Pruett also admitted he did not know how much stress caused the deck fixtures to fail or how the barges were made up. In addition, Surveyor Purdom's testimony is reinforced by the fact that the plaintiff's vessels made 2100 round trip voyages up and down the Columbia River through adverse weather with no serious incidents. I find that the B-1 was seaworthy at the time of the accident.
CONCLUSIONS ON LIABILITY
Based on all the evidence I conclude that the CHANDLER's Officers breached their duty to exercise reasonable care to avoid creating a dangerous swell.
At the time of the collision the CHANDLER was in violation of the safe speed rule, a statutory rule intended to prevent collisions; therefore the burden rests on the CHANDLER to prove that it could not have been the cause of the collision. United Overseas Exp. Lines v. Medluck Compania Maviera, 785 F.2d at 1324[2]. The CHANDLER failed to produce *1460 any evidence that I found probative that the damage to the B-1 was not caused by the CHANDLER's swell. Moreover the plaintiff proved, independent of the Pennsylvania Rule, that the CHANDLER caused the damage to the B-1. I conclude that the CHANDLER's swell caused the damage to the B-1.
There is no merit in the government's defense that the B-1 is unseaworthy. It is seaworthy and the MARY B's crew exercised commendable seamanship throughout the entire episode. The CHANDLER is one hundred percent at fault for the collision. I now consider the plaintiff's damages.
II. DAMAGES
1. Anti-Assignment Act
The government concedes that with one exception the amounts set out in the pre-trial order are the proper measure of damages in this action. The government contends that the plaintiff cannot recover for the lost cargo because recovery would violate the Anti-Assignment Act (the "Act").
The Act provides that voluntary assignments of claims against the government are void. 31 U.S.C. § 3727. The Act's three main objectives are to: (1) prevent the buying up of claims against the government, (2) to avoid multiple payment of claims, and (3) to preserve government defenses and counterclaims which might not be available against an assignee. Kingsbury v. United States, 563 F.2d 1019, 1024, 215 Ct.Cl. 136 (1977). Numerous exceptions to the Act exist when these purposes are not served. The Act does not apply to involuntary assignments, assignments by operation of law, assignments for the benefit of creditors, or subrogation. New York Guardian Mortgagee Corp. v. Cleland, 473 F.Supp. 422, 434 (S.D.N.Y. 1979).
Jim Forsman, President of Bernert Towboat Company, testified that Longview Fibre, the cargo owner, demanded payment from the plaintiff for the lost cargo. He also testified that the plaintiff was not at fault for the cargo loss and that there is no written contract between the plaintiff and cargo owner. When asked why he paid for the lost cargo he replied that the cargo disappeared while on the plaintiff's vessel and he felt the plaintiff had a moral obligation. Longview Fibre is the plaintiff's only customer so as a practical matter it was probably good business judgment to pay for the cargo. The plaintiff claims that this effected an assignment by operation of law.
A contract of private carriage creates a bailee-bailor relationship. The carrier owes the cargo owner a duty of due care and is not an insurer of the cargo. Close v. Anderson, 442 F.Supp. 14, 16 (W.D.Wa. 1977). If the cargo is delivered in good condition and arrives at the destination in a damaged condition a presumption of negligence arises. But the burden to prove that cargo damage is the carrier's fault still rests on the cargo owner. Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. 104, 110, 62 S.Ct. 156, 160, 86 L.Ed. 89 (1941).
I found the plaintiff faultless in the collision. Therefore the plaintiff had no legal obligation to pay for the lost cargo. Longview Fibre had a claim against the government for cargo damage but it is not a party to this litigation. The plaintiff is therefore asserting the cargo owners rights. See The Beaconsfield, 158 U.S. 303, 307, 15 S.Ct. 860, 861, 39 L.Ed. 993 (1895). As such it is a voluntary assignment of the cargo owner's rights to the plaintiff which is technically at odds with the Act[3].
*1461 2. Affirmative Defense
Plaintiff contends that the government waived the defense because it did not raise the Act in its answer. Fed.R.Civ.P. 8(c). Generally, failure to raise an affirmative defense in the answer results in waiver. Allied Chemical Corp. v. Mackay, 695 F.2d 854, 855-56 (5th Cir.1983). However, the defendant raised the Act in the pre-trial order, which has the effect of amending the pleadings. 999 v. C.I.T. Corp., 776 F.2d 866, 870 (9th Cir.1985). See also Fed. R.Civ.P. 16(e); L.R. 235-2(c). The plaintiff claims that amendment through the pre-trial order is ineffective because it unfairly prejudices the plaintiff. Whether or not to grant leave to amend is within the court's discretion. The four main considerations are: "(1) undue delay, (2) bad faith, (3) prejudice to the opponent, and (4) futility of amendment." Gabrielson v. Montgomery Ward & Co., 785 F.2d 762, 766 (9th Cir. 1986).
The government filed its answer in June, 1986. It first raised the Act in rough drafts of the pretrial order in February, 1987. A seven-month delay is long, but the plaintiff still had three months before trial to prepare to meet the defense. There is no evidence of bad faith on the government's part. Allowing amendment is prejudicial to the plaintiff because it bars recovery for cargo loss. However, the plaintiff is not unfairly prejudiced by assertion of a valid defense. I conclude that the pretrial order amended the pleadings and that the government prevails on the anti-assignment issue.
3. Interest
Under the Suits in Admiralty Act and the Public Vessels Act the plaintiff is only entitled to prejudgment interest if provided by contract, 46 U.S.C. § 782, and post judgment interest is limited to four percent. 46 U.S.C. § 743. Two circuit courts have recently held that the government is not liable for interest except as provided by the two statutes. See Transorient Navigators Co., S.A. v. M/S SOUTHWIND, 788 F.2d 288, 293-94 (5th Cir.1986); SCNO Barge Lines, Inc. v. Sun Transp. Co., 775 F.2d 221, 227 (8th Cir.1985). I agree. The plaintiff cannot recover prejudgment interest, and postjudgment interest is limited to four percent.
CONCLUSIONS ON DAMAGES
The government has agreed that pursuant to a finding of liability the amounts set out in the pre-trial order are the proper measure of damages. The plaintiff is awarded damages as set out in the pre-trial order with the exception of the amounts paid to the cargo owner.
This opinion constitutes my findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a).
NOTES
[1] See also Scalici v. Moran Towing, 1986 A.M.C. 2645, 2652 (E.D.N.Y.1986) [Available on WESTLAW, DCT database]; Sweeney v. Car/Puter Intern. Corp., 521 F.Supp. 276 (D.S.C.1981); The MAJESTIC, 48 F. 730 (2nd Cir.1891); Griffin, The American Law of Collision, section 259 (1949).
[2] Under the circumstances, the CHANDLER's speed is as a matter of law a violation of the safe speed rule. The CHANDLER, a 563 foot ship, was traveling in excess of 21 knots up a channel that is about 300 yards wide with shoal water to the port and starboard. There were other vessels on the river, and the prospect of people on the river banks. The damage done to the plaintiff's barge is proof that the CHANDLER's speed was excessive. In addition, there were no extenuating circumstances such as an in extremis situation that required the CHANDLER to travel at a speed that placed life and property in danger. Captain Easley testified that once the B-1 started to list, the MARY B was in danger of capsizing. It may have been good seamanship, or good luck, on the part of the MARY B's crew that prevented more serious consequences from this accident.
[3] Some older cases hold that the Act does not apply to suits under the Public Vessels Act. See Ozanic v. United States, 188 F.2d 228, 231 n. 7 (2nd Cir.1951) (citing cases). This proposition seems questionable at best. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3288106/ | The appeal is on the judgment-roll. The decree of the court required defendant Alpaugh Irrigation District, "upon payment of reasonable cost of furnishing and delivering the same to furnish and deliver to plaintiff, or his successors, upon said land mentioned, and described in the complaint in this action, for irrigation purposes from the water supply and water system formerly owned by said Second Extension Water Company" a certain quantity of water designated and described therein; it also adjudged that said quantity of water is appurtenant to all the real property described in the complaint and belonging to plaintiff, and ordered and directed that plaintiff recover from said defendant the sum of $1,625.60 for *Page 649
failure and neglect to furnish water on said land for irrigation purposes during the irrigation season of 1917.
The defendant, Second Extension Water Company, a mutual water corporation, was incorporated in January, 1906, in accordance with the provision of section 324 of the Civil Code. The by-laws provided that the water should be supplied only to the owners of the stock, and that such stock should be appurtenant to certain lands described in the certificates issued therefor. One hundred and twenty shares of such stock were issued to plaintiff, and in the certificate thereof 120 acres of land belonging to plaintiff were described, and a certified copy of the by-laws of the corporation was recorded with the county recorder of Tulare County wherein the land was situated. It is not disputed that the Second Extension Water Company complied with the provisions of said section 324 and that said shares of stock owned by respondent were and are appurtenant to said 120 acres of land, and it is admitted that, as a stockholder in said corporation, respondent has paid all assessments, calls, and demands thereon.
At a meeting of the stockholders of said corporation held on December 21, 1915, the holders of two-thirds of the issued capital stock authorized, by resolution, the board of directors to sell the water, water rights, and all physical property of the corporation to the Alpaugh Irrigation District, and thereafter, for a valuable consideration, the sale was consummated, and on March 3, 1917, said district entered into actual and exclusive possession and control of all of said physical properties.
The respondent did not consent to such transfer and has at all times vigorously opposed the same.
It is admitted by appellant that, prior to March 3, 1917, "The Second Extension Water Company had regularly furnished respondent the amount of water called for in his certificate of stock for the irrigation of the land described in said certificate, but from and after the date of said transfer neither defendants would furnish him with any water, though he demanded it from both."
Said section 324 of the Civil Code provides that "any corporation organized for or engaged in the business of selling, distributing, supplying or delivering water for irrigation purposes or for domestic use, may in its by-laws *Page 650
provide that water shall only be so sold, distributed, supplied, or delivered to owners of its capital stock and that such stock shall be appurtenant to certain lands when the same are described in the certificate issued therefor, and when such certificate shall be so issued, and a certified copy of such by-laws recorded in the office of the county recorder in the county where such lands are situated, the shares of stock so located on any land shall only be transferred with said lands, and shall pass as an appurtenance thereto."
Section 361a of said code provides how a valid sale may be made of the business, franchise, and property as a whole of any corporation in the state, and it is not disputed that the sale herein was made in compliance with said statutory authority.
[1] The question then to be determined is whether respondent owning certain stock in a mutual water corporation, such stock being appurtenant to certain land and therefore real property, lost his right to demand water when the corporation, without his consent, sold all its water rights and physical property, or whether the vendee must continue furnishing water to respondent. The question has been decisively answered by the supreme court in favor of respondent's contention, and extended consideration would therefore seem to be unnecessary.
In South Pasadena v. Pasadena L. W. Co., 152 Cal. 579, [93 P. 490], the question arose in reference to a corporation engaged in supplying water for public use, and the supreme court held that such water company by complying with the provisions of said section 361a could transfer "its business, franchises, and property as a whole," but that "the transferee would take the franchise and property pertaining to it subject to all its burdens, and so long as it held it, would be obliged to continue the performance of the public service to which it had been dedicated, and that all the persons to whose use the water is appropriated or dedicated are vested with a right to have the supply continued by whosoever may be in control thereof, and may enforce such right by a proceeding in mandamus
against the person in control of the supply and the works by which it is distributed, regardless of the title, to compel the continuance of the distribution, *Page 651
in the usual and proper manner, to those entitled."
In that case the water was a public utility, and appellant seeks to distinguish it from this upon the ground that herein only a private right of property is involved.
But in Orcutt v. Pasadena L. W. Co., 152 Cal. 599, [93 P. 497], it is held that the rule is the same where the water is appurtenant to the land and is a private right of property. Therein it is said: "The plaintiffs are residents of the portion of South Pasadena supplied with water by the defendant company, and owners of land therein, and it is alleged that a certain share of said water is appurtenant to the respective tracts of land for irrigation and domestic use thereon. They sue on behalf of themselves and of others having similar rights. The fact that the right to receive the water is appurtenant to the land and is a private right of property, and not a mere right as one of a class entitled to share in a public use, does not in any way materially distinguish the case from South Pasadena v. Pasadena L. W. Co."
This view is not in conflict with said section 361a of the Civil Code. While the section authorizes the sale of the business, franchise, and property of the corporation as a whole, it does not nor does it purport to relieve the system of the burden of a vested interest in a portion of the water belonging to a nonconsenting stockholder. In fact, he could not legally be thus deprived of such real property. This right of property does not belong to the corporation, and the owner of it could be divested of it "only by operation of law, or by an instrument in writing, subscribed by the party disposing of the same, or by his agent thereunto authorized by writing." (Sec.1091, Civ. Code.) The sale by the corporation was manifestly in its individual capacity and not as an agent or instrumentality of the government. Hence, the sale was not by operation of law. (Klauber v. San Diego St. Car Co., 95 Cal. 353, [30 P. 555].) The owner himself could have transferred his right to the water and thus have severed the appurtenance from the land itself (Estate of Thomas, 147 Cal. 236, [81 P. 539]), but that is, clearly, not this case.
The fault of appellant seems to be principally in assuming that the interest of the stockholder, as in the ordinary *Page 652
corporation, is confined to the right to participate in the profits of the business, and the distribution of the assets. Such was the situation in the cases cited by appellant:Wright v. Oroville Gold etc. Co., 40 Cal. 20; Kohl v.Lilienthal, 81 Cal. 378, [6 L. R. A. 520, 20 P. 401, 22 P. 689]; Hobbs v. Tom Reed etc. Co., 164 Cal. 497, [43 L. R. A. (N. S.) 1112, 129 P. 781]. They involved mining corporations, and the shares of stock therein did not represent a vested interest that was appurtenant to land.
In the first of these it was said: "The mere legal title to this mining property is undoubtedly vested in the corporation itself, and not in the stockholders as such. The board of trustees may, therefore, control the property, provided that, in doing so, it do not act beyond the limit which the law has assigned to the exercise of corporate authority."
So in Kohl v. Lilienthal it is said: "Stockholders have no legal title to the property of the corporation. That remains in the corporation, and the shares simply represent the right of the shareholders to share in the distribution of the profits of the corporation, and in the final distribution of its estate when it shall cease to exist and its estate shall have been finally administered."
Likewise, in the Hobbs case the declaration is: "A corporation is the agent and trustee of its stockholders, in their behalf and for their use and benefit holding, controlling, and managing the corporate property and business."
Herein there can be no objection to the sale of the business or of the assets of the corporation, but the stock represents an additional element, an interest in real property, which constitutes a private vested right that the owner may continue to assert, notwithstanding the property of the corporation has been sold. He is bound by the sale to the extent of the ordinary incidents of stock in a corporation and he must accept service of the water from the vendee, but the law does not place in the hands of any number of his fellow-stockholders the power to take away at their will this property right, which the stockholders by their own contract have made appurtenant to plaintiff's land. *Page 653
Indeed, the decision of the supreme court is a necessary conclusion from the language of section 324 providing that "the shares of stock so located on any land shall only be transferred with said lands, and shall pass as an appurtenant thereto."
We may add that in section 1473 of Kinney on Irrigation and Water Rights (second edition) the learned author says: "Not only may a corporation purchase from individuals or other corporations certain portions of their property and rights, but an incorporated water company has the power to purchase from another corporation, and the latter corporation has the power, with the assent of the requisite number of stockholders required by the law, to legally sell and convey to another corporation all of its property, including its water rights, rights of way, diverting and carrying works, franchises and business, and all other personal and real property of whatsoever kind or nature, if the same is done in good faith, and not for the purpose of delaying or defrauding creditors.
"But the rights of consumers which vested under the operations of the selling corporation are not affected by the transfer to another company, but they have the right to have the water supply 'continued by whomsoever may be in control thereof.' "
We conclude that respondent's water right is his vested private property appurtenant to his land of which he cannot be divested except by his own conveyance, or by operation of law, that no such transfer has been made; that the purchaser took the property of the Second Extension Water Company subject to this vested right of plaintiff and that he is entitled to a continued service of water from the system.
The judgment is affirmed.
Prewett, P. J., pro tem., and Hart, J., concurred.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on May 2, 1921.
All the Justices concurred. *Page 654 | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3288109/ | This is an appeal from a judgment of nonsuit in an action to recover for personal injuries. The respondents have filed no brief. According to the evidence presented by the appellant in her brief she was standing on the sidewalk at the northeasterly corner of Sixth and Alvarado Streets in Los Angeles at about 12 o'clock noon on June 12, 1927. The intersection is provided with signals. She waited for the traffic going north and south on Alvarado Street until she heard the first bell, when she started to cross Alvarado Street. She had taken two or three steps when the automobile driven by the respondent Elaine L. Schuck attempted to turn to the right from Sixth Street into Alvarado Street, ran into her from the rear and struck her down. There is evidence to indicate that the respondent Schuck was confused in the signals. According to the testimony of appellant the former said that she thought she could make it before the second bell rang. There was testimony to the effect that respondent Schuck for some time prior to June 12th had been living with her sister and brother-in-law, the other respondents; that the automobile belonged to her sister, Marie Prescott, who on the day of the accident was in San Francisco, but who had let respondent Schuck have the key to the car; that she asked her brother-in-law about using the car, but he said "no". She took it anyway. Miss Shuck also testified that all three of them operated the same car. *Page 106
The judgment must be reversed. [1] In the absence of proof of the ordinance relating to the signals established at the intersection we must consider the case simply as one where the automobile overtook and ran down the appellant from the rear.[2] The rules of law applicable in such a case are: First, the pedestrian "is not guilty of contributory negligence as a matter of law because of a failure to look behind him and discover an approaching car which may heedlessly run him down" (Burk v.Extrafine Bread Bakery, 208 Cal. 105 [280 P. 522, 524], and cases cited); second, the operator of an automobile is bound to anticipate that he may meet persons on the street and he must in order to avoid a charge of negligence "keep a proper lookout for them and keep his machine under such control as will enable him to avoid collision with another person using proper care and caution and if the situation requires, he must slow up and stop" (Reaugh v. Cudahy Packing Co., 189 Cal. 335 [208 P. 125, 127]; Rush v. Lagomarsino, 196 Cal. 308 [237 P. 1066]); third, the driver of a motor vehicle must before turning see that such movement can be made in safety, and if it cannot be made in safety must wait until it can be so made. (California Vehicle Act, sec. 130; Deering's Gen. Laws, 1923, p. 1891, Act 5128.)[3] Applying these rules to the instant cause it is patent that there was sufficient evidence of negligence on the part of the respondent Schuck that the court should under proper instructions have left the cause to the jury, at least so far as the respondent Schuck is concerned.
[4] Concerning the respondent Marie Prescott, who it was testified was the owner of the automobile, the law is established that an inference of agency arises between the owner of a motor vehicle and the driver from the fact of ownership, and is sufficient to make out a prima facie case (Perry v.Paladini, 89 Cal.App. 275 [264 P. 580]; Hathaway v.Matthews, 85 Cal.App. 31 [258 P. 712].) The nonsuit was therefore improperly granted as to the respondent Marie Prescott.
[5] However, the husband is not liable for the torts of his wife and there was no evidence to establish an agency between him and his sister-in-law. In fact, the only evidence upon this phase of the question was to the effect that *Page 107
he told her she could not take the car. The motion was properly granted as to him.
Judgment affirmed as to respondent Robert L. Prescott and reversed as to respondents Elaine L. Schuck and Marie Prescott.
Works, P.J., and Craig, J., concurred. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3283740/ | This is a creditor's suit to set aside a conveyance, executed by defendant McKamy to defendant *Page 269
Keester, alleged to have been made with intent to hinder and delay plaintiff in collecting a judgment for five hundred dollars that had been given and made in his favor against McKamy in a proceeding under section 772 of the Penal Code to oust the latter from his office of city marshal of the city of Bakersfield — a proceeding wherein plaintiff here was the informer. From a judgment in favor of plaintiff adjudging that the conveyance to Keester was fraudulent and void and setting it aside, and likewise from an order denying their motion for a new trial, defendants have appealed.
[1] Notice of appeal from the order denying the motion for a new trial having been filed after section 963 of the Code of Civil Procedure had been amendel in 1915, [Stats. 1915, p. 209], the attempted appeal therefrom must be dismissed.
Respondent's right to the relief he here seeks depends upon whether he is a judgment creditor of McKamy, the grantor in the conveyance sought to be set aside. Whether he is such a creditor, or even a general creditor of McKamy, depends upon the validity of the judgment in the ouster proceeding, wherein the superior court of Kern County adjudged that McKamy be deprived of his office as city marshal of Bakersfield and that the informer, W. C. Dorris, the respondent here, recover of and from McKamy the sum of five hundred dollars.
Section 772 of the Penal Code authorizes the superior court to entertain an accusation made under oath by a private citizen against an official within its jurisdiction, charging him with having collected illegal fees or with having refused or neglected to perform the official duties pertaining to his office; and on conviction the court must enter a decree that the accused be deprived of his office, and give judgment for five hundred dollars in favor of the informer. [2] An accusation presented under this section of the Penal Code is an accusation of a public offense, to wit, neglect of official duties, or misfeasance in office. The proceeding is a criminal proceeding, and, in its nature, a prosecution for crime, the penalty wherefor is removal from office and a fine of five hundred dollars that goes to the informer. (In re Curtis,108 Cal. 661, [41 P. 793]; Wheeler v. Donnell, 110 Cal. 655, [43 P. 1]; People v. McKamy, 168 Cal. 531, [143 P. 752].)
[3] If the verified accusation against McKamy wholly failed to state a case sufficient to constitute an offense under *Page 270
the criminal law of the state, the court was without jurisdiction in the proceeding to oust him from office, and the judgment for five hundred dollars in favor of the respondent here — a sine qua non to his right to the relief here sought by him — was a nullity.
Courts derive their jurisdiction from the law. In criminal cases their jurisdiction extends to such matters as the law has declared criminal, and none other; and when they undertake to punish for an offense to which no criminality attaches, however reprehensible such offense may be in foro conscientiae, they act beyond their jurisdiction. (In re Corryell, 22 Cal. 178.) Hence the rule is that if an indictment, information, or written accusation — the very groundwork of the whole superstructure thereafter to be built thereon — charges or purports to charge acts which do not constitute any crime known to the law, the court is without jurisdiction, and the sentence or judgment is subject to collateral attack, as, for instance, in a habeas corpus proceeding. (In re Corryell, supra; Ex parteHarrold, 47 Cal. 129; Ex parte Kearny, 55 Cal. 212; In reKowalsky, 73 Cal. 121, [14 P. 399]; Ex parte McNulty, 77 Cal. 164, [11 Am. St. Rep. 257, 19 P. 237]; Ex parte Goldman, 7 Cal. Unrep. 254, [88 P. 819]; Hutton v. Superior Court,147 Cal. 156, [81 P. 409]; In re Worthington, 21 Cal.App. 497, [132 P. 82]; In re Wilson, 30 Cal.App. 567, [158 P. 1050];Siebe v. Superior Court, 114 Cal. 551, [46 P. 456]; Ferguson
v. Superior Court, 26 Cal.App. 554, [147 P. 603]; Ex parteNeet, 157 Mo. 527, [80 Am. St. Rep. 638, 57 S.W. 1025]; Exparte Show, 4 Okl. Cr. 416, [113 P. 1062]; Ex parte Beall, 28 Okl. 445, [114 P. 724]; Ex parte Roquemore, 60 Tex. Cr. 282, [32 L. R. A. (N. S.) 1186, 131 S.W. 1101].) In Siebe v.Superior Court, supra, speaking of an accusation filed under section 772 of the Penal Code, the court said: ". . . and unless the accusation charges the officer with a violation of his official duties in respect to one or the other of these particulars, the court has no jurisdiction in the matter." (The italics are ours.) In Ex parte Harrold, 47 Cal. 129, the petitioner for the writ of habeas corpus had been tried and found guilty as alleged in an indictment charging him with "willfully omitting as a public officer to perform a duty enjoined by law upon him." It was charged in the indictment that he had failed to reside at the county seat. It was contended by the attorney-general *Page 271
that this was a "willful omission to perform a duty enjoined by law upon a public officer," within the meaning of section 176 of the Penal Code. It was held that the failure to reside at the county seat was not an "omission to perform any duty enjoined by law upon a public officer," and that, therefore, the indictment did not charge any offense. Because the facts set forth in the indictment did not constitute any crime known to the law, it was held that the petitioner was entitled to his discharge. In Ferguson v. Superior Court, 26 Cal.App. 554, [147 P. 603], it was held that if an accusation under section 772 of the Penal Code does not state facts sufficient to constitute a ground for the officer's removal, the court is without jurisdiction to entertain the proceeding, and the officer is entitled to a writ of prohibition restraining the trial court from proceeding further in the matter. The rule is clearly and concisely stated by the Montana supreme court as follows: "If an information states facts which do not constitute any crime known to the law, or undertakes to state such an offense, but the facts stated do not constitute the offense, and no addition to them, however full and complete, can supply what is essential, then the court is without jurisdiction to put the complainant on trial. In such case the judgment cannot be corrected. It is simply void." (In reFarrell, 36 Mont. 254, [92 P. 785].) In Ex parte Ruef,150 Cal. 665, [89 P. 605], the court, recognizing a distinction between proceedings in courts of inferior as distinguished from courts of general jurisdiction, held that, where the criminal proceeding is one pending in a court of general jurisdiction and the indictment or information purports or attempts to state an offense of a kind of which the court has jurisdiction, the question whether the facts charged are sufficient to constitute an offense of that kind will not be examined into on a collateral attack. As we understand this statement of the rule, it amounts practically to this: If it can be deduced from the accusation that the prosecutor intended to charge an act or an omission which is a crime known to the law, the court has jurisdiction and habeas corpus will not lie, however defectively the act or omission be described. But if the act or omission charged or attempted to be charged as an offense is not a crime known to the law, then the court is without jurisdiction, and its judgment a nullity. We think the only conclusion that is consistent with the weight of authority and the *Page 272
decisions of our own supreme court is that if the accusation filed against McKamy states facts which do not constitute any crime known to the law of this state, the court was without jurisdiction, and its judgment void.
Did the accusation state facts that constitute any offense known to the criminal law of this state? [4] We think not. It did not differ in any material respect from that held to be insufficient in Ferguson v. Superior Court, 26 Cal.App. 554, [147 P. 603].
The written accusation presented to the superior court for McKamy's removal from office alleges that, at the times therein mentioned, he was the city marshal of Bakersfield; that in that city there was at that time a large number of women living in houses of prostitution or cribs, maintaining or keeping said places as disorderly houses or houses of illfame; that such houses had been resorted to by divers and sundry persons for the purposes of prostitution; and that such women kept such places as houses of ill-fame for the purposes of prostitution. Then follows, in paragraph III, a description of the houses or cribs, and the allegation that "such places have been erected, maintained, leased, and, let" for the purposes of prostitution and lewdness, and that "the occupancy and living in said houses" by said women "has been open and notorious," and that the women in said places "dress and conduct themselves in a vile and indecent manner, as follows: That said women and girls will leave said cribs and solicit, entice, and invite those passing thereby to visit them therein for the purposes of prostitution and lewdness." Then follows paragraph IV, which is as follows: "That during all of the times above mentioned, said defendant James McKamy has had knowledge of the fact that said women were doing the things and performing the acts as in the paragraph last hereinbefore alleged [i. e., the third paragraph], and that he has failed, refused, and neglected, and still fails, refuses, and neglects to cause the arrest or prosecution of the said women, or any of them, for said acts, but permits them to occupy the said cribs as hereinabove alleged, without molestation or force against them."
Nowhere in the accusation is it alleged, nor is it even claimed, that any warrant was ever delivered to McKamy for the arrest of any of the persons referred to in the accusation. The offenses which the accusation attempts to allege were *Page 273
committed by the women whom McKamy failed to arrest were misdemeanors only. (Pen. Code, secs. 315, 316, 318.)
In Ferguson v. Superior Court, 26 Cal.App. 554, [147 P. 603], it is held that where the only special charges of neglect on the part of the officer to perform his official duties are, first, his failure "to cause the prosecution or the arrest of any persons letting cribs for the purposes of prostitution," and second, his failure to cause the prosecution or arrest of "any of the persons residing therein," the accusation fails to state facts sufficient to constitute a ground for the officer's removal. It was held in that case that the accusation was insufficient to give the court jurisdiction to remove the officer, even though it alleged that he had knowledge of all the facts respecting such letting of the cribs and residence therein; and that, while the code provides that in prosecutions for keeping a house of prostitution, common repute may be received as independent evidence of the character of the house and the women resorting to it, the failure of a peace officer to act upon such common repute in arresting the keeper or the inmates thereof does not constitute a neglect of official duty, although it might excuse such action if he did arrest them.
[5] Where, as in the accusation in question here, it is sought to remove a peace officer from his office upon the ground that he "has refused or neglected to perform the official duties pertaining to his office," in that he has refused or neglected to arrest, for a crime amounting to a misdemeanor only, some person whom, it is claimed, it was his duty to arrest — no warrant for such arrest having been issued — two things are essential: (1) That the person whom it is claimed should have been arrested committed or attempted to commit a misdemeanor; and (2) that the misdemeanor was committed or attempted to be committed in the officer's presence. A peace officer has authority to make an arrest for a misdemeanor only when he is armed with a warrant or the crime is committed in his presence. (Pen. Code, sec. 836.)
The accusation against McKamy fails to allege, not only that any warrant had been delivered to him, but that any of the women had committed, in his presence, any act sufficient to constitute any offense denounced by any Penal Code section to which our attention has been called. The charge in the accusation is that McKamy "has had knowledge of the *Page 274
fact that said women were doing the things and performing the acts as in the paragraph last hereinbefore alleged," i. e., paragraph III. The only acts that paragraph III alleges were committed by the women are: 1. Occupying and living in said houses of prostitution openly and notoriously; and 2, Dressing and conducting themselves "in a vile and indecent manner, as follows: That said women and girls will leave said cribs and solicit, entice, and invite those passing thereby to visit them therein for the purposes of prostitution and lewdness." It is not alleged that the women "willfully" lived in or occupied the houses, though the language of section 315 of the Penal Code is that "Every person who . . . willfully resides in such house, is guilty of a misdemeanor." As to the alleged soliciting and enticing, it it not alleged that any unmarried female was enticed — the crime denounced by section 266 of the Penal Code — nor that, by reason of such soliciting, enticing, or inviting, any person was "prevailed upon" to visit the room of any of the lewd women — the offense denounced by section 318
of the Penal Code. Our attention has not been called to any other code section making it an offense to solicit, entice, or invite.
An analysis of the language of the accusation whereby it was sought to deprive McKamy of his office discloses that the alleged neglect of official duty with which he was charged was not stated so strongly as in the similar case against Ferguson — the petitioner for the writ in Ferguson v. Superior Court,26 Cal.App. 554, [147 P. 603]. For the reasons set forth in that case, with which we agree, we hold that the accusation against McKamy did not state facts sufficient to give the court jurisdiction to punish him by depriving him of his office and adjudging that he pay a fine of five hundred dollars to the informer, the plaintiff in this action.
Respondent seeks to differentiate the accusation here in question from that presented against Ferguson by arguing that the accusation against McKamy alleges that he"permits" the women "to occupy said cribs as hereinbefore alleged." The word "permit" is a word of considerable elasticity; it lacks clearcut and precise definiteness. As defined by Webster and others, "permit" implies no affirmative act. It involves no intent. It is mere passivity, abstaining from preventative action. (In re Thomas, 103 Fed. 272, 274.)[6] An allegation that McKamy "permits" the women to occupy *Page 275
the cribs amounts to no more than that having received no warrant issued upon a complaint sworn to by some person moved thereto by a proper sense of civic duty, and not having seen, "committed in his presence," any acts sufficient to constitute any of the offenses denounced by the Penal Code, he made no arrests.
While, in the light of the facts alleged in the accusation, McKamy's failure to swear to a complaint, as any private citizen might have done, indicates a lack of appreciation of the duties that devolve upon every decent citizen having knowledge of facts sufficient to justify the honest belief that misdemeanors have been committed, nevertheless, as was said in the Ferguson case, "We cannot subscribe to the proposition that the failure of an officer, without process, to make an arrest under such circumstances, or to swear to a complaint and cause the prosecution of the offenders, constitutes a misdemeanor, to wit, neglect of official duties, for which he may be removed from office. Under such circumstances, to subject him to a prosecution under the provisions of section 772 of the Penal Code, at the relation of one seeking to recover the five hundred dollar penalty provided therein, would not only impose unnecessary and intolerable burdens, but strip him of all discretion in the making of arrests for misdemeanors, and require him at his peril to make arrests of vagrants, prostitutes, and inmates of houses of prostitution upon common repute or information."
The accusation here in question is not simply a case where the document has been inartificially drawn, or a case where it intimates the existence of facts necessary to the constitution of the offense denounced by section 772 of the Penal Code, or even an attempted statement, insufficient, but indicating a purpose to declare on the essential facts. There is here a total failure to allege any offense for which McKamy may be punished by removal from office; and that the court was without jurisdiction and the judgment a nullity is the only conclusion that accords with such cases as Ex parte Harrold, 47 Cal. 129;Siebe v. Superior Court, 114 Cal. 551, [46 P. 456], andFerguson v. Superior Court, 26 Cal.App. 554, [147 P. 603]. Tested by the rulings in those cases, the accusation was not merely defective, or technically insufficient, not merely demurrable or subject to a motion to quash, but, in the language of Ex parte Show, 4 Okl. Cr. 416, [113 P. 1062], "it was *Page 276
elementally and fundamentally defective in substance, so that it charged a crime in no manner or form and by no intendment."
For these reasons we hold that respondent never was a creditor of McKamy.
Other points are made, but what has been said is sufficient to dispose of the appeal.
The appeal from the order denying the motion for a new trial is dismissed.
Judgment reversed.
Sloane, J., and Thomas, J., concurred. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3283741/ | The action was for damages for the death of Joseph G. Ward, the husband of plaintiff, and the jury found a verdict in her favor for the sum of four thousand five hundred dollars. The particular acts of negligence on the part of defendant upon which the action was based are set out in the complaint as follows: "That on and prior to the nineteenth day of May, 1916, the said defendant was engaged in the business of interstate commerce as a common carrier of freight and passengers in the county of Placer, state of California; that at said time said defendant was engaged in tearing down and removing certain snowsheds along its railroad line near Immigrant Gap, in said county; that on said day, and immediately prior thereto, said Joseph G. Ward, deceased, was employed by said defendant as foreman of certain other employees of said defendant who were engaged in said work upon said snowsheds; that on said day there were two other employees of said defendant, whose *Page 184
true and correct names are unknown to this plaintiff and are therefore styled as John Doe and Richard Roe, who were engaged in throwing certain pieces of timber from the top of said snowsheds to the ground after removing them from said snowsheds; that while engaged in throwing said timber from the snowsheds to the ground as aforesaid, the said employees, John Doe and Richard Roe, so carelessly and negligently conducted themselves as to cause said timber which they were throwing to the ground to fall in an opposite direction from that to which they had been directed to throw it, thereby causing said timber to fall against an upright post, a portion of said snowsheds, causing said upright post to be broken away and knocked loose from the supports which maintained said upright post in an upright position. That immediately prior thereto the said Joseph G. Ward, deceased, had caused a rope to be tied to the upright post last above referred to and had caused said rope to be wound loosely around another upright post, situate about twenty feet, more or less, north of the upright post first hereinabove mentioned; that at the said time last mentioned the said Joseph G. Ward, deceased, instructed and directed another employee of said defendant, whose true and correct name is unknown to the plaintiff and who is therefore styled as Peter Smith, to manage and hold the other end of said rope in such manner as to control the falling of the upright post to a point designated by the said Joseph G. Ward, deceased; that at the time said upright post was broken away and knocked loose from its supports, through the carelessness and negligence of the said John Doe and Richard Roe, as above mentioned, the said Peter Smith so carelessly and negligently conducted himself as to cause said upright post first above mentioned to fall upon the said Joseph G. Ward, deceased, whereby the skull of the said Joseph G. Ward was fractured and death ensued therefrom almost immediately thereafter." The claim is thus apparent that two acts of negligence concurred in producing the unfortunate result; one being the careless removal of the timber from the top of the snowshed, and the other the improper use of the rope attached to the upright, which fell against the deceased and caused his death. *Page 185
The following diagram and reference points will tend to elucidate the situation:
[EDITORS' NOTE: DIAGRAM IS ELECTRONICALLY NON-TRANSFERRABLE.]
"REFERENCE POINTS ON PHOTOGRAPH."
A — Main line track.
B — Siding track.
C — Turntable track.
D — Switch.
E — Where Ward ran to when timber started to fall.
F — Upright which fell.
G — Cross-beam which De Neef and Clark rolled off.
H — End of cross-beam where De Neef was working.
I — Upright supporting north end of cross-beam "G."
J — Upright to which Marsh tied rope.
K — Joist upon which De Neef was sitting while rolling off crossbeam "G."
L — End of cross-beam where Clark was working.
M — Where plate broke when upright "F" fell.
O — Where Ward was struck by post.
W — Point where Ward and Marsh were when Ward gave orders to Marsh and Smith.
X — Post around which Smith had taken turn with rope "8" attached to upright "I."
Y — Plate that broke when cross-beam "G" was rolled off.
Z — Where Ward stood before timber fell.
1 — End of plate "5" where sawed off flush with cross-beam "G."
2 — End of plate "Y" where sawed off flush with cross-beam "G."
3 — Joist upon which Clark was sitting while rolling off cross-beam "G."
4 — Brace struck by cross-beam "G" in falling.
5 — Plate.
6 — Upright.
7 — Upright.
8 — Rope tied by Marsh.
Of the undisputed facts, we may state that the two employees engaged in removing the timber from the top of the snowshed, named Clark and De Neef, at the time of the accident, were using crowbars to detach a beam, sixteen feet in length and weighing seven hundred pounds, from the top of two uprights twenty-two feet from the ground and each upright weighing about four hundred pounds. There uprights and the beam were standing on a north and south line. Clark, seated on a support near the top of the southern upright, was working at the south end of the beam, and *Page 186
De Neef, similarly situated, was engaged at the north end of the beam.
The case of plaintiff, as to the first instance of negligence, really hinges upon the conduct of De Neef in prying off the northern end of the beam while the southern end was still attached to the southern upright. That this condition existed appears from the testimony of De Neef himself and of one Thomas J. Smith. As to the testimony of the former the record shows the following: "Q. Describe to the jury how the beam was removed in this particular case, how it fell to the ground if it did. A. My end of the beam seemed to go down a little ahead of the other end. Q. Describe what happened after that. A. I believe that — although I am not certain — that it struck the brace, started to strike the brace which is attached to the post and in that way started the post to fall in Ward's direction, or across the track. Q. I understand you to say that your end of the beam was pried off before the other end, is that correct? A. That was evident."
Mr. Smith testified: "The end Mr. De Neef was working on came off at the plate before the other end had — dropped in kind of a diagonal, here it struck on this brace, this small end of that about where the braces were fastened to the posts somewhere in that neighborhood." It may be added that he and other witnesses illustrated their testimony and no doubt made it plainer to the jury by reference to a model of the snowshed, which model was used at the trial and also at the oral argument in this court.
The beam was fastened to the plates and uprights by spikes, and it is a reasonable, if not necessary, inference that De Neef pried off his end of the beam before Clark had loosened his from the plate to which it was spiked. Of course, this was a very important matter. They were engaged in a very dangerous business at best, but the danger to themselves and others would be greatly increased by casting one end of the beam from the uprights while the other was still attached. This would be manifest to the average juror, as indeed to anyone familiar with the fundamental laws of physics and such a simple mechanical contrivance as the snowshed. No doubt Clark and De Neef knew that the safer course — indeed, the only proper course — was to project both ends of the beam from the uprights at *Page 187
practically the same time. In fact, De Neef testified that Ward told him "to roll them off to lay flatly on the ground." The direction was intended, and was so understood, to mean that the beam was to be rolled off so as to fall in a horizontal position as nearly as possible. In order to accomplish this, Clark and De Neef should have been careful to see that the spikes were removed or, at least, that they were so loosened from both ends that the beam would fall properly. These workmen were only sixteen feet apart, and both could easily ascertain the conditions at the other end of the beam. It also appears from the testimony of De Neef that the beam could have been turned over upon the plates before it was thrown down. Indeed, he testified that it was so turned over, but this is manifestly inaccurate, as the evidence shows that it was still fastened at Clark's end when De Neef threw it off. We think it cannot be said to be an irrational inference from all the circumstances that said workmen were chargeable with the want of due care, either in failing to remove the spikes or in turning the beam to ascertain whether it was clear, before hurling it to the ground. We may not be able to say just why it fell as it did. Probably the jury had no decided opinion as to that, but it was and is a rational conclusion that it would have fallen without causing any injury if the workmen had exercised the ordinary precaution which the peculiar situation demanded.
That the method pursued resulted in the fall of the upright and thereby contributed directly to the death of Ward is hardly open to controversy. The beam swung in the arc of a circle and struck the brace of said upright with such force as to break the plate at the top and to precipitate the heavy timber to the ground. If the beam had been thrown in the usual and safe manner, the probability is — and, of course, these cases must be decided upon probabilities — that it would have fallen clear of the timbers, and Ward would have suffered no injury. He expected it to fall that way and had stationed himself accordingly. However, in consequence of the unusual and dangerous direction taken by the beam, it appeared to him necessary to change his position. Indeed, it is a fair inference from the testimony of Smith and De Neef that the beam started to fall toward Ward, and his action in moving away in the easterly direction would *Page 188
tend to confirm this inference. It is not to be supposed that he would have taken this step unless he had reason to believe that he would thereby promote his own safety.
[1] Instead of escaping the danger, the result proved, however, that Ward, by changing his place, brought himself in contact with the falling timber and consequently lost his life. But it is entirely plain that the court cannot hold him chargeable with contributory negligence because of the change in his position. As to this, it must be remembered that the burden of proof was upon defendant and that the presumption was and is that he had a justifiable reason for his conduct. This presumption was confirmed by the testimony showing how the upright started to fall. Ward was watching the process, and, seeing the timber falling toward him, what more natural thing than for him to move away from it? The fact that the upright shifted its course was a matter that he could not be supposed to anticipate. In fact, as to this circumstance, we may add, there is evidence in the record justifying the inference that this change was due to an act of one March, an employee of defendant, in tying the rope — marked 8 in the diagram — to the upright directly east of the one that fell. He was given direction by Ward not to tie the rope, but to take a loop around said upright and hold it loosely. The other upright starting to fall in a southerly direction at right angles to this rope would, of course, be subject to its restraining power, and the resultant of the two forces would be the fall of the timber in a southeasterly direction. That seems plain enough, and it constitutes another circumstance tending to justify Ward's conduct, as he had no knowledge that the rope was so tied. Moreover, if necessary, Ward's conduct could be excused by the application of the familiar principle as to the degree of care required of a person suddenly placed in a position of grave peril, but we are entirely satisfied that as to this defense the verdict of the jury is sufficiently supported, not only by the presumptions that naturally attach to the case, but also by a strong and rational inference from all the facts and circumstances revealed by the evidence.
[2] There is, as already suggested, another theory upon which the verdict may be affirmed, regardless of the question whether Clark or De Neef, or both, were guilty of any *Page 189
negligence. We may, indeed, acquit them of any want of due care in rolling the beam from the uprights, and still there is evidence to justify the conclusion that Ward would have escaped if it had not been for the hidden danger caused by the tying of the rope; that the latter circumstance was a proximate cause of his death, and was due to the negligence of the defendant through its servant in violating the order given by the deceased.
We deem it unnecessary to dwell longer upon the evidence. We may add, however, this reflection, that we have given it anxious attention, and while it has caused us some difficulty, yet no more so than most of this class of cases that we are called upon to consider. Indeed, it seems to us, there is less reason for a reversal here than in a large number of damage suits wherein the judgments have been affirmed.
As to the general aspect of the case, it is not improper to suggest the significance of certain rather striking circumstances disclosed by the record. One of these is the fact that an important witness for plaintiff — and called by her probably from necessity — was under great inducement to make the circumstances appear as unfavorable as possible to her contention. In fact, one theory upon which she relied involved the charge of negligence on the part of said witness, De Neef. His natural desire for vindication was, no doubt, appreciated and properly gauged by the jury. Again, the case seems to have been tried with great care, the rulings were uniformly just, the law was given to the jury with clearness and accuracy, no complaint whatever being made by appellant of the action of the court in any of these respects, and the jury displayed great moderation in awarding only the sum of four thousand five hundred dollars for the death of a strong, capable man in the prime of life.
Of course, these circumstances, of themselves, are not sufficient to justify the verdict, but believing that it is warranted by the evidence, we refer to them as confirmatory of the statement that this case is somewhat unusually free from error.
[3] The only other point made by appellant was suggested for the first time at the oral argument in this court, and that is, that the complaint does not state a cause of action, for the reason that there is no positive allegation of *Page 190
pecuniary loss on the part of plaintiff occasioned by the death of her husband. The matter is learnedly discussed by the able counsel for appellant, and several cases are cited in support of the contention, the one chiefly relied upon beingGarrett v. Louisville N. R. Co., 235 U.S. 308; [59 L.Ed. 242, 35 Sup. Ct. Rep. 32, see, also, Rose's U.S. Notes]. From this decision the following quotation is made: "Where any fact is necessary to be proved, in order to sustain the plaintiff's right of recovery, the declaration must contain an averment substantially of such fact in order to let in the proof. Every issue must be founded upon some certain point, so that the parties may come prepared with their evidence, and not be taken by surprise and the jury may not be misled by the introduction of various matters (citing cases). The plaintiff's declarationcontains no positive averment of pecuniary loss. . . . Nor does it set out facts or circumstances adequate to apprise the defendant with reasonable particularity that such loss in fact was suffered. . . . The rights of the defendant must be given effect."
This and other citations are reviewed by respondent and the peculiar facts in the various decisions are pointed out and distinguished, but we do not feel called upon to report the matter more specifically. It ought to be sufficient, we think, to say that respondent alleged in her complaint "that the said Ethel Julia Ward has been damaged through the negligence of said defendant and by the death of her said husband in the sum of fifty thousand dollars." If that is not equivalent to an averment that she has suffered pecuniary loss by the death of her husband in the sum of fifty thousand dollars, then we must admit that the significance of the language is not apparent to us. At any rate, it is an imperfect allegation of the fact, and when we consider that no such objection was made at the trial, that, on the contrary, appellant denied in the answer that she suffered any damage by the death of her husband and the evidence was introduced upon the theory that the fact was properly in issue, under numerous decisions of this and other courts, the error, if any, is absolutely without prejudice. (Slaughter v. Goldberg-Bowen Co., 26 Cal.App. 318, [147 P. 90]; Boyle v. Coast Imp. Co., 27 Cal.App. 714, [151 P. 25].) *Page 191
It appears to us that the law requires us to affirm the judgment, and it is so ordered.
Hart, J., and Chipman, P. J., concurred.
A petition for a rehearing of this cause was denied by the district court of appeal on August 9, 1919, and the following opinion then rendered thereon:
THE COURT. — [4] In its petition for rehearing, appellant emphasizes the point that Ward assumed the risk that was incident to such negligence as caused the accident. The contention is manifestly based upon the assumption that he should have anticipated that De Neef would negligently pry off his end of the beam before the other was loosened. If that is to be held as a matter of law, it seems to us it would sweep away the right of a foreman to recover for any negligence of the workman. The danger of so treating the beam was so obvious that it would not be necessary to caution the man of ordinary intelligence against such conduct, nor do we think it should be anticipated that anyone would be so reckless. We may add, however, that the instruction which was given by Ward as to how the beam should fall would clearly imply that both ends of it were to be loosened before either was projected from the upright.
Appellant thinks an inconsistency appears in the opinion by reason of the statement: "We may not be able to say just why it fell as it did. Probably the jury had no decided opinion as to that." Of course, the statement in the first of these sentences must be true, regardless of the soundness of our opinion as to the merits of the appeal. The second sentence is susceptible of misunderstanding, as it has been misunderstood by the learned counsel. What we had in view was the whole situation, the entire cause of the peculiar direction taken by the beam, and what was said was really in response to various speculations of appellant as to the many circumstances that may have contributed to the result. The statement is not a full and accurate expression of what was intended, clarity being somewhat sacrificed to conciseness.
We still think the jury may not have had a decided opinion as to all these circumstances. But if they believed, as they undoubtedly did, that the negligence of defendant's *Page 192
servants contributed to the accident, and the evidence supports a finding to that effect, it matters not about other elements such as rusty nails or rotten uprights that may have affected the fall of the beam.
Of course, no opinion can be written or any conclusion announced that cannot be criticized with some show of justification by astute and censorious counsel, but we have given the cause careful consideration, and our judgment is that we should not interfere with the verdict. With that, we are content.
The petition for rehearing is, therefore, denied.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on September 8, 1919.
All the Justices concurred. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3283746/ | Defendant was convicted of the crime of murder in the second degree and sentenced to imprisonment for the term of twenty years. His appeal is from the judgment and from an order denying his motion for a new trial.
The principal assignment of error refers to the court's instruction to the jury that it might find the defendant guilty of murder in the first degree, or murder in the second degree, or not guilty, and the court's refusal to add to these alternatives an instruction that they might, if the evidence warranted it, find him guilty of manslaughter. The general rule is, as stated in the Penal Code, section 1159, that "the jury may find the defendant guilty of any offense, the commission of which is necessarily included in that with which he is charged, or of an attempt to commit the offense." The attorney-general has called our attention to decisions of the supreme court which hold that in a prosecution for murder the refusal of the court to instruct the jury that they may return a verdict of manslaughter is not error, if the evidence clearly shows that the crime committed was not manslaughter. (People v. Lee Gam,69 Cal. 552, [11 P. 183]; People v. Fellows, 122 Cal. 233, [54 P. 830], and other cases cited in those decisions.) We do not question the rules as stated, but they are not applicable to the record in this case. Brinkley, the deceased, was about 23 years old, and an attachment had grown up between him and a fifteen year old daughter of the defendant. The defendant had informed his daughter that he was opposed to her association with Brinkley, and had sent to the young man information to the same effect. On the morning of June 6, 1915, Brinkley went out riding on a motorcycle with defendant's daughter. The defendant purchased a revolver and started down the road in the direction they had taken. The defendant testified that he saw them coming toward him on the motorcycle and waved his hands, but they seemed to be coming faster. He testified further as follows: "Then I thought if I would pull the gun out of my pocket and wave *Page 565
it at him, that he would surely stop then. . . . And when he passed me, just before he got to me, he said something to Dora, he says, 'I will, if I hit him,' . . . and he brushed me along the side here [showing] and on this rib, forearm, and kind of numbed that arm a little, . . . And at that time I struck at him with the gun in my hand, and the gun discharged. And whether I hit him or not, I didn't know, I wasn't thinking about shooting at all, I never thought of shooting. But when I struck at him the gun discharged. . . . And directly I seen the motorcycle turn to one side and they tumbled off, and then I thought he had been shot when the gun discharged. Then I came on up and Dora, she asked me if she should call a doctor, and I says, 'Yes, call one,' then I says, 'Wait a minute.' Some other parties had come in an automobile and I says, 'Wait, and maybe they can go quicker and call a doctor'."
Manslaughter is the unlawful killing of a human being, without malice. One of the conditions described in the code definition is that of an involuntary killing "in the commission of an unlawful act, not amounting to felony." (Pen. Code, sec. 192.) If the jury believed the testimony of the defendant, they might have reached the conclusion that in striking at the deceased the defendant was committing an unlawful act amounting to an assault, but without intending to shoot. The firing of the pistol under the circumstances shown endangered the life of his daughter as well as the life of Brinkley. Her arm was around the young man and the bullet did in fact pass through the middle finger of her right hand. There is no evidence that the defendant had ever threatened the life of Brinkley or that he entertained animosity toward him beyond the mere fact that he was unwilling to have the young man paying attentions to his daughter, who was still a young school girl. The testimony to which we have referred, with much other evidence to which we might refer, was abundantly sufficient to entitle the defendant to have the case go to the jury under instructions which would permit a verdict of manslaughter.
Counsel for defendant in their brief assert that the court erred in giving certain other instructions, and also in refusing to give sundry instructions requested by the defendant. These assertions are not accompanied by any argument or any reference to authorities bearing upon the questions involved; *Page 566
and we will not discuss these instructions more than to say that, on the face of the record, we perceive no error in the court's rulings concerning them. So far as the refused instructions were correct and pertinent to the case, the substance of them appears to have been given in the court's instructions to the jury. Nevertheless, the error which was committed and to which we have referred was sufficient to seriously prejudice the defendant with respect to an important right of defense, and he is entitled to a new trial.
The judgment and order are reversed.
James, J., and Shaw, J., concurred.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on April 3, 1916. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1601765/ | 445 F.Supp. 647 (1977)
Ernest Benjamin SMITH
v.
W. J. ESTELLE, Jr., Director, Texas Department of Correction, and Warden, Ellis Unit, Texas Department of Corrections.
No. CA3-77-0544-F.
United States District Court, N. D. Texas, Dallas Division.
December 30, 1977.
New Trial Denied March 27, 1978.
*648 *649 *650 John F. Simmons, Dallas, Tex., Joel Berger, New York City, Anthony G. Amsterdam, Stanford, Cal., for petitioner.
Joe B. Dibrell, Jr., Asst. Atty. Gen., Chief, Enforcement Div., Anita Ashton, Asst. Atty. Gen., Austin, Tex., for respondents.
MEMORANDUM OPINION
ROBERT W. PORTER, District Judge.
During the early morning hours of September 28, 1973, Ernest Benjamin Smith and Howie Ray Robinson entered a Schepps Grocery in Dallas County, Texas, intending to rob the store. Robinson placed a package of lunch meat and a jar of mustard on the counter while Smith held a gun on the cashier and said "This is a holdup". The cashier moved suddenly as if to reach for something and Smith yelled either "Get him Howie" or "Look out Howie." Robinson then fatally shot the cashier. Smith and Robinson removed the money from the register and a gun from underneath the counter and left for the home of a friend where they divided the money.
Robinson and Smith were apprehended and charged with the offense of murder with malice aforethought in the course of a robbery. Judge R. T. Scales of the 195th Judicial District Court of Dallas County appointed John Simmons to represent Smith and, one year later, appointed attorney Howard G. Wilson to assist Mr. Simmons. A motion to sever Smith's case from his co-defendants' was granted.
*651 Robinson's case went to trial and he was convicted. However, on April 20, 1977, this conviction was overturned by the Texas Court of Criminal Appeals which held that admission of testimony that a state's witness had taken and passed a lie detector test was reversible error. Robinson v. State, 550 S.W.2d 54 (Tex.Cr.App.1977). Robinson was retried and again convicted. On December 2, 1977, however, Texas District Court Judge Richard Mays granted Robinson a new trial and the case is currently pending. State of Texas v. Howie Ray Robinson, No. C-74-3195-PNQ.
In the Smith case the grand jury returned a bill of indictment on December 28, 1973 and the state gave notice that it intended to seek the death penalty. Some time prior to February 18, 1974, Judge Scales instructed the state's attorney Doug Mulder to arrange a psychiatric examination of Smith by Dr. James P. Grigson, a psychiatrist.[1] Dr. Grigson was asked to determine whether Smith was competent to stand trial.
"In all cases where the State has sought the death penalty," Judge Scales testified in this proceeding, "I have ordered a mental evaluation of the Defendant to determine his competency to stand trial. I have done this for my benefit because I do not intend to be a participant in a case where the Defendant receives the death penalty and his mental competency remains in doubt."
Dr. Grigson visited Smith on February 18, 1974 and after a ninety minute examination concluded that the defendant was competent to stand trial. In a letter to Judge Scales Dr. Grigson wrote: "It is my opinion that Ernest Benjamin Smith, Jr. is aware of the difference between right and wrong and is able to aid an attorney in his defense." This conclusion approximates the test for competency.[2] Dr. Grigson's letter was filed among the court papers.
This competency evaluation was ordered even though Mr. Simmons and Mr. Wilson had not put into question Smith's competency to stand trial or the related psychiatric issue of Smith's sanity at the time of the offense. Judge Scales' practice of ordering competency hearings in death penalty cases, however, cannot be faulted in the least even when the issue has not been previously raised. The Court has authority to protect the integrity of the judicial system by making certain only mentally competent defendants stand trial.
It is also Judge Scales' practice to notify defense counsel that the psychiatric examination will be conducted. However, inexplicably in this case that notification was never received by either Mr. Simmons or Mr. Wilson. No formal order of appointment was entered and possibly due to the heavy workload of the Court, less formal notification was not accomplished. Dr. Grigson never filed a written report of his evaluation[3] but did send a letter summary of his conclusions to Judge Scales. Again, through some mixup, Mr. Simmons and Mr. Wilson never received a copy of this letter and first discovered it while reviewing the court papers after picking the jury in Smith's trial which commenced on March 11, 1974. This was their first notice that a *652 psychiatrist had been appointed and had examined the defendant. Mr. Simmons testified that "although I had not known of the letter or the visit before seeing the letter in the file, I attached no significance to it. From the contents of the letter I just assumed that Judge Scales wanted to be satisfied in his own mind that the defendant was competent to stand trial. He had never asked me that question but if he had I would have answered affirmatively. Ernest had never had any mental problems and was above average intelligence in my opinion."
Logically Dr. Grigson's appointment should not have concerned Mr. Simmons. A motion to discover the state's list of witnesses had been granted and Dr. Grigson's name did not appear. There was therefore no danger that possibly incriminating statements made by Smith to Dr. Grigson would be used at the guilt or innocence stage of the trial. There was also no reason to believe Dr. Grigson would be used at the punishment stage. The question of competency or sanity had never been raised, no prospective juror was questioned on this issue and absolutely no evidence at the guilt or punishment stage was introduced by the defense as to Smith's competency, sanity or any other potential personality disorder.
The capital murder trial in Texas is held in two stages. In the first stage the jury determines whether the defendant is guilty or innocent of the offense. The jury found Smith guilty as alleged in the indictment. Once guilt has been established the trial moves into the punishment phase. After hearing evidence in this proceeding, the jury must determine on the basis of all the evidence it has heard whether the Defendant should be put to death or given a life sentence. The death penalty may be imposed only if the jury answers "yes" to each of three special issues submitted to it.[4]
The state has the burden of proving beyond a reasonable doubt that these answers should be "yes". If the state fails in its proof or if the jury answers "no" on any one of these three issues the death penalty may not be imposed.[5] Because the state has the burden of proof it introduces testimony first in the punishment proceeding followed by the defense.
In this case, however, the state took the unusual step of resting subject to reopening.[6] Judge Scales permitted this procedure after making clear on the record that the state had the right to go first.
Mr. Simmons called three witnesses, one of whom testified, in effect, that Smith's gun was broken and would not fire on the *653 night of the robbery. Smith's step-mother, the second witness, testified that the defendant had graduated from high school, that he was a truthful person and that he had received an honorable discharge from the military service. Smith's aunt, the third witness, corroborated the step-mother's testimony. The defense rested. Mr. Mulder then announced his intention to call Dr. Grigson. Mr. Simmons objected and this objection was overruled. When this occurred Mr. Simmons asked that the prosecution not be permitted to tell the jury that Dr. Grigson was appointed by the court. Judge Scales initially granted this motion but, after hearing additional argument from Mr. Mulder, reversed his ruling. The jury was informed that Dr. Grigson was the court appointed psychiatrist. They were not told he was appointed for the sole purpose of determining Smith's competency to stand trial. Mr. Simmons was permitted to take Dr. Grigson on voir dire out of the presence of the jury and it was established that Mr. Mulder had contacted Dr. Grigson the previous Thursday and said that his testimony would be needed in the Smith case. Dr. Grigson, who does much court related work,[7] responded that he would be available when needed.
Dr. Grigson's psychiatric testimony may be summarized as follows. On direct examination he testified (1) to his credentials as a psychiatrist; (2) to the types of examinations administered by him to Smith; (3) to the results of those examinations; (4) that Smith is medically and legally sane; (5) that Smith has a sociopathic personality disorder; (6) to the characteristics of the sociopath; (7) that there are degrees of sociopathy and Smith is on the very severe end of that scale; (8) that the prognosis is Smith will continue his previous behavior or get worse; (9) that Smith has no regard for other persons' property or lives; (10) that no treatment to improve his condition exists; (11) that Smith will commit criminal acts of violence that will constitute a continuing threat to society if given the opportunity to do so; (12) that Smith is a leader. On cross examination Dr. Grigson testified (1) that it is not known what causes a person to be a sociopath; (2) that for the basis of his diagnosis, he spent approximately an hour and one-half examining Smith but did not interview friends and relatives who knew Smith with the exception of Howie Robinson whom he examined in connection with Robinson's criminal trial arising out of the same incident; (3) that he is certain that Smith is a severe sociopath; (4) that his diagnosis of sociopathic personality was based on Smith's failure to show any guilt feelings or remorse with respect to the commission of the offense for which he was on trial; (5) that during the examination Smith was pleasant, cooperative, polite, intelligent, rational, courteous, and did not try to fake insanity; and (6) that sociopathic symptoms may show up as early as *654 age four or five, or may not appear until age thirty.[8]
Dr. Grigson was the state's only witness at the punishment phase. After his testimony concluded, the jury retired to consider its verdict. It returned with "yes" answers to all three questions which meant that under Texas law Ernest Benjamin Smith would be put to death. The Texas Court of Criminal Appeals affirmed Smith's conviction and his sentence.[9] The United States Supreme Court denied certiorari.[10] A state writ of habeas corpus was denied by Judge Scales on April 18, 1977. The Texas Court of Criminal Appeals denied a similar writ on April 19, 1977 and Smith's execution was set for April 26, 1977. On April 22, 1977 I entered an order staying that execution pending review of Smith's federal writ of habeas corpus filed April 21, 1977.
That review has now been completed and because I find the death penalty was imposed in violation of the Fifth, Sixth, Eighth and Fourteenth Amendments to the United States Constitution it is hereby vacated. No constitutional error has been found with respect to the guilt phase of the trial.[10A]
Having reviewed the relevant facts of this case and having stated my legal conclusions, I would like to elaborate on why these facts present issues of constitutional dimension.
A. Due Process of Law.
A majority of the United States Supreme Court has held that the death penalty not only differs in degree from any other punishment that may be imposed but that it is different in kind. It is therefore imperative both to the defendant and the community that the decision to impose the death penalty reflect a reasoned judgment devoid of caprice or emotion and derived from all the available evidence presented at a fair proceeding. See Gardner v. Florida, 430 U.S. 349, 357-58, 97 S.Ct. 1197, 51 L.Ed.2d 393 (1977); Gregg v. Georgia, 428 U.S. 153, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976); Furman v. Georgia, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972).
The fairness of the sentencing process is measured by the due process clause, and, as it is a critical stage of the criminal *655 proceedings, the defendant is entitled to the effective assistance of counsel. "The defendant has a legitimate interest in the character of the procedure which leads to the imposition of sentence even if he may have no right to object to a particular result of the sentencing process. Gardner v. Florida, supra, 430 U.S. at 358, 97 S.Ct. at 1205.
As the Supreme Court has often stated "once it is determined that due process applies, the question remains what process is due." Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972). In general the procedural protections required by the due process clause vary according to the demands of the particular situation. In this case I find that because of the private interest affected by the government's action the situation demanded more procedural protection than was afforded.
The state's evidence at the punishment stage was introduced in such a way as to deny defense counsel effective cross examination of Dr. Grigson. It is impossible for even the best lawyers to effectively cross examine a medical expert without any preparation. A review of the record shows that Mr. Simmons was not an exception to this rule. Although a psychiatrist's methodology and conclusions are susceptible to impeachment by those knowledgable in the field, they are virtually impregnable to challenge by one who is not a psychiatric expert and totally unprepared to question on this subject matter. Mr. Simmons did not know that Dr. Grigson was going to be a witness at the punishment proceedings until a few minutes before he was called. Effective cross examination under these circumstances was virtually impossible. Criminal convictions have been reversed in the past when they have been procured through government "cloak and dagger" tactics in introducing surprise testimony. See Riggs v. United States, 280 F.2d 750, 753-54 (5th Cir. 1960).
Dr. Grigson's testimony was also presentedafter the defense had restedin a manner which precluded the opportunity to obtain expert psychiatric testimony for the defendant.[11] Effective cross examination and the ability to obtain a psychiatric expert for the defendant are especially critical when psychiatric testimony is introduced because studies have shown that the opinions of psychiatrists in this area are often unreliable and invalid.[12] The unreliability and invalidity of the opinion is heightened where, as here, the psychiatrist is appointed for one purposeto determine competencybut testifies on a completely different matterwhether the defendant will commit similar acts of violence in the future, (hereinafter referred to as "dangerousness").[13]*656 The prejudice is compounded when the Courtby permitting the prosecutor to inform the jury that the doctor is court appointedvouches in effect for the accuracy of the psychiatrist's opinions on "dangerousness" even though the judicial appointment was to determine "competency".
Even a cursory review of the psychiatric literature reveals that psychiatrists differ widely in their diagnosis of the same patients. The testimony of psychiatric experts is receiving increased judicial scrutiny because of its unreliable and invalid nature. See United States ex rel. Wax v. Pate, 298 F.Supp. 164 (N.D.Ill.1967), affirmed 409 F.2d 498 (7th Cir.), cert. denied, 396 U.S. 830, 90 S.Ct. 83, 24 L.Ed.2d 81 (1969). Cf. Specht v. Patterson, 386 U.S. 605, 87 S.Ct. 1209, 18 L.Ed.2d 326 (1967).[14]
This judicial scrutiny reflects skepticism among experts in the field itself. In 1969 Professor Dershowitz reviewed studies on the predictions of anti-social conduct and concluded:
". . . that psychiatrists are rather inaccurate predictorsinaccurate in an absolute sense and even less accurate when compared with other professionals, such as psychologists, social workers and correctional officials and when compared to actuarial devices, such as prediction or experience tables. Even more significant for legal purposes, it seems that psychiatrists are particularly prone to one type of errorover prediction. They tend to predict antisocial conduct in many instances where it would not, in fact, occur. Indeed, our research suggests that for every correct psychiatric prediction of violence, there are numerous erroneous predictions. That is, among every group of inmates presently confined on the basis of psychiatric predictions of violence, there are only a few who would, and many more who would not, actually engage in such conduct if released."
Dershowitz, The Psychiatrist's Power in Civil Commitment: A Knife That Cuts Both Ways, Psychology Today, Feb. 1969, at 47.
Recent studies support Professor Dershowitz's conclusions: "perhaps the most striking evidence supporting Dershowitz's conclusions comes from the study of the results of "Operation Baxstrom" involving 969 prisoner-patients in New York State who were affected by the Supreme Court's decision in Baxstrom v. Herold. [383 U.S. 107, 86 S.Ct. 760 15 L.Ed.2d 620 (1966)]. The Court held that those persons remaining in Department of Corrections Hospitals after their prison terms had expired must be released, and committed civilly, if at all. Each of the 969 patients had been detained in maximum-security hospitals because psychiatrists *657 determined that they were mentally ill and too dangerous for release or even for transfer to civil hospitals. Nevertheless, one year after the patients were transferred to civil hospitals, 147 had been discharged to the community and the 702 who remained were found to present no special problems to the hospital staff. Only seven patients were found to be so difficult to manage or so dangerous as to require recommitment to a Department of Corrections hospital. Several years later, 27% of the patients were living in the community, only nine had been convicted of a crime (only two of felonies), and only 3% were in a correctional facility or hospital for the criminally insane.
"Another recent study, described by one observer as the `most extensive study to date on the prediction . . . of dangerousness in criminal offenders' confirms the lesson of Baxstrom. A team of at least five mental health professionals, including two or more psychiatrists, was asked to conduct unusually thorough clinical examinations of individuals who had been convicted previously of serious assaultive crimes (often sexual in nature), assigned to special treatment programs after conviction, and who were then eligible for release. Based upon the examinations, extensive case histories, and the results of psychological tests, the team attempted to predict which individuals again would commit assaultive crimes if released. These predictions of dangerousness were made prior to the court hearings at which the ultimate release decisions were made. Of 49 patients considered by the evaluating team to be dangerous and therefore not recommended for release, but who nevertheless were released after a court hearing, 65% had not been found to have committed a violent crime within five years of returning to the community. In other words, 2/3 rds of those released despite predictions of dangerousness by the professional team did not in fact turnout to be dangerous." Ennis & Litwack, Psychiatry and the Presumptions of Expertise: Flipping Coins in the Courtroom, 62 Cal.L.Rev. 693, 712-13 (1974) (Footnotes omitted) (emphasis supplied.)
I do not believe that psychiatric testimony should be excluded per se from the guilt/innocence trial and/or circumscribed in the punishment stage as some legal scholars have suggested. See Bartholomew & Milte, The Reliability and Validity of Psychiatric Diagnosis in Courts of Law, 50 Austr.L.J. 450 (1976). I hold only that when the state introduces psychiatric testimony on dangerousness at the punishment phase of a capital trial the defense must have a fair opportunity to cross examine that testimony and rebut it with expert testimony on behalf of the defendant. When that fair opportunity is denied the defendant, as it was here, our adversary system breaks down and a man is unjustly sentenced to die.
In the future to insure the right to effective cross examination and the right to effectively defend the case through expert rebuttal testimony, which the due process clause guarantees, defense counsel must be notified that a psychiatric examination will be held on the issue of "dangerousness" the results of which may be used at the penalty phase of the trial. Defense counsel prior to trial, must have meaningful access to the report, now required by state statute, prepared by the psychiatrist stating his findings and conclusions. If the trial court wishes to appoint a psychiatric expert on the issue of dangerousness the order of appointment should so reflect. The testimony of a court appointed psychiatrist and his report would then be equally available to both defense and prosecution for presentation to the jury.[15] However, both sides should have a meaningful right to obtain additional psychiatric experts to either supplement or challenge the conclusions of the court appointed expert.
*658 In summary, the due process clause of the Fourteenth Amendment was violated in this case because (1) Dr. Grigson was informed of his appointment by the prosecutor and not through written order of the court; (2) defense counsel was never notified of the appointment; (3) a psychiatric report was never filed; (4) defense counsel never received a copy of Dr. Grigson's letter summarizing his conclusions, sent to the judge; (5) the state's attorney intentionally omitted Dr. Grigson's name from the witness list in violation of the trial court's order even though the prosecutor knew at least several days before the punishment stage that Dr. Grigson would be called as a witness and that his testimony would not be rebuttal testimony but would be critical to the state's case; (6) the psychiatrist was appointed to determine competency but was permitted to testify on the completely unrelated issue of "dangerousness" and; (7) the trial judge permitted the state's attorney to create the impression with the jury that Dr. Grigson had been appointed by the court for the purpose of determining the defendant's "dangerousness" and that the court was therefore vouching for Dr. Grigson's testimony.[16]
B. The Death Penalty and Mitigating Circumstances: The Eighth Amendment.
In Jurek v. State of Texas, 428 U.S. 262, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976) the United States Supreme Court upheld the constitutionality of the Texas Death Penalty Statute.[17] It found that at the sentencing stage the Texas statute assured that all possible relevant information about the individual defendant would be brought before the jury. Jurek, supra at 271-76, 96 S.Ct. 2950. The constitutionality of the Texas procedure rests upon the ability of the defendant to present mitigating circumstances.
For the same reasons specified in subsection A of this opinion, I find that the defendant was, in effect, denied the opportunity to present mitigating circumstances concerning his supposed personality disorder. The opportunity to effectively challenge Dr. Grigson's conclusion was not available. The opportunity to obtain and present psychiatric testimony on behalf of the defendant was not present. Finally, Dr. Grigson testified that defendant showed no remorse or guilt over the incident. When Mr. Simmons attempted to question Smith about his remorse or guilt the following took place:
Q. By Mr. Simmons: Did you tell Howie to look out when you saw Mr. Moon either reaching for a pistol or whatever else he had?
A. Yes, sir.
Q. Ernest, do you understand and know that it is wrong to do what you did and what you were involved in?
A. Yes, sir.
Q. Do you regret this thing has happened to Mr. Moon? (the murder victim) A. Mr. Mulder, State's Attorney. We object to that.
The Court: Sustained.
Mr. Simmons: We will pass this witness, your Honor.[18]
*659 The Texas statute, on its face, provides that all relevant evidence will be presented to the jury but, as applied in this case, the jury was clearly unable to consider all the evidence.[19] Accordingly, the death penalty in this case constitutes cruel and unusual punishment. Here the jury was told all the reasons why the death sentence should be imposed but only some of the reasons why it should not. Cf. Woodson v. North Carolina, 428 U.S. 280, 96 S.Ct. 2978, 49 L.Ed.2d 944 (1976). The State was directly responsible for causing the suppression of the additional reasons why the death penalty should not be imposed.
C. Right to Counsel and Right to Remain Silent.
In addition to challenging the death penalty on due process and Eighth Amendment grounds, petitioner has alleged a violation of right to counsel and the right to remain silent with respect to his compelled psychiatric examination. The state has responded to these challenges on the merits even though neither was a ground for objection at the trial court and neither issue was presented to the Texas Court of Criminal Appeals.[20] It must be determined whether the Texas "True Contemporaneous Objection Rule" bars considerations of these two claims in this federal habeas corpus proceeding. See Wainwright v. Sykes, 433 U.S. 72, 97 S.Ct. 2497, 53 L.Ed.2d 594 (1977); Jiminez v. Estelle, 557 F.2d 506 (5th Cir. 1977); Patterson v. State of Texas, 509 S.W.2d 857 (Tex.Crim.App.1974). A federal district court may consider a claim in a habeas corpus petition that was not presented to the state courts, if it determines the petitioner has shown "cause" for failing to object in state court with resulting "prejudice" to the defendant. To fully develop the record, I have asked Mr. Simmons to file an affidavit explaining the reason (cause) why he did not raise these objections before either Judge Scales or the Texas Court of Criminal Appeals.
Before considering whether the showing of "cause" and "prejudice" is adequate under Sykes, the court must determine whether in a federal habeas corpus proceeding the state may waive the "contemporaneous objection" defense. In both Sykes and Jiminez, the state sought to uphold the convictions on the basis of the contemporaneous objection rule. See Sykes, at 433 U.S. 84, at 97 S.Ct. 2505-06, at 53 L.Ed.2d 607; Jiminez at 557 F.2d 507. Here, however, the state has joined issue on the alleged right to counsel. Likewise, the state has responded on the merits to the contention that the accused has a right to remain silent at the psychiatric exam and must be advised of that right.
It is certainly beyond question that procedural rights may be waived. There is nothing about the state's relinquishment of this procedural advantage that affects this court's jurisdiction or eliminates the existence of a live case or controversy. Accordingly, I hold that the "contemporaneous objection" defense may be waived and is so waived when the state decides to answer on the merits without relying either solely or in the alternative on the contemporaneous objection rule.
Even though this rule is designed to produce criminal proceedings which are as free of error as possible, the state is to be commended *660 for not raising this procedural bar here where a constitutional issue of first impression is presented to a federal court. Although the interest in minimizing error in criminal proceedings is a weighty concern, the state also has a strong interest in determining as soon as practicable whether its procedures implementing a recently enacted statute comply with the United States Constitution.
The Texas Death Penalty Statute was revised in light of Furman v. Georgia, supra, and only recently upheld by the United States Supreme Court. The practice of introducing psychiatric testimony at the punishment stage of a capital case is, therefore, in its infancy. If the right to counsel and/or right to remain silent apply in a psychiatric examination, it is better for the statein terms of minimizing error in criminal trialsto have that determination made now rather than later.
As I have found the contemporaneous objection rule inapplicable in this case, it is unnecessary to determine whether Mr. Simmons' "cause" for failing to object is adequate under Sykes. If I am wrong in this determination, however, the record has been made for the appellate courts, in the case of appeal, to make that determination. As outlined in Subsection A of this opinion, I believe the requirement of prejudice has clearly been met.
1. The Right to Counsel.
The Texas Court of Criminal Appeals held in Livingston v. State of Texas,[21] that the use of testimony obtained from a compelled psychiatric examination in a capital murder sentencing hearing does not violate the Sixth Amendment right to counsel. The Court relied on prior holdings which found no right to counsel at a psychiatric examination on competency or sanity. Although some courts require the presence of counsel[22] at a competency or sanity examination the majority view is to the contrary.[23] The 5th Circuit Court of Appeals squarely subscribes to the majority view that there is no right to counsel in a compelled psychiatric examination to determine competency or sanity. United States v. Cohen, 530 F.2d 43, 47-48 (5th Cir. 1976); cert. denied 429 U.S. 855, 97 S.Ct. 149, 50 L.Ed.2d 130 (1976); United States v. Smith, 436 F.2d 787, 790 (5th Cir. 1971), cert. denied, 402 U.S. 976, 91 S.Ct. 1680, 29 L.Ed.2d 142 (1971).
The question then boils down to whether a distinction may be made between psychiatric examinations for determinations of competency or sanity and psychiatric examinations for "dangerousness". One reason for denying the right to counsel is common to all threethe presence of counsel would destroy the purpose of the examination. See Thornton v. Corcoran, 132 U.S.App.D.C. 232, 248, 407 F.2d 695, 711 (1969) (Burger, J., Dissenting). I agree with the comment of the now chief justice that:
"Our approach should encourage an attitude of cooperation rather than partisanship; emphasis must be on the common pursuit for an objective, uninhibited inquiry, uncluttered by the techniques and devices of the courtroom." 132 U.S.App. D.C. 248, 407 F.2d 711.
Any right to counsel in this area would therefore have to consider the practical limitations of the psychiatric examination. In United States v. Wade[24] the Supreme Court held there was a right to be represented by counsel at a police lineup. The Wade court proposed two tests for determining whether the presence of counsel is necessary: (1) potential substantial prejudice to defendant's rights which inheres in a particular confrontation and (2) the ability of counsel to help avoid that prejudice. *661 See United States v. Baird, 414 F.2d 700, 711 (2nd Cir. 1969), cert. denied, 396 U.S. 1005, 90 S.Ct. 559, 24 L.Ed.2d 497 (1970).
If the state follows the procedures outlined in Part A of this opinion, which I have found compelled by the due process clause, the potential for substantial prejudice is minimized.[25] If one accepts that counsel may not participate in the examination, as one must if its purpose is to be preserved then the lawyer's ability to avoid any residual prejudice is minimal. I therefore hold that the right to presence of counsel is not required in a compelled psychiatric examination for the purpose of determining "dangerousness", even though I believe the examination is a critical stage of the criminal proceedings. The Sixth Amendment is not so inflexible as to require the presence of counsel when that presence would destroy the character of the proceeding, especially in light of minimal prejudice to the defendant.
The Sixth Amendment, however, also requires the effective assistance of counsel. To insure this right the procedural safeguards required in Subsection A of this opinion are compelled by the Sixth Amendment as well as the due process clause of the Fourteenth. As they were unavailable to petitioner here his sentence is invalid under the Sixth Amendment.
As Chief Justice Burger observed in Thornton, the check on the processes by which the psychiatrist reaches his conclusion is the power to cross-examine him. Because the psychiatric examination demands privacy, the presence of counsel is not required so long as the power of effective cross-examination and the right to gather additional expert psychiatric testimony is not impaired. 132 U.S.App.D.C. at 248, 407 F.2d at 711. That right was clearly impaired here.
2. The Right to Remain Silent.
Petitioner claims his right to remain silent under the Fifth Amendment was violated when he was examined by Dr. Grigson without notice to his counsel and without being advised that he had a right to remain silent. The State contends that there is no constitutional right involved because communications at the psychiatric examination are non-testimonial. One commentator has written that this is the "best" reason for holding that the Fifth Amendment privilege against self incrimination does not apply to a compelled psychiatric examination on the issue of dangerousness. See Crump, Capital Murder: The Issues in Texas, 14 Hou.L.Rev. 531, 574-75 (1977).
The Texas Court of Criminal Appeals has refused to apply the Fifth Amendment privilege to a compelled psychiatric examination on dangerousness. The court found that the communications involved in such an examination were not testimonial. See Livingston v. State of Texas, 542 S.W.2d 655 (Tex.Cr.App.) cert. denied, 431 U.S. 933, 97 S.Ct. 2642, 53 L.Ed.2d 250 (1977).
A federal court is not, of course, bound by a state court's determination of federal law. I believe, therefore, an independent look at this problem is required. The so-called "testimonial" limitation on the privilege against self incrimination is rooted in Mr. Justice Holmes' opinion in Holt v. United States, 218 U.S. 245, 31 S.Ct. 2, 54 L.Ed. 1021 (1910). In Holt the Defendant was compelled to try on a blouse to show that it fit him. Mr. Justice Holmes stated that: "[T]he prohibition of compelling a man in a criminal court to be a witness against himself is a prohibition of the use of physical or moral compulsion to exhort communications from him, not an exclusion of his body as evidence when it may be material." 218 U.S. at 252-53, 31 S.Ct. at 6. In Schmerber v. California, 384 U.S. 757, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966) the Supreme Court followed the Holmes reasoning in holding that the privilege against self incrimination was not violated by the taking of a blood sample over the objection of a criminal defendant. It was held that the resulting blood sample *662 "was neither petitioner's testimony nor evidence relating to some communicative act . . .." 384 U.S. at 765, 86 S.Ct. at 1833.
In United States v. Wade, 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967) the Supreme Court found no Fifth Amendment violation where the Defendant was compelled to speak within hearing distance of witnesses to the alleged crime. The court found this "no different from compelling Schmerber to provide a blood sample or Holt to wear the blouse." 388 U.S. at 222, 87 S.Ct. at 1930. In Gilbert v. California, 388 U.S. 263, 87 S.Ct. 1951, 18 L.Ed.2d 1178 (1967) the court held that requiring a Defendant to provide a handwriting exemplar would not violate the privilege. The Court stated that "[a] mere handwriting exemplar, in contrast to the content of what is written, like the voice or body itself, is an identifying physical characteristic outside [the privilege's] protection." 388 U.S. at 266-267, 87 S.Ct. at 1953.
Finally, in United States v. Dionisio, 410 U.S. 1, 93 S.Ct. 764, 35 L.Ed.2d 67 (1973) the court refused to apply the privilege to compelled voice exemplars which were obtained for comparison with tape recordings of alleged criminal activity. The Court wrote: "Wade and Gilbert definitely refute any contention that the compelled production of the voice exemplars in this case would violate the Fifth Amendment. The voice recordings were to be used solely to measure the physical properties of the witnesses' voices, not for the testimonial or communicative content of what was to be said." 410 U.S. at 7, 93 S.Ct. at 768. (footnote omitted).
All of these cases reach only those situations where identifiable physical characteristics or properties of the Defendant are compelled. See People v. Evans, 90 Misc.2d 195, 393 N.Y.S.2d 674 (1977).[26] It does not matter what the Defendant speaks or what he writes when a voice or handwriting exemplar is produced. The Defendant is only being compelled to divulge the way he speaks or the manner in which he writes both of which are non-testimonial acts to which the privilege does not apply.
The compelled psychiatric examination on the issue of "dangerousness" clearly rests on different ground. Here it is not only the way the Defendant communicates to the psychiatrist, but also the content of what he says that forms the basis of the expert opinion.[27]
I, therefore, do not believe that the Holt line of cases inevitably leads to the conclusion urged by the State. Each of these cases has been careful to distinguish between the "content" of the communication and the "fact" of the communication. No such distinction is possible where the psychiatrist, as here, relies, at least in part, on the content of the communication elicited from the Defendant.[28]
It might be argued that while the Supreme Court has not extended the Holt doctrine to compelled psychiatric examinations, many decisions of the circuits have done so with respect to the issues of competency and sanity. However, the issues of competency and sanity are distinguishable from an examination for dangerousness. When the issue of sanity is raised by the *663 Defendant, some courts have held that the psychiatric examination may be compelled by either the state or the court as the privilege against self incrimination has either been waived or the Defendant is estopped from asserting it. See e. g., Lee v. County Court of Erie County, 27 N.Y.2d 432, 318 N.Y.S.2d 705, 267 N.E.2d 452 (1971). When the sanity defense is raised the Government must prove that the Defendant was not insane at the time the crime was committed and often the only way it may meet this burden is through expert psychiatric testimony.[29] Sanity is therefore an issue raised by the defendant where the only evidence to rebut the defense is in the possession of the defendant. Dangerousness, by contrast, is an issue raised by the prosecution where psychiatric testimony is only one of a number of ways the issue may be proved to the jury.
The issue of competency raises somewhat different problems. First, if raised by the Defendant the same principles of waiver and estoppel might apply. Second, and more importantly, psychiatric testimony on competency can rarely be used against the criminal Defendant. In many states the issue must be determined prior to the trial on the merits.[30] Third, the state and the Defendant do not have truly adverse interests in a competency evaluation. Both seek to have only mentally competent Defendants stand trial.
The benign effect of psychiatric testimony on the issue of competency differs sharply from the psychiatric testimony of "dangerousness". Dr. Grigson's testimony was clearly used against Smith at the punishment stage. The State, at least at one point in this litigation,[31] took the position that the only evidence in support of the jury's answer to question number two was the Grigson testimony. This testimony would have been guttedif not rendered completely worthless, without the cooperation of Smith. That cooperation took the form of a 90 minute interview where the contents of his communications to Dr. Grigson were used against him by the State at the punishment stage of the trial.[32]
It is clear, however, that the psychiatric knife can cut both ways. Psychiatric testimony could be as beneficial to some criminal Defendants at the punishment stage as it was damaging to Smith. It may be difficult to determine prior to an examination what conclusions will result, although certain psychiatrists may gain a reputation for seeing problems in a particular way.
If the Defendant initiates a psychiatric examination on the issue of dangerousness or if he seeks to introduce psychiatric testimony at the punishment phase he can not hide behind his privilege against self incrimination when the court or the prosecutor seek to have him examined by an additional psychiatrist, or when the prosecutor attempts to introduce the testimony by the Defendant's expert, or its own expert at the punishment phase. In such cases the Defendant would waive his privilege against self incrimination, and also any doctor-patient privilege.
If, however, the Defendant does not request a psychiatric examination on the issue of "dangerousness" and does not seek to introduce testimony on this issue, he may *664 not be compelled to participate in a psychiatric examination to determine dangerousness.
A difficult problem of waiver is presented when the Defendant raises the insanity defense but is nevertheless found guilty. At the punishment stage may the jury consider the psychiatric evidence on sanity as a mitigating factor and, if so, may the state then introduce psychiatric testimony on dangerousness? Ordinarily the jury would be permitted to consider the Defendant's psychiatric evidence on sanity as a mitigating factor. If the Defendant intends to rely on this testimony at the punishment stage, he then waives his privilege against self incrimination and the State may have a psychiatrist examine the Defendant on the issue of dangerousness and introduce testimony on this issue before the jury.
If, however, the Defendant does not wish to rely on his psychiatrist's insanity testimony at the penalty stage then the jury must be instructed to disregard the psychiatric testimony as a mitigating factor and the privilege against self incrimination may be asserted to foreclose either a compelled psychiatric examination on the issue of dangerousness or evidence from a court appointed or state psychiatrist on dangerousness learned from a sanity or competency examination.
In the future if the State or Court seeks to have the Defendant examined by the psychiatric expert on the issue of dangerousness, the Defendant must be advised he has a right to remain silent. If the Defendant indicates that he wishes to exercise that right, he may not be questioned by the psychiatrist for the purpose of determining dangerousness.
Smith was not so advised in this case and his sentence of death is thus in violation of the Fifth Amendment of the United States Constitution.
(D) Conclusion.
The Petitioner has alleged several additional constitutional violations[33] but as I have found no such violation with respect to the guilt or innocence phase and as I have granted the relief requested with respect to the punishment phase it is unnecessary to reach these additional issues.
In summary, it is this Court's opinion that:
(1) The circumstances surrounding the state's presentation of Dr. Grigson's testimony at the punishment stage of the trial were grossly unfair and the Defendant was thus denied due process of law;
(2) The Defendant was effectively denied the right to present complete testimony regarding mitigating factors on his alleged personality disorder which supposedly makes him a continuing threat to society;
(3) The Defendant was denied the right to effective assistance of counsel because of the methods employed by the state with respect to the Grigson testimony; there is, however, no right to the presence of counsel at a psychiatric examination on dangerousness;
(4) The Defendant was not advised of his right to remain silent at the psychiatric examination on dangerousness where he did not seek to introduce psychiatric testimony on the issue himself at the punishment stage or at the guilt/innocence stage and where he did not initiate a psychiatric examination on the issue.
*665 Some may be shocked that a convicted murderer has for the moment escaped death through what may seem to them a legal technicality. But whereas "technicalities" are often thought of as mindless and silly elevations of form over substance the procedures denied to the Defendant in this case are basic and fundamental. They may be summed up in one wordfairness. And one need not condone the acts of this Defendant to agree that he is entitled to a fair proceeding and that he is entitled to the same opportunity to put on his evidence as is given the State.
Our legal proceduresas opposed to superfluous "technicalities"separate our judicial system from virtually all others in the history of the world. They separate us from those systems where rights are guaranteed on paper but denied in practice. They separate us from those systems where the guilt of the Defendant is never to be doubted. They separate a free country from a controlled one.
The money and effort the State of Texas will be forced to spend retrying the penalty phase of this Defendant's trial is the price our continued freedom and independence demand.
NOTES
[1] Statement of Facts. State v. Smith (hereinafter cited as "Record") Vol. VI at 2929. [I will refer to the numbers on the bottom of the pages in the record. A different set of numbers appears at the top of each page.]
[2] See Dusky v. United States, 362 U.S. 402, 80 S.Ct. 788, 4 L.Ed.2d 824 (1960).
[3] This failure to file a written report of the examination would violate Art. 46.02 § 3(d) of the Texas Code of Criminal Procedure which was amended after Smith's trial. The section provides:
A written report of the examination shall be submitted to the court within 30 days of the order of examination, and the court shall furnish copies of the report to the defense counsel and the prosecuting attorney. The report shall include a description of the procedures used in the examination, the examiner's observations and findings pertaining to the defendant's competency to stand trial, and recommended treatment. If the examiner concludes that the defendant is incompetent to stand trial, the report shall include the examiner's observations and findings about whether there is a substantial probability that the defendant will attain the competence to stand trial in the foreseeable future.
[4] The special issuesas provided in Art. 37.071(b) of the Texas Code of Criminal Procedure Supp.1976-77 read:
1. whether the conduct of the defendant that caused the death of the deceased was committed deliberately and with the reasonable expectation that the death of the deceased or another would result;
2. whether there is a probability that the defendant would commit criminal acts of violence that would constitute a continuing threat to society; and
3. if raised by the evidence, whether the conduct of the defendant in killing the deceased was unreasonable in response to the provocation, if any, by the deceased.
[5] Jurek v. State of Texas, 428 U.S. 262, 269, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976).
[6] The Court: As I understand it, Mr. Mulder, you are going to resthow do you want to word it? Subject to the right to reopen? Mr. Mulder: Whatever your pleasure is. However, I don't think they're going to know one way or the other. We can do it right now. They can come in, and the Defense and be calling witnesses?
The Court: Mr. Simmons?
Mr. Simmons: I didn't understand.
The Court: He doesn't have any testimony right now, but will have.
Mr. Mulder: We will rest right now in the record.
The Court: Subject to your right to reopen if they don't put on any testimony?
Mr. Tokoly: I think since we are permitting them to go first, if they can start putting on their testimony as if that's the normal thing to do, then we will put on our testimony after theirs.
The Court: That's fine. Since the state has the right to go first, I wanted to show something in the record concerning you resting at this time.
Mulder: That's fine, Judge, with that understanding.
Record at 2910-11.
[7] Dr. Grigson testified that at the time of the trial he had been in full time private practice for about six years and six months. Record at 2933. He had examined almost 8,000 persons charged with criminal offenses and had testified several hundred times in court. For appellate cases where Dr. Grigson's testimony has been at issue see e. g., Bruce v. Estelle, 536 F.2d 1051, 1060 (5th Cir. 1976), cert. denied, 429 U.S. 1053, 97 S.Ct. 767, 50 L.Ed.2d 770 (1977) (Judge Mahon's reliance on Dr. Grigson's diagnosis held clearly erroneous); Benavides v. Mutual Life Insurance Co. of New York, 516 F.2d 393, 398-99 (5th Cir. 1975); Bruce v. Estelle, 483 F.2d 1031, 1035, 1038-40 (5th Cir. 1973); Collins v. State, 548 S.W.2d 368, 377-78 (Tex.Cr.App.1976), cert. denied, 430 U.S. 959, 97 S.Ct. 1611, 51 L.Ed.2d 811 (1977); Graham v. State, 546 S.W.2d 605, 609 (Tex.Cr.App.1977); Ex Parte Dickey, 543 S.W.2d 99, 104 (Tex.Cr.App.1976); Livingston v. State, 542 S.W.2d 655, 661-62 (Tex.Cr.App. 1976), cert. denied, 431 U.S. 933, 97 S.Ct. 2642, 53 L.Ed.2d 250 (1977); Lee v. Thomas, 534 S.W.2d 422, 424 (Tex.Civ.App. Waco, 1976, ref., n. r. e.); Hicks v. State, 525 S.W.2d 177, 180 (Tex.Cr.App.1975); Garza v. State, 522 S.W.2d 693, 694 (Tex.Cr.App.1975); Jackson v. State, 516 S.W.2d 167, 173 (Tex.Cr.App.1974); Hurd v. State, 513 S.W.2d 936, 946 (Tex.Cr. App.1974); Culley v. State, 505 S.W.2d 567, 569 (Tex.Cr.App.1974); Armstrong v. State, 502 S.W.2d 731, 735 (Tex.Cr.App.1973); Wilborn v. State, 491 S.W.2d 432, 433 (Tex.Cr. App.1973); Boss v. State, 489 S.W.2d 580, 582 (Tex.Cr.App.1973); Williams v. State, 463 S.W.2d 15, 17 (Tex.Cr.App.1971); Blankenship v. State, 432 S.W.2d 945, 946-47 (Tex.Cr.App. 1968).
[8] The summary of Dr. Grigson's testimony is borrowed largely from the excellent summary found in Judge Odom's opinion dissenting in part from the ruling of the Texas Court of Criminal Appeals in this case. After the U.S. Supreme Court ruled in Jurek, Judge Odom withdrew his dissent. One other matter concerning Dr. Grigson's testimony concerns this Court.
Dr. Grigson testified that: "With regard to his (Smith's) emotional state, for the most part throughout the examination he was very pleasant, very cooperative, very polite. The one significant fact which was present was I could find absolutely no signs of any remorse or any type of guilt feelings. I thought this was very important in the situation that existed."
"Again, I could find no remorse feelings, no guilt feelings."
Record at 2941.
It appears that Smith made a "quasi" confession during the course of the examination as was brought out during cross examination of Dr. Grigson. Record at 2950-52. Therefore, it appears that Smith, in effect, established his guilt in Dr. Grigson's eyes which enabled him to determine that the defendant showed no remorse or guilt feelings which in turn formed the basis for the diagnosis. Although not the case here, it troubles this court that a psychiatrist might, during an examination where no "confession" is given, assume the defendant's guilt which then forms the basis of the psychiatric diagnosis. This certainly seems to be at odds with the presumption of innocence to which all criminal defendants who plead not guilty have a constitutional right.
[9] Smith v. State of Texas, 540 S.W.2d 693 (1976).
[10] 430 U.S. 922, 97 S.Ct. 1341, 51 L.Ed.2d 601 (1977).
[10A] The State takes the position that Smith may not be retried under state law on punishment alone. Thus, the State contends, that if Smith is to be given the death penalty he must also be tried again on guilt or innocence. This is a question of state law and need not be addressed here. If permissible under state law the attorney general may wish to forego a retrial on punishment which would resultpresumablyin a life sentence. Whatever decision the Texas Court of Criminal Appeals reaches on these issues it should be clearly understood that I find constitutional violations only at the punishment stage and not during the guilt or innocence proceedings.
[11] The Fifth Circuit Court of Appeals has held that failure to provide expert psychiatric assistance may deprive an indigent defendant of effective assistance of counsel. Greer v. Beto, 379 F.2d 923, 924 (5th Cir. 1967). Hintz v. Beto, 379 F.2d 937 (5th Cir. 1967).
[12] "Reliability" and "validity" are terms of art found in the psychiatric literature. Reliability does not have a precise meaning. See L. Cronbach, Essentials of Psychological Testing 173-82 (3rd ed. 1970). Reliability generally refers however, to the probability or frequency of agreement when two or more independent observers answer the same question. For example, is Smith dangerous? If representative pairs of psychiatrists, interviewing a representative sample of prospective patients, usually agree that each individual is or is not "dangerous" the judgment of "dangerousness" is said to be reliable. Conversely, if pairs of psychiatrists would not usually agree wither such individuals are dangerous, that judgment is said to be unreliable.
"Validity," on the other hand, refers to not how likely psychiatrists are to agree to a particular judgment but to how accurate their judgments are. If every psychiatrist in the world agrees that Smith would commit a dangerous act if released from the hospital, that judgment would be 100% reliable. But if Smith were released and does not commit a dangerous act, the judgment would be invalid. Similarly, psychiatric judgments of "dangerousness" would be generally reliable if most observers would agree whether or not given individuals are dangerous, yet invalid if those judgments usually would be wrong.
For studies detailing the invalid and unreliable nature of psychiatric examinations see, generally Ennis & Flitwack, Psychiatry and the Presumptions of Expertise: Flipping Coins in the Courtroom, 62 Cal.L.Rev. 693, 697 (1974) (Footnotes omitted).
[13] In United States v. Mattson, 469 F.2d 1234 (9th Cir. 1972) cert. den'd, 410 U.S. 986, 93 S.Ct. 1513, 36 L.Ed.2d 183 (1973) the court indicated that unless counsel was notified of the dual purpose of the psychiatric examdetermination of both competency and sanity was ordered the psychiatric evidence would be inadmissible. In United States v. Alvarez, 519 F.2d 1036, 1041 (3rd Cir. 1975), the court held that failure in an order, to provide for the dual nature of the examination would render the psychiatric testimony inadmissible. See also Birdsell v. United States, 346 F.2d 775 (5th Cir. 1965), cert. denied, 382 U.S. 963, 86 S.Ct. 449, 15 L.Ed.2d 366 (1966) where the court stated:
"Although `[I]t is not to be assumed * * * that a psychiatrist who has been ordered to prepare an opinion as to a man's trial competency will conduct the type of examination which is necessary to provide the trier of the facts with the information essential for a proper determination of criminal responsibility,' Winn v. United States [106 U.S.App.D.C. 133], 270 F.2d 326, 328 (1959), a record may show that this was in fact done, and we think that was the case here." 346 F.2d at 780.
See also United States v. Driscoll, 399 F.2d 135, 137 (2nd Cir. 1968) ("We do not believe that a defendant can be told that he is to be examined for one purpose and, once his cooperation has been obtained, be advised of another".)
[14] As the court in United States ex rel. Wax v. Pate, 298 F.Supp. 164, 167 (N.D.Ill.1967) noted:
"It is an accepted fact of which the court will take notice that the results of psychiatric observations and examinations are often a good bit more conjectural than the results of scientific laboratory tests on finger prints, blood samples, hair and the like. The variables and technique are many. And indeed, considerable ferment has been engendered as to the sufficiency of the present legal tests of insanity."
[15] When the psychiatrist is not appointed on the issue of "dangerousness" (but limited to competency, for example) and the prosecutor nevertheless intends to use the psychiatrist at the penalty stage on the issue of dangerousness, notice of this intention must be given to defense counsel. In that event, the jury may not be told that the psychiatrist is court appointed.
[16] Under the above described circumstances, I find that Mr. Simmons and Mr. Wilson protected their client's interest to the extent possible. However, if one assumes that there is no error in the manner in which Dr. Grigson's testimony was introduced, that would inevitably lead to the conclusion that Smith was denied the effective assistance of counsel because they failed to produce rebuttal psychiatric testimony and to explore the ramifications of the psychiatric issue. See United States v. Edwards, 488 F.2d 1154, 1164-65 (5th Cir. 1974). If I found Mr. Simmons and Mr. Wilson did not provide effective assistance of counsel, which I decline to do, then Smith's death penalty would be rendered constitutionally invalid on that ground.
[17] Tex.Penal Code § 19.03 (1974); Tex.Code Crim.Pro. Art. 37.071 (Supp.1975-76.)
[18] Record at 2743-44. I do not believe that this was necessarily an improper objection or that the trial judge ruled erroneously. It is generally immaterial that a criminal defendant regrets now what he did in the past. At the time this objection was lodged the jury had not yet found Smith guilty. Only Mr. Mulder knew at that point in the trial that Dr. Grigson would put into issue the defendant's lack of remorse or guilt. With this knowledge the objection was perhaps improper as the jury could have been instructed not to consider the testimony on the issue of guilt but only on punishment if they returned a guilty verdict. The better procedure, however, would be to recall the defendant at the punishment phase and ask him the material questions then. Mr. Simmons, for some reason, did not do that in this case.
[19] See Richmond v. Arizona, ___ U.S. ___, 98 S.Ct. 8, 54 L.Ed.2d 34 (1977) (Rehnquist, J.) where defendant's sociopathic personality was presented as a mitigating factor at the punishment phase. While a sociopathic personality might in some cases be used in mitigation it was not done so in this case. The state clearly argued that this sociopathic personality disorder made the defendant "dangerous" thus requiring an affirmative answer to question 2.
[20] These matters were apparently first raised in the petitioner's writ of habeas corpus before Judge Scales and subsequently, the Texas Court of Criminal Appeals. Both writs were denied without a hearing.
[21] 542 S.W.2d 655 (Tex.Cr.App.1976), cert. denied, 431 U.S. 933, 97 S.Ct. 2642, 53 L.Ed.2d 250 (1977).
[22] See e. g. Lee v. County Court of Erie County, 27 N.Y.2d 432, 318 N.Y.S.2d 705, 267 N.E.2d 452 (1971).
[23] See e. g. United States v. Albright, 388 F.2d 719 (4th Cir. 1968).
[24] 388 U.S. 218, 87 S.Ct. 1926, 18 L.Ed.2d 1149 (1967).
[25] The actual statements of the accused to the psychiatrist are inadmissible at the guilt and possibly the punishment phases of the trial. See Livingston v. State, supra, at 661-62.
[26] It strikes the court that an issue of reliability is also raised even if one assumes that the communications in a psychiatric examination are non-testimonial. This involves the requirement that the physical characteristics or properties be identifiable. No two lab technicians would disagree over the results of a blood sample or a fingerprint. Handwriting exemplars and voice exemplars may also be analyzed with some precision. A diagnosis of a person's present and past mental condition is less reliable but nevertheless much more accurate than a prediction of future behavior which inheres in a diagnosis of "dangerousness".
[27] For example:
Psychiatrist: Do you feel remorse over the victim's death?
Defendant: No I do not.
Psychiatrist: Do you feel guilt over the victim's death?
Defendant: No I do not.
Psychiatric Conclusion: The defendant shows no remorse or guilt over the victim's death and, principally for this very important reason, I believe he is a severe sociopath.
[28] Dr. Grigson clearly relied at least in part on Smith's oral communication that he felt no remorse or guilt over the incident.
[29] See, e. g., United States v. Cohen, supra. Here, however, there are a number of other ways for the state to show "dangerousness". Thus, the jury could consider the defendant's prior criminal record, if any; the range and severity of his prior criminal conduct; his age; whether he was acting under duress or under the domination of another; and efforts to rehabilitate himself after a criminal conviction. See Jurek v. State of Texas, 428 U.S. at 272-73, 96 S.Ct. 2950.
[30] See, e. g., Tex.Code Crim.Pro. Art. 46.02 § 2 (Supp.1976-77).
[31] In its brief submitted to the Texas Court of Criminal Appeals the state relied solely upon Dr. Grigson's testimony to support the jury finding on question 2. The Court of Criminal Appeals seemed to rely in addition on the facts of the primary offense, a five year probated sentence for possession of marijuana and a poor employment record.
[32] It would be constitutionally permissible for a psychiatrist to merely observe the defendant for the purposes of diagnosis. But whether mere observations would be legally sufficient to form the basis for a medical opinion on dangerousness need not be decided here.
[33] The petitioner raises an interesting point concerning the severity of the death penalty for a defendant who does not actually pull the trigger. This is the so-called non-triggerman issue which is currently before the United States Supreme Court. Bell v. Ohio, 433 U.S. 907, 97 S.Ct. 2971, 53 L.Ed.2d 1091 (1977).
It strikes this court that there may be instances where the non-triggerman is just as culpable as the triggerman. I believe this case is one of them although the fact that this defendant did not actually commit the murder certainly is a mitigating factor for the jury's consideration. At any rate, I believe it would be unwise to adopt a per se rule for non-triggermen. One can envision a situation where one person, shouldering and aiming a bazooka for his trigger pulling accomplice is as culpable as his cohort.
Whatever the merits or demerits of this controversy, it should be resolved soon by the Supreme Court and, in light of the present posture of this case, it is unnecessary to decide that question here. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4567580/ | Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-20-00325-CV
CESAR ORNELES LAW, PLLC and Cesar Ornelas, II,
Appellants
v.
Rachel Rodriguez MEDINA,
Appellee
From the 407th Judicial District Court, Bexar County, Texas
Trial Court No. 2019-CI-15819
Honorable Michael E. Mery, Judge Presiding
PER CURIAM
Sitting: Rebeca C. Martinez, Justice
Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: September 16, 2020
DISMISSED
Appellants Cesar Orneles Law, PLLC and Cesar Orneles, II and Appellee Rachel
Rodriguez Medina filed a joint motion to dismiss, requesting that this court dismiss the appeal and
cross appeal with prejudice. We grant the motion and, accordingly, dismiss the appeal and cross
appeal. See id. TEX. R. APP. P. 42.1(a)(1). Costs of the appeal and cross appeal are taxed against
the party who incurred them. See id. R. 42.1(d).
PER CURIAM | 01-03-2023 | 09-22-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/1977471/ | 99 F. Supp. 280 (1951)
UNITED STATES
v.
RICHFIELD OIL CORP.
No. 6896-Y.
United States District Court S. D. California, Central Division.
July 2, 1951.
*281 *282 *283 William C. Dixon, Sp. Asst. to Atty. Gen., Theodore M. Alexander, T. Keister Greer, Theron M. Hall, Lawrence M. Somerville, Sp. Attys., Anti-Trust Division, Department of Justice, all of Los Angeles, Cal., for plaintiff.
William J. DeMartini, Robert E. Paradise, Los Angeles, Cal., for defendant.
YANKWICH, District Judge.
This is an action instituted by the United States Government against Richfield Oil Corporation, to be referred to as Richfield,a corporation organized under the laws of the State of Delaware, with offices and its principal place of business in Los Angeles, California, in which the Government seeks equitable relief under Section 4 of the Act of the Congress of July 2, 1890, commonly referred to as the Sherman Anti-Trust Act[1], and under Section 15 of the Act of the Congress of October 15, 1914, as amended, commonly known as the Clayton Act.[2] The Government seeks to prevent and restrain violations of Section 1 of the Sherman Anti-Trust Act[3] and Section 3 of the Clayton Act.[4]
I
The Nature of the Controversy
Richfield is engaged in the business of acquiring and developing oil reserves and producing, transporting, refining and marketing petroleum and petroleum products therefrom in the States of California, Oregon, Washington, Nevada, Idaho, Arizona, Texas and New Mexico. No evidence was offered relating to activities in the States of Texas and New Mexico, but the pleadings alleged, and the evidence in the case showed, that, in the disposition of its products in the first six States named, Richfield availed itself of various forms of outlets which were referred to as L-O (leased-out) stations, and "dealer" stations, designated as 337 and 3-C stations. Through regional representatives, merchandisers, salesmen and others, whose relation to the company need not be gone into, the petroleum products were supplied to the operators of these stations.
Richfield also deals in automotive accessories manufactured by others, which were referred to during the trial as "sponsored products". These consist of replacement parts and articles sold and used in servicing or repairing automotive vehicles. These include tires, tubes, batteries, spark plugs, oil filters, fan belts, battery cables, lamp bulbs, fuses, windshield wiper blades, tire repair and vulcanizing kits, anti-freeze, tire chains, and similar items.
During the trial, these were referred to as "TBA". It is the assertion of the Government that the various agreements, written and oral, existing between Richfield and the operators of these three types of stations, bind them, in effect, to secure their entire requirements, both as to petroleum products and TBA, exclusively from Richfield; that they are forbidden to handle petroleum products of any other company or to handle accessories competitive with those distributed or sponsored by Richfield.
In brief, the Government claims that these contracts are an unreasonable restraint of interstate trade or commerce, in violation of Section 1 of the Sherman Act, and substantially lessen competition and tend to create a monopoly in a line of commerce, in violation of Section 3 of the Clayton Act.
Richfield has denied that there is a violation of either statute in their relations with any of the groups of dealers mentioned, either *284 as to their petroleum products, or as to the sponsored TBA products.
II
The Commerce Involved
Despite voluminous testimony, the scope of the inquiry is rather narrow. The interstate origin and nature of the commerce of both the petroleum products and TBA is established beyond dispute. The petroleum products originate in oil reserves and producing wells and bulk plants and refineries operated in California and elsewhere, the products of which move across state lines continuously to supply the various stations. Richfield has oil reserves and producing wells in certain oil fields in California. Crude oil is transported by Richfield from producing wells in California to its refineries located at Watson and Vinvale, California. At the Watson refinery crude oil is refined into gasoline and other petroleum products. Richfield owns and operates two natural gasoline plants in California. Gasoline and other petroleum products refined at the gasoline plants in California are shipped by Richfield to its refinery at Watson, California. The petroleum products refined at its refinery at Watson, California, are, in some instances, shipped by Richfield from the refinery to bulk plants located in California, Oregon, Washington, Arizona, Nevada and Idaho. Gasoline and petroleum products are stored in bulk plants, and sold and delivered from time to time to service stations located in the respective states in which the bulk plants are located. Richfield maintains pipe lines in California used by it in transporting crude oil and petroleum products between points solely in California. It maintains automotive vehicles used in making deliveries of petroleum products from bulk plants to service stations located in the respective states in which the bulk plants are located.
Richfield owns 107 bulk plants in California, of which 23 are operated by Richfield and 84 by commission agents, from which petroleum products are distributed by Richfield and commission agents to 1577 service stations in California. It owns 35 bulk plants in Oregon, of which 2 are operated by Richfield and 33 by commission agents, from which petroleum products are distributed by Richfield and commission agents to 388 service stations in Oregon. Richfield owns 36 bulk plants in Washington, of which 4 are operated by it and 32 by commission agents, and from which bulk plants petroleum products are distributed by Richfield and commission agents to 646 service stations in Washington. Richfield owns 7 bulk plants in Nevada, all of which are operated by commission agents, and from which plants petroleum products are distributed by commission agents to 39 service stations in Nevada. Richfield owns 5 bulk plants in Idaho, all of which are operated by commission agents, from which petroleum products are distributed by commission agents to 56 service stations in Idaho. Richfield owns 22 bulk plants in Arizona, of which 2 are operated by Richfield and 20 by commission agents, from which petroleum products are distributed by Richfield and commission agents to 190 service stations in Arizona. In a few instances, petroleum products have been delivered from bulk plants in one state to service stations located in other states.
The sponsored products are manufactured at various industrial plants throughout the United States, from which they find their way first to the storerooms of the authorized Richfield distributors, and then to the shelves of the individual station operators. In some instances, these sponsored products are shipped directly to service station operators. So there is a constant flow of interstate commerce in the operations of the defendant.[5]
*285 The competitive products, both petroleum and TBA, which were kept out of these stations as the result of the agreements, were manufactured at various places in the United States. So, in this respect also, if the practices of which the Government complains stand proved, they unquestionably affect the flow of goods and products in interstate commerce.[6] The amount of commerce involved satisfies all the requirements of substantiality laid down by the cases.[7] The anti-trust laws forbid practices through which competitors are "shut out of the market by a provision that limits it (a product), not in terms of quality, but in terms of a particular vendor."[8]
And, as said by the Supreme Court in another case: "The anti-trust laws are as much violated by the prevention of competition as by its destruction."[9]
Back of this is the fundamental determination embedded in the anti-trust laws to maintain our national economy free by keeping it competitive. The Supreme Court has expressed this thought very recently: "The heart of our national economic policy long has been faith in the value of competition. In the Sherman and Clayton Acts, as well as in the Robinson-Patman Act, `Congress was dealing with competition, which it sought to protect, and monopoly, which it sought to prevent.'"[10]
A few statistics supplied by Richfield, and culled from the record, will suffice to demonstrate readily that the commerce affected is substantial. The number of L-O stations in 1950 was 1343. The number of 337 stations was 1361. The 3-C stations numbered 261. The Government, by counting the separate written agreements, which go to make up each unit, including the painting agreements, arrives at a total of 4581. If to these are added the oral arrangements affecting the stations, we have a total of 7546 written and oral agreements.
The written contracts are approved at one of Richfield's divisional offices, of which there are three located in the States of California and Washington. The contracts come to the respective offices in those States from various other States for approval. Some of the contracts are required to be approved at the main Richfield office in Los Angeles.
The gallonage of gasoline distributed in 1950, through the L-O stations was 160,795,000, of the money value of $23,790,968.00. The gallonage of gasoline distributed *286 through the 337 stations during the same year was 67,476,000, with a money value of $10,164,158.00. As to the 3-C stations, the gallonage was 20,385,000, and the money value $3,069,987.00. For the same year the gallonage of motor oils and greases was, as to all types of stations, 3,491,369, of the money value of $2,546,127.59. For the same year, the money value of all accessories sold to the three types of stations was $3,603,003.85. The interstate nature of the commerce involved and its substantiality, both from the standpoint of the number of outlets involved and the quantity and value of the products handled, being evident, the pattern of our inquiry becomes very narrow. It is reduced to the problem whether the agreements through which this commerce was handled are of the type condemned by the decision in the Standard Oil Case[11], rendered by me in 1948, and affirmed by the Supreme Court.[12]
It is to be borne in mind that the opinion of the Supreme Court contented itself with the determination that the agreements there involved violated Section 3 of the Clayton Act. Here, we are concerned with the alleged violation of both Acts. And the case calls for the determination of both questions.
But, while the same principles are to be applied to the three different outlets, it is necessary to examine separately their characteristics, in order to determine whether there is any difference (a) as to the relation existing between the operators and Richfield, and (b) the restrictive practices in effect.
III
The Leases on L-O (Leased-Out) Stations
The problem is simplified as to the L-O stations by the Richfield admission that the oral understandings under which the leases are made, and for the violation of which the leases are forfeited under the 24-hours' termination clause, to be referred to, not only provide but demand that Richfield petroleum products and Richfield-sponsored TBA products be handled exclusively and without deviation.
So the main consideration as to these stations is the relations which control them. The extent of the commerce affecting these stations has already been adverted to. It should be added that Richfield claims an investment in these stations as of December 31, 1950, of $19,542,082.58, of which the cost of the land purchased represents $11,213,657.33, and the cost of improvements installed, $8,328,425.25. The figures as to improvements relate chiefly to the stations themselves, and adjunct buildings and the permanent equipment. They do not include improvements such as tanks, pumps, compressors, hoists, neon signs, hiboys and the like.
In justification of the investment, and, for that matter, of the entire policy, Richfield asserts that once "the shooting war" was over, and the purchase of gasoline by Government agencies had decreased, it was compelled to find an outlet for the increased refining facilities which it had built during the war period, and that the only certain way of securing an assured market was through controlled units.
Intent and purpose are an element in a case involving violation of Section 2 of the Sherman Act[13]. But such violation is not concerned with a specific intent. And a specific intent, or good motive, for that matter, is not material when we deal with Section 1 of the Sherman Act[14], or Section *287 3 of the Clayton Act[15]. The determining consideration is the effect of a particular practice on interstate trade or commerce. Other considerations, such as economic necessity, do not, and should not enter into our inquiry whether the practices here involved violate either statute.[16]
Very recently the Supreme Court rejected a contention that the anti-trust statute should not be given full effect in a particular field, in view of certain current foreign trade conditions.[17] The argument is just as valid when applied to market conditions as to petroleum and allied products in a specific area in this country. Economic considerations are relevant in determining legislative policy. They may be important in interpreting the limit of that policy. They do not constitute an excuse for the violation of the legislative policy declared in a statute.
These preliminary observations clear the way for a consideration of the nature of the arrangements under which the L-O stations were operated. The foundation of the relations was the service station lease, denominated Form 542. It was prepared by Richfield, underwent several changes through the years, and, in its final form, as it appears in this case, it was an elaborate lease containing fifteen different clauses setting forth the conditions governing the transfer of the property.
The habendum clause of each lease leases the described real property and the improvements and facilities thereon to the designated lessee for a definite period of time, subject to a 24-hours' termination clause, at a specified rental per month, payable in advance on the first day of each of the calendar months. In addition to this, the lessee agrees to pay as rental a sum equivalent to the total number of gallons of gasoline in excess of a certain stated maximum, delivered to the premises during the month for which payment is being made for resale and distribution, the rate being fixed for each of the twelve months of the year, on the basis of the excess over a definite amount of gallons. Richfield has the right to demand a deposit of cash or bond to secure the payment of the rent in amount equal to the average rent payable.
The lease limits the use of the premises to the operator of a gasoline station, prohibits the use for any other or an unlawful purpose, and forbids the commission of a nuisance by the lessee. The prohibition by law of the continuance of the business terminates the lease. There follow provisions placing upon the lessee the duty to maintain the premises and the improvements in good repair and a clean and safe condition, and prohibiting the making of changes or alterations without the permission of the lessor. The remaining clauses may be summed up briefly. The lessee, upon expiration of the lease or its termination, agrees to surrender the premises in as good a condition as when received, wear and tear excepted. Destruction by fire terminates the lease. The lessee is responsible for all charges for utilities. Failure to comply with the terms of the lease, default in payment of rent, bankruptcy or insolvency, the levying of an attachment, assignment or execution, or the institution of any other legal proceedings affecting the premises or any of the equipment on them, is ground for termination without notice. The lease is not assignable, either voluntarily or by operation of law. And the lessee agrees to indemnify the lessor against any claims for injury to property or person occurring on the premises during the operation of the lease by himself, his agents or employees. There follow the usual general clauses protecting against waiver of breach, making provision for attorney's fees for the lessor in case of suit, and designating the place to serve notice, and merging into the instrument all other agreements.
*288 IV
The Nature of the Lessee's Interest
If this instrument is assayed by the accepted tests which determine the relation of landlord and tenant, the conclusion is inescapable that it is a lease. For we have a relation which is the result of specific agreement, which calls for (a) a fixed term, (b) at a determined rental, (c) by which a specific estate passes to the tenant, (d) who takes exclusive possession of the premises against all the world, including the owner, (e) all the lessee's rights being subordinated to the primary right to the fee of the owner, and (f) subject to reversion to him at the end of the term, or on termination of the lease.[18]
Implicit in the contract is the lessee's assumption of obligation and responsibility for his own acts upon the premises and those of his employees in their relation to the public, who come in contact with them during the time of his dominion. The lessee is not the employee of Richfield. Richfield pays him no wages or other remuneration. He must carry his own workmen's compensation. He is not carried on their books as an employee for the purpose of social security taxes or any of the withholding taxes, state or federal, incidental to the employer-employee relationship. Richfield is not required to withhold any moneys from him for income tax purposes. Neither are they required to perform any of the duties just mentioned as to any of the employees who may assist the lessee in the conduct of the station or of any auxiliary repair work upon the premises. The lessee is solely responsible for his own conduct and that of his employees which may cause damage to the person or property of others. In brief, it would be difficult to find an instrument which so completely makes, by its own terms, the lessee master of the domain covered by the lease as does this lease. He is certainly as independent as any lessee is. And the relationship is no different than that found in the "leasedout" stations in the Standard case.[19]
When, in law, we speak of "an independent contractor", or "an independent business man", we deal with a practical concept, not with a philosophical phrase. We mean a person who, in the performance of a particular contract, or in the conduct of his business, acts chiefly for himself and for his own benefit and profit, and not for others and the benefit and profit of others. And this is true, even though, as in every contract, the other party to the contract may also derive benefits. Mutuality of benefits lies behind every contract. And the fact that a party to such contract may derive a benefit or impose conditions in the carrying on of an enterprise which transcend the usual conditions, does not destroy the independent character of the other party.
In a sense, in this complex and interdependent world, no one is really independent. But when, through a formal and written instrument, a relationship is established by which exclusive possession and control of property is turned over to another, in exchange for a specified rental, with full responsibility for the conduct of the business falling upon the lessee, with all profit or loss accruing entirely to him and not to the transferor, the relationship satisfies all the requirements of an independent enterprise. And when a corporation like Richfield deals with such an enterprise, it cannot be said to be dealing with itself, as though the estate it created were nothing and the person in charge, to whom possession was turned over, is a mere employee because, under clauses not contained in the contract, they supervise *289 his actions, regulate, to some extent, his personal appearance, and do other things, some distinctly illegal, as will presently appear.
In this respect, the Timkin case, already referred to, is very revealing. It involved a prosecution under Section 2 of the Sherman Act. It was Timkin's contention, as it is the contention of Richfield, that certain wholly-owned subsidiaries were so controlled by them, that, in reality, they were not other corporations with which they could conspire to violate the Act. But the Supreme Court declined to allow the control to destroy the existence of the units as separate business entities, and held that the law was violated when Timkin engaged in the prohibited acts with its own subsidiaries. Just as Richfield here would have us characterize their relationship with the L-O stations by some name unknown to common-law categories, Timkin, in that case, resorted to the term "joint venture" to avoid the charge of illegality. But the Supreme Court's answer was brief and decisive: "The fact that there is common ownership or control of the contracting corporations does not liberate them from the impact of the antitrust laws. E. G. Kiefer-Stewart Co. v. Joseph E. Seagram & Sons, supra, 340 U.S. at page 215, 71 S. Ct. 259. Nor do we find any support in reason or authority for the proposition that agreements between legally separate persons and companies to suppress competition among themselves and others can be justified by labeling the project a `joint venture'. Perhaps every agreement and combination to restrain trade could be so labeled."[20]
The principle which the Supreme Court applied is not new. That Court has repeatedly declared that "common ownership and control does not liberate corporations from the impact of the antitrust laws."[21]
This indicates clearly that the principle is applicable whether we are dealing with a monopoly case under Section 2 of the Act as the Timkin case was, or a case in restraint of trade under Section 1 of the Act. Rightly. For in all these cases, the Courts have insisted that "realities must dominate the judgment."[22] And, if control of instrumentalities which results in abolishing competition among them were sufficient to relieve the parties of the effect of the agreement on interstate commerce, the purpose of the Act could be subverted by the establishment by large industrial concerns of "puppet" outlets tied to the parent organization by the most restrictive agreements which would not only unreasonably restrain trade and lessen competition, but actually destroy it.
In interpreting this and other statutes, we must eschew the tyranny of words or labels. We must, in each case, get behind the facade which the organization has created, as did the Supreme Court in the Masonite case when it went behind a del credere agency, which, at first blush, seemed to be a fiduciary relationship established by the concern for its own purposes, and found, instead, a means for monopolization. The Court did not then hesitate to declare the agency a mere cloak for restraints: "So far as the Sherman Act is concerned the result must turn not on the skill with which counsel has manipulated the concepts of `sale' and `agency' but on the significance of the business practices in terms of restraint of trade."[23]
In the light of these norms, we continue our analysis of the relations established by the written lease. The operator pays for his gasoline and the petroleum products sold to him by Richfield. They are not merely consigned to him. Upon execution of the lease, if he was preceded by another lessee, he pays for the *290 inventory of petroleum products on the premises, and of the approved TBA products. He is responsible for credit losses, except such as result from extension of credits to customers carrying Richfield cards. If we consider the provision for 24-hours' termination as valid, the lessee has, at the worst, a tenancy at will. And in the American law of landlord and tenant, this is an estate carved out and independent of, but subordinate to, the estate of the transferor.[24] While the ancient common law did not favor this form of estate, it recognized it. Indeed, even in the absence of a statute the courts of England required a notice to quit in order to terminate the estate.[25] State courts, including those of California, have followed the trend of turning an estate at will into an estate for a definite term whenever, through the method of paying rent, or other provisions in the lease, it was apparent that a definite term was contemplated.[26]
So the Courts have done all in their power to give to this estate, so humble in the feudal law, a higher standing in accordance with their desire to achieve a more rational and just relationship than strict application of antiquated feudal principles would warrant. And it is interesting to note that in a very early California case, even before the law as just stated became crystallized, the Courts ranked the rights of a tenant at will so much higher than those of an employee that they rejected the contention of one who was the caretaker of property of another that he be considered a tenant at will, saying: "Such a principle is not countenanced by the authorities, and its adoption would lead to very inconvenient results. It would give to servants and agents novel and embarrassing powers over employers and their property."[27] (Emphasis added.)
And I am inclined to think that, because of the conflict of the 24-hours' termination clause with the monthly rental provisions, Courts would consider the tenancy created by the L-O agreements, at least, a month-to-month tenancy terminable only upon the minimum notice required in such cases.
In the case before us, there is no evidence that it was ever used as a means for terminating the lease for the infraction of any of its express conditions. It was used only to enforce the illegal restraints superimposed orally. Indeed, it was the boast of the representatives of the Company that so long as the provision as to exclusive dealing in Richfield products or Richfield sponsored TBA products were complied with, the tenancy was of practically unlimited duration, and that prospective lessees were so informed.
V
The Oral Requirements Restrictions
So we come to the question: Is the independence, both legal and factual, created by the lease destroyed by the oral agreements and conditions superimposed by Richfield and which binds the lessee to the distribution of Richfield petroleum products and Richfield sponsored TBA products under penalty rigidly enforced, as the record shows, of ouster unceremonious on 24-hours' notice, sometimes effected between sundown and sunup of successive days? Richfield insists that it is. The fact of control is admitted in their Answer, which states: "That each of the service stations owned by Richfield or leased by Richfield from a party other than the operator thereof, was acquired and/or constructed by Richfield as an outlet for the sale of Richfield petroleum products to *291 the motoring public; and that each operator of any such service station has been selected and trained by Richfield and has been permitted by Richfield to occupy such service station and use Richfield's land, building, facilities and equipment on a temporary basis subject to termination on 24-hours' notice."
Evidencing the rigor with which the control was exercised, there were shown at the trial instances of termination of the lease for failure to conform to the restrictions as to the products to be sold. On termination, no matter how long the occupancy had been, the lessee was not allowed to choose his successor, even in cases where the latter had agreed to purchase from him not only the petroleum products and approved products, but also the non-approved items on his shelves or equipment which he had installed. On termination, it was Richfield's policy to instruct the buyer that he "was not required" to buy the non-sponsored TBA products or other equipment owned by the lessee. And in all instances in which the suggestion was made, "he did not buy". Nor did Richfield allow the lessee to capitalize on his good will. On termination, the lessee could receive no compensation for good will, even when he found a buyer willing to pay for the good will which the long occupancy and the efforts of the lessee had created at the particular station.
These and other incidences of control, not spelled out in the lease, but made effective through Richfield's exercise of power, led Richfield to insist at the trial that their control over the L-O type station was, in effect, ownership. And they sought to apply to this ownership my statement in the Standard case that restrictive agreements are not prohibited as to wholly-owned outlets.[28]
We need not quarrel with the statement referred to, although the form in which it was cast indicates clearly that it applied only to the facts there before the Court. However, the discussion which precedes indicates that the Supreme Court has held repeatedly that even ownership does not stand in the way of the application of the restraint provisions of the Sherman Anti-Trust Law.[29] And the obvious answer to the claim of ownership is the same which Courts give in tax cases to contentions of taxpayers who, after having chosen to do business under a certain form of organization, try to have us disregard it, on the ground that they were, in reality, "doing business with themselves".[30] And the answer is that a person choosing a particular entity in order to achieve certain results is not in a position to ask us to disregard it, when he wishes to avoid results unanticipated.
So Richfield is tied to the form they chose. And if it does not give them immunity from the admitted restraints they impose through it, they must bear the consequences of their voluntary act, regardless of any contrary intention they may have had.
VI
The "Created" Market
Richfield contends that it "created" these instrumentalities for its own purpose. For this reason, they argue that there could be no restraint of trade, because no competition is involved.[31] No *292 case will be found which supports the contention that the mere creation of an exclusive form of outlet is, in itself, sufficient to avoid the consequences of the anti-trust laws. Indeed, one of the older cases[32] to which the case cited by Richfield referred as its authority, specifically holds that contracts, no matter how worded, will be scrutinized in order to determine whether they have been entered into or are to be performed for the apparently legitimate purpose which they specify on their face or for the purpose of restraining the free flow of commerce. We quote the language of the Court: "The court in the Standard Oil Case construed the act as intended to reach only combinations unduly restrictive of the flow of commerce, or unduly restrictive of competition, and, illustrating what were such undue or unreasonable combinations, it classed as illegal [Standard Oil Co. v. U. S. 221 U.S. 1, at p. 58, 31 S. Ct. 502, 55 L. Ed. 619] `all contracts or acts which were unreasonably restrictive of competitive conditions, either from the nature or character of the contract or act, or where the surrounding circumstances were such as to justify the conclusion that they had not been entered into or performed with the legitimate purpose of reasonably forwarding personal interest and developing trade, but, on the contrary, were of such a character as to give rise to the inference or presumption that they had been entered into or done with the intent to do wrong to the general public and to limit the right of individuals, thus restraining the free flow of commerce and tending to bring about the evils, such as enhancement of prices, which were considered to be against public policy.'"[33] (Emphasis added.)
And in the very case referred to, the following is given as the purpose of the anti-trust statutes: "Combination which unreasonably limits competition which would otherwise exist between persons in similar businesses is illegal. A suppression of competition necessarily restrains commerce. Board of Trade [of City of Chicago] v. United States, 246 U.S. 231, 38 S. Ct. 242, 62 L. Ed. 683, Ann.Cas.1918D, 1207. The purpose of the anti-trust laws an intendment to secure equality of opportunity is thwarted if group-power is utilized to eliminate a competitor who is equipped to compete."[34]
The vice of the entire argument lies in the fact that it permits suppression of competition at the inception of an enterprise, a practice against which the Clayton Act is specifically directed. As is shown in this case, a concern such as Richfield, through investment of large sums of money in real property and on stations, could so tie the hands of the sellers of its products as to completely shut out competition. If the fact that no outlets for the product existed before Richfield entered the field, would give complete immunity, regardless of the purpose for which the outlets are established and of the manifest intent to keep out competitors and to deny to the public at large access to competitive products through these outlets, then the anti-trust laws could be circumvented easily.
But the argument lacks substance. The trade was there, it being the custom for which it was bidding. And, if in bidding for it, it eliminated others and prevented their access to the products, the market is unreasonably restrained. As said by a unanimous Supreme Court: "In order to establish violation of the Sherman Anti-Trust Act, it is not necessary to show that the challenged arrangement suppresses all competition between the parties or that the parties themselves are discontented with the arrangement. The interest of the public in the preservation of competition is the primary consideration. The prohibitions of the statute cannot `be evaded by good motives. The law is its own measure of right and wrong, of what it *293 permits, or forbids, and the judgment of the courts cannot be set up against it in a supposed accommodation of its policy with the good intention of parties, and, it may be, of some good results.'"[35]
Neither the Curtis case[36] nor the Masonite case[37] warrants the conclusion that the creation of individual outlets creates such immunity. In the Curtis case the Court found that the contracts under consideration created an "agency" between the parties which had none of the features condemned by the anti-trust law. This relationship found to have been legitimately entered into by the Federal Trade Commission on findings of fact conclusive upon the Court, the Court found no legal reason to condemn, saying: "The engagement of competent agents obligated to devote their time and attention to developing the principal's business, to the exclusion of all others, where nothing else appears, has long been recognized as proper and unobjectionable practice. The evidence clearly shows that respondent's agency contracts were made without unlawful motive and in the orderly course of an expanding business. It does not necessarily follow, because many agents had been general distributors, that their appointment and limitation amounted to unfair trade practice. * * * Effective competition required that traders have large freedom of action when conducting their own affairs. Success alone does not show reprehensible methods, although it may increase or render insuperable the difficulties which rivals must face. The mere selection of competent, successful and exclusive representatives in the orderly course of development can give no just cause for complaint, and, when standing alone, certainly affords no ground for condemnation under the statute."[38]
The Masonite case has already been commented on. (Part IV of this Opinion.) There the Court found no difficulty in condemning what were apparent del credere agencies as means for illegitimate restraint. Convinced that the object of the establishment of the agency was to restrain commerce, the Court found no difficulty in disregarding the form. Richfield has enunciated an abstract concept which finds no justification in the history or interpretation of the anti-trust laws. To follow it would mean to turn defiance of law into a virtue, to make legitimate the very means of restraint. Granted that a business may create its own outlets, it can do so only by making them its agency in truth and fact. It cannot do so by creating a well-recognized legal estate, superimpose on it oral limitations, the object of which is to restrain trade, and then claim legitimacy for this very restraint. Even exclusive agencies, if they are of such character as to result in substantial lessening of competition, would be violative of the Clayton Act, although, at their creation, they did not violate the Sherman Act.
So Richfield cannot, by creating the relationship of landlord and tenant, long and anciently known to our law, with all the responsibilities that such relationship imposes on the transferee, restrain trade through that outlet by imposing illegitimate oral contracts which restrict the transferee to the handling of Richfield's products or Richfield's sponsored products. Even if it be admitted that if the outlet were its "exclusive agency", the limitation could be imposed as an incident of ownership, under the form it has chosen, Richfield cannot deny to the dealers the right to deal with other suppliers as to their products, or to deny *294 to such suppliers access to the dealers, so that these varied products may reach the public, whose protection the anti-trust laws seek. The law, as the Supreme Court has stated, "does not compel competition".[39] But restrictive contracts are condemned because of their "denial to commerce of the supposed protection of competition."[40] And, as said in the same case, when such restrictions "are parts of a plan, the mere projecting of which condemns them unconditionally, the realization of the plan itself must also be proscribed."[41]
It follows that the L-O operators are, by the instrument of their creation, independent business men, as that concept is understood in anti-trust law, and that the imposition on them by oral agreements of restrictive conditions limiting their dealings to Richfield products and Richfield sponsored TBA products, and denying access to other dealers in petroleum and accessories to these stations, and, through them, to the public, is violative of both Section 1 of the Sherman Anti-Trust Law and Section 3 of the Clayton Act.
VII
The "Dealer" Stations
We come now to the agreements under which the other stations are operated. We refer to the 337 stations and to the 3-C stations. As to these stations, Richfield admits that they are independent. Their chief witness and general manager in charge of sales, W. G. King, admitted that they were such, and he applied the designation to station dealers "who owned their places of business or leased them from others than Richfield."
The problem as to these stations is, therefore, a factual one: Do the written instruments under which these stations dispense Richfield products and Richfield sponsored TBA products and the oral agreements accompanying them restrict *295 them to the handling of these products exclusively?
Richfield has classified these stations as "dealer stations". They include service stations which are owned by service station dealers or leased by them from a lessor other than Richfield. Richfield has leased these stations from the dealers, and, in turn, has sub-leased them back to the dealers and has entered into a written sales contract with each dealer covering the petroleum products to be handled by the dealer. Each of the units into which this group is divided 337 and 3-Cis governed by multiple instruments.
In the case of the 3-C stations, the fundamental instrument is a service station lease, originally running from the owner to Richfield, and an operator's lease from Richfield to the operator, the operator assuming, in substance, the obligations of Richfield under their primary lease, with some modifications at times as to the rent paid. The record discloses that in some instances, the rental received by Richfield from the operator is less than it pays under its lease with the owner.
For brevity's sake, we omit the description of the terms, which are the usual terms in such leases. Their enumeration would not aid the discussion, because the tie-in as to these stations is represented by an operator's sales contract whereby the operator agrees to purchase from Richfield a definite quantity of gasoline, lubricating oil and greases for each month. The evidence in the record shows that the computation is intended to cover 80 per cent of the estimated requirement.
As to the other stations, presumably stations owned by the operator as to which no landlord and tenant relationship exists between Richfield and the operator or Richfield and the original owner, the tie-in agreement consists of a sales contract of the type already described and a painting agreement whereby Richfield agrees to paint the station in its own colors and insignia. After an expenditure of a definite sum of money, the dealer agrees to "remove from the surface of the station which is to be painted all signs and insignia, and upon completion of the painting of said service station by Richfield, shall not place upon or over the painted surfaces any advertising sign, trademark, insignia, or any other matter without first procuring the consent and approval of Richfield." And Richfield retains the right to cause the removal of any signs placed in violation of this clause. The violation of any of the terms of the agreement makes the dealer liable to Richfield for the amount expended in painting.
It is quite evident that the aim of the sales contract is to so control the outlet for petroleum products that there is little, if any, room left for dispensing products other than those contracted for. Such arrangements were envisaged by me in the Standard case. And it was pointed out in that opinion that, while an agreement of this character would as effectively shut out access to other products, it still left a possibility of dealing with others should the operator be unable to secure his full supply from the contracting supplier.
The painting agreement is obviously intended to secure an exclusive outlet under the guise of a painting agreement. Richfield is not in the business of painting. And the undertaking to paint at a certain cost in consideration of flying its colors under penalty of repayment when the agreement is breached, when tied to a sales contract which envisages 80 per cent of the needs of the operator, and to which the painting contract specifically refers, could have but one object, i. e., to shut out all competition. And, in reality, that was the effect of the arrangement.
Richfield's witnesses testified that the instructions to their representatives were "to persuade" the dealers working either under 337 or 3-C arrangements to confine themselves to Richfield products. On the other hand, individual operators of these types of stations have testified to the fact that they were "coerced" into limiting themselves to Richfield products, that they were "called on the carpet", as it were, if other products were on their shelves.
It is not denied that Richfield maintained a policy against "split" pumps, that is, pumps of other gasoline distributors. *296 And it is quite evident that, in one form or another, the policy has been enforced, and that the moment gasoline of another concern was handled by any of the operators on these leases, as one of their own witnesses put it, Richfield "was no longer interested in the station", and terminated their relationship. Some of Richfield's own field representatives, called by the Government, testified that their instructions as to these stations were not to accept them and sell products to them, except upon a hundred per cent basis, i. e., that they deal only in Richfield products. Unauthorized signs were reported to Richfield. Orders were given to remove these competitive signs, when discovered. And, as to both types of stations, Richfield salesmen testified that their instructions were that only approved merchandise was to be handled, and that they understood the sales and painting agreements to call for that policy, and so informed the operators of "dealer" stations.
There is also evidence that, despite the asserted independence of these operators so far as TBA products are concerned, in reality, there was coercion to induce them to confine their dealings to the sponsored products. In truth, there is evidence that the policy of the Company was that if "any dealer" refused to interest himself in Richfield sponsored TBA products, "then it's a new dealer", i. e., the instructions were to cancel the arrangement, whatever it was.
The fact that non-sponsored TBA products were more profitable to the dealers, either because of better discounts or quicker fulfillment of warranties, shows Richfield's motivation in keeping this trade for itself by means of these agreements. It is true there were denials by witnesses for Richfield. But it is significant that the denials are mostly by persons who either made policy or carried it into effect, or who testified to instructions given or received on the subject.
On the other hand, the existence of the practice is testified to by men in charge of the stations or by men in the field who testified to particular experiences and incidents.
So the trier of fact must choose. And, when confronted by a series of instruments, the sole object of which is to tie these stations to contracts which, in effect, are requirement contracts, although not so denominated, the testimony of the men in the field who actually were told that they could not trade freely with outsiders fits into the scheme which the sales contracts coupled with the leases, and the sales contracts coupled with the painting agreements, evidently were intended to set up.
We conclude, therefore, that the agreements relating to L-O, 337 and 3-C stations under which Richfield has operated in the six named States, are, and each of them is, in their creation and effect, in violation of Section 1 of the Sherman Anti-Trust Act and Section 3 of the Clayton Act.[42]
*297 Judgment will, therefore, be for the plaintiff upon the following specific findings:
(1) The Richfield agreements as to each of the three types of stations relate to interstate commerce.
(2) They affect, and the transactions under them are, in the course of interstate commerce.
(3) The relation established by each of the three types of agreements, L-O, 337 and 3-C, is that of independent contractor, each of the operators being an independent business man, as that term is understood in anti-trust law.
(4) The 24-hours' termination clause has been used as an instrumentality to force upon the lessees of L-O stations illegal restrictions as to the types of petroleum and sponsored TBA products to be handled on the premises.
(5) The 24-hours' termination clause is invalid, against public policy, and cannot, either under state or federal law, be enforced as a means of terminating the lease for even legal grounds by any notice by either side less than at least the minimum rental period for which rent is reserved, one month.
(6) Richfield should be prohibited from using the 24-hours' termination clause at all to enforce its restrictive conditions as to the products sold on the premises.
(7) The agreements in the form of leases, sales contracts and/or painting contracts, and the oral agreements superimposed on them confine the operations of the stations to which they apply to dealing exclusively with Richfield petroleum products and automotive accessories handled or sponsored by Richfield.
(8) The agreements lock out dealers from sources of competitive products originating in interstate commerce.
(9) The agreements deny to dealers and, through them to the public, access to such competitive products.
(10) The agreements deny to manufacturers or suppliers of such products access to the outlets controlled by the independent business men who operate the three types of stations.
(11) The agreements affect a substantial number of outlets and a substantial amount of products, whether considered comparatively or not.
(12) The agreements constitute an unreasonable restraint of trade and commerce among the States, under Section 1 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1.
(13) The agreements result in a substantial lessening of competition and tend to create a monopoly in a line of commerce in contravention of Section 3 of the Clayton Act, 15 U.S.C.A. § 14.
(14) The agreements are illegal in their effect and should be enjoined.
NOTES
[1] 15 U.S.C.A. § 4.
[2] 15 U.S.C.A. § 25.
[3] 15 U.S.C.A. § 1.
[4] 15 U.S.C.A. § 14.
[5] Santa Cruz Fruit Packing Company v. Labor Board, 1938, 303 U.S. 453, 463, 58 S. Ct. 656, 82 L. Ed. 954; United States v. Yellow Cab Company, 1947, 332 U.S. 218, 224-226, 67 S. Ct. 1560, 91 L. Ed. 2010; United States v. Paramount Pictures, 1948, 334 U.S. 131, 173, 68 S. Ct. 915, 92 L. Ed. 1260; Carter Carburetor Corp. v. Federal Trade Commission, 8 Cir., 1940, 112 F.2d 722, 730; United States v. Standard Oil Company of California, D.C. Cal., 1948, 78 F. Supp. 850, 856, and cases cited in Notes 3 and 4.
[6] See writer's opinion in United States v. Standard Oil Company of California, D.C. Cal.1948, 78 F. Supp. 850, 856-864, and cases cited in Footnotes 4-33. And see, Fashion Originators' Guild v. Federal Trade Commission, 2 Cir., 1940, 114 F.2d 80, 84-85; Wickard v. Filburn, 1942, 317 U.S. 111, 118-128, 63 S. Ct. 82, 87 L. Ed. 122; Mandeville Farms, Inc. v. American Crystal Sugar Company, 1948, 334 U.S. 219, 229-234, 68 S. Ct. 996, 92 L. Ed. 1328.
[7] Standard Oil Company of New Jersey v. United States, 1911, 221 U.S. 1, 61, 31 S. Ct. 502, 55 L. Ed. 619; Indiana Farmer's Guide Company v. Prairie Farmer Publishing Company, 1934, 293 U.S. 268, 278-279, 55 S. Ct. 182, 79 L. Ed. 356; United States v. Columbia Steel Company, 1948, 334 U.S. 495, 525, 68 S. Ct. 1107, 92 L. Ed. 1533; United States v. Griffith, 1948, 334 U.S. 100, 105-107, 68 S. Ct. 941, 92 L. Ed. 1236; William Goldman Theatres, Inc., v. Loew's, Inc., 1945, 3 Cir., 150 F.2d 738, 744.
[8] International Salt Company v. United States, 1947, 332 U.S. 392, 398, 68 S. Ct. 12, 16, 92 L. Ed. 20.
[9] United States v. Griffith, 1948, 334 U.S. 100, 107, 68 S. Ct. 941, 945, 92 L.Ed. Ed. 1236.
[10] Standard Oil Company v. Federal Trade Commission, 1951, 340 U.S. 231, 248-249, 71 S. Ct. 240, 249. See the writer's opinion in Balian Ice Cream Company v. Arden Farms Company, D.C.Cal.1950, 94 F. Supp. 796, 801, and cases cited in Notes 18 and 19; and F. & A. Ice Cream Company v. Arden Farms Company, D. C.Cal.1951, 98 F. Supp. 180, especially Note 44, which gives a history of the development of the concept which led to the adoption of the anti-trust laws. And see, Shotkin v. General Electric Company, 10 Cir., 1948, 171 F.2d 236, 238; United States v. South-Eastern, Underwriters' Ass'n, 1944, 322 U.S. 533, 553-554, 64 S. Ct. 1162, 88 L. Ed. 1440. And for a comprehensive review of the anti-trust laws, see, "Anti-Trust Law," The University of Illinois Law Forum, Vol. 1950, No. 4, pp. 491-672.
[11] United States v. Standard Oil Company of California, D.C.Cal.1948, 78 F. Supp. 850.
[12] Standard Oil Company of California v. United States, 1949, 337 U.S. 293, 69 S. Ct. 1051, 93 L. Ed. 1371.
[13] 15 U.S.C.A. § 2. See, United States v. Griffith, 1948, 334 U.S. 100, 105-106, 68 S. Ct. 941, 92 L. Ed. 1236; United States v. Paramount Pictures, 1948, 334 U.S. 131, 173-174, 68 S. Ct. 915, 92 L. Ed. 1260.
[14] 15 U.S.C.A. § 1. See, Paramount Famous Corp. v. United States, 1930, 282 U.S. 30, 44, 51 S. Ct. 42, 75 L. Ed. 145; United States v. Masonite Corp., 1942, 316 U.S. 265, 275, 62 S. Ct. 1070, 86 L. Ed. 1461; Fashion Originators' Guild v. Federal Trade Commission, 2 Cir., 1940, 114 F.2d 80, Note 6.
[15] 15 U.S.C.A. § 14. See, Fashion Originators' Guild v. Federal Trade Commission, 1941, 312 U.S. 457, 468-469, 61 S. Ct. 703, 85 L. Ed. 949.
[16] Standard Oil Company v. United States, 1949, 337 U.S. 293, 311-313, 69 S. Ct. 1051, 93 L. Ed. 1371.
[17] Timkin Roller Bearing Co. v. United States, 71 S. Ct. 971.
[18] 51 C.J.S., Landlord and Tenant, §§ 1-3; 32 Am.Jur., Landlord and Tenant, Sec. 2.
[19] United States v. Standard Oil Co. of California, D.C.Cal.1948, 78 F. Supp. 850. Richfield contended at the trial that, as to certain leased stations, Standard had admitted that they were operated by "independent contractors". But the conclusion reached in the case was not based upon any admission. Standard contested all the way the validity of the tie-in contracts as to "every type" of station involved. And the conclusion that certain station operators were independent contractors was based upon the facts in the case and not upon any admission by Standard. (See Finding 3, 78 F.Supp. at page 875 of Opinion.)
[20] Timkin Roller Bearing Company v. United States, 71 S. Ct. 971.
[21] Kiefer-Stewart Company v. Joseph E. Seagram & Sons, Inc., 1951, 340 U.S. 211, 215, 71 S. Ct. 259, 261. and see, Appalachian Coals, Inc. v. United States, 1933, 288 U.S. 344, 360-361, 376-377, 53 S. Ct. 471, 77 L. Ed. 825; United States v. Yellow Cab Co., 1947, 332 U.S. 218, 227, 67 S. Ct. 1560, 91 L. Ed. 2010.
[22] Appalachian Coals, Inc. v. United States, supra, 288 U.S. at page 360, 53 S.Ct. at page 474.
[23] United States v. Masonite Corp., 1942, 316 U.S. 265, 280, 62 S. Ct. 1070, 1078, 86 L. Ed. 1461.
[24] 51 C.J.S., Landlord and Tenant, § 156; 32 Am.Jur., Landlord and Tenant, Secs. 66-70; Restatement, Property, Secs. 21, 45; California Civil Code, § 761; and see, Smith v. Royal Insurance Company, Ltd., 9 Cir., 1940, 111 F.2d 667, 670-671, 130 A.L.R. 812.
[25] Spiritwood Grain Co. v. Northern Pacific Ry. Co., 8 Cir., 1950, 179 F.2d 338, 341.
[26] Phelan v. Anderson, 1897, 118 Cal. 504, 505-506, 50 P. 685; see, Psihozios v. Humber, 1947, 80 Cal. App. 2d 215, 220, 181 P.2d 699; Camp v. Matich, 1948, 87 Cal. App. 2d 660, 667, 197 P.2d 345.
[27] Mitchell v. Davis, 1862, 20 Cal. 45, 47-48. This early case enunciated a rule, which has since become general. 32 Am. Jur., Landlord and Tenant, Sec. 9.
[28] United States v. Standard Oil Company of California, D.C.Cal.1948, 78 F. Supp. 850, at page 854.
[29] See cases cited in Notes 21 and 22. And see, Associated Press v. United States, 1945, 326 U.S. 1, 15, 65 S. Ct. 1416, 89 L. Ed. 2013.
[30] Pacific Magnesium, Inc., v. Westover, D.C.Cal.1948, 86 F. Supp. 644, and cases cited in Notes 4-6 therein; Pacific Magnesium Co. v. Westover, 9 Cir., 1950, 183 F.2d 584.
[31] There is a statement in one of the cases to which they refer, Wm. Goldman Theatres, Inc. v. Loew's, Inc., 3 Cir.,1945, 150 F.2d 738, 743 which reads: "The restraint of trade contemplated by the statute means restraint of competition. Eastern Retail L[umber] D[ealers'] Ass'n v. United States, 234 U.S. 600, 34 S. Ct. 951, 58 L. Ed. 1490, L.R.A.1915A, 788."
In the case to which reference is made in support of this statement, Eastern States Retail Lumber Dealers' Ass'n v. U. S., 1914, 234 U.S. 600, 610, 34 S. Ct. 951, 58 L. Ed. 1490, I find no language capable of being epitomized in this manner.
[32] Eastern States Retail Lumber Dealers' Ass'n v. U. S., supra.
[33] Eastern States Retail Lumber Dealers' Ass'n v. U. S., supra, 234 U.S. at page 610, 34 S.Ct. at page 953.
[34] Wm. Goldman Theatres, Inc., v. Loew's, Inc., 3 Cir., 1945, 150 F.2d 738, 743.
[35] Paramount Famous Lasky Corp. v. United States, 1930, 282 U.S. 30, 44, 51 S. Ct. 42, 45, 75 L. Ed. 145.
[36] Federal Trade Commission v. Curtis Publishing Company, 1923, 260 U.S. 568, 43 S. Ct. 210, 213, 67 L. Ed. 408. The scope of the case is so limited in Carter Carburetor Corp. v. Federal Trade Commission, 8 Cir., 1940, 112 F.2d 722, 736.
[37] United States v. Masonite Corp., 1942, 316 U.S. 265, 280, 62 S. Ct. 1070, 86 L. Ed. 1461.
[38] United States v. United States Steel Corp., 1920, 251 U.S. 417, 451, 40 S. Ct. 293, 64 L. Ed. 343.
[39] United States v. United States Steel Corp., supra, 251 U.S. at page 451, 40 S.Ct. at page 299.
[40] United States v. Aluminum Company of America, 2 Cir., 1945, 148 F.2d 416, 428.
[41] United States v. Aluminum Company of America, supra, 148 F.2d at page 428. And see, Standard Fashion Co. v. Magrane-Houston Co., 1922, 258 U.S. 346, 356, 42 S. Ct. 360, 66 L. Ed. 653; M. A. Adelman, "Effective Competition and the Anti-Trust Laws", 1948, 61 Harvard Law Review, p. 1289. It should be added that, in the solution of the problem which confronts us, we must bear in mind the type of legislation which we are interpreting. And cases holding operators of stations of this type employees under a state Workmen's Compensation Act, Continental Oil Co. v. Sirhall, Colo.1950, 222 P.2d 612, or subjecting individual stations to state chain store taxes, Standard Oil Company of Indiana v. State Board of Equalization, 1940, 110 Mont. 5, 99 P.2d 229; Maxwell v. Shell Eastern Petroleum Products, Inc., 4 Cir., 1937, 90 F.2d 39, do not help. For, in interpreting Workmen's Compensation or taxing statutes, Courts notoriously interpret their terms broadly, so as to achieve the beneficent social aims of the statutes. See, Fox v. Standard Oil Co., 1935, 294 U.S. 87, 55 S. Ct. 333, 79 L. Ed. 780. Nor, for that matter, are we assisted by the recent decision of the District Court of Appeals of California, Hayes v. Richfield Oil Corp., Cal.App.1950, 229 P.2d 32, which has held Richfield liable to third persons for injuries suffered on the premises of one of the L-O stations. The case was decided upon the theory, submitted to a jury, that, in view of the public purpose of the business conducted on the premises, the lessor could be held liable, if the leased premises were not safe for the use intended, and the condition existed at the time of the transfer.
This decision is in accord with the general view that, while a landlord of leased premises is not ordinarily liable for the injuries occurring thereon, he will be held liable where the property is leased for public purposes, which the public is expected to enter for the transaction of business. 32 Am.Jur., Landlord and Tenant, Sec. 668. So the California Court, in applying this rule to one of the L-O stations, did not make a determination of the nature of the occupancy, binding on us.
On May 17, 1951, the Supreme Court of California granted a hearing in the case. This means that the Opinion loses all force as a precedent. For the Supreme Court may repudiate the doctrine announced in it. But even if it should stand, it does not go counter to views here expressed.
[42] Richfield seems to find comfort in, and justification for, its position in an article, "Exclusive Dealer Devices of Petroleum Products", by Forrest Revere Black, 1940, 29 Georgetown Law Journal, p. 438 et seq. The article was written before some of the most important decisions in the field of anti-trust law, including the decisions in the Standard case dealing with restrictive contracts, were made. More, a study of the article shows that what the writer sought to show was various devices resorted to by certain companies in order to avoid the consequence of regulatory statutes.
His introductory paragraph reads: "In any comprehensive history of government regulation of business in America, one chapter must be reserved to relate the strange story of the ingenious strategy of the major oil companies in marketing their products through the so-called `Iowa Plan' and cognate devices, whereby the operator simulates the appearance of an independent dealer and the major producing companies thereby acquire an exclusive outlet and attempt to evade the obligations of chain store taxes, social security legislation, Workmen's Compensation Laws, public liability insurance and labor troubles from attempts at unionization and collective bargaining." (p. 429.) (Emphasis added.)
Speaking more specifically of petroleum products, the article states: "The retail marketing of petroleum products has gone through several stages. The dominant consideration on the part of producers has been a mad race to secure additional retail outlets and increased gallonage, and usually connected with this has been an attempt to exclude the sale of competitor's products and to control the resale price." (p. 439-440.) (Emphasis added.)
While describing the various marketing methods, including what is known as the "Iowa Plan", the general effect of which is to make the operator simulate the appearance of an independent dealer when he is, in reality, the manager of a chain store, the author does not give them his approval as successful attempts at avoiding the effect of controls. But, even if such methods of evasion appealed to a lawyer, they certainly do not deserve the approval of a Court. In the field of anti-trust regulations, the aim of courts has always been to look behind devices which, under the appearance of innocuous arrangements, such as exchange of information, listing of customers and the like, involved attempts to restrain and prevent competition and to enthrone monopoly. So here, our problem is to see what the true relationship is, regardless of what Richfield and the operators under its domination thought it to be. And, as already appears, what to Richfield may seem apparent independence is demonstrably real independence, so far as the application of principles of anti-trust law are concerned. So, to apply a philosophical phrase, what to Richfield seems to be mere appearance, has, to us, all the indicia of reality. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2709898/ | Order Michigan Supreme Court
Lansing, Michigan
July 29, 2014 Robert P. Young, Jr.,
Chief Justice
Michael F. Cavanagh
Stephen J. Markman
148656 Mary Beth Kelly
Brian K. Zahra
Bridget M. McCormack
David F. Viviano,
PEOPLE OF THE STATE OF MICHIGAN, Justices
Plaintiff-Appellee,
v SC: 148656
COA: 319135
Isabella CC: 2012-001466-FH
STEVIE NICHOL O’KEEFE,
Defendant-Appellant.
_________________________________________/
On order of the Court, the application for leave to appeal the January 9, 2014 order
of the Court of Appeals is considered and, it appearing to this Court that the case of
People v Lockridge (Docket No. 149073) is pending on appeal before this Court and that
the decision in that case may resolve an issue raised in the present application for leave to
appeal, we ORDER that the application be held in ABEYANCE pending the decision in
that case.
I, Larry S. Royster, Clerk of the Michigan Supreme Court, certify that the
foregoing is a true and complete copy of the order entered at the direction of the Court.
July 29, 2014
d0721
Clerk | 01-03-2023 | 08-05-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1408638/ | 20 F.Supp. 623 (1937)
WHITE
v.
UNITED STATES.
No. 1772.
District Court, W. D. Kentucky.
August 20, 1937.
Chester A. Bennett and Daniel C. Eberly, both of Washington, D. C., for plaintiff.
Bunk Gardner, U. S. Atty., and Eli H. Brown, 3d, Asst. U. S. Atty., both of Louisville, Ky.
HAMILTON, District Judge.
This is an action instituted by the plaintiff, William C. White, against the United States of America, seeking to recover $1,484.25, fraud penalties assessed and collected from him by the Collector of Internal Revenue for the District of Kentucky.
The taxable years involved are 1929 and 1930. For the calendar year 1929 the plaintiff reported a taxable net income of $24,946.72 and voluntarily paid the taxes due thereon. On audit and review by the Commissioner of Internal Revenue, his taxable *624 net income was increased $19,225.55, made up of the following items:
Income from profession
(physician) $ 4,442.37
Interest received 82.50
Income from rents 4,725.63
Increase in profit from sales 5,428.75
Dividends increased 919.00
Other income 2,375.00
_____________
$17,973.25
Deductions decreased:
Interest paid $1,035.89
Taxes paid 216.41 1,252.30
__________________________
$19,225.55
The plaintiff is a practicing physician and in his original return reported professional income of $6,384.97. He was a member of a partnership and deducted in his personal return $4,442.37 business expense, which had been deducted in determining partnership income.
The plaintiff filed a joint return and failed to include $82.50 interest received by his wife. He reported $2,676 rents received and omitted $4,725.63, which sum represented payments on mortgages during the year.
The plaintiff sold, during the year, 100 shares of the capital stock of the First National Bank of Louisville, and reported $24,100 profit from said sale. In determining the cost of the stock, he used the purchase price of other shares which resulted in overstating cost $5,428.75.
The plaintiff omitted in his original return $874 dividends received by his wife on stock of the Standard Oil Company of Kentucky.
The plaintiff received from his partner, E. D. Wells, during the calendar year 1929, $2,375 for an interest in his medical practice, no part of which was reported in his original return. Plaintiff insists he believed, when making his return, that this was not income.
The plaintiff deducted in his original return $6,713.14 interest paid which was an overstatement of $1,035.89. The latter sum represented payments on the principal.
The plaintiff overstated taxes paid by him $216.41, and deducted in his original return $3,596.11.
For the calendar year 1930, the plaintiff reported a net loss in his return of $6,143.91. On audit and review, the Commissioner of Internal Revenue found the plaintiff's net income to be $18,739.63. The following changes were made by the Commissioner:
Rents increased $ 7,993.92
Increase of profit on sale
of stocks 15,018.30
Dividends increased 714.00
Other income increased 2,325.00
___________
$26,051.22
Deductions:
Taxes paid reduced $ 816.73
Deductible interest
increased (1,984.41) (1,167.68)
________________________
Balance $24,883.54
Net loss in original return 6,143.91
___________
$18,739.63
The plaintiff showed on his original return a loss from the operation of rental income property $765.96. In arriving at this sum, plaintiff deducted from gross rental income payments on mortgages, costs of improvements, and other capital items.
The plaintiff sold 50 shares of the capital stock of the First National Bank of Louisville and 100 shares of the capital stock of the Standard Oil Company of Kentucky. No profit was reported from either of these sales.
Plaintiff and his wife had received $714 in dividends from the Standard Oil Company of Kentucky, none of which was reported.
He also received during the calendar year 1930 from his partner, E. D. Wells, $2,325 for an interest in his medical practice, no part of which was reported.
Plaintiff deducted in his original return $4,296.11 taxes paid which was on overstatement of $816.73. He also understated interest paid $1,984.41.
Plaintiff is a successful, practicing physician in the City of Louisville and enjoys an excellent reputation for honesty and integrity. His testimony in regard to keeping records of income from which a correct tax return could be made shows gross negligence and an utter disregard of the responsibility resting on him as a citizen to make a fairly accurate return of income to his Government. Section 293 of the Revenue Act of 1928, 26 U.S.C.A. p. 658, chapter 24, § 2293 (26 U.S.C.A. § 293 and note) provides:
*625 "(a) Negligence. If any part of any deficiency is due to negligence, or intentional disregard of rules and regulations but without intent to defraud, 5 per centum of the total amount of the deficiency (in addition to such deficiency) shall be assessed, collected, and paid in the same manner as if it were a deficiency, except that the provisions of section 2272(i), relating to the prorating of a deficiency, and of section 2292, relating to interest on deficiencies, shall not be applicable.
"(b) Fraud. If any part of any deficiency is due to fraud with intent to evade tax, then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid, in lieu of the 50 per centum addition to the tax provided in sections 97 and 98 of this title. (May 29, 1928, 8:00 a. m., c. 852, § 293, 45 Stat. 858).
The Commissioner of Internal Revenue assessed the penalties against the plaintiff under section (b) of the above act, and I am convinced from a fair preponderance of the evidence that his omission of income supported the imposition of these penalties.
The statute under which the Commissioner acted provides: "If any part of any deficiency is due to fraud with intent to evade tax." The word "fraud" is not defined in the act, and it is to be construed as ordinarily understood.
The purpose in requiring taxpayers to make returns is to promptly bring to the attention of the Government their taxable income. It is well understood that the Government relies largely on the return for the correctness of the tax, and it is not complete unless sworn to by the taxpayer. Some courts hold the rule that a fraud penalty cannot be imposed on the taxpayer unless the facts would also support a criminal prosecution. I do not so view the act here in question. If there has been deliberate suppression of vital facts in the return, which is misleading, it is a fraud, and the misrepresentation will support fraud penalties if made recklessly without knowledge, or if so carelessly done as to lead a trier of facts to believe that the person on whom the duty rests to disclose has knowingly or intentionally failed to do what the law requires.
A charge of fraud cannot be sustained unless it is shown that the person charged had in his mind the intention to deceive another, but the intention may be inferred from the consequences of the act. If a person tells a willful falsehood with the intention that it shall be acted upon by the person to whom he tells it, his mind is plainly wicked and he must be said to have acted fraudulently. Again, fraud may be inferred if a person makes a statement recklessly, intending it to be acted upon, without regard to its truth or falsity.
The income omitted by plaintiff was large in amount and involved several different items for each of the years. The inference must be drawn from these facts that the plaintiff was reckless in ascertaining his taxable income, and his recklessness was such as to lead me to the conclusion that the fraud penalties were properly assessed and collected.
The plaintiff's petition will be dismissed, the defendant to recover its costs. Counsel will prepare findings of fact and conclusions of law conformable to this memorandum. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4160700/ | United States Court of Appeals
For the Eighth Circuit
___________________________
No. 15-3992
___________________________
United States of America,
lllllllllllllllllllll Plaintiff - Appellee,
v.
Jose Luis Romero-Orbe, also known as Jose Ramon Armenta-Valdez,
lllllllllllllllllllll Defendant - Appellant.
____________
Appeal from United States District Court
for the District of Minnesota - St. Paul
____________
Submitted: October 19, 2016
Filed: April 17, 2017
____________
Before LOKEN, SMITH,1 and COLLOTON, Circuit Judges.
____________
COLLOTON, Circuit Judge.
Jose Romero-Orbe pleaded guilty to illegal reentry to the United States after
a previous removal and conviction for commission of an aggravated felony. See 8
1
The Honorable Lavenski R. Smith became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on March 11, 2017.
U.S.C. §§ 1326(a) and (b)(2). The district court2 sentenced him to 36 months’
imprisonment.
Romero-Orbe appeals, arguing that the district court committed procedural
error in calculating the advisory guideline range. Under the guidelines in effect at the
time of sentencing, the defendant’s offense level was enhanced by 16 levels if he
previously was deported after a conviction for a felony that was a “crime of
violence.” USSG § 2L1.2(b)(1)(A) (2015). “Crime of violence” under the guideline
includes any offense under state law that “has as an element the use, attempted use,
or threatened use of physical force against the person of another.” Id., comment.
(n.1(B)(iii)).
Romero-Orbe contends that the district court mistakenly concluded that his
prior conviction for domestic assault under Minn. Stat. § 609.2242, subdivision 4 was
a crime of violence that triggered the increase. Subdivision 4 provides that a
violation of subdivision 1 of the statute constitutes a felony, as opposed to a
misdemeanor, if it is committed within ten years of the first of any two or more prior
domestic violence-related convictions. Subdivision 1, in turn, explains that a
domestic assault occurs when a person, against a family or household member, “(1)
commits an act with intent to cause fear in another of immediate bodily harm or
death; or (2) intentionally inflicts or attempts to inflict bodily harm upon another.”
§ 609.2242, subd. 1 (2013).
The district court ruled that Romero-Orbe’s conviction under § 609.2242,
subdivision 4 qualified as a “crime of violence,” because the offense satisfied the
“force” clause of the definition in the guideline. Romero-Orbe disputes this
conclusion. He maintains that under subdivision 1(1), a person can be convicted
2
The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
-2-
based on an intent to cause fear, without “the use, attempted use, or threatened use of
physical force.” Therefore, he argues, the Minnesota statute is not categorically a
crime of violence, and the district court erred by increasing his offense level.
This case is controlled by the reasoning of United States v. Schaffer, 818 F.3d
796 (8th Cir. 2016). In Schaffer, this court determined that Minn. Stat. § 609.2242,
subdivision 1(1) qualifies as a “violent felony” for purposes of the Armed Career
Criminal Act, 18 U.S.C. § 924(e). The court reasoned that an act undertaken with
intent to cause fear in another of immediate bodily harm or death necessarily involves
a threatened use of physical force against the person of another. 818 F.3d at 798.
Although Schaffer applied § 924(e) rather than the sentencing guideline at issue here,
the applicable definitions are identical, and we see no basis for a distinction.
Accordingly, the district court correctly concluded that Romero-Orbe’s conviction
under Minn. Stat. § 609.2242, subdivision 4 was for a crime of violence under USSG
§ 2L1.2. There was no procedural error.
The judgment of the district court is affirmed.
______________________________
-3- | 01-03-2023 | 04-17-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/2193554/ | 433 B.R. 547 (2010)
In re QIMONDA AG BANKRUPTCY LITIGATION.
Micron Technology, Inc., Appellant,
v.
Qimonda AG, et al., Appellees.
Elpida Memory, Inc., et al., Appellants,
v.
Qimonda AG, et al., Appellees.
Nanya Technology Corp., Appellant,
v.
Qimonda AG, et al., Appellees.
Nos. 1:10cv26, 1:10cv27, 1:10cv28.
United States District Court, E.D. Virginia, Alexandria Division.
July 2, 2010.
*551 MEMORANDUM OPINION
T.S. ELLIS, III, District Judge.
This appeal from the Eastern District of Virginia Bankruptcy Court ("Bankruptcy Court") presents several novel questions concerning cross-border insolvency proceedings conducted pursuant to Chapter 15 of the Bankruptcy Code, 11 U.S.C. §§ 1501-1532 (2006). Specifically at issue are the following questions:
(i) whether the Bankruptcy Court properly ensured that appellants were sufficiently protected, as required by 11 U.S.C. § 1522, in modifying the discretionary relief previously granted under 11 U.S.C. § 1521;
(ii) whether the Bankruptcy Court erred in concluding that 11 U.S.C. § 365(n) does not apply automatically in a Chapter 15 proceeding; and
(iii) whether the Bankruptcy Court erred in granting comity to German Insolvency Code § 103, which treats executory intellectual property license contracts differently from licenses protected under § 365(n).
I.
Appellee Qimonda AG ("Qimonda") is a German company with its headquarters in *552 Munich, Germany. From 2006 to the time of its insolvency in 2009, Qimonda, a major producer of dynamic random access memory ("DRAM") chips for computers, operated globally through a number of subsidiaries, including Qimonda North America Corporation and Qimonda Richmond, LLC.[1] Qimonda claims to hold approximately 12,000 patents, including at least 4,000 U.S. patents and over 1,000 pending U.S. patent applications. The remaining patents were issued by Germany and various other countries.
Appellee Michael Jaffé is a German attorney who specializes in insolvency law. In April 2009, the Munich, Germany insolvency court appointed Jaffé as Insolvency Administrator of Qimonda's estate. Thereafter, the U.S. Bankruptcy Court named Jaffé as Qimonda's Foreign Representative in the Chapter 15 proceeding.[2]
Between 1995 and 2008, Qimonda (or its predecessor entities) entered into various joint venture and patent cross-licensing agreements with appellants,[3] all of which are international electronics companies that manufacture and sell semiconductors in the United States and abroad. Pursuant to these agreements, Qimonda and appellants have perpetually and irrevocably cross-licensed tens of thousands of patents.
In January 2009, Qimonda commenced insolvency proceedings in Munich, Germany. In the course of the proceeding, Jaffé was appointed Insolvency Administrator of Qimonda's estate. In this capacity, Jaffé then filed in the U.S. Bankruptcy Court a petition for recognition of the German insolvency proceeding under Chapter 15 of the Bankruptcy Code. Following a hearing on the petition, the Bankruptcy Court issued two orders, both dated July 22, 2009. The first order correctly recognized the German insolvency proceeding as a "foreign main proceeding," i.e., an insolvency proceeding "pending in the country where the debtor has the center of its main interests." 11 U.S.C. § 1517 (setting forth prerequisites to granting recognition).[4] The second order (the "July 22, 2009 supplemental order") issued under § 1521[5]appointed Jaffé as Foreign Representative and granted discretionary relief to appellees. Pertinent *553 here is paragraph 4 of the July 22, 2009 supplemental order, which made certain provisions of the Bankruptcy Code applicable to Qimonda's Chapter 15 proceeding:
Pursuant to 11 U.S.C. § 1521(a) and in addition to those sections made applicable pursuant to § 1520, the following sections of title 11 of the United States Code are also applicable in this proceeding: §§ 305-307, 342, 345, 349, 350, 364-366, 503, 504, 546, 551, 558.
In re Qimonda AG, 1:09-14766 (Bankr. E.D.Va. July 22, 2009) (Supplemental Order).
Thereafter, Jaffé, acting as Qimonda's Foreign Representative, sent letters to Samsung, Infineon, Elpida, and Nanya electing nonperformance of the patent cross-licensing agreements between Qimonda and these appellants pursuant to German Insolvency Code § 103.[6] This prompted at least Samsung and Elpida to respond by sending letters to the Foreign Administrator, asserting their rights under the Bankruptcy Code to retain licenses for Qimonda's patents. More specifically, Samsung and Elpida in their lettersconsistent with appellants' position on appealargued that § 365(n) does not permit appellees to elect nonperformance of the cross-licensing agreements. Instead, § 365(n) allows appellants (i) to accept appellees' termination and sue for damages, or (ii) to reject appellees' termination, thereby continuing the patent licenses. See 3 Collier on Bankruptcy ¶ 365.14. In short, the parties dispute whether their cross-licensing agreements may be terminated by appellees without appellants' consent under German Insolvency Code § 103, or whether § 365(n) precludes such an action.
Given this dispute, the Foreign Administrator filed a motion in the Bankruptcy Court to amend the July 22, 2009 supplemental order. Specifically, the Foreign Administrator requested that the Bankruptcy Court (i) remove the reference to § 365 made in paragraph 4 or, in the alternative, (ii) insert at the conclusion of paragraph 4 the proviso that "Section 365(n) applies only if the Foreign Representative rejects an executory contract pursuant to Section 365 (rather than simply exercising the rights granted to the Foreign Representative pursuant to the German Insolvency Code)." In support of the motion, the Foreign Representative argued that "[t]he changes requested to the Supplemental Order ... are consistent with principals [sic] of comity and the core purposes of Chapter 15."
Following briefing and argument, the Bankruptcy Court granted the Foreign Administrator's motion to amend the July 22, 2009 supplemental order over appellants' objections. More precisely, in a November 19, 2009 order issued under § 1522(c),[7] the Bankruptcy Court stated that
[t]he application of Section 365 to the instant proceeding shall not in any way limit or restrict (i) the right of the Administrator to elect performance or non-performance of agreements under § 103 German Insolvency Code or such other applicable rule of law in the Foreign Proceeding, or (ii) the legal consequence of such election; provided, however, if upon a motion by the Administrator under *554 Section 365 of the Bankruptcy Code, the Court enters an Order providing for the assumption or rejection of an executory contract, then Section 365 shall apply without limitation solely with respect to the contracts subject to such motion.
In re Qimonda AG, 1:09-14766 (Bankr. E.D.Va. Nov. 19, 2009) (Order).
Accordingly, the Bankruptcy Court issued a revised supplemental order (the "November 19, 2009 supplemental order") containing the following proviso in paragraph 4:
provided, however, Section 365(n) applies only if the Foreign Representative rejects an executory contract pursuant to Section 365 (rather than simply exercising the rights granted to the Foreign Representative pursuant to the German Insolvency Code).
In re Qimonda AG, 1:09-14766 (Bankr. E.D.Va. Nov. 19, 2009) (Supplemental Order).
In an accompanying memorandum opinion, the Bankruptcy Court gave the following reasons for granting the Foreign Administrator's motion and conditioning the applicability of § 365(n) on the formal rejection of an executory contract under the Bankruptcy Code:
(i) that the application of § 365 to Qimonda's patent portfolio would substantially undermine German Insolvency Code § 103, which permits an administrator to elect nonperformance of an executory contract;
(ii) that § 365 must give way to the German Insolvency Code because "[a]ncillary proceedings such as the Chapter 15 proceeding pending in this court should supplement, but not supplant, the German proceeding";
(iii) that "[i]f the patents and patent licenses are dealt with in accordance with the bankruptcy laws of the various nations in which the licensees or licensors may be located or operating, there will be many inconsistent results";
(iv) that the inconsistent treatment of Qimonda's patent portfolio may result in the portfolio being "splintered" or "shattered into many pieces that can never be reconstructed";
(v) that the application of § 365(n) to only certain patents in Qimonda's portfolio will "diminish[] the value of these assets" and "may well be detrimental to parties who are or wish to license the patents";
(vi) that it was an "unfortunate but inevitable result" of Qimonda's insolvency and the Foreign Administrator's election of nonperformance under the German Insolvency Code that appellants would be forced "to bid for licenses for which they have already paid"; and
(vii) that "[a]ll patents should be treated the same" on the ground that "[t]here should not be disparate results simply because of the location of a factory or research facility or corporate office."
In re Qimonda AG, 2009 WL 4060083, 2009 Bankr.LEXIS 3786 (Bankr.E.D.Va. Nov. 19, 2009).
On January 11, 2010, appellants filed three separate notices of appeal, with Micron and Nanya filing individually; and Elpida, Infineon, and Samsung filing jointly (the "Elpida appellants").[8] On appeal, appellants argue that the Bankruptcy Court erred in conditioning the applicability of § 365(n) on the Foreign Representative's formal rejection of the parties' cross-licensing agreements under the Bankruptcy *555 Code. More specifically, the parties principally raise four issues:
(i) whether the decision to grant comity to German law is reviewed de novo or for an abuse of discretion;
(ii) whether the Bankruptcy Court's decision to amend its July 22, 2009 supplemental order was consistent with the procedural requirements of Rule 60(b), Fed.R.Civ.P., and § 1522;
(iii) whether the Bankruptcy Court erred in holding that § 365(n) applies discretionarily in a Chapter 15 proceeding under § 1521, rather than mandatorily and automatically under § 1520; and
(iv) whether the Bankruptcy Court erred in deferring to the application of the German Insolvency Code under comity principles.[9]
The parties briefed and argued the issues at a May 14, 2010 hearing, and thereafter submitted supplemental briefs. Accordingly, the appeal is ripe for disposition.
II.
It is well-settled that a district court "review[s] the bankruptcy court's factual findings for clear error ... [and] questions of law de novo." See Loudoun Leasing Dev. Co. v. Ford Motor Credit Co. (In re K & L Lakeland, Inc.), 128 F.3d 203, 206 (4th Cir.1997). It is equally well-settled that "decisions committed to the discretion of the bankruptcy court are reviewed for abuse of discretion." Morris v. Zabu Holding Co. (In re Morris), 385 B.R. 823, 828 (E.D.Va.2008) (citing Robbins v. Robbins (In re Robbins), 964 F.2d 342, 345 (4th Cir.1992)). Accordingly, the parties correctly agree that the Bankruptcy Court's discretionary decision to amend its July 22, 2009 supplemental order and limit the applicability of § 365(n) pursuant to § 1522 is reviewed under an abuse of discretion standard. See id. The parties also correctly agree that the Bankruptcy Court's refusal to apply § 365(n) automatically under § 1520 is a matter of statutory interpretation requiring de novo appellate review. See United States v. Myers, 280 F.3d 407, 416 (4th Cir.2002) ("We review questions of statutory interpretation de novo"). The parties disagree, however, as to whether the Bankruptcy Court's decision to grant comity to German law is properly reviewed de novo or for an abuse of discretion.
Typically, a bankruptcy court's decision to defer to foreign law under comity principles is reviewed under an abuse of discretion standard. See, e.g., JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V., 412 F.3d 418, 422-23 (2d Cir.2005); Underwood v. Hilliard (In re Rimsat, Ltd.), 98 F.3d 956, 963 (7th Cir. 1996); Remington Rand Corporation-Del. v. Bus. Sys., Inc., 830 F.2d 1260, 1266 (3d Cir.1987); French v. Liebmann (In re French), 320 B.R. 78, 81 (D.Md.2004). Appellants argue, however, that a de novo standard should apply here, citing the Second Circuit's decision in Royal & Sun Alliance Insurance Co. of Canada v. Century International Arms, Inc., 466 F.3d *556 88, 92 (2d Cir.2006). There, the Second Circuitreviewing a district court's decision to dismiss a case in deference to a pending Canadian bankruptcy actionheld that "because we are reviewing a court's decision to abstain from exercising jurisdiction, our review is `more rigorous' than that which is generally employed under the abuse-of-discretion standard," with `"little practical distinction between review for abuse of discretion and review de novo.'" Id. (quoting Hachamovitch v. DeBuono, 159 F.3d 687, 693 (2d Cir.1998)). Yet, the appeal at bar does not involve a decision to abstain from exercising jurisdiction; to the contrary, the Bankruptcy Court continues to exercise jurisdiction over the Chapter 15 proceeding. Accordingly, the Royal & Sun case is inapposite, and the Bankruptcy Court's decision to defer to German law under comity principles must be reviewed for an abuse of discretion.
III.
At the threshold, certain appellants challenge on procedural grounds whether the Bankruptcy Court had the authority to amend its July 22, 2009 supplemental order. Specifically, Micron argues that the November 19, 2009 supplemental order did not adhere to the requirements of Rule 60(b), Fed.R.Civ.P. In addition, the Elpida appellants and Micron argue that the November 19, 2009 supplemental order improperly modified the relief previously granted because appellants' interests were not sufficiently protected, as required by § 1522(c). Each of these arguments is addressed in turn.
A.
Rule 9024, Fed. R. Bankr.P., states that Rule 60, Fed. R. Civ. P., "applies in cases under the [Bankruptcy] Code," with certain exceptions not applicable here. In turn, Rule 60(b) provides that a "court may relieve a party or its legal representative from a final judgment, order, or proceeding" for various reasons, including mistake, inadvertence, surprise, or excusable neglect, or for any other reason that justifies relief. Notably, however, the plain text of the Rule indicates that it applies only to "a final judgment, order, or proceeding." Rule 60(b), Fed.R.Civ.P. (emphasis added). Accordingly, "the power of a court to modify an interlocutory judgment or order at any time prior to final judgment remains unchanged and is not limited by the provisions of Rule 60(b)." 11 Wright, Miller & Kane, Federal Practice & Procedure § 2852. This general principle extends to the bankruptcy context, where courts have held that "[i]n the exercise of its inherent equitable powers, the bankruptcy court has authority to modify or vacate its own interlocutory orders." A & A Sign Co. v. Maughan, 419 F.2d 1152, 1155 (9th Cir.1969).
These principles, applied here, compel the conclusion that the Bankruptcy Court did not run afoul Rule 60(b) in issuing the November 19, 2009 supplemental order because that Rule was not applicable. This is so because the Bankruptcy Court's July 22, 2009 supplemental order was an interlocutory ordernot a final orderand as such was not subject to the requirements of Rule 60(b). See Indemnity Ins. Co. of N. Am. v. Reisley, 153 F.2d 296 (2d Cir.1945) ("[N]o order in a bankruptcy proceeding is final ... until the proceeding has been terminated."). Accordingly, the Bankruptcy Court did not err or abuse its discretion by failing to perform the analysis required under Rule 60(b).[10]
*557 B.
Under 11 U.S.C. § 1521, a bankruptcy court, upon recognizing a foreign proceeding under Chapter 15, may discretionarily "grant any appropriate relief in order to "effectuate the purpose of this chapter and to protect the assets of the debtors or the interests of the creditors." 11 U.S.C. § 1521(a). Thereafter, pursuant to § 1522(c), a bankruptcy court "may, at the request of the foreign representative or an entity affected by relief granted under section 1519 or 1521, or at its own motion, modify or terminate such relief." Id. § 1522(c). Significantly, "[t]he exercise of discretion is ... circumscribed by the Bankruptcy Code." In re Atlas Shipping A/S, 404 B.R. 726, 739 (Bankr. S.D.N.Y.2009). Consistent with this, a bankruptcy court, when modifying or terminating relief pursuant to § 1522(c), must ensure that "the interests of the creditors and other interested entities, including the debtor, are sufficiently protected." 11 U.S.C. § 1522(a).
Only one reported decision addresses the meaning of the § 1522(a) statutory requirement that the relevant parties' interests be "sufficiently protected." In In re Tri-Continental Exchange Ltd., the bankruptcy court stated in dicta, while reviewing generally the tools available to bankruptcy courts administering Chapter 15 proceedings, that
[s]tandards that inform the analysis of § 1522 protective measures in connection with discretionary relief emphasize the need to tailor relief and conditions so as to balance the relief granted to the foreign representative and the interests of those affected by such relief, without unduly favoring one group of creditors over another.
349 B.R. 627, 637 (Bankr.E.D.Cal.2006) (emphasis added). As an example of protections for creditors, courts in other contexts have noted that § 1522(b) expressly permits a bankruptcy court to require the giving of a security or the filing of a bond. E.g., In re Atlas Shipping, 404 B.R. at 730 (citing 11 U.S.C. § 1522(b)); In re Tri-Cont'l, 349 B.R. at 636-37 & n. 12 (same).[11]
In this case, the Bankruptcy Court correctly recognized that § 1522 applies because the November 19, 2009 supplemental order modifies relief previously granted under § 1521.[12]See In re Qimonda AG, 2009 WL 4060083, *3, 2009 Bankr.LEXIS 3786, at *7 (citing § 1522(c) for proposition that "court retains jurisdiction to modify the supplemental order from time to time"). Furthermore, the parties correctly agree that the standard set forth in In re Tri-Continental guides the analysis here. Accordingly, the parties' dispute focuses sharply on whether the Bankruptcy Court appropriately balanced the parties' respective interests.
In this respect, the Bankruptcy Court stated in its memorandum opinion that
[i]f the laws of the various nations in which the patents are being used would be applicable, there will be many different treatments of the patents that have been licensed by Qimonda AG and many different and inconsistent results throughout the world. ... It may well be detrimental to parties who are or wish to license the patents. It is not difficult *558 to envision that if the patent portfolio is splintered without overall administration or control, some parties may be left with incomplete patent protection. Holding an American patent without holding a patent enforceable in the [sic] Europe may significantly restrict its use and utility.
Id., 2009 WL 4060083, *2, 2009 Bankr.LEXIS 3786, at *4-*5. Further, in response to appellants' argument that the application of German insolvency law would inequitably permit the Foreign Representative to terminate appellants' patent cross-licensing agreements with Qimonda, and then demand that appellants pay new licensing or royalty fees, the Bankruptcy Court noted that "[t]his is an unfortunate but an inevitable result of the bankruptcy of any company." Id., 2009 WL 4060083, *3, 2009 Bankr.LEXIS 3786, at *5.
It is unclear on this somewhat anemic record whether the Bankruptcy Court adequately balanced the parties' interests, as required by § 1522. With respect to appellees, the Bankruptcy Court did not articulate its reasons for concluding that the application of § 365(n) would unavoidably "splinter" or "shatter" the Qimonda patent portfolio "into many pieces that can never be reconstructed," thereby diminishing its value and rendering the Qimonda patent portfolio essentially unsalable. Id., 2009 WL 4060083, *2, 2009 Bankr.LEXIS 3786, at *5. Left unexplained, in particular, is why this is so, given that the continuation of appellants' non-exclusive licenses for an unspecified percentage of the Qimonda patent portfolio would preclude neither the sale of the patents themselves nor the grant of additional, non-exclusive licenses.
With respect to appellants, it is equally unclear whether the Bankruptcy Court considered any information about the nature of the U.S. patents licensed to appellants, and whether cancellation of licenses for those patents would put at risk appellants' investments in manufacturing or sales facilities in this country for products covered by the U.S. patents. At best, the Bankruptcy Court stated (i) that the application of dissimilar bankruptcy laws to different portions of Qimonda's patent portfolio "may well be detrimental to parties who are or wish to license patents," and (ii) that appellees' demanding that appellants pay new licensing or royalty fees was an "unfortunate but an inevitable result" of Qimonda's insolvency. Id., 2009 WL 4060083, *2, 2009 Bankr.LEXIS 3786, at *5-*6. It is not readily apparent why this is so. To begin with, were § 365(n) to apply in this case, appellants would retain valid cross-licenses to certain Qimonda patents, and accordingly any "splintering" of Qimonda's patent portfolio would have no effect on appellants' intellectual property interests. In addition, although it is well-established that the central purpose of the Bankruptcy Code is to provide a procedure by which qualified insolvent debtors may obtain a "fresh start," the Bankruptcy Code nonetheless "limits the opportunity for a completely unencumbered new beginning to the honest but unfortunate debtor," as "statutory provisions governing nondischargeability reflect a congressional decision to exclude from the general policy of discharge certain categories of debts." Grogan v. Garner, 498 U.S. 279, 286-87, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) (citation and internal quotation marks omitted).
Accordingly, because this case warrants a remand to the Bankruptcy Court for reasons discussed infra, the Bankruptcy Court on remand should articulate more fully and explicitly its basis for modifying the discretionary relief previously granted, consistent with the requirements of § 1522 and In re Tri-Continental.
IV.
Chapter 15 of the Bankruptcy Code, enacted in 2005, cross-references and automatically *559 applies various preexisting provisions of the Code. More specifically, § 1520 enumerates statutory provisions that apply automatically "[u]pon recognition of a foreign proceeding that is a foreign main proceeding." 11 U.S.C. § 1520(a). Yet, § 1521 provides a non-exclusive list of additional relief that may, in the discretion of a bankruptcy court, be granted "where necessary to effectuate the purpose of [Chapter 15] and to protect the assets of the debtor or the interests of the creditor." Id. § 1521(a). See generally In re Atlas Shipping, 404 B.R. at 739-42 (discussing automatic and discretionary statutory provisions). At issue on appeal is whether § 365(n)which governs a debtor's treatment of executory contracts relating to intellectual property licenses applies automatically in Chapter 15 proceedings under § 1520, or whether it applies in the discretion of the Bankruptcy Court under § 1521. Appellants contend that the Bankruptcy Court erred in viewing § 365(n) as discretionary relief that may be withheld and/or conditioned pursuant to § 1521.[13] Instead, according to appellants, § 365(n) applies automatically pursuant to § 1520 on the recognition of a foreign main proceeding under Chapter 15.[14] This question of statutory interpretation is reviewed de novo. See United States v. Myers, 280 F.3d at 416.
The principles governing statutory interpretation are well-established. As always, the analysis appropriately begins with the text of the statute. United States v. Midgett, 198 F.3d 143, 145-46 (4th Cir. 1999). In the absence of any indication to the contrary, such as an explicit statutory definition, "words in a statute are assumed to bear their `ordinary, contemporary, common meaning.'" Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202, 207, 117 S.Ct. 660, 136 L.Ed.2d 644 (1997) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 388, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993)). And where "the statutory language is clear and unambiguous, [the] inquiry ends there as well; [a court] neither resort[s] to an examination of the statute's legislative history nor appl[ies] the traditional rules of statutory construction." Faircloth v. Lundy Packing Co., 91 F.3d 648, 653 (4th Cir.1996).
The analysis concerning whether § 365(n) applies automatically in Chapter 15 proceedings begins with the text of § 1520(a). This provision states, as follows:
(a) Upon recognition of a foreign proceeding that is a foreign main proceeding
(1) sections 361 and 362 apply with respect to the debtor and the property of the debtor that is within the territorial jurisdiction of the United States;
(2) sections 363, 549, and 552 apply to a transfer of an interest of the debtor in property that is within the territorial *560 jurisdiction of the United States to the same extent that the sections would apply to property of an estate;
(3) unless the court orders otherwise, the foreign representative may operate the debtor's business and may exercise the rights and powers of a trustee under and to the extent provided by sections 363 and 552; and
(4) section 552 applies to property of the debtor that is within the territorial jurisdiction of the United States.
11 U.S.C. § 1520(a). The absence of a cross-reference to § 365(n)or even § 365 more generallyin § 1520's specific list of mandatory relief provisions points persuasively to the conclusion that § 365(n) is discretionary relief within the ambit of § 1521. Although it appears that no published judicial decision addresses this question, the only treatise to do so reaches the same result:
If a chapter 15 debtor has an executory contract or unexpired lease in the United States, the court should consider whether § 365 should be made applicable in the chapter 15 case. Because of the complexity of this provision, the court should adopt and apply to the chapter 15 case only those parts of § 365 that are relevant to the case.[15]
The conclusion that § 365(n) does not automatically apply in Chapter 15 proceedings is further supported by considering §§ 1520 and 1521 in pari materia. See Va. Int'l Terminals, Inc. v. Edwards, 398 F.3d 313, 317 (4th Cir.2005) ("[A]djacent statutory subsections that refer to the same subject matter ... must be read in pari materia as if they were a single statute."). Simply put, § 1520 plainly lists only those provisions that concern typical, central aspects of Chapter 15 proceedings, while § 1521 permits a Bankruptcy Court to consider the particular circumstances of the debtor and, "at the request of the foreign representative, grant [additional] appropriate relief." Thus, § 1520 lists only three provisions from Chapter 3 namely §§ 361, 362, and 363that apply automatically, all of which are routinely implicated in Chapter 15 proceedings. To begin with, the mandatory application of §§ 361 and 362 ensures that the debtor is entitled to the automatic stay common to all bankruptcy proceedings, and that creditors are adequately protected while the debtor enjoys the benefits of the automatic stay and, in certain cases, continues to operate its business. See 11 U.S.C. § 1520(a)(1) (applying §§ 361 and 362 automatically in Chapter 15 cases).[16] Likewise, § 363 applies in the familiar situation where, as here, the Chapter 15 debtor has property within the territorial jurisdiction of the United States that may be transferred, often in the course of the foreign representative's operating the debtor's business during insolvency. See id. § 1520(a)(2)-(3) (applying § 363 automatically in Chapter 15 cases). Notably, a foreign administrator's operation of a debtor's business is so commonplace that § 1520(a)(3) permits the foreign representative to operate the debtor's business as a matter of course in the absence of a court order to the contrary, thereby "preserving] value and eliminat[ing] delay attendant *561 to obtaining permission to do so." Bufford, supra note 15, at 258.
By contrast, § 365(n) is not routinely implicated in every bankruptcy. It follows that Congress sensibly left the application of § 365(n) to the discretion of bankruptcy courts, where appropriate. Accordingly, §§ 1520 and 1521, when read together, distinguish between (i) those Bankruptcy Code provisions that are typically implicated by, and central to, Chapter 15 proceedings, and (ii) additional relief that may be appropriate in a more limited number of Chapter 15 proceedings.[17]
The Bankruptcy Court's actions in this case are consistent with this statutory interpretation. Realizing that Qimonda was a party to executory contracts governing property situated in the United States namely cross-licensing agreements concerning U.S. patentsthe Bankruptcy Court initially ordered that § 365 apply in its entirety. See In re Qimonda AG, 1:09-14766 (Bankr.E.D.Va. July 22, 2009) (Supplemental Order). Thereafter, the Bankruptcy Court amended the order and conditioned the applicability of § 365(n) on the formal rejection of the parties' cross-licensing agreements. See In re Qimonda AG, 1:09-14766 (Bankr.E.D.Va. Nov. 19, 2009) (Supplemental Order). This action did not run afoul § 1520 because § 365 is not among the provisions that apply automatically on the recognition of a foreign proceeding under Chapter 15.[18] Instead, § 365 applies only in the discretion of a bankruptcy court where, as here, circumstances warrant its invocation.
In response, appellants principally contend that § 365(n) applies implicitly under § 1520. This incorporation-by-reference argument proceeds as a basic three-part *562 syllogism. First, § 1520 plainly makes specific reference to the automatic applicability of § 363 where the foreign administrator (i) "transfer[s] ... an interest of the debtor in property that is within the territorial jurisdiction of the United States," and/or (ii) operates the debtor's business. 11 U.S.C. § 1520(a)(2)-(3).[19] Second, § 363(l), in turn, states that "subject to the provisions of section 365, trustee may use, sell or lease property ... notwithstanding [an ipso facto clause[20]]." Id. § 363(l) (emphasis added). And thus third, according to appellants, it follows that § 365(n) applies automatically in Chapter 15 proceedings by virtue of the cross-reference to § 365 in § 363(l).
This argument fails because it ignores the specific context in which the prefatory clause, "subject to the provisions of section 365," appears in § 363(l). Generally, § 363 sets forth the conditions and procedures by which a debtor or trusteeor in a Chapter 15 proceeding, a foreign representativemay use, sell, and lease the debtor's property. Assets sold in the ordinary course of business are governed by § 363(c), which does not require notice or a hearing, while assets sold outside the ordinary course of business are governed by § 363(b), which requires notice, a hearing, and various other restrictions. See id. § 363(b)-(c). Consistent with this, the remaining paragraphs of § 363 address more specific scenarios in which the debtor's property may be sold, imposing certain limitations or conditions on those sales. See generally 3 Collier on Bankruptcy ¶ 363.01 (providing overview).
Ample authority holds that § 363(l) is "directed solely at making so-called ipso facto or bankruptcy-default clauses unenforceable."[21] Although the plain language of § 363(l) subjects the sale of a debtor's property to the protections of § 365, it does so only in the context of rendering ipso facto clauses unenforceable. Accordingly, this prefatory clause"[s]ubject to the provisions of section 365"is insufficient to apply § 365 referentially to all § 363 sales, notwithstanding whether an ipso facto clause is implicated. Indeed, where, as here, the patent cross-licensing agreements at issue do not contain ipso facto clauses, the sale of property may be effectuated solely under § 363(b) or § 363(c) without resort to § 363(l). In this scenario, it strains logic to reason that § 365 would nonetheless apply by virtue of § 363(l) when § 363(l) itself does not apply. Had Congress intended all sales under § 363 to be subject to § 365, it could have stated so clearly and unambiguously in either (i) § 363(b) and § 363(c), the most general paragraphs found in the section, or (ii) in a separate paragraph not tethered to the ipso facto clause restriction, rather than importing § 365 wholesale *563 into § 363 by way of a prefatory clause to § 363(l).
Nanya cites one commentator's view that § 363(l) applies regardless of whether an ipso facto clause is at issue. This argument rests on two rationales: (i) that "a review of the legislative history of § 363(l) reveals a clear Congressional intent to subordinate § 363 sales to the provisions of § 365 in its entirety"; and (ii) that "[i]f the proviso (`subject to section 365') were intended to be applicable only with respect to ipso facto or bankruptcy clauses, the proviso would have referred specifically to § 365(e)(2) rather than to § 365 generally."[22] These arguments are unpersuasive. To begin with, the legislative history argument fails to address the fact that § 363(l) deals specifically with ipso facto clauses, and that the prefatory clause concerning the application of § 365 is made in the context of § 363(l). And notably, the legislative history citation is to a single, conclusory sentence in Collier on Bankruptcy, which itself cites only the session law inserting the prefatory clause. See Baxter, supra note 22, at 482 & n. 58 (citing 3 Collier on Bankruptcy ¶ 363.LH[3][a]). This evidence is insufficient to establish any "clear" congressional intent with respect to the enactment of § 363(l)'s prefatory clause. Likewise, the § 365(e)(2) cross-reference argument is equally unpersuasive because it fails to recognize the other sections of § 365 that are implicated by § 363(l). In other words, § 363(l) appropriately cross-references § 365 generally, rather than specific paragraphs such as § 365(e)(2), because other § 365 paragraphs are relevant to § 363(l) and ipso facto clauses. For instance, § 365(b)(2) makes inoperative a provision precluding a bankruptcy trustee from assuming a defaulted executory contract, absent cure of the default, where the contract contains an ipso facto clause. Significantly, the language of § 363(l) and § 365(b)(2) are identical, as both relate to contract clauses that concern (i) "the insolvency or financial condition of the debtor," (ii) "the commencement of a case under this title," and (iii) "the appointment of or the taking by a trustee in a case under this title or a custodian." Compare 11 U.S.C. § 363(l), with id. § 365(b)(2). Accordingly, the cross-reference in § 363(l) to § 365 in its entirety is consistent with the conclusion that § 363(l)including the prefatory clause incorporating § 365is limited to situations in which an ipso facto clause is at issue.[23]
Appellants also cite a number of decisions for the proposition that § 363(l) does not restrict the automatic applicability of § 365 to ipso facto clauses because courts have regularly imposed § 365(n) as a condition of the sale of intellectual property in bankruptcy proceedings absent ipso facto clauses.[24] Yet, these decisions do not address *564 the meaning or applicability of § 363(l), and in fact do not cite § 363(l) at any point. As such, these decisions are not responsive to the Foreign Administrator's argument that § 363(l) must be read in light of its clear purpose, namely to clarify the legal effect of ipso facto clauses on the sale of a debtor's property. Contrary to appellants' assertions, the cases do not hold that § 363(l)'s ipso facto clause limitation incorporates § 365 wholesale into § 363.
Importantly, this reading of § 363(l) does not lead to the "absurd result" appellants advance. Specifically, appellants contend that if § 365 does not apply automatically in Chapter 15 proceedings, but instead applies only where an ipso facto clause is at issue under § 363(l), licensees without ipso facto clauses in their agreements will never gain the protections of § 365(n). Yet, this argument misunderstands the conclusion reached here, namely that § 363(l) does not, as a matter of course, subject all § 363 sales of a debtor's property to § 365. From this, appellants incorrectly infer that § 365 will never apply absent an ipso facto clause. It is clear, however, that § 365 could, and often does, apply where a bankruptcy court orders such discretionary relief. In other words, the precise issue raised, addressed, and resolved here is whether § 365 applies automatically in all Chapter 15 proceedings because it is cross-referenced in § 363(l), not whether § 365 ever governs the sale of a debtor's property. Nothing said here precludes the discretionary application of § 365 where appropriate under § 1521.
V.
The conclusion that § 365(n)'s applicability is discretionary under § 1521, rather than mandatory and automatic under § 1520, does not end the analysis. Notwithstanding the Bankruptcy Court's treatment of § 365(n) as discretionary relief under § 1521, appellants argue that the Bankruptcy Court erred in granting comity to German law. As discussed supra, the Bankruptcy Court's decision to grant comity is reviewed for an abuse of discretion, which occurs when a court "fails to take relevant factors intended to guide its discretion into account or when it acts on the basis of legal or factual misapprehensions respecting those factors." Robinson v. Wix Filtration Corp. LLC, 599 F.3d 403, 420 (4th Cir.2010).
A.
Principally at issue here are two sections found in Chapter 15 of the Bankruptcy Code. First, § 1509(b)(3) states that "a court in the United States shall grant comity or cooperation to the foreign representative." 11 U.S.C. § 1509(b)(3) (emphasis added). Significantly, however, this directive is subject to a second statutory provision, namely § 1506, which provides that "[n]othing in [Chapter 15] prevents the court from refusing to take an action governed by this chapter if the action would be manifestly contrary to the public policy of the United States." Id. § 1506.[25] In addition to disputing whether § 1506 precluded the Bankruptcy Court from deferring to German Insolvency Code § 103, the parties spill much ink over whether reversal is also warranted on the grounds that the Bankruptcy Court: (i) failed to balance the interests of all parties, as is *565 typical in a comity analysis, see, e.g., In re French, 440 F.3d at 153 (listing factors); and (ii) failed to recognize and apply the anti-comity exception for certain bankruptcy proceedings stated in Koreag, Controle et Revision S.A. v. Refco F/X Assocs., Inc. (In re Koreag), 961 F.2d 341, 348 (2d Cir.1992) (holding that deference to foreign insolvency proceeding does not extend to disputes between debtors and third-parties over U.S. property interests). These arguments are unpersuasive because they address the issue already decided by Congress in § 1509, namely whether courts must grant comity to a foreign representative in a Chapter 15 proceeding.
Section 1509 states, in mandatory terms, that "a court in the United States shall grant comity or cooperation to the foreign representative." 11 U.S.C. § 1509(b)(3) (emphasis added).[26] As the Fourth Circuit has explained, in interpreting federal statutes the word "may" evidences "a congressional intent to grant courts ... discretion," in contrast to the word "shall," which connotes that "Congress clearly did not manifest an intent to confer such discretion."[27] Thus, under the plain terms of § 1509(b)(3), the Bankruptcy Court lacked general discretion to deny the Foreign Administrator's request for comity; rather, the Bankruptcy Court could only have refused to defer to German Insolvency Code § 103 on the ground that applying German law, instead of § 365(n), would be "manifestly contrary to the public policy of the United States" under § 1506. Put another way, §§ 1509(b)(3) and 1506, read in pari materia, provide that comity shall be granted following the U.S. recognition of a foreign proceeding under Chapter 15, subject to the caveat that comity shall not be granted when doing so would contravene fundamental U.S. public policy. Accordingly, the analysis must focus sharply on whether § 365(n) embodies the fundamental public policy of the United States, such that subordinating § 365(n) to German Insolvency Code § 103 is an action "manifestly contrary to the public policy of the United States."[28] 11 U.S.C. § 1506.
*566 B.
In resolving whether the § 1506 public policy exception applies here, it is necessary to discuss the history of § 365(n), which begins with the Fourth Circuit's decision in Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc. (In re Richmond Metal Finishers, Inc.), 756 F.2d 1043 (4th Cir.1985). Lubrizol concerned the question "whether Richmond Metal Finishers (RMF), a [Chapter 11] bankrupt debtor in possession, should have been allowed to reject as executory a technology licensing agreement with Lubrizol Enterprises (Lubrizol) as licensee." Id. at 1044. The Fourth Circuit held that RMF was permitted to reject the licensing agreement under the business judgment rule[29] because to hold otherwise would impermissibly substitute the court's judgment for the debtor's business judgment, which, in the circumstances, could only be viewed as sound:
The testimony of RMF's president, also factually uncontested by Lubrizol, indicated that sale or further licensing would be facilitated by stripping Lubrizol of its rights in the process and that, correspondingly, continued obligation to Lubrizol under the agreement would hinder RMF's capability to sell or license the technology on more advantageous terms to other potential licensees.
Id. at 1047. Simply put, it was reasonable under the business judgment rule for RMF, a debtor in bankruptcy, to reject its patent licensing agreement with Lubrizol, thereby increasing the value of the patent at sale or in licensing negotiations.
Notwithstanding this result, the Fourth Circuit noted that Lubrizol's public policy argument was substantial, although not ultimately controlling. Specifically, the Fourth Circuit observed that
[i]t cannot be gainsaid that allowing rejection of such contracts as executory imposes serious burdens upon contracting parties such as Lubrizol. Nor can it be doubted that allowing rejection in this and comparable cases could have a general chilling effect upon the willingness of parties to contract at all with businesses in possible financial difficulty.
Id. at 1048. Nonetheless, the structure and plain language of § 365which provided for the rejection of all types of executory contracts, including technology licensing agreementscompelled the Fourth Circuit to hold that Congress "plainly provided for the rejection of executory contracts, notwithstanding the obvious adverse consequence for contracting parties thereby made inevitable." Id.
*567 Congress overturned Lubrizol with the enactment of § 365(n) in the Intellectual Property Bankruptcy Protection Act of 1988 ("IPBPA"), Pub.L. No. 100-506, 102 Stat. 2538. The Senate Report accompanying the enacted version of § 365(n) specifically noted that Lubrizol "leaves licensees in a precarious position" by "subject[ing] the licensee to the risk that, upon bankruptcy of the licensor, the licensee would lose not only any future affirmative performance required of the licensor under the license, but also any right of the licensee to continue to use the intellectual property as originally agreed." S.Rep. No. 100-505, at 2-3 (1988), as reprinted in 1988 U.S.C.C.A.N. 3200, 3201-02. This, according to the Senate Report, was a "fundamental threat to the creative process that has nurtured innovation in the United States." Id. at 3, as reprinted in 1988 U.S.C.C.A.N. at 3202. In addition, as noted by one commentator, "[b]ecause many businesses rely on intellectual property rights as a vital resource for survival, many businesses were faced with financial ruin due to the precedent which the Lubrizol case established."[30] The IPBPA accordingly "correct[ed] the perception of some courts that Section 365 was ever intended to be a mechanism for stripping innocent licensee [sic] of rights central to the operations of their ongoing business," and instead made clear that licensees were entitled to retain these rights. Id. at 4, as reprinted in 1988 U.S.C.C.A.N. at 3203.[31] Simply put, "[t]he IPBPA was Congress' solution to the unjust results that the Lubrizol case presented."[32]
Given this, it is clear that Congress carefully considered Lubrizol's public policy implications and, by overturning Lubrizol, took affirmative steps to protect patent licensees from debtors' termination of patent licenses in bankruptcy proceedings. Whether § 365(n) embodies the public policy of the United States such that its non-application would be "manifestly contrary to the public policy of the United States" under § 1506 is the comity merits issue presented here.
C.
Section 1506 instructs courts in Chapter 15 proceedings to "refus[e] to take an action governed by this chapter if the action would be manifestly contrary to the public policy of the United States." 11 U.S.C. § 1506. Courts have described the § 1506 public policy exception to be a "safety valve,"[33] which provides a basis "for imposing specific protections" for creditors in Chapter 15 proceedings.[34] Courts have also recognized that Congress's use of the word "manifestly," as a qualifier to "public policy," substantially limits the scope of the exception. As the often-cited House Report accompanying Chapter 15's enacting legislation[35] explains,
[t]his provision [§ 1506] follows the Model Law article 5 exactly, is standard *568 in UNCITRAL texts, and has been narrowly interpreted on a consistent basis in courts around the world. The word "manifestly" in international usage restricts the public policy exception to the most fundamental policies of the United States.
H.R.Rep. No. 109-31, at 109 (2005), as reprinted in 2005 U.S.C.C.A.N. 88, 172. Accordingly, "[w]hile the legislative history of Section 1506 demonstrates that this exception should be applied narrowly, it should be invoked when fundamental policies of the United States are at risk." In re Gold & Honey, Ltd., 410 B.R. 357, 372 (Bankr.E.D.N.Y.2009).
Despite courts' widespread agreement that § 1506 may only be used in narrow circumstances, few decisions address precisely when U.S. policy is in fact "fundamental," thus warranting protection under § 1506. Indeed, only four published decisions discuss the matter at any length, three of which conclude that the public policy exception does not apply,[36] and one of which finds that the fundamental policies of the United States are at risk.[37] These decisions are instructive here.
To begin with, all four decisions agree that the fact that application of foreign law leads to a different result than application of U.S. law is, without more, insufficient to support § 1506 protection. This purely results-oriented approach has been rejected on the ground that "`[w]e are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home.'" In re Ephedra, 349 B.R. at 336 (quoting Ackermann v. Levine, 788 F.2d 830, 842 (2d Cir.1986)); see also In re Metcalfe, 421 B.R. at 697 ("The relief granted in the foreign proceeding and the relief available in a U.S. proceeding need not be identical."). Thus, although a conflict between foreign law and U.S. law is a necessary prerequisite to the § 1506 analysisfor absent such conflict the comity and public policy exception questions become moot[38] that fact alone is not dispositive of whether an action taken in a Chapter 15 proceeding is "manifestly contrary to the public policy of the United States." U.S.C. § 1506.
Instead, in deciding whether to apply § 1506, courts have focused on two factors: (i) whether the foreign proceeding was procedurally unfair;[39] and (ii) whether the application of foreign law or the recognition of a foreign main proceeding *569 under Chapter 15 would "severely impinge the value and import" of a U.S. statutory or constitutional right, such that granting comity would "severely hinder United States bankruptcy courts' abilities to carry out ... the most fundamental policies and purposes" of these rights.[40]
These two principles are evident in In re Ephedra. There, the court held that wrongful death claims brought in U.S. courts against an insolvent Canadian-based cross-border distributor of Ephedraa drug subsequently banned by the U.S. Food and Drug Administration for causing heart attacks and strokeswere subject to a claims resolution procedure devised by the Canadian insolvency court. Although the claimants would have been entitled to a jury trial in the United States under the Seventh Amendment, no corresponding right was made available to them in the Canadian proceeding. Over the objections of certain claimants invoking § 1506, the court rejected the claimants' § 1506 argument. Specifically, the court reasoned that the Canadian insolvency proceeding should be afforded deference, and therefore govern the claimants' wrongful death suits, because "the notion that a fair and impartial verdict cannot be rendered in the absence of a jury trial defies the experience of most of the civilized world." In re Ephedra, 349 B.R. at 337.
Significantly, two factors justified the conclusion that deferring to the Canadian proceeding was not an action manifestly contrary to U.S. public policy. First, the court agreed to defer to the Canadian insolvency proceeding only after the Canadian court adopted certain procedural safeguards the U.S. court requested in order "to assure greater clarity and procedural fairness." Id. at 334. And second, in addition to ensuring the foreign proceeding's procedural fairness, the court reasoned that the crux of the claimants' objections was that the absence of a jury in the Canadian proceeding would give them less leverage in settlement negotiations, and that "[deprivation of such bargaining advantage hardly rises to the level of imposing on plaintiffs some fundamental unfairness." Id. at 337.[41] Thus, the court's decision was consistent with the principles identified above as governing the § 1506 analysis. Deferring to the Canadian proceeding neither (i) subjected claimants to a procedurally unfair foreign proceeding, nor (ii) "severely impinge[d] the value and import" of the claimants' constitutional jury trial right.[42]
In re Gold & Honey is the sole published decision in which a bankruptcy court has found § 1506 to apply since the 2005 enactment of Chapter 15, and in this regard it is equally instructive. There, debtor GH LP filed for bankruptcy under Chapter 11, thereby staying automatically all litigation against GH LP under § 362, including a pending Israeli receivership proceeding instituted by First International Bank of Israel ("FIBI").[43] Despite the *570 imposition of the Chapter 11 stay and the bankruptcy court's express warning that any actions taken in the foreign proceeding would be "at [FIBI's] own peril," FIBI continued to prosecute the Israeli receivership proceeding, ultimately persuading the Israeli court to appoint receivers. See In re Gold & Honey, 410 B.R. at 362-65 (summarizing prior litigation). This, according to the bankruptcy court, was a clear violation of the § 362 automatic stay and the bankruptcy court's orders. See id. at 368-69. Accordingly, the bankruptcy court denied FIBI's subsequent Chapter 15 petition for U.S. recognition of the Israeli receivership proceeding on the ground that
[r]ecognizing a foreign seizure of a debtor's assets postpetition would severely hinder United States bankruptcy courts' abilities to carry out two of the most fundamental policies and purposes of the automatic staynamely, preventing one creditor from obtaining an advantage over other creditors, and providing for the efficient and orderly distribution of a debtor's assets to all creditors in accordance with their relative priorities.
Id. at 372. Simply put, the denial of FIBI's Chapter 15 petition was necessary to protect a central aspect of bankruptcy proceedings. To hold otherwise would "severely impinge the value and import of the automatic stay" and invite parties to contravene U.S. public policy while simultaneously invoking U.S. courts' jurisdiction. See id. ("[C]ondoning FIBI's conduct here would limit a federal courts' jurisdiction over all of the debtors' property... as any future creditor could ... violate the stay in order to procure assets that were outside the United States, yet still under [sic] the United States court's jurisdiction.").
In sum, these cases make clear that at least the following three principles guide courts in analyzing whether an action taken in a Chapter 15 proceeding is manifestly contrary to the public policy of the United States under § 1506.
(1) The mere fact of conflict between foreign law and U.S. law, absent other considerations, is insufficient to support the invocation of the public policy exception.
(2) Deference to a foreign proceeding should not be afforded in a Chapter 15 proceeding where the procedural fairness of the foreign proceeding is in doubt or cannot be cured by the adoption of additional protections.
(3) An action should not be taken in a Chapter 15 proceeding where taking such action would frustrate a U.S. court's ability to administer the Chapter 15 proceeding and/or would impinge severely a U.S. constitutional or statutory right, particularly if a party continues to enjoy the benefits of the Chapter 15 proceeding.
D.
The application of these principles to the Bankruptcy Court's decision to condition the applicability of § 365(n) on the formal rejection of an executory contract under the Bankruptcy Code is unclear on this record. Although appellants argued to the Bankruptcy Court that deferring to the application of German Insolvency Code § 103 and conditioning the applicability of § 365(n) was improper because it was squarely at odds with Congress's enactment of the IPBPA and rejection of Lubrizol, the Bankruptcy Court neither addressed nor resolved this important issue. Instead, the Bankruptcy Court held, seemingly without qualification, that U.S. courts administering Chapter 15 proceedings must "cooperate on an international basis and ... give precedence to the [foreign] *571 main proceeding." In re Qimonda AG, 2009 WL 4060083, *2, 2009 Bankr.LEXIS 3786, at *6. Accordingly, it is appropriate to remand the matter to the Bankruptcy Court so that it may, in the first instance, determine whether the relief granted violates fundamental U.S. public policies under § 1506 and the principles discussed here.
VI.
In sum, because § 365 is discretionary relief that may be applied in a Chapter 15 proceeding pursuant to § 1521, rather than mandatory relief that applies automatically pursuant to § 1521, the Bankruptcy Court correctly made § 365 applicable discretionarily. Yet, the Bankruptcy Court did not, as required by § 1522, adequately balance the parties' respective interests. Nor did the Bankruptcy Court address or resolve a significant issue raised by the parties, namely whether conditioning the applicability § 365(n) was a prohibited action "manifestly contrary to the public policy of the United States" under § 1506. For these reasons, the matter must be remanded to the Bankruptcy Court for further proceedings not inconsistent with this Memorandum Opinion.
An appropriate Order shall issue.
NOTES
[1] In February 2009, these North American Qimonda entities filed for bankruptcy in the District of Delaware under Chapter 11. In that proceeding, the official committee of unsecured creditors for Qimonda North America and Qimonda Richmond filed an adversary complaint alleging that these subsidiaries, and not Qimonda AG, own the rights to approximately 800 patents and patent applications issued by various countries, including the United States. No decision has yet been rendered, and accordingly the appeal at bar remains ripe for disposition.
[2] Under Chapter 15 of the Bankruptcy Code, a foreign representative is appointed to represent the foreign debtor in U.S. courts and, as such, is authorized to seek relief pursuant to the Bankruptcy Code. See, e.g., 11 U.S.C. §§ 1509, 1512 (creating right of direct access and permitting foreign representative "to participate as a party in interest").
[3] Appellants are Elpida Memory, Inc. ("Elpida"), Infineon Technologies ("Infineon"), Micron Technology ("Micron"), Nanya Technology Corporation ("Nanya"), and Samsung Electronics Co., Ltd. ("Samsung").
[4] In determining where the debtor has the center of its main interest, a court is entitled to presume, in the absence of evidence to the contrary, that "the debtor's registered office... [is] the center of the debtor's main interests." 11 U.S.C. § 1516(c). In this case, as noted supra, Qimonda is headquartered in Munich, Germany, and thus the presumption was correctly applied.
[5] Section 1521 sets forth the relief a court, in its discretion, may provide to a debtor on a foreign representative's request. See 8 Collier on Bankruptcy ¶ 1521.01 (Alan N. Resnick & Henry J. Sommer eds., 16th ed. 2010) ("The relief under section 1521 is discretionary. ...").
[6] No such letter was sent to Micron.
[7] Section 1522(c) states that "[t]he court may, at the request of the foreign representative or an entity affected by relief granted under section 1519 or 1521, or at its own motion, modify or terminate such relief." 11 U.S.C. § 1522(c). Notably, however, in modifying or terminating such relief, the court must ensure that "the interests of the creditors and other interested entities, including the debtor, are sufficiently protected." Id. § 1522(a). This statutory requirement is discussed infra.
[8] These appeals were consolidated on appellees' motion. See In re Qimonda AG Bankr.Litig., 1:10cv26, 1:10cv27, 1:10cv28 (E.D.Va. Feb. 11, 2010) (Order). Jurisdiction is proper pursuant to 28 U.S.C. § 158(a)(1) and Rule 8001, Fed. R. Bankr.P.
[9] In addition, Nanya filed a motion to supplement the record on appeal with, or to take judicial notice of, a memorandum filed by the Foreign Administrator in the Bankruptcy Court after appellants noticed the appeals at bar. The motion must be granted in part with respect to taking judicial notice of the memorandum, yet the motion must be denied in part with respect to supplementing the record on appeal. Compare Colonial Penn Ins. Co. v. Coil, 887 F.2d 1236, 1239 (4th Cir. 1989) (judicial notice on appeal), with Thomas v. Lodge No. 2461 of Dist. Lodge 74 of the Int'l Ass'n of Machinists and Aerospace Workers, AFL-CIO, 348 F.Supp.2d 708, 711 (E.D.Va.2004) (supplementation of appeal record). See generally 16A Charles Alan Wright, Arthur R. Miller, Edward H. Cooper, Richard D. Freer, Joan E. Steinman, Catherine T. Struve, Vikram David Amar, Federal Practice & Procedure § 3956.4 (distinguishing judicial notice from supplementation).
[10] It is worth noting that although Micron argues that "Qimonda sought grounds for relief from a final order under Rule 60(b)(6)," it is clear that the Foreign Administrator's motion neither invoked nor referenced this Rule.
[11] In re Atlas Shipping also discusses the meaning of "sufficiently protected," but it does so in a different context, namely the entrustment of a debtors' U.S. assets under § 1521(b). See 404 B.R. at 739-40. The discussion there does not inform the analysis under § 1522.
[12] Worth noting is the fact that although the July 22, 2009 supplemental order was issued pursuant to § 1521, the parties dispute whether the Bankruptcy Court was correct to construe § 365(n) to be discretionary relief under § 1521, as opposed to mandatory relief under § 1520.
[13] Although appellants raised the issue, the Bankruptcy Court in its memorandum opinion did not address whether § 365(n) was automatically made applicable to Qimonda's Chapter 15 proceeding by virtue of § 1520. Yet, there is no dispute that the Bankruptcy Court considered the applicability of § 365(n) relief to be discretionary, as the July 22, 2009 supplemental order applying § 365(n) in the first instance issued pursuant to § 1521.
[14] Although the parties' briefs, if at all, only cursorily address whether the patent licensing agreements at issue here are executory in nature, the parties, by counsel, confirmed in oral argument that the contracts are in fact executory because they impose continuing obligations on the parties. See Transcript at 26-27 (May 14, 2010). See generally RCI Tech. Corp. v. Sunterra Corp. (In re Sunterra Corp.), 361 F.3d 257, 264 (4th Cir.2004) (discussing requirements of executory contracts in bankruptcy proceeding under § 365).
[15] Samuel L. Bufford, United States International Insolvency Law 2008-2009, at 17 (2009) (emphasis added). Notably, the treatise's principal and contributing authors are U.S. Bankruptcy Court judges for the Central and Southern Districts of California, and the Southern District of New York, as well as a retired Superior Court Justice for Ontario, Canada. See id. at xiii-xiv.
[16] See Bufford, supra note 15, at 244 ("The U.S. automatic stay (moratorium) is one of the basic protections given to debtors, creditors, and property of the bankruptcy estate under U.S. bankruptcy law."); see id. at 236-37 (discussing purpose of adequate protection provision and its relationship to §§ 362 and 363).
[17] It is worth noting that the Foreign Representative also argues that a literal reading of § 103 precludes the automatic application of § 365(n) in a Chapter 15 proceeding. In particular, § 103(a) states that "chapters 1, 3 [including § 365], and 5 of this title apply in a case under chapter 7, 11, 12, or 13 of this title, and that this chapter, sections 307, 362(n), 555 through 557, and 559 through 562 apply in a case under chapter 15." 11 U.S.C. § 103(a). This argument is unpersuasive for two reasons. First, § 103 makes no distinction in Chapter 15 proceedings between provisions that are automatically applicable on the one hand, and discretionary on the other, and is therefore unhelpful here. Second, although a purely literal reading of § 103(a) may support the Foreign Administrator's position, the argument nonetheless must be rejected because the list of applicable provisions in § 103 is not complete. For example, § 103(a) specifies that only § 362(n) applies, but it is well-settled that § 362 applies in its entirety on the recognition of a foreign main proceeding under Chapter 15. This inconsistency is noted in Collier on Bankruptcy: "[I]t is difficult to understand why this paragraph [section 362(n)] is applied to chapter 15, as section 1520(a)(1) applies the whole of section 362 to a foreign main proceeding and (n) will not be needed where (a) is not applicable." 2 Collier on Bankruptcy ¶ 103.02 n. 2. Thus, that a statutory provision is cross-referenced in § 103(a) is not dispositive as to whether it applies in a given bankruptcy proceeding. Yet, the tension with § 103(a) is resolved by the application of the "basic principle of statutory construction that when two statutes are in conflict, a specific statute closely applicable to the substance of the controversy at hand controls over a more generalized provision." Farmer v. Employment Sec. Comm'n, 4 F.3d 1274, 1284 (4th Cir. 1993); see also 2 Collier on Bankruptcy ¶ 103.02 ("In those cases where chapters 7, 9, 11, 12, 13 or 15 of the Bankruptcy Code contain specific language that governs the application of the three general chapters, the specific provisions will prevail over the general."). In this case, the more specific list of applicable provisions set forth in §§ 1520 and 1521 controls over the more general terms of § 103(a).
[18] As discussed supra, however, it is unclear whether the Bankruptcy Court modified the relief granted in a manner consistent with the statutory requirements of § 1522, namely ensuring sufficient protection to interested and affected parties.
[19] The parties correctly do not dispute this first point. See In re Tri-Con't, 349 B.R. at 639 ("An automatic consequence of recognition of a foreign main proceeding is that § 363 applies.").
[20] An "ipso facto clause," in the context of § 363(l), is a contract provision that "terminate[s] or modifies] the debtor's interest in property of the estate based on the debtor's financial condition or the commencement of the bankruptcy case." 3 Collier on Bankruptcy ¶ 363.10[1].
[21] Abbott Bank-Thedford v. Hanna (In re Hanna), 912 F.2d 945, 950 n. 8 (8th Cir.1990); see also S. Motor Co. v. Cater-Pritchett-Hodges, Inc. (In re MMH Auto. Group, LLC), 385 B.R. 347, 365 (Bankr.S.D.Fla.2008) ("All courts that have considered section 363(l) view this statute section as one of a series of Bankruptcy Code provisions ... that either invalidate, or strictly limit the enforceability of, bankruptcy forfeiture provisions."); 3 Collier on Bankruptcy ¶ 363.10[1] ("Under this provision, parties may not contract out of bankruptcy by placing restrictions on the debtor's use, sale or lease of property triggered by the debtor's bankruptcy....").
[22] Michael St. Patrick Baxter, Section 363 Sales Free and Clear of Interests: Why the Seventh Circuit Erred In Precision Industries v. Qualitech Steel, 59 Bus. Law. 475, 483-84 (2004).
[23] It is also worth noting that the Baxter article, see supra note 22, specifically responds to, and criticizes, the Seventh Circuit's decision in Precision Industries, Inc. v. Qualitech Steel SBQ, LLC (In re Qualitech Steel Corporation and Qualitech Steel Holdings Corporation), a case of first impression at the circuit level that analyzed the relationship between "two distinct provisions of the Bankruptcy Code: 11 U.S.C. § 363(f), which authorizes the sale of a debtor's property free of any `interest' other than the estate's, and 11 U.S.C. § 365(h), which protects the rights of the lessee when the debtor rejects a lease of estate property." 327 F.3d 537, 540 (7th Cir.2003). As such, the author acknowledged that "[a]n examination of the relationship between § 363(f) and § 365(n) [was] beyond the scope of this Article." Id. at 499 n. 156.
[24] Compak Cos., LLC v. Johnson, 415 B.R. 334 (N.D.Ill.2009); Shaw Group, Inc. v. Bechtel Jacobs Co., LLC, (In re The IT Group, Inc.), 350 B.R. 166 (Bankr.D.Del.2006); In re Dynamic Tooling Sys., Inc., 349 B.R. 847 (Bankr.D.Kan.2006); In re Access Beyond Techs., Inc., 237 B.R. 32 (Bankr.D.Del.1999).
[25] See also George W. Shuster, Jr., The Trust Indenture Act and International Debt Restructurings, 14 Am. Bankr.Inst. L.Rev. 431, 455 (2006) ("Section 1506 is an `anti-comity' provision, allowing the U.S. court to deny chapter 15 relief if such relief (and, by implication, the applicable foreign insolvency law) violates U.S. public policy.").
[26] That comity principles are central to Chapter 15 is readily apparent. See Bufford, supra note 15, at 33 ("While comity finds only three specific references in chapter 15, its influence in chapter 15 is pervasive."). For a detailed history of Chapter 15, which is based on the United Nations Commission on International Trade Law's ("UNCITRAL") 1997 Model Law on CrossBorder Insolvency, see generally id. at 10-16; Jay Lawrence Westbrook, Chapter 15 at Last, 79 Am. Bankr.L.J. 713, 718-19 (2005).
[27] DIRECTV, Inc. v. Rawlins, 523 F.3d 318, 325 (4th Cir.2008); see also United States v. Monsanto, 491 U.S. 600, 607, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (holding that Congress, in using the phrase "shall order" in a forfeiture statute, "could not have chosen stronger words to express its intent that forfeiture be mandatory in cases where the statute applied").
[28] It is worth noting that the Elpida appellants argue that German Insolvency Code § 103 does not affect appellants' irrevocable, interminable, non-exclusive licenses, and that the Bankruptcy Court therefore erred in interpreting German law. Appellees disagree, arguing that German Insolvency Code § 103 permits the debtor to elect nonperformance of the parties' executory cross-licensing agreements. This dispute is governed by Rule 9017, Fed. R. Bankr.P., which incorporates Rule 44.1, Fed.R.Civ.P. Under Rule 44.1, foreign law determinations are treated as questions of law requiring de novo review, although they previously were considered to be questions of fact. See Sec. & Exchange Comm'n v. Dunlap, 253 F.3d 768, 777 (4th Cir.2001); 9A Wright & Miller, Federal Practice & Procedure § 2444. The Bankruptcy Court did not resolve the parties' dispute concerning the content of German law, but it is clear from the Bankruptcy Court's memorandum opinion that it considered German Insolvency Code § 103 and § 365(n) to be at odds. See In re Qimonda AG, 2009 WL 4060083, *1, 2009 Bankr.LEXIS 3786, at *2 ("These rights [provided by § 365] are inconsistent with those provided under the German Insolvency Code."). The Bankruptcy Court's conclusion appears to be correct, as the German Federal Court of Justice has held,
Sec. 103 [of the Insolvency Code] generally applies to the usage agreement.... A license agreement is classified in line with the classification of the lease of rights (Rechtspacht) as a contract for the performance of a continuing obligation (Dauernutzunsgvertrag). As no immovable property is considered here, the insolvency administrator (Insolvenzverwalter) in the insolvency proceedings (Insolvenzverfahren) over the assets of any of the contracting parties has, in accordance with the prevailing opinions of insolvency law and copyright law scholars, a right to elect non-performance (Nichterfüllungswahl) with regard to such agreements pursuant to Sec. 103 [of the Insolvence Code], taken that the agreement has not yet been completely performed....
Bundesgerichtshof [BGH] [Federal Court of Justice] Nov. 17, 2005, 155 Entscheidungen des Bundesgerichtshofes in Zivilsachen [BGHZ] 87 ¶ 21 (F.R.G.) (certified translation at Elpida Appellants' Ex. 27 Attach. B).
[29] Under the business judgment rule, "courts should defer toshould not interfere with decisions of corporate directors upon matters entrusted to their business judgment except upon a finding of bad faith or gross abuse of their `business discretion.'" Lubrizol, 756 F.2d at 1047.
[30] David M. Jenkins, Comment, Licenses, Trademarks, and Bankruptcy, Oh My: Trademark Licensing and the Perils of Licensor Bankruptcy, 25 J. Marshall L.Rev. 143, 151-52 (1991).
[31] It is worth noting that reference to the legislative history to determine the public policy embodied in § 1506 is appropriate. As the leading treatise on statutory construction observes, "[t]he public policy underlying a statutory provision is found by examining the history, purpose, language and effect of the provision." 2B Sutherland Statutes and Statutory Construction § 56:1.
[32] Jenkins, supra note 30, at 149-54.
[33] See In re Basis Yield Alpha Fund (Master), 381 B.R. 37, 45 n. 27 (Bankr.S.D.N.Y.2008).
[34] See In re Tri-Cont'l, 349 B.R. at 638.
[35] Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub.L. 109-8, 119 Stat. 23.
[36] In re Metcalfe & Mansfield Alternative Investments, 421 B.R. 685 (Bankr.S.D.N.Y. 2010); In re Ernst & Young, Inc., 383 B.R. 773 (Bankr.D.Col.2008); In re Ephedra Prods. Liability Litig., 349 B.R. 333 (S.D.N.Y.2006).
[37] In re Gold & Honey, 410 B.R. 357 (Bankr. E.D.N.Y.2009).
[38] See Societe Nationale Industrielle Aerospatiale v. U.S. Dist. Court for the S. Dist. of Iowa, 482 U.S. 522, 555, 107 S.Ct. 2542, 96 L.Ed.2d 461 (1987) (Blackmun, J., concurring in part and dissenting in part) ("[T]he threshold question in a comity analysis is whether there is in fact a true conflict between domestic and foreign law.").
[39] See, e.g., In re Metcalfe, 421 B.R. at 697 ("The key determination required by this Court is whether the procedures used in Canada meet our fundamental standards of fairness."). It is also worth noting that courts have, on public policy grounds, also declined to recognize foreign proceedings outside of the Chapter 15 context where, unlike here, the foreign proceeding was conducted within a corrupt or unfair judicial system. See, e.g., Bridgeway Corp. v. Citibank, 201 F.3d 134, 139, 141-44 (2d Cir.2000) (affirming decision that Liberian judgment was unenforceable in the United States because "Liberia's courts did not constitute a system of jurisprudence likely to secure an impartial administration of justice" (citation and internal quotation marks omitted)).
[40] In re Gold & Honey, 410 B.R. at 372.
[41] The court in In re Gold & Honey likewise agreed that the claimants' jury trial rights were not truly impinged because "jury trials in bankruptcy courts are quite rare and not typically invoked in a claims allowance process." 410 B.R. at 372.
[42] In drafting the Model Law, certain UNCITRAL members expressed the view that the words "manifestly contrary" in § 1506 should refer only to those actions that raise constitutional concerns. See 8 Collier on Bankruptcy ¶ 1506.1. Although In re Ephedra does not address this view expressly, its holding implicitly rejects such a categorical distinction.
[43] Whether the § 362 automatic stay may be applied extraterritorially has been debated by courts and commentators. See, e.g., In re French, 320 B.R. at 81-83 (discussing cases and commentary). The resolution of this question does not, however, affect the import of In re Gold & Honey here. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1631759/ | 649 F. Supp. 380 (1986)
NATIONAL TREASURY EMPLOYEES UNION and Argent Acosta
v.
William VON RAAB, Commissioner, United States Customs Service.
Civ. A. No. 86-3522.
United States District Court, E.D. Louisiana.
November 14, 1986.
*381 ROBERT F. COLLINS, District Judge.
The Court is presented with a Motion by the defendant to Dismiss this action on the grounds that: (1) venue does not lie in this District; (2) plaintiffs lack standing to bring this action; (3) this Court lacks jurisdiction over this dispute; and (4) plaintiffs have failed to state a claim upon which relief may be granted. Plaintiffs oppose the Motion to Dismiss and have moved for preliminary injunctive relief. With the concurrence of all parties, pursuant to Rule 65(a)(2), the Court has consolidated hearing on the Motion for Preliminary Injunctive Relief with Trial on the Merits. The parties filed numerous exhibits into the record, but did not call any live witnesses. The parties agreed that no contested facts were presented. Accordingly, the Court makes its findings based upon the uncontroverted facts and exhibits filed into the record.
For reasons set forth below, the Court finds that venue is proper in the Eastern District of Louisiana, that the plaintiffs have standing to bring this action, that jurisdiction is properly vested in federal district court, and that plaintiffs have stated a valid claim for relief. The Court finds that the drug testing plan at issue violates numerous provisions of the United States Constitution and must be enjoined and declared unconstitutional. Accordingly, the Motion to Dismiss is DENIED, and the Petition for Injunctive and Declaratory Relief is GRANTED.
*382 The Drug Testing Plan
This action has been brought in federal district court seeking an injunction to block the United States Customs Service from further urine collection and analysis as a part of a "drug-testing" program implemented on July 21, 1986. The drug testing plan requires that United States Customs Service workers who seek promotion into certain enumerated "covered positions" submit to drug screening through analysis of their urine. "Drug screening through urinalysis is a condition of employment for placement into positions covered by the program." Customs Directive on Drug Screening Program, Plaintiffs' Exhibit No. 1 at 1. Customs employees who test positive through drug screening "are subject to loss of consideration for the position applied for ... [and] ... are subject to removal from the service." Plaintiffs' Exhibit No. 1 at 11. Any tentative selectee for the promotion who refuses to undergo drug screening "will lose consideration for that position." Plaintiffs' Exhibit No. 1 at 11. Urine samples are tested by using immunoassay as well as gas chromatography/mass spectrometry techniques. Plaintiffs' Exhibit No. 1 at 3. A collector is actually physically present in the lavatory during the urination process, though observation is supposed to be "close but not `direct.'" Plaintiffs' Exhibit No. 1 at 6. One Customs worker who has already been tested described the procedure as follows: "The laboratory representative accompanied each of us into the restroom, one by one. He placed some dye into the urinal and then stepped behind a partition. The representative was able to observe me from my shoulders up from behind the partition while I urinated into the sample jar." Affidavit of Lee Cruz, Plaintiffs' Exhibit No. 5 at 3. Prior to voiding into the sample jar, subjects are required to fill out a pre-test form stating medications taken within the last thirty days and any circumstances in which the subject may have been in contact with illegal substances over the last thirty days. Plaintiffs' Exhibit No. 1 at 5.
Having discussed the drug testing plan at issue, the Court will now focus on defendant's Motion to Dismiss.
Venue Lies In The Eastern District Of Louisiana
Venue is proper in the Eastern District of Louisiana. Under Title 28 United States Code section 1391(e), "A civil action in which a defendant is an officer or employee of the United States or any agency thereof acting in his official capacity ... may, except as otherwise provided by law, be brought in any judicial district in which ... (2) the cause of action arose, or ... (4) the plaintiff resides if no real property is involved in the action." Both subsections support venue in this District. The Fifth Circuit has held that a cause of action can arise in several forums for purposes of venue, and that "the court should not oppose the plaintiff's choice of venue if the activities that transpired in the district where suit is brought were not insubstantial and the forum is a convenient one, balancing the equities and fairness to each party." Florida Nursing Home Association v. Page, 616 F.2d 1355, 1361 (5th Cir.), cert. denied (as to venue issue), 449 U.S. 872, 101 S. Ct. 211, 66 L. Ed. 2d 92 (1980), rev'd on other grounds, 450 U.S. 147, 101 S. Ct. 1032, 67 L. Ed. 2d 132 (1981). The Customs Service houses its headquarters for the entire South Central Region in New Orleans. Hundreds of Customs employees are located in the Eastern District of Louisiana. Employees from this District will be required to take drug tests here to receive promotions to covered positions. Activities that will transpire in this District where the suit has been brought are not insubstantial. The Court rejects defendant's restrictive notion that the only forum in which the drug testing plan may be challenged is Washington, D.C. While the Customs Directive may have been conceived and drafted in Washington, D.C., the great bulk of Customs employees who are subject to the program are outside of Washington, D.C. and will be tested outside of Washington, D.C. Activities in the Eastern District of *383 Louisiana contemplated under the drug testing plan are substantial.
The defendant has failed to cite a single factor that makes this an inconvenient forum. The United States has attorneys all over the country, including the Eastern District of Louisiana. While Customs is disappointed that plaintiff, National Treasury Employees Union (NTEU), exercised its unqualified right under Federal Rule of Civil Procedure 41(a)(1)(i) to voluntarily dismiss an earlier action it brought in the District of Columbia before answer was filed, Customs could have prevented this by filing an answer before the NTEU had an opportunity to voluntarily dismiss. By choosing to exercise its right under Fed.R. Civ.P. 12(a) to delay as long as 60 days before answering, the defendant lost an opportunity to prevent a voluntary dismissal of plaintiff NTEU's action brought in Washington, D.C. Having chosen to delay the filing of an answer, the defendant cannot now complain that plaintiff exercised its right to voluntarily dismiss in Washington, D.C. before issue was joined, and to refile in the Eastern District of Louisiana.
Venue also lies in the Eastern District of Louisiana under Title 28 United States Code section 1391(e)(4) because "the plaintiff resides" in this District. There are two plaintiffs in this action: the National Treasury Employees Union and Argent Acosta. Plaintiff Argent Acosta, President of NTEU Local 168 (which has its office in New Orleans) is a resident of this District, as are most of the employees he represents in this action. Moreover, at least one court has held that a labor organization "resides" wherever its individual members are for purposes of Section 1391(e)(4). Columbia Power Trades Council v. U.S. Department of Energy, 496 F. Supp. 186, 189 (W.D.Wash.1980), rev'd on other grounds, 671 F.2d 325 (9th Cir.1982). Finally, even if NTEU proper did not "reside" in this District, numerous courts that have considered the issue have concluded that Section 1391(e)(4) does not require all the plaintiffs to reside in the forum, but only one. Section 1391(e)(4) permits an action to be brought against the federal government by plaintiffs from more than one district, in any district in which at least one of the plaintiffs resides. Exxon Corporation v. FTC, 588 F.2d 895, 898-99 (3d Cir.1978); Santa Fe International Corp. v. Watt, 580 F. Supp. 27, 29 & n. 4 (D.Del.1984); Dow Chemical v. Consumer Product Safety Commission, 459 F. Supp. 378, 384, n. 4 (W.D.La.1978). The Court concludes that venue lies in the Eastern District of Louisiana under both Sections 1391(e)(2) and (e)(4) of Title 28 United States Code.
The National Treasury Employees Union Has Standing To Bring This Action
In its brief in support of its Motion to Dismiss, the defendant contended that the NTEU lacked standing to bring the instant lawsuit on behalf of its members. Although the defendant conceded the standing issue at oral arguments, the Court addresses it nevertheless.
A very recent Opinion of the United States Supreme Court compels the finding that the NTEU has standing to bring this action. International Union, United Automobile Aerospace, and Agricultural Implement Workers of America v. Brock, ___ U.S. ___, 106 S. Ct. 2523, 91 L. Ed. 2d 228 (1986), held that a union whose members claimed that they were eligible for benefits under the 1974 Trade Act has standing to bring a federal court lawsuit on behalf of the members challenging the secretary's interpretation. The Supreme Court applied the three-part test from Hunt v. Washington Apple Advertising Commission, 432 U.S. 333, 97 S. Ct. 2434, 53 L. Ed. 2d 383 (1977). Hunt held that an association has standing to bring suit on behalf of its members when: (1) its members would otherwise have standing to sue in their own right; (2) the interests it seeks to protect are germane to the organization's purpose; and (3) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. In the instant litigation, individual *384 NTEU members would otherwise have standing to sue in their own right. The interests the NTEU seeks to protect are germane to the organization's purpose, namely, protecting union members from degradation, harm, humiliation and loss of promotions or jobs. Neither the claim asserted by the NTEU, that the drug testing plan violates constitutional protections, nor the type relief requested, a permanent injunction, requires the participation of individual members in the lawsuit. Applying Brock and Hunt to the facts of this case, the Court concludes that the NTEU has standing to object to the drug testing program.
The Court Has Jurisdiction Over This Dispute
The defendant's next argument in favor of dismissal is that this Court lacks jurisdiction to entertain this dispute. Defendant contends that this action must be resolved according to the Civil Service Reform Act (CSRA), which precludes district court jurisdiction over federal labor relations disputes.
According to the defendant, the testing program constitutes a new "condition of employment." It is the defendant's position that the plaintiffs must, therefore, attempt to characterize the program as a "negotiable" employment practice with the Federal Labor Relations Authority (FLRA), and raise their labor practice challenges to the program before that administrative tribunal. The defendant contends that plaintiffs' constitutional challenges to the program will eventually receive Article III review because the plaintiffs are entitled to appeal any final FLRA decision to the appropriate Circuit Court of Appeals.
In addition to establishing the FLRA framework for resolving labor relations disputes, the defendant argues that the CSRA sets out the exclusive comprehensive process for resolving personnel claims of federal employees in the Merit Service Protection Board (MSPB) scheme. The defendant contends that if an employee, subjected to drug testing, is denied a promotion or suffers any other "adverse action," see 5 U.S.C. § 7512, he may appeal that agency decision to the MSPB. Therefore, the defendants conclude, the MSPB alone may hear the type of personnel challenges the plaintiffs have presented to this Court in regard to the testing program.
The Court finds that the plaintiffs' claim for injunctive and declaratory relief is not cognizable under this broad administrative scheme of the CSRA, but rather is properly brought directly in federal district court.
The starting point for an analysis of the preclusive effect of the CSRA is the landmark Opinion of Bush v. Lucas, 462 U.S. 367, 103 S. Ct. 2404, 76 L. Ed. 2d 648 (1983). Bush involved an action brought by an aerospace engineer against the director of a federal space flight center to recover for alleged defamation and an alleged retaliatory demotion. The Supreme Court held that because the engineer's claims arose out of an employment relationship that was governed by comprehensive procedural and substantive provisions giving meaningful remedies against the United States, it would be inappropriate for the Court to supplement that regulatory scheme with a new nonstatutory damages remedy. The defendant to the instant litigation contends that Bush v. Lucas requires dismissal for lack of jurisdiction. This Court disagrees. A close reading of Bush reveals that this Court has jurisdiction to grant the relief requested.
The critical language in Bush is as follows:
"Federal civil servants are now protected by an elaborate, comprehensive scheme that encompasses substantive provisions forbidding arbitrary action by supervisors and procedures administrative and judicial by which improper action may be redressed. They apply to a multitude of personnel decisions that are made daily by federal agencies.28
28 Not all personnel actions are covered by this system. For example, there are no provisions for appeal of either suspensions for 14 days or less, 5 U.S.C. § 7503 (1982 ed), or adverse actions against probationary employees, *385 § 7511. In addition, certain actions by supervisors against federal employees, such as wiretapping, warrantless searches, or uncompensated takings, would not be defined as `personnel actions' within the statutory scheme."
Bush v. Lucas, 103 S.Ct. at 2415 (emphasis added).
It is evident that warrantless searches do not constitute "personnel actions" within the statutory scheme into which defendant seeks to relegate NTEU. As discussed infra, this Court finds that examination of Customs workers' urine constitutes a warrantless search. Therefore, a claim for injunctive relief to block urinalysis is not covered under the CSRA. Accordingly, this Court is not deprived of jurisdiction by virtue of the CSRA.
The Court is unimpressed with defendant's attempt to distinguish footnote 28 of Bush as being limited to actions by "supervisors." Defendant's logic would lead this Court to the absurd result that an aggrieved Customs worker could sue his immediate supervisor for a warrantless search, but could not sue the ultimate supervisor, Commissioner Von Raab. It would be pointless to require plaintiffs to amend their suit to name each individual supervisor that would be in charge of drug testing at each location across the country. It is much more rational and judicially economical to name the head of the agency as the party defendant. Moreover, footnote 28 discussed actions by "supervisors" because Bush v. Lucas involved a suit by a federal employee against his supervisor. The Court rejects defendant's contention that footnote 28 is somehow limited to ultra vires actions by supervisors. Nothing in the footnote supports such a tortured reading, and this Court refuses to so limit the scope of footnote 28.
Aside from Bush, defendant relies primarily upon National Federation of Federal Employees, et al. v. Weinberger, et al., 640 F. Supp. 642 (D.D.C.1986) (hereinafter referred to as NFFE). In that case, Judge Hogan granted a motion to dismiss a claim that challenged drug testing procedures employed by the military. Although Judge Hogan placed great weight on the language in Bush discussed supra, he failed to discuss the critical Bush footnote 28. The rationale of NFFE is completely undercut by Bush footnote 28. Since warrantless searches are not personnel actions within the statutory scheme, the preclusive effect of the CSRA does not operate to deprive plaintiffs of the right to seek injunctive relief in federal district court. This Court is unpersuaded by the NFFE decision, since that case ignores a crucial point of law raised in Bush v. Lucas.
Another reason why Bush and its progeny do not persuade this Court that it lacks jurisdiction is because plaintiffs to the instant litigation do not seek creation of a new judicial remedy, as was the case in Bush. As Justice Stevens pointed out in Bush: "Petitioner asks us to authorize a new nonstatutory damages remedy for federal employees whose First Amendment rights are violated by their superiors." 103 S.Ct. at 2406. Here, plaintiffs seek to invoke this Court's historic equitable powers to enjoin the defendant from engaging in unconstitutional activity. Plaintiffs are not seeking damages for drug tests that have already taken place. This Court does not now rule on the issue of whether it would have jurisdiction to entertain a suit for damages sustained as a result of Customs' drug screening plan. This Court merely holds that it has jurisdiction to grant equitable relief to Customs workers seeking to enjoin an unconstitutional program of warrantless searches.
It would be absurd for this Court to hold that plaintiffs must submit to unconstitutional programs established by the defendant, then seek damages under the CSRA. The more sensible approach is to enjoin the activity in the first place. Indeed, persons who test negative for drugs will have little likelihood of success in the CSRA framework since Customs would not take adverse action against such employees upon a negative test result. Yet, the employees would have been subjected to an unconstitutional search. This issue is discussed in the NFFE decision:
*386 With respect to the MSPB procedures at issue, if an individual Aberdeen employee either refuses to be tested or tests positively for drug use in both field and confirmation tests, and the Army takes `adverse action' against him as that term is used in the CSRA, he may raise constitutional and statutory challenges to the testing program in MSPB proceedings. See 5 U.S.C. § 7703(B)(1) ...
If agency action is taken against a civilian employee that cannot be characterized within the framework of the CSRA as `adverse,' so that the employee does not have an available avenue of relief to the MSPB, it appears that nothing would prevent the employee from bringing a Bivens-type action against the individuals who ordered or supervised his drug testing: in short, `effective remediation' for alleged constitutional deprivations could not `conceivably' be achieved through the administrative process. Daly, 661 F.2d at 963.
NFFE, 640 F.Supp. at 654.
Under the NFFE approach, the district court should decline to entertain complaints for injunctive relief to prevent a constitutional violation, but should exercise jurisdiction over certain claims seeking damages for the constitutional violations. This approach is irrational. Rather than forcing the plaintiffs to submit to an unconstitutional program then seek damages in court, this Court will exercise jurisdiction over the Petition for Declaratory and Injunctive Relief.
Turning to the merits of the Petition for Declaratory and Injunctive Relief, the Court finds numerous constitutional infirmities that compel this Court to grant the injunctive and declaratory relief requested.
The Drug Testing Plan Violates The Fourth Amendment
Testing of Customs workers' urine pursuant to the Customs Directive constitutes a full-blown search within the meaning of the Fourth Amendment to the United States Constitution. See Capua v. City of Plainfield, 643 F. Supp. 1507 (1986); Jones v. McKenzie, 628 F. Supp. 1500 (D.D. C.1986); McDonell v. Hunter, 612 F. Supp. 1122 (D.C.Iowa 1985). Drug testing of Customs workers' bodily wastes is even more intrusive than a search of a home. When analyzing urine specimens, the defendant is searching for evidence of illicit drug usage. The drug testing plan is no minor frisk or pat-down. It is rather a full-scale search that triggers application of Fourth Amendment protections.
The mandatory collecting of urine samples pursuant to the drug testing plan constitutes a seizure within the meaning of the Fourth Amendment. McDonell v. Hunter, 612 F. Supp. 1122 (D.C.Iowa 1985). Indeed, the urine is seized from the Customs workers in that they must hand over a jar of their bodily wastes for analysis by the defendant.
Even Schmerber v. State of California, 384 U.S. 757, 86 S. Ct. 853, 16 L. Ed. 2d 908 (1966), cited by defendant and discussed infra in connection with violations of the Fifth Amendment, held that blood testing for the presence of alcohol "plainly involves the broadly conceived reach of a search and seizure under the Fourth Amendment." 86 S.Ct. at 1834. The Supreme Court noted that the Fourth Amendment "expressly provides that `[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches shall not be violated ...'" (emphasis in text of Schmerber). Id. The Supreme Court went on to hold that "it could not reasonably be argued ... that the administration of the blood test in this case was free of the constraints of the Fourth Amendment. Such testing procedures plainly constitute searches of `persons' and depend antecedently upon seizures of `persons' within the meaning of that Amendment." Id. This Court rejects defendant's contention that urinalysis does not involve search and seizure within the meaning of the Fourth Amendment. Quite to the contrary, the Court finds that the drug testing plan falls squarely within the ambit of the Fourth Amendment. Testing *387 of urine, like the testing of blood, is a full-blown search and seizure.
Under the Customs Directive at issue, the searches and seizures are to be made in the total absence of probable cause or even reasonable suspicion. The plan does not call simply for the testing of those whom the defendant reasonably suspects of using or selling drugs at the work site. Rather, the plan uses a dragnet approach of testing all workers who seek promotion into so-called "covered positions." This dragnet approach, a large-scale program of searches and seizures made without probable cause or even reasonable suspicion, is repugnant to the United States Constitution. In weighing the massive intrusive effect of the drug testing plan against the legitimate governmental interest in a drug-free work place and work force, the Court finds the plan to be overly intrusive and constitutionally infirm. While the goal is legitimate, the means selected by the defendant violate the protections of the Fourth Amendment.
Customs workers have a reasonable expectation of privacy in their urine. See Capua v. City of Plainfield, 643 F. Supp. 1507 (1986); Patchogue-Medford Congress of Teachers v. Board of Education, 119 A.D.2d 35, 505 N.Y.S.2d 888 (1986); Caruso v. Ward, 506 N.Y.S.2d 789 (1986). Urination is usually conducted in private, and persons do not normally urinate in public. Indeed, under many municipal ordinances, urination in public is unlawful. Customs workers do not lose an expectation of privacy in their urine merely by reporting to work at a work site supervised by the defendant. The Court notes that excreting body fluids and body wastes is one of the most personal and private human functions. While body fluids and body wastes are normally disposed of by flushing them down a toilet, Customs workers do maintain a legitimate expectation of privacy in their urine until the decision is made to flush the urine down the toilet and the urine is actually flushed down the toilet. The Customs Directive violates a legitimate expectation of privacy held by Customs workers.
This Court agrees with Judge Vietor's analysis in McDonell v. Hunter, 612 F. Supp. 1122 (D.C.Iowa 1985):
Urine, unlike blood, is routinely discharged from the body, so no governmental intrusion into the body is required to seize urine. However, urine is discharged and disposed of under circumstances where the person certainly has a reasonable and legitimate expectation of privacy. One does not reasonably expect to discharge urine under circumstances making it available to others to collect and analyze in order to discover the personal physiological secrets it holds, except as part of a medical examination. It is significant that both blood and urine can be analyzed in a medical laboratory to discover numerous physiological facts about the person from whom it came, including but hardly limited to recent ingestion of alcohol or drugs. One clearly has a reasonable and legitimate expectation of privacy in such personal information contained in his body fluids.
McDonell, 612 F.Supp. at 1127. See also, Jones v. McKenzie, 628 F. Supp. 1500, 1508 (D.D.C.1986) (finding a reasonable expectation of privacy from a search of mandatory urine testing for drugs).
The Court concludes that the drug testing plan constitutes an overly intrusive policy of searches and seizures without probable cause or reasonable suspicion, in violation of legitimate expectations of privacy. The searches and seizures are unreasonable and wholly unconstitutional.
It Is Unconstitutional To Condition Public Employment On "Consent" To An Unreasonable Search
The Court rejects defendant's contention that Customs workers who are compelled to submit to urinalysis as a precondition to advancement into so-called "covered positions" have voluntarily waived their constitutional rights. Quite to the contrary, the Court finds that Customs workers who submit to the plan do not and have not done so voluntarily, but give and have *388 given consent as a result of "coercion, express or implied" within the meaning of Schneckloth v. Bustamonte, 412 U.S. 218, 93 S. Ct. 2041, 36 L. Ed. 2d 854 (1973).
The Court holds that it is unconstitutional for the government to condition public employment on "consent" to an unreasonable search. The Court refuses to find voluntary "consent" to an unreasonable search where the price of not consenting is loss of government employment or some other government benefit.
This holding, that consent coerced from Customs workers is involuntary, is consistent with the Opinion of the Fifth Circuit in Thorne v. Jones, 765 F.2d 1270 (5th Cir. 1985), cert. denied, ___ U.S. ___, 106 S. Ct. 1198, 89 L. Ed. 2d 313 (1986). In that case, a visitor to a prison was obliged to sign a visitor form as a precondition to visiting his two inmate sons. The form purported to waive Fourth Amendment rights. After being subjected to a strip search, the father brought an action challenging the search. The Fifth Circuit held that the trial court did not err in rejecting the Louisiana State Penitentiary's "consent" defense. Following the Fifth Circuit's guidance, this Court holds that purported consent to urinalysis by Customs workers is involuntary and is the result of coercion.
The Drug Testing Plan Violates The Self-Incrimination Clause Of The Fifth Amendment
The Court finds that the drug testing plan would violate the Fifth Amendment protections against self-incrimination. Customs workers who seek promotions are forced to provide bodily excrements to enable the defendant to seek evidence of any illicit drugs the workers may have taken. Additionally, Customs workers are required to fill out a pre-test form stating which medications were taken within the last thirty days and any circumstances where the subject may have been in contact with illegal substances in the last thirty days. This constitutes involuntary self-incrimination which is forbidden under the Fifth Amendment to the United States Constitution.
The Court is cognizant that Schmerber v. California, 384 U.S. 757, 86 S. Ct. 1826, 16 L. Ed. 2d 908 (1966) held that the privilege against self-incrimination protects an accused only from being compelled to testify against himself, or to provide "evidence of a testimonial or communicative nature." 384 U.S. at 761, 86 S.Ct. at 1830. The withdrawal of blood in Schmerber was held not to involve compulsion to those ends. Schmerber, however, is distinguishable from the instant case on numerous grounds. In Schmerber, the Supreme Court found that "there was plainly probable cause" to arrest and to charge the defendant, whereas in the instant case the defendant conducts the searches and seizures in the absence of probable cause. The Customs Directive applies to workers who have given no reason to believe they are using drugs and who have furnished no probable cause to justify arrest. Moreover, Schmerber involved only the taking of a blood sample, whereas the Customs Directive requires both a urine sample and a pre-test form stating medications taken and any circumstances in which the subject may have been in contact with illegal substances. Taken as a whole then, the Customs Directive calls for "evidence of a testimonial or communicative nature." Finally, Schmerber involved the mere drawing and testing of a blood sample, a procedure that in no way detracts from human dignity and self respect. The Customs Directive, on the other hand, requires the presence of an observer in the restroom while a subject performs excretory functions. The observer listens to the bodily fluids being expelled and witnesses the voiding process closely but not directly. This gross invasion of privacy constitutes a degrading procedure that so detracts from human dignity and self respect that it "shocks the conscience" and offends this Court's sense of justice. Rochin v. California, 342 U.S. 165, 72 S. Ct. 205, 96 L. Ed. 183 (1952). The Court concludes that the Customs Directive violates the self-incrimination clause of the Fifth Amendment.
*389 The Drug Testing Plan Violates Penumbral Rights Privacy Guaranteed By The United States Constitution
The Court finds that the Customs Directive unconstitutionally interferes with the penumbral rights of privacy held by Customs workers. In Griswold v. State of Connecticut, 381 U.S. 479, 85 S. Ct. 1678, 14 L. Ed. 2d 510 (1965), the Supreme Court held that "specific guarantees in the Bill of Rights have penumbras, formed by emanations from those guarantees that help give them life and substance ... These cases bear witness that the right of privacy ... is a legitimate one ... The present case, then, concerns a relationship lying within the zone of privacy created by several fundamental constitutional guarantees." Griswold, 85 S.Ct. at 1681-82. The constitutional right of personal privacy was reiterated by the Supreme Court in Roe v. Wade, 410 U.S. 113, 93 S. Ct. 705, 93 S. Ct. 705, 35 L. Ed. 2d 147 (1973). There the Court stated: "In a line of decisions ... going back perhaps as far as Union Pacific R. Co. v. Botsford, 141 U.S. 250, 251, 11 S. Ct. 1000, 1001, 35 L. Ed. 734 (1891), the Court has recognized that a right of personal privacy, or a guarantee of certain areas or zones of privacy, does exist under the Constitution." Roe, 93 S.Ct. at 726.
The Court finds that the Customs Directive detracts from the dignity of each Customs worker covered under the plan and invades the right of privacy such workers have under the United States Constitution. Excreting bodily wastes is a very personal bodily function normally done in private; it is accompanied by a legitimate expectation of privacy in both the process and the product. The Customs Directive unconstitutionally interferes with the privacy rights of the Customs workers.
The Drug Testing Plan Is So Unreliable As To Violate Due Process Of Law
The Court finds that the drug testing plan is far from an infallible system. Indeed, the affidavit of a Customs worker who has already been tested, Benito D. Juarez, states that the laboratory representative mixed up his sample with that of another Customs worker:
"After I urinated, I noticed that the laboratory representative was affixing a sticker to my sample bottle. The sticker he was affixing had the wrong social security number on it. He had already filled out the labels before collecting our samples, and apparently he placed Fred Robinson's sticker on my bottle. When I alerted him to his mistake, he went back and checked his papers to determine my social security number and then corrected his error."
Affidavit of Benito D. Juarez, Plaintiffs' Exhibit No. 6 at 3.
The entire process is fraught with the danger of mishaps and false-positive readings. The Affidavit of Dr. Arthur J. McBay, a toxicologist with a Ph.D. in Pharmaceutical Chemistry, describes the dangers:
The EMIT screen suffers from limitations in its reliability. This test will give a positive result for the tested drug when other prescription and over the counter drugs have been ingested, and may react to food and other substances, including enzymes produced by the body itself. This is because of a phenomonon known as `cross-reactivity.' The legitimate drugs that have triggered a positive result for marijuana, for example, include the anti-inflammatory drugs ibuprofen, fenoprofen, and naproxen, some of the most widely used drugs in this country. They are sold under the brand names Advil, Motrin, Nuprin, Rufen, Anaprox, Aponaproxen, Naprosyn, Navaonaprox and Nalfon. A number of drugs that are closely related in chemical structure to amphetamines will also test positive, mainly diet and cold preparations containing ephedrine and phenyl-propanolamine. These include Nyquil, Contac and other brand names. In addition, the immunoassay tests cannot distinguish between codeine, a legal drug, and heroin. Both are classified opiates. *390 I am also familiar with the Gas Chromatography/Mass Spectrometry method of urinalysis testing. If conducted properly, the combination of gas chromatography with mass spectrometry can provide a more reliable test for determining the presence of drugs in a urine sample, because it identifies the specific metabolites in urine samples. Positive identification, however, requires strict handling safeguards and procedures which insure that the samples are not exposed to excessive temperatures through the transportation process. The GC/MS test is significantly more expensive to conduct ...
All drug testing procedures result in false positives. The reliability of all drug determinations, whether by immunoassay or GC/MS, depend on such factors as the certainty of specimen identification; specimen storage, handling, and preparation; preparation and storage of test reagents; proper cleaning and calibration of testing instruments and hardware; and the qualification and training of laboratory personnel performing the test and interpreting the results. The danger of carelessness in test performance and/or inadequately trained personnel may be a particular problem with immunoassays, which are popular for low-cost, large-scale screening of many specimens with readily available equipment and minimum personnel training. The problem nonetheless is also present when GC/MS is utilized.
Affidavit of Dr. Arthur J. McBay, Plaintiffs' Exhibit No. 8 at 3-4.
The Court concludes that the drug testing program is so fraught with dangers of false positive readings as to deny the Customs workers due process of law when they apply for promotion into covered positions. Furthermore, in balancing the legitimate law enforcement, societal and governmental interests of the defendant against the severity of the intrusiveness, the unreliability of the testing further convinces the Court that the drug testing plan is unreasonable and not rationally related to achievement of the governmental interest.
The Defendant Has Failed To Show That A Legitimate Governmental Interest Has Been Threatened
That the drug testing plan is not rationally related to the achievement of a legitimate governmental interest is highlighted by the conspicuous absence of any statistics by the defendant showing any drug problem whatsoever among federal workers. Indeed, in a United States Government Memorandum from the Commissioner of Customs to all Customs Employees, dated March 13, 1986, the Commissioner stated, "I believe that Customs is largely drug-free ..." Plaintiffs' Exhibit No. 2 at 1. Since Customs has not demonstrated a drug problem among its work force, the drug testing plan is an overly intrusive scheme that bears no rational relationship to the protection of an endangered governmental interest. The defendant simply has not shown that a legitimate governmental interest has been threatened.
Even if it could show that its interest in a drug-free work force were threatened, the means selected to achieve that end are overly intrusive. After weighing the legitimate governmental interests of the plan against the severity of the intrusiveness, the Court concludes that the drug testing plan is unreasonable.
Receipt Of A Federal Benefit Cannot Be Conditioned Upon Waiver Of Constitutional Rights
The Court holds that it is unconstitutional for the government to condition receipt of a federal benefit, in this case federal employment or promotion, upon the waiver of constitutional rights. If the government were permitted to compel waiver of constitutional rights in order to receive a federal promotion, there would be little stopping the government from extending the principle to require, for instance, that all those who wish to receive welfare benefits must consent to have their urine searched, or that those who wish to ride upon federal highways must consent *391 to have their urine searched. Essentially, the plan requires the federal Customs workers to prove their innocence. Under the United States Constitution, persons are presumed innocent until proven guilty. The Customs Directive would reverse that as to Customs workers.
As Judge Sarokin eloquently noted in Capua, et al. v. City of Plainfield, 643 F. Supp. 1507 (1986):
The invidious effect of such mass, roundup urinalysis is that it casually sweeps up the innocent with the guilty and willingly sacrifices each individual's Fourth Amendment rights in the name of some larger public interest. The City of Plainfield essentially presumed the guilt of each person tested. The burden was shifted onto each fire fighter to submit to a highly intrusive urine test in order to vindicate his or her innocence. Such an unfounded presumption of guilt is contrary to the protections against arbitrary and intrusive government interference set forth in the Constitution ...
Capua, 643 F.Supp. at 1517.
It is up to the government to obtain evidence in a constitutionally permissive manner against those who are suspected of illicit drug usage. If the government has probable cause to suspect a particular Customs worker is using or selling illicit drugs on the job, a warrant should be obtained in a court of law.
The Drug Testing Plan Is Utterly Repugnant To The United States Constitution
The plan put forth in the Customs Directive is so utterly repugnant to the United States Constitution, that this Court has no choice but to permanently enjoin Commissioner William Von Raab from further implementing it.
WHEREFORE, the Petition for Injunctive and Declaratory Relief is GRANTED. The Motion to Dismiss is DENIED. The defendant is ENJOINED from conducting urinalysis drug testing in the absence of probable cause. The Court GRANTS a DECLARATORY JUDGMENT declaring the drug testing program to be unconstitutional. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1874679/ | 694 F. Supp. 864 (1988)
HAITIAN REFUGEE CENTER, INC., a not-for-profit corporation; Roman Catholic Diocese of Palm Beach; Marie Gizele Angrand; Germaine Cadet; Rosita Delva; Dieumercie Desir; Joseph Saintil Dieudonne; Gerald Henry; Marie France Jean-Philippe; Novamise Julien; Francklin Joseph; Sylvia Lindor; Recol Neus; Rose Pierrecina Lebon Pierre; Marie Philomene Servilien; Hector Trejo Tamayo; Juan Tamayo Vega; Marie Raquel Viera; and Jeanette Vixama, Plaintiffs,
v.
Alan C. NELSON, Commissioner of Immigration and Naturalization Service; Perry Rivkind, District Director, Immigration and Naturalization Service, District Office Number 6; Kenneth Pasquarell, District Director, Immigration and Naturalization Service, District Office Number 26; William Chambers, Director, Immigration and Naturalization Service Regional Processing Facility for the Southern Region; Immigration and Naturalization Service, Department of Justice; Richard Norton, Associate Commissioner for Examination, Immigration and Naturalization Service; William Slattery, Assistant Commissioner for Legalization, Immigration and Naturalization Service; Edwin Meese, III, Attorney General of the United States; and United States Department of Justice, Defendants.
No. 88-1066-Civ.
United States District Court, S.D. Florida.
August 22, 1988.
*865 Ira J. Kurzban, Counsel for National Emergency Civil Liberties Foundation, Miami, Fla., Michael Guare, Florida Rural Legal Services, Inc., Bartow, Fla., Robert Williams, Maureen T. Kelleher, Florida Rural Legal Services, Inc., Immokalee, Fla., Cheryl A.E. Little, Haitian Refugee Center, Inc., Miami, Fla., for plaintiffs.
Patricia Kenny, Asst. U.S. Atty., Miami, Fla., Richard Chamovitz, David N. Bernal, Office of Immigration Litigation, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendants.
ORDER GRANTING MOTION FOR PRELIMINARY INJUNCTION AND CERTIFYING THE CLASS
ATKINS, District Judge.
THIS CAUSE is before the court on the plaintiffs' motion for a preliminary injunction. *866 After an extensive hearing at which the parties offered evidence and presented witnesses and after exhaustive briefing, the court concludes that it is vested with jurisdiction to consider this matter and renders this Memorandum Decision in accordance with Fed.R.Civ.P. 52(a). It is further
ORDERED AND ADJUDGED that the plaintiffs' motion is GRANTED.
This action was initiated on behalf of the Haitian Refugee Center ("HRC"), the Migration and Refugee Services of the Diocese of Palm Beach ("MRS"), and 17 individual applicants for temporary residence under the Special Agricultural Workers ("SAW") provisions found at section 210 of the Immigration and Nationality Act ("INA"), 8 U.S.C. § 1160, as amended by the Immigration Reform Control Act ("IRCA"), Pub.L. 99-603, 100 Stat. 3417.[1] The plaintiffs seek declaratory, mandatory, and injunctive relief for themselves and a class of persons who have applied or will apply for SAW status and who have been or will be denied such status because of the defendants' alleged unlawful practices and policies. The plaintiffs contend that the defendant Immigration and Naturalization Service ("INS") officials have (1) imposed an unlawful burden of proof by requiring applicants to produce corroborating evidence in addition to affidavits to prove the performance of the requisite ninety man-days of agricultural labor, (2) denied the individual plaintiffs' alleged "non-frivolous" applications prior to March 29, 1988, and thus denied work authorization pending final adjudication of the claims contrary to the statute and regulations, (3) issued I-292 notices of denial which failed to state the specific reasons for denial and provided incorrect information for purposes of appeal, and (4) imposed an interview procedure which violates the applicants' Fifth Amendment right to due process by failing to provide interpreters, failing to allow the applicants to rebut adverse evidence, and refusing to allow the applicants to present witnesses on their own behalf.
The plaintiffs seek a preliminary injunction: (1) enjoining the defendants from applying an improper burden of proof to SAW applications; (2) enjoining defendants from utilizing an interview process that is procedurally deficient by failing to allow applicants to clarify information, failing to apprise applicants of adverse evidence with an opportunity to rebut, failing to provide an opportunity to present live witnesses, failing to provide competent interpreters, and failing to make a verbatim transcript; (3) requiring the defendants to readjudicate all SAW applications filed by the plaintiffs using the proper burden of proof; (4) requiring the defendants to readjudicate all SAW applications filed by the plaintiffs and members of the class they seek to represent which were denied at the Legalization Offices prior to March 29, 1988, for lack of work records, precise documentation, or for suspected fraud; (5) requiring the defendants to grant work authorization and stays of deportation to all of the plaintiffs and members of the class they seek to represent whose applications were denied at Legalization Offices prior to March 29, 1988, for lack of work records, precise proof of employment, or suspected fraud; and (6) requiring defendants to renotify and provide specific reasons for denial to those applicants who received denials on form I-292.
BACKGROUND
The Special Agricultural Workers Program ("SAW") was created by and as part of the Immigration Reform and Control Act of 1986 ("IRCA") and was intended to extend lawful immigrant status to qualifying aliens. The program mandates that the Attorney General adjust the status of any alien to that of an alien admitted for temporary residence if that alien applies for a change in status between June 1, 1987, and November 30, 1988, and is able to establish that s/he has resided in the United States and performed seasonal agricultural services for at least ninety man-days during the twelve month period ending on May 1, 1986. See 8 U.S.C. §§ 1160(a)(1)(A) and (B). The applicant must also establish that s/he is admissible to the United States as *867 an immigrant. 8 U.S.C. § 1160(a)(1)(C). An alien who is granted temporary residency under this program will eventually be admitted as a permanent resident. 8 U.S. C. § 1160(a)(2).
The application process begins at one of five Legalization Offices ("LO") located in the state of Florida where the application is reviewed and the applicant interviewed.[2] The interviewing officer either denies the application, recommends that it be denied, or recommends that it be granted. Those applications not denied outright at the LO are forwarded to one of four Regional Processing Facilities ("RPF") for adjudication. A denial that issues either from an LO or from the RPF may be appealed to the Legalization Appeals Unit ("LAU"), the final administrative decision in a SAW applicant's case.[3]
LOs are "local offices of the Immigration and Naturalization Service which accept and process applications for legalization or special agricultural worker status", under the authority of the district directors in whose districts such offices are located." 8 C.F.R. § 210.1(h). At this stage, the interviewing officer determines whether a completed application filed for processing is "non-frivolous."[4] Under subsection (d) of section 210 of the Act, applicants who file a "non-frivolous" case of eligibility for SAW status under subsection (a) shall not be deported or excluded and shall be granted authorization to engage in employment pending final determination of his or her application.[5] Only an LO is authorized to *868 issue work authorization to an applicant who files a "non-frivolous" claim. 8 C.F.R. § 210.4(b).
The regulations initially provided that the district director could only deny, through the LOs, those applications found to be frivolousthose that clearly failed to meet the statutory requirementsor those applications in which the applicant admitted fraud or misrepresentation in its preparation. 8 C.F.R. § 103.1(n)(2). District directors may now deny all ineligible applications at the LO level, 53 Fed.Reg. 10062, 10064 (March 29, 1988), but the regulations contemplate that only those applicants filing frivolous or fraudulent claims be denied a stay of deportation or exclusion and work authorization. 8 U.S.C. § 1160(d)(2) and (3)(B).
The applicant has the initial burden of proving by "a preponderance of the evidence" that s/he worked the requisite ninety man-days of seasonal agricultural services and may meet this burden by producing "sufficient evidence to show the extent of that employment as a matter of just and reasonable inference." 8 U.S.C. § 1160(b)(3)(B)(i), (b)(3)(B)(iii) (emphasis added). Having done so, "the burden then shifts to the Attorney General to disprove the alien's evidence with a showing which negates the reasonableness of the inference to be drawn from the evidence." 8 U.S.C. § 1160(b)(3)(B)(iii).
The regulations provide that "[t]he sufficiency of all evidence produced by the applicant will be judged according to its probative value and credibility," and, to meet the burden of proof, an applicant must provide evidence of eligibility "apart from his or her own testimony." 8 C.F.R. § 210.3(b)(2). "Affidavits and other personal testimony by an applicant which are not corroborated, in whole or in part, by other credible evidence (including testimony of persons other than the applicant) will not serve to meet the applicant's burden of proof." 8 C.F.R. § 210.3(b)(3)).[6] If an employer or labor contractor has kept proper and adequate records, an applicant may meet the burden of proof by timely production of those records under regulations to be promulgated by the Attorney General. 8 U.S.C. § 1160(b)(3)(B)(ii); but see n. 10 infra. An alien may also meet the burden of proof by producing affidavits of agricultural producers, farm labor contractors, union officials, fellow employees, or other persons who have knowledge of the applicant's employment. 8 C.F.R. § 210.3(c)(3). The affiant must provide "a certified copy of corroborating records or state [his] willingness to personally verify the information provided." Id. (emphasis added).
FACTS
The individual plaintiffs are applicants who have been denied SAW status. The plaintiffs Jean-Philippe, Vixama, Delva, and Henry were denied at the LO; the plaintiffs Angrand,[7] Lindor, Neus, Joseph, Tamayo, Vega, and Viera were denied by the RPF. Julien and Servilien were denied by the RPF and their denials affirmed on appeal by the LAU.[8]
*869 The plaintiff HRC is a non-profit membership corporation organized under the laws of the state of Florida with its principal place of business in Miami. Its membership consists of Haitian refugees and its main function is to provide its membership with legal representation.
The Roman Catholic Diocese of Palm Beach through its component the plaintiff MRS is an affiliate of the United States Catholic Conference. MRS has been designated by the INS as a Qualified Designated Entity ("QDE") under section 245A(C)(2) of the IRCA, 8 U.S.C. § 1255a(c)(2) for the purpose of receiving the applications of farmworkers seeking SAW status. MRS serves the Diocese of Palm Beach including the geographical areas of Palm Beach, Martin, St. Lucie, Indian River, and Okeechobee Counties. The Diocesan program provides counseling to SAW applicants and receives applications for refugee status.
As of July 6, 1988, the INS District LOs servicing the state of Florida had received 77,861 SAW applications; 73,246 of those applicants had received interviews as of that date. Of those interviewed, 54,536 were recommended for approval and 14,524 for denial by the LO. The remaining 4,086 were denied at the LO.[9]
Of the 77,609 applicants as of July 1, 1988, 30,425 are Haitians who speak Creole. Although most SAW applicants do not speak English, the INS does not provide interpreters at SAW interviews. Non-English speaking applicants are expected to provide their own interpreters; the INS does not investigate the proficiency of any interpreter beyond asking if they understand English and the language which they intend to interpret. The record of the interview does not identify the interpreter, his or her qualifications, or in fact whether an interpreter was used. The Okeechobee LO has never had a Creole speaking employee.
The interview is an extremely important step in the application process. It is the only face to face encounter between the applicant and the INS allowing the INS to assess the applicant's credibility. Yet, the INS does not record or prepare a transcript of the interview. Any inconsistencies between the applicant's documents and information elicited by the interviewer are to be noted on the worksheet, Form I-696, however, the plaintiffs' worksheets contain very little information pertaining to the interview or credibility determinations.
An applicant may only inspect this worksheet through a request pursuant to the Freedom of Information Act.
Applicants whose applications are determined to be non-frivolous but are recommended for denial at the LO level are usually not made aware of the recommendation or its basis.
Farm labor contractors and other agricultural employers often do not maintain accurate employment records. This makes it difficult and, in many cases, impossible for a farm worker to produce formal documentation.[10] Farm workers are likely to be paid in cash by farm labor contractors whose lists of workers are often incomplete.[11] Testimony suggested that in cases *870 where records were kept, employers are frequently reluctant to produce them for fear of incriminating themselves for violations of federal law and subjecting themselves to civil penalties.
Congress specifically recognized this problem and provided a solution when it created the SAW program. If an employer or farm labor contractor kept proper and adequate records, the applicant's burden of proof "may be met by securing timely production of work records under regulations promulgated by the Attorney General." 8 U.S.C. § 1160(b)(3)(B)(ii).[12] When records are nonexistent or unavailable, the applicant can meet the burden of proof "by producing sufficient evidence to show the extent of that employment as a matter of just and reasonable inference. In such a case, the burden then shifts to the Attorney General to disprove the alien's evidence with a showing which negates the reasonableness of the inference to be drawn from the evidence." 8 U.S.C. § 1160(b)(3)(B)(iii).[13] Congress intended to encourage aliens to utilize the SAW program and to aid growers of perishable commodities often dependent upon a crew of illegal laborers to harvest crops. H.R. Conf.Rep. No. 99-1000, 99th Cong., 2d Sess. 85, 95, reprinted in 1986 U.S. Code Cong. & Admin.News 5840, 5850-51.
Wayne Joy and John Adamczyk both testified that the Defendants were directed to take a liberal view in determining whether the just and reasonable inference had been created, yet Defendants have not received any training or instructions as to the shifting burden of proof to be employed in SAW cases. Wayne Joy stated that the burden *871 required to meet the just and reasonable inference is identical to the burden required to meet the nonfrivolous standard.
On May 1, 1987, the INS issued regulations allowing applicants to establish qualifying employment by submitting affidavits of growers, foremen, farm labor contractors, and fellow employees.[14] The regulations require the affiant to provide a certified copy of corroborating records or state his or her willingness to verify personally the information contained therein.[15]
Prior to the application period, representatives of several Qualified Designated Entities ("QDEs") met with the Deputy Commissioner of the INS in charge of the SAW program and developed an affidavit for use by applicants to satisfy the requirements of the regulation. The I-705 "Affidavit Confirming Seasonal Agricultural Employment of an Applicant for Temporary Residence Status Under Section 210 of the Immigration and Nationality Act," is designed to provide information of when, where, and in what crops the applicant labored. The form, which recites that the affiant is "willing to personally confirm this information, if requested" and is to be signed under penalty of perjury, was published in the Federal Register at 52 Fed.Reg. 16195 (May 1, 1987).
During the first several months of the program, affidavits sufficed to corroborate the applicant's claim of employment. Suspicion of widespread fraud in the application procedure led the LOs to demand corroborative evidence, such as payroll records, pay stubs, and rent receipts, and to deny many applications accompanied only by the form I-705 affidavit.
According to defendants' testimony, an affidavit would not be sufficient if the weight of the affidavit comes into question because of its connection to fraud, inconsistencies, or other credibility questions. The defendants' standard for judging credibility questions may hinge upon the fact that applicants often cannot identify the grower, the name of the farm, or the area in which it is located.[16] Farm workers may only know the name of their crew leader or labor contractor who collects them from a preappointed spot in the morning and redelivers them in the evening. Therefore "inconsistencies" between the interview and the written application may develop because an applicant improperly identifies a "growing area" or cannot name an employer. The interview is the sole means of judging an applicant's credibility.
The Miami District developed a list of farm labor contractors and immigration consultants suspected by the INS of being involved in fraudulent applications. The list was given to each interviewer for use in evaluating individual applications. Contractors or others whose names appeared on the "list" were often not aware of the fact nor were they provided with an opportunity to rebut the "suspected" fraud.
Although applicants should be made aware of adverse evidence considered during the evaluation of their applications, 8 C.F.R. § 103.2(b)(2), applicants were not told if an affiant who supported the alien's applications appeared on the list nor were they given an opportunity to supplement their applications to support a suspect affidavit.[17] Applicants were not told if or why *872 their applications were recommended for denial.[18]
Plaintiffs Henry and Jean-Philippe, denied after their initial interview because their affiant appeared on the list of "suspected" labor contractors, were not given the opportunity to rebut the adverse evidence. In some cases, all applications accompanied by an affidavit bearing the name of a contractor or other individual whose name appeared on the "list" were denied for failure to produce corroborative evidence, despite the fact that some of those who appeared on a list were genuine crewleaders whose names had been used by another. In such a case, though the applicant had actually worked for the suspected crewleader, his or her application was denied merely because the crewleader's name was under suspicion. William Chambers testified that form notices of denial were issued to hundreds possibly thousands of applicants. The denial stated that the "affidavits were signed by the same affiant and were not substantiated by any additional credible evidence such as piecework receipts or employers' daily records."[19]
A wire addressed to all district directors, regional legalization officers, and the Legalization Appeals Unit, dated April 11, 1988, instructed the parties that 8 C.F.R. § 103.2(b) requires that applicants be advised of adverse evidence considered by the INS and that they be given an opportunity to present evidence to rebut it prior to a decision. The directive provided that an I-72 notice be sent to any applicant whose application was to be denied because of adverse evidence and that the applicant be given thirty days to overcome its inference. But no measures were taken to correct denials effected without informing the applicant of adverse evidence that occurred prior to issuance of the directive.[20]
JURISDICTION
The defendants challenge the jurisdiction of the court without which the remainder of this decision would be fruitless. Therefore this court, having considered the question as a threshold issue, finds jurisdiction vested for adjudication of this matter.
The defendants note that both administrative and judicial review of INS decisions on SAW applications are provided for by IRCA. Title 8 U.S.C. § 1160, the IRCA provision addressing legalization for SAW applications, expressly states that sole judicial *873 review of a denial of SAW status occurs during the applicant's deportation case. It provides:
There shall be no administrative or judicial review of a determination respecting an application for adjustment of status under this section except in accordance with this subsection.
* * * * * *
There shall be judicial review of such a denial only in the judicial review of an order of exclusion or deportation under section 1105a of this title.
8 U.S.C. § 1160(e)(3)(A).
The defendants urge that Congress deliberately structured the system in a way to exclude participation by district courts. Under IRCA, aliens cannot contest the denial of their SAW applications unless and until the INS institutes deportation proceedings against them.[21] District courts lack jurisdiction to adjudicate deportation proceedings which are initially tried by an immigration judge. 8 U.S.C. § 1252(b); 8 C.F.R. §§ 1.1(1) and 242.8. Appeal of an adverse decision by the immigration judge goes to the Board of Immigration Appeals. 8 U.S.C. § 1105a(c); 8 C.F.R. § 3.1(b). Only after exhausting these administrative remedies may an alien seek review and his appeal is then directed to the courts of appeals. 8 U.S.C. § 1105a(a)(2). It cannot be disputed that "petition for review in the Court of Appeals `shall be sole and exclusive procedure for the judicial review of all final orders of deportation....'" Immigration and Naturalization Service v. Chadha, 462 U.S. 919, 937, 103 S. Ct. 2764, 2777, 77 L. Ed. 2d 317 (1983) (quoting Immigration and Nationality Act § 106(a), 8 U.S. C. § 1105a(a)). Therefore, had the plaintiffs chosen to challenge denial of the individual applications, this court would be without power to address the complaint. The plaintiffs' complaint, however, does not challenge any individual determination of any application for SAW status but rather attacks the manner in which the entire program is being implemented, allegations beyond the scope of administrative review.
In Haitian Refugee Center v. Smith, 676 F.2d 1023 (5th Cir. Unit B 1982), the Fifth Circuit considered a class action suit brought by Haitians seeking political asylum in the United States. The complaint challenged the expedited administrative procedure employed by the INS in processing the asylum applications of members of the plaintiff class. The government argued the same grounds that it is arguing before this court, that is: (1) exclusive jurisdiction is conferred upon the courts of appeals under 8 U.S.C. § 1105a(a), and (2) though the court has jurisdiction, it should decline to exercise it because the plaintiffs failed to exhaust their administrative remedies. The court in Smith recognized congressional intention to give the courts of appeals exclusive jurisdiction over all final orders of deportation, but the court also highlighted the narrow exception that allows jurisdiction to the district courts "insofar as the [complaint] set[s] forth matters alleged to be part of a pattern and practice by immigration officials to violate the constitutional rights of a class of aliens" under its federal question jurisdiction. 676 F.2d at 1033. The court stated that to the extent that the "irregularities may provide a basis for reversal of an individual deportation," the court of appeals still has exclusive jurisdiction to review the alleged procedural irregularities. Id. The court drew a distinction "between the authority of a court of appeals to pass upon the merits of an individual deportation order and any action in the deportation proceeding to the extent that it may affect the merits determination, on the one hand, and, on the other, the authority of a district court to wield its equitable powers when a wholesale, carefully orchestrated, program of constitutional violations is alleged." Id.
In Jean v. Nelson, 727 F.2d 957 (11th Cir.1984), the Eleventh Circuit considered a class action on behalf of Haitian aliens detained in facilities pending final determination of their asylum cases. The plaintiffs *874 alleged violations of the Administrative Procedure Act and discriminatory detention. The court stated that "executive officials `function as agents of Congress in enforcing the law.... If such officers depart from the zone of authority charted in the statute they act illegally and their actions can be corrected in the courts.'" 727 F.2d at 966 (citations omitted).
In the case before this court, the plaintiffs allege that the defendants have exceeded their authority by illegal implementation of stated congressional intent. To deny jurisdiction would be to allow illegal agency action to go unchallenged. Lloyd Sabaudo Societa Anonima Per Azioni v. Elting, 287 U.S. 329, 53 S. Ct. 167, 77 L. Ed. 341 (1932); Mahler v. Eby, 264 U.S. 32, 44 S. Ct. 283, 68 L. Ed. 549 (1924); Gegiow v. Uhl, 239 U.S. 3, 36 S. Ct. 2, 60 L. Ed. 114 (1915). This court does not, by this decision, intend to widen the narrow holding in Smith but rather finds that the present case fits within that narrow exception.[22]
STANDING
The defendants assert that the organizational plaintiffs lack standing because they have not established a cognizable injury nor have they established the causation elements required to find a case or controversy. To establish standing, "at an irreducible minimum, Art. III requires the party who invokes the court's authority to `show that he personally has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant,'" Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S. Ct. 752, 758, 70 L. Ed. 2d 700 (1982) (quoting Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 99 S. Ct. 1601, 1607, 60 L. Ed. 2d 66 (1979)), "and that the injury `fairly can be traced to the challenged action' and `is likely to be redressed by a favorable decision.'" Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758 (quoting Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. 26, 38, 41, 96 S. Ct. 1917, 1924, 1926, 48 L. Ed. 2d 450 (1976) (footnote omitted)). The exercise of judicial authority is thus limited to litigants who are able to demonstrate "injury in fact" resulting from the complained of behavior. Valley Forge, 454 U.S. at 473, 102 S.Ct. at 759.
The Supreme Court has also recognized that, beyond constitutional requirements, there exist certain prudential principles that require the court to refrain from adjudicating "`abstract questions of wide public significance' which amount to `generalized grievances,' pervasively shared and most appropriately addressed in the representative branches." Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760 (quoting Warth v. Seldin, 422 U.S. 490, 499-500, 95 S. Ct. 2197, 2205, 45 L. Ed. 2d 343 (1975) (footnote omitted)). Finally, the plaintiffs' complaint must fall within "the zone of interest to be protected or regulated by the statute or constitutional guarantee in question." Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760 (quoting Association of Data Processing Service Orgs. v. Camp, 397 U.S. 150, 153, 90 S. Ct. 827, 830, 25 L. Ed. 2d 184 (1970) (footnote omitted)).
The organizational plaintiffs before this court have satisfied both constitutional and prudential requirements for standing and thus their claims are cognizable. The constitutional requirements encompass three components: (1) injury in fact, (2) causation, and (3) redressability. Numerous courts have found standing based upon allegations similar in scope to those presented by the plaintiffs HRC and MRS.
HRC has alleged that the "[d]efendants' refusal to recognize that such persons [HRC's members] are eligible under IRCA both directly and indirectly injures HRC. It directly injures the organization because it makes HRC's work of assisting the Haitian refugee community more difficult and *875 results in the diversion of HRC's limited resources away from members and clients having other urgent needs." Complaint at ¶ 17. HRC also alleges an indirect injury through the adverse effect upon its members. Id. The plaintiff MRS is a QDE under IRCA authorized to provide counseling to aliens about the legalization process and to assist them in obtaining documentation. It also receives applications and fees from aliens and is reimbursed by the INS for counseling and filing services. MRS alleges that the defendants' behavior has discouraged otherwise eligible SAW applicants from seeking counseling and/or filing their claims and MRS is prevented from fulfilling its basic mission of assisting aliens to qualify under IRCA. Id. at ¶ 18.
In Havens Realty Corp. v. Coleman, 455 U.S. 363, 102 S. Ct. 1114, 71 L. Ed. 2d 214 (1982), the Supreme Court addressed the standing of an organization, Housing Opportunities Made Equal ("HOME"), whose purpose was "`to make equal opportunity in housing a reality in the Richmond Metropolitan Area.'" Id. at 368, 102 S.Ct. at 1118 (quoting App. at 13, ¶ 8). The organizational plaintiff's activities included operation of a housing counseling service and the investigation and referral of complaints of housing discrimination. 455 U.S. at 368, 102 S.Ct. at 1118. The Court found that:
"If, as broadly alleged, petitioners' steering practices have perceptibly impaired HOME's ability to provide counseling and referral services for low- and moderate-income home-seekers, there can be no question that the organization has suffered injury in fact. Such concrete and demonstrable injury to the organization's activitieswith the consequent drain on the organization's resourcesconstitutes far more than simply a setback to the organization's abstract social interests...."
Id. at 379, 102 S.Ct. at 1124. The plaintiff HOME's complaint alleged simply that it "has been frustrated by defendants' racial steering practices in its efforts to assist equal access to housing through counseling and other referral services. Plaintiff HOME has had to devote significant resources to identify and counteract the defendant's [sic] racially discriminatory steering practices." Id. at 379, 102 S.Ct. at 1124.
In Action Alliance of Senior Citizens v. Heckler, 789 F.2d 931 (D.C.Cir.1986), the court, recognizing the standard set by the Supreme Court in Havens, found that the appellant, whose function was, through informational, counseling, referral, and other services, to improve the lives of elderly citizens, had sufficient standing to press its claim. As in the case before this court, the appellant in Action Alliance alleged "inhibition of their daily operations, an injury both concrete and specific to the work in which they are engaged." 789 F.2d 938 (footnote omitted).
HRS and MRS, whose very existence is devoted to assisting Haitian refugees through legal counseling and referral, have concrete programmatic concerns that form an adequate basis for alleging an injury in fact and thus fulfill the primary constitutional requirement for standing.[23] But, though a plaintiff demonstrates a very real injury, it may lack standing because of the absence of causation or redressability. Simon v. Eastern Kentucky Welfare Rights Org., 426 U.S. at 40-46, 96 S.Ct. at 1925-28. The causal connection in the present case cannot be deemed "speculative." See id. at 45, 96 S.Ct. at 1927. The defendants in the case before this court have actual control over the implementation of the SAW program and their alleged mishandling is the very basis for the plaintiffs' complaint. Finally, because the defendants control implementation of the regulations, requiring them to recognize and abide by these regulations would provide the plaintiffs with the remedy they seek and resolve *876 the alleged injury.[24] Therefore the plaintiffs meet the Article III requirements for standing to pursue this action.
The dispute before this court also fulfills the prudential standing requirements outlined in Valley Forge. 454 U.S. at 475, 102 S.Ct. at 760. The interests at stake are not "`abstract questions of wide public significance' which amount to `generalized grievances,' pervasively shared and most appropriately addressed in the representative branches," Id. (quoting Warth v. Seldin, 422 U.S. at 499-500, 95 S.Ct. at 2205), but rather are particularized concerns that affect an identificable group of people. Finally, HRC claims that defendants' behavior makes it increasingly difficult to render the legal assistance that forms the core of its functions. HRC's interest in aiding the applicants' legalization process falls squarely within the "zone of interests" that is protected by the statute. See, e.g., Action Alliance, 789 F.2d at 939 (interests as promotion of knowledge, enjoyment, and protection of rights created by a statute are in the zone of interests); Animal Welfare Institute v. Kreps, 561 F.2d 1002, 1010 (D.C.Cir.1977) (environmental group's participation in passage of the statute); Consumers Union v. Federal Trade Commission, 691 F.2d 575, 576-77 (D.C.Cir. 1982) (en banc) (consumer groups may challenge FTC rules that withhold used car information from consumers).
CLASS CERTIFICATION
Fed.R.Civ.P. 23(a) lists four prerequisites to class certification: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Rule 23(b)(2) allows a class action when the requirements of 23(a) have been met and "the party opposing the class action has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding relief with respect to the class as a whole."
The defendants have not challenged the adequacy of the representative parties' protection of the class interests and so this court will address only those challenges to class certification that contend: (1) the numerosity allegations are too vague to be credited; (2) the plaintiffs have not demonstrated that they meet the commonality and typicality requirements; and (3) the plaintiffs never clearly described the class they seek to have certified. This court concludes that the defendants' arguments lack merit for the following reasons.
The defendants correctly state that the mere allegation that a class is too numerous to make joinder practicable is insufficient to satisfy this basic requirement. See, e.g., Fleming v. Travenol, 707 F.2d 829, 833 (5th Cir.1983). A court must look to the specific facts of each case to determine the number of potential class members and whether joinder is possible. See Garcia v. Gloor, 618 F.2d 264, 267 (5th Cir.1980). Defendants err, however, by applying that rationale in this context. In their complaint, the plaintiffs define their action as one that "challenges the practices, policies and procedures of the INS for determining Lawful Temporary Resident status under the SAW program." The challenge is based on two grounds: (1) that the plaintiffs have been cast with an improper burden of proof in establishing their right to a change in residence status; and (2) that the INS has failed to promulgate regulations to ensure that the applicants are able to secure needed records to establish their claims.
The plaintiffs Angrand, Cadet, Dieudonne, Neus, Pierre, Tamayo, and Vega each received an identical form denial, see *877 n. 14 supra, which merely stated that they had failed to submit sufficient credible evidence to substantiate their claims because their affidavits were not accompanied by "piecework receipts or employers' daily records." These form denials, which the plaintiffs allege were defective by imposing an improper burden of proof and by failing to state with particularity the reasons for denial were, according to defendants' witness William Chambers, issued to hundreds possibly thousands of applicants. Therefore the persons who have been affected by what the plaintiffs allege is illegal implementation of congressional policy number in the hundreds, possibly thousands, and therefore the numerosity allegations have been sufficiently established. The very number of the persons affected as well as the nature of their work and their economic means makes joinder impracticable.[25]See, e.g., Jean v. Nelson, 727 F.2d 957, 961 n. 2 (11th Cir.1984) (class certified by the district court was comprised of "[a]ll Haitian aliens who have arrived in the Southern District of Florida on or after May 20, 1981, who are applying for entry into the United States and also are presently in detention pending exclusion proceedings at various INS detention facilities, for whom an order of exclusion has not been entered and who are either: (1) Unrepresented by counsel; or (2) Represented by counsel pro bono publico assigned by the Haitian Refugee Volunteer Task Force of the Dade County Bar Association") (quoting Louis v. Nelson [Louis III], 544 F. Supp. 973, 984 (S.D.Fla.1982)); Haitian Refugee Center v. Smith, 676 F.2d 1023, 1026 n. 1 (5th Cir. 1982) (class certified by the district court included "all Haitian nationals who have applied for political asylum on or before May 9, 1979 under 8 C.F.R. § 108, and whose applications were or may be denied by the INS District Director or his designee in INS District Office No. 6, Miami, Florida").
The defendants challenge the plaintiffs' contention that there exist common questions of law or fact and that the representative parties exhibit claims that are typical of the class as a whole. Fed.R.Civ. P. 23(a)(2). It must be noted that this provision does not require that all of the questions of law and/or fact raised by the case be common to all the plaintiffs. Johnson v. American Credit Co. of Georgia, 581 F.2d 526, 532 (5th Cir.1978); 7 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil § 1763 (1986) (hereinafter Wright & Miller). Class actions seeking injunctive or declaratory relief as in the instant caseby their very nature present common questions of law or fact. 7 C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure: Civil § 1763. Commonality also exists when plaintiffs allege that a defendant has acted or is acting uniformly regarding a class. Haitian Refugee Center v. Smith, 676 F.2d at 1033. The class of plaintiffs in this case allege that they were denied temporary residence status because the defendants imposed an illegal burden of proof that the applicants were unable to meet. Such an allegation is sufficient to meet the commonality and typicality requirements of Rule 23(a)(2) and (3). See Cox v. American Cast Iron Pipe Co., 784 F.2d 1546, 1557 (11th Cir.1986) (claims actually litigated must simply be those fairly represented by the named plaintiffs).
Finally, the court rejects the defendants' argument that the plaintiffs did not adequately describe the class. The defendants' very requirements for eligibility under the SAW program identify the class members with sufficient particularity for this court to determine whether a SAW applicant is a member. Therefore the class certified shall consist of all persons who have applied for, or will apply for, adjustment *878 to lawful residence under the Special Agricultural Worker ("SAW") program within the eighteen month period and who have been or will be denied such status by the INS within this circuit because of the defendants' unlawful practices and policies.
PRELIMINARY INJUNCTION
The plaintiffs seek preliminary injunctive relief under Fed.R.Civ.P. 65(a), the purpose of which is to prevent irreparable injury and preserve the court's ability to render a meaningful decision on the merits. United States v. Alabama, 791 F.2d 1450, 1459 (11th Cir.1986). Because the application period under the SAW program terminates on November 30, 1988, preliminary injunctive relief is necessary to ensure that a remedy will be available. Id. (citing Gresham v. Windrush Partners, Ltd., 730 F.2d 1417, 1424 (11th Cir.1984)). With full understanding that a preliminary injunction is an extraordinary and drastic remedy, the grant of which is exceptional, this court, nevertheless, finds that the circumstances before it require such relief.[26]
To be entitled to injunctive relief, the plaintiffs must establish four factors: (1) substantial likelihood that they will prevail on the merits; (2) they will suffer irreparable injury if the injunction is not granted; (3) the threatened harm to the plaintiffs outweighs the potential harm to the defendants; and (4) the public interest will not be harmed if the injunction should issue. United States v. Alabama, 791 F.2d at 1459 n. 10; Johnson v. Department of Agriculture, 734 F.2d 774, 781 (11th Cir. 1984); Cate v. Oldham, 707 F.2d 1176, 1185 (11th Cir.1983); United States v. Lambert, 695 F.2d 536, 539 (11th Cir.1983).
Likelihood of Success
The plaintiffs allege that the defendants have violated the applicants' due process rights under the Fifth Amendment by the manner in which they are implementing the SAW program. The plaintiffs cite what they allege to be an improper burden of proof in establishing eligibility under the program, defendants' failure to publish new rules governing SAW applications, practice of denying non-frivolous claims at the Los, and failure to advise applicants of specific reasons for denial of their applications.
The Supreme Court has recognized that a constitutionally protected liberty or property interest may be created by positive rules of law enacted by the federal government and creating a substantial entitlement to a particular government benefit. Haitian Refugee Center v. Smith, 676 F.2d at 1038. In Smith, the Fifth Circuit found a constitutionally protected right to petition the federal government for political asylum in federal regulations establishing asylum procedures. In the case before this court, the applicants have a constitutionally protected right to seek SAW status under IRCA and the resultant regulations. Smith recognized a problem that also faces this courtthat fundamental fairness, the very essence of due process, is violated when the government creates a right to petition and then makes it utterly impossible to exercise that right. 676 F.2d at 1039.
Thus the individual plaintiffs have been afforded the right to seek temporary residency in this country through the congressionally created SAW program. Congress intended that the program be liberally applied to encourage undocumented farm workers to come forward and seek legalization. The program was created in a way to circumvent to well recognized problem of documentation that exists for migrant worker. The evidence before this court strongly suggests that, despite congressional directives, applicants are being required to produce exactly what they cannot, i.e., payroll records.
The Supreme Court has repeatedly emphasized that, not only must an aggrieved party be given the opportunity to "some form of hearing" prior to being deprived of a protected interest, the hearing must be *879 conducted "at a meaningful time and in a meaningful manner." Armstrong v. Manzo, 380 U.S. 545, 552, 85 S. Ct. 1187, 1191, 14 L. Ed. 2d 62 (1965).
The applicants in this case were expected to defend their applications against inferences of "suspected fraud," "lack of credibility," or "inconsistencies" to interviewers who did not speak their language and were not schooled in their culture. Applicants were not advised when their applications were recommended for denial, and were deprived of the opportunity to rebut any adverse inferences drawn from their interviews. Hundreds perhaps thousands of applicants received denial notices stating only that submitted affidavits were "not substantiated by any additional credible evidence such as piecework receipts or employers' daily records." They were misinformed about the time within which they were required to appeal an adverse decision, and not informed at all of where to submit an appeal. It is difficult to find that the above circumstances constituted a "meaningful" opportunity to be heard.
Under section 210(a)(1) of the INA, as amended by IRCA, 8 U.S.C. § 1160(a)(1), the Attorney General "shall" adjust the status of an alien who creates a just and reasonable inference of eligible employment and meets the other requirements of the statute. The Attorney General must also grant an application when a just and reasonable inference is shown unless the reasonableness of the inference is negated a "showing." 8 U.S.C. § 1160(b)(3)(B)(iii). Congress intended that the standards outlined in the case law interpreting the Fair Labor Standards Act be applied to the SAW program. See n. 13 supra. See, e.g., Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687, 66 S. Ct. 1187, 1192, 90 L. Ed. 1515 (1946) (employee must produce sufficient evidence from which the amount of time worked may be determined as a just and reasonable inference and the burden then shifts to the employer to negate the reasonableness of the inference).[27] In Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1330-31 (5th Cir.1985), the court recognized that a just and reasonable inference may be established through testimony of other employees. See also Castillo v. Givens, 704 F.2d 181 (5th Cir.1983); Brennan v. General Motors Acceptance Corp., 482 F.2d 825 (5th Cir.1973). In Williams v. Tri-County Growers, Inc., 747 F.2d 121, 129 (3rd Cir.1984), the court, in a footnote, chided the defendants who erroneously contended that no case has permitted the testimony of plaintiffs alone to satisfy the burden Anderson places upon employees by pointing to Marshall v. Van Matre, 634 F.2d 1115, 1119 (8th Cir. 1980) and Mitchell v. Williams, 420 F.2d 67, 70-71 (8th Cir.1969). See Williams, 747 F.2d at 128 n. 13. The court, in rejecting the defendant's argument that testimony alone was insufficient to create a just and reasonable inference, remarked that when "employees are migrant farm workers, it is difficult to imagine what other evidence the defendant would require [the farm workers] to produce." 747 F.2d at 128 n. 13.
The defendants in the present case are rejecting the "just and reasonable" inference established by the applicants' proffered affidavits on the basis of arbitrary credibility determinations that rest partly on suspicion of widespread fraud. The statute, however, requires that the applicant's "just and reasonable inference" be countered by "a showing that negates the reasonableness of the inference," and not the mere suspicion of wrongdoing.
Irreparable Injury
The key word in the determination of the injury that will result from a denial of a motion for preliminary injunction is "irreparable." United States v. Jefferson, 720 F.2d 1511 (11th Cir.1983). An injury is "irreparable" for purposes of a preliminary injunction only if it cannot be undone through monetary remedies. Cate v. Oldham, 707 F.2d 1176; Deerfield Medical Center, 661 F.2d 328. See also Jets Service *880 Inc. v. Hoffman, 420 F. Supp. 1300 (D.C.Fla.1976) (a recognized, legitimate interest that will vanish if not preserved constitutes irreparable injury).
The injury to the individual plaintiffs and the class involves a denial of temporary residency that will be adjusted to permanent residency within two years. This court cannot say that any monetary remedy would compensate for the loss of the benefits afforded by United States residency. The opportunity offered to the applicants is of limited duration, limited by the eighteen month application period ending on November 30, 1988.
SAW applicants whose applications were denied at the LO and those applicants who failed to appeal timely denials because of improper notices lack work authorization and thus a means of livelihood. The plaintiffs, HRC and MRS are unable to provide their members with the services that form the core of the organizations' functions.
Balance of Interests
The possible harm to the plaintiffs must be balanced against the possible harm to the defendants. In a case which involves a government agency, this factor is often intertwined with the public interest consideration. See Baker v. School Board of Marion County, 487 F. Supp. 380, 383 (M.D.Fla.1980). The defendants allege that the administrative burden that will result from the grant of injunctive relief outweighs the interests at stake. This court does not agree. Although it is true that the relief the plaintiffs seek involves necessary administrative expense and time, the loss to the plaintiffs is of such a magnitude to justify the additional burden. This court may use a sliding scale analysis, in which a strong showing of one factor may lessen the requirement for another. In addition, the overriding prerequisite is irreparable injury without an adequate remedy at law. Baker v. School Board, 487 F.Supp. at 383 (citing Sampson v. Murray, 415 U.S. 61, 88-89, 94 S. Ct. 937, 951-52, 39 L. Ed. 2d 166 (1974)). Plaintiffs who have been improperly denied a change of status have suffered a very great loss as will those possibly denied in the future. When the program concludes on November 30, 1988, the chance to qualify under the program is gone. There exists no remedy at law that this court is aware of to compensate for this loss and therefore this court finds that the injunctive relief requested by the plaintiffs is proper.
It is thus the considered decision of this court that the class of plaintiffs described in this decision be certified and the injunctive relief be granted. An appropriate preliminary injunction order shall be entered.
ORDER GRANTING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION
THIS CAUSE is before the court on the plaintiffs' motion for a preliminary injunction. After reviewing all of the submitted memoranda, after an extensive hearing, and after reviewing post hearing memoranda, it appearing that the plaintiffs and members of their class will suffer irreparable harm absent the preliminary relief sought because they will be denied the ability to earn a living and to support themselves and will be subject to deportation by the defendants, it is
ORDERED AND ADJUDGED as follows:
The defendant Alan C. Nelson, as Commissioner of Immigration and Naturalization Service, and the United States Immigration and Naturalization Service ("INS") and all persons acting by, through, or subject to their control or supervision, shall comply with the following:
(1) In those case in which the INS issued notices of denial which did not comply with the requirements of 8 C.F.R. § 103.3(a) because they did not advise the applicant of the correct procedure for appeal or did not provide specific reasons for denial, the INS shall vacate the denials and issue new notices of denial which comply with 8 C.F.R. § 103.3(a);
(2) In those cases in which the INS considered evidence adverse to the applicant of which the applicant was unaware, contrary to 8 C.F.R. § 103.2(b)(2), the INS shall vacate the denials, afford the applicant an opportunity to examine the adverse evidence, to rebut it, and to offer additional evidence before rendering a decision;
*881 (3) In those cases which the INS denied based in whole or in part on the fact that the applicant failed to submit payroll records or piecework receipts, the INS shall vacate the denials and reconsider the cases in light of the proper standard of proof which will require the government to present evidence to negate the just and reasonable inference created by the affidavits and other documents submitted by the applicant;
(4) The INS shall vacate those denials issued by the Legalization Offices during the period June 1, 1987, to March 29, 1988, unless the government can show that the applications were clearly frivolous based upon the documentation submitted by the applicant or that the applicant admitted fraud or misrepresentation in the application process;
(5) The INS shall issue temporary work authorization to all class members pending the final outcome of the proceedings in this case and a final decision on the merits of their individual cases;
(6) The Legalization Offices shall maintain competent translators, at a minimum, in Spanish and Haitian Creole, and translators in other languages shall be made available if necessary;
(7) The INS shall afford the applicants the opportunity to present witnesses at the interview including but not limited to growers, farm labor contractors, co-workers, and any other individuals who may offer testimony in support of the applicant;
(8) The interviewers shall be directed to particularize the evidence offered, testimony taken, credibility determinations, and any other relevant information on the form I-696.
This order shall remain in effect pending further order of this court. The plaintiffs are directed to post security in the amount of $500 by 4 p.m. on August 25, 1988, in accordance with Fed.R.Civ.P. 65(c).
NOTES
[1] IRCA created section 210 of the Immigration and Nationality Act, 8 U.S.C. § 1160.
[2] Regulations to implement the SAW provisions were first promulgated on May 1, 1987. 52 Fed.Reg. 16190 et seq. and 16195 et seq. (May 1, 1987), codified at 8 C.F.R. Parts 103 and 210 (1987). In relevant part, the regulations provide that the application for SAW status must be filed on Form I-700 together with the necessary fee, report of medical examination, evidence of identity, and fingerprint chart. "Each applicant shall be interviewed by an immigration officer" at the appropriate INS Legalization Office, except that the interview may be waived when it is impractical because of the health of the applicant. 8 C.F.R. § 210.2(c)(2)(iv).
[3] Whenever a SAW application is denied by the LO or by the RPF, the applicant must be given written notice setting forth the specific reasons for the denial on Form I-692. 8 C.F.R. § 103.3(a)(2). The form must contain advice that the applicant may appeal the decision and that such appeal must be taken on Form I-694 within 30 days of service of the denial notification. Id. The appeal with the required fee must be filed with the RPF for consideration by the Associate Commissioner for Examinations (Administrative Appeals Unit ("AAU")). Id.; 8 C.F.R. § 210.2(f). If the AAU dismisses the appeal, no further administrative appeal is available nor may the application be filed or reopened before an immigration judge or Board of Immigration Appeals during exclusion or deportation proceedings. 8 U.S.C. § 1160(e)(2); 8 C.F.R. § 103.3(a)(2). The Act does provide, however, for judicial review of an administrative denial of a legalization application by the AAU, but only in the judicial review of an order of exclusion or deportation. 8 U.S.C. § 1160(e)(3).
[4] See H.R.CONF.REP.NO. 99-1000, 99th Cong., 2d Sess. 85, 97, reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 5840, 5852.
The Conferees intend that the Immigration and Naturalization Service allow aliens to make a declaration, under penalty of perjury and under such terms and conditions that the Attorney General may by regulation provide, (i) attesting that they have in fact worked the requisite number of man-days required; (ii) identifying the type or nature of documentation they intend to adduce to make the necessary showing, (although this last shall not limit their rights to produce other evidence at a later date), (iii) acknowledging that false statements concerning their eligibility constitute a violation of Title 18 U.S.C., and may make them ineligible for this program and, further, subject to deportation or exclusion, and (iv) identifying their current or immediate past employer(s). The Conferees intend that INS not go beyond these criteria in seeking to determine whether an alien has made a nonfrivolous case for eligibility. To do otherwise may undermine the purposes of this section, viz., to encourage undocumented workers to come forward and seek to obtain legal status.
Id. (emphasis added).
[5] 8 U.S.C. § 1160(d)(2). The standard for defining "non-frivolous" was endorsed by Congress through an amendment to section 210(d) of the Act, 8 U.S.C. § 1160(d) on December 22, 1987. Pub.L. 100-202, 101 Stat. 1329-18 (Dec. 22, 1987). The new 8 U.S.C. § 1160(d)(3)(B) provides that "[d]uring the application period as defined in section 1160(a)(B)(1)(B) of this title any alient [sic] who has filed an application for adjustment of status within the United States as provided in section 1160(b)(1)(A) of this title pursuant to the provision of 8 C.F.R. section 210.1(j) is subject to paragraph (2) of this subsection."
[6] The INS considers that an affidavit by the applicant is no different than his testimony and a recent amendment to the regulation omits an earlier reference to the applicant's affidavit to avoid confusion. 53 Fed.Reg. 10063 (March 29, 1988).
[7] Plaintiffs Angrand and Dieudonne were both recommended for approval by the examiner who interviewed the applicant. Both cases were denied directly by William Chambers, director of the Texas RPF. There is no indication in these files that the INS had any reason to doubt the credibility of the affiant or that any material inconsistencies were found between the information provided in the application and in the interview. Gesner Desmornes, the farm labor contractor for whom both Plaintiffs Angrand and Dieudonne worked, testified as to his lack of payroll records and the fact that INS never contacted him to verify Plaintiffs' employment. Mr. Desmornes is not on the list of "suspect contractors" which Defendants used to identify questionable affidavits.
[8] In fact, Plaintiff Julien responded to the RPF's decision that she was ineligible, because she has failed to submit additional corroborating evidence of her claim other than affidavits from her crew leader, by submitting additional evidence, including affidavits from the owner of the farm where she worked, her crew leader and a co-worker. She was denied by the LAU because she had not submitted payroll records.
[9] Mr. William Chambers director of the RPF in Texas which adjudicates applications filed in the state of Florida testified that the denial rate in SAW cases is approximately 29%. The denial rate for applications filed for legalization under section 245A of IRCA is less than 5%.
[10] Laws such as the Migrant and Seasonal Agricultural Worker Protection Act, 29 U.S.C. § 1801 et seq. and its predecessor, the Farm Labor Contractor Registration Act, 7 U.S.C. § 2041 et seq. require farm labor contractors and other agricultural employers to maintain proper payroll records and provide pay receipts. Numerous cases brought either in this state or against Florida-based farm labor contractors demonstrate that violations of these recordkeeping provisions remain widespread, if not pervasive. See, e.g., Washington v. Miller, 721 F.2d 797 (11th Cir.1983); Rivera v. Adams Packing Ass'n, Inc., 707 F.2d 1278 (11th Cir.1983); Lucien Bertrand, et al. v. Jimmie Lee Jorden, 672 F. Supp. 1417 (M.D.Fla.1987); Bohan v. Hudson, 28 Wage & Hour Cas. 357 (BNA) (E.D.N.C.1987) [available on WESTLAW, 1987 WL 357]; Haywood v. Barnes, 109 F.R.D. 568 (E.D.N.C.1986); Davis v. Williams, 622 F. Supp. 386 (W.D.N.Y. 1985); Donovan v. Anderson, 24 Wage & Hour Cas. 1468 (BNA) (D.S.C.1981) [available on WESTLAW, 1981 WL 2311].
[11] Many times payroll records maintained by farm labor contractors do not list all of the individuals who worked for that employer; often, farm labor contractors and agricultural employers whose records are deficient are reluctant to make those records available to their employees or former employees because they fear they will be subject to civil penalties for violations of federal laws enacted for the protection of the farmworkers and for back social security and unemployment insurance taxes. A most common situation is when a husband and wife or, in some cases, an entire family, work together under a single name. Often, where workers are being paid on a piece-rate basis, several workers may work together filling a bucket or a bin (as in the case of citrus) for which they receive a ticket. The work may be recorded only under the name of the worker who turns in the tickets at the end of the day. In some cases, the work done by four or five workers may be listed under a single name. Often, the work of alien workers who lack valid social security numbers is recorded under the name of a former U.S. worker with a valid number. Unlike the situation in which a worker is using an alias or a false social security number, workers in this situation may be unaware that their work is being improperly recorded. Sometimes certain workers are not listed at all on payroll records furnished by the contractor to the farm operator. In some cases records which once existed were lost or stolen. In some cases, records are simply not kept.
[12] Although only three and one-half months remain in the application period, the Attorney General has not promulgated any regulations which provide for the timely production of this proof. On May 31, 1988, the District Court for the Eastern District of California issued a preliminary injunction ordering Defendant Nelson to forthwith promulgate regulations which shall provide for the timely production of employment records in accordance with IRCA. United Farmworkers of America (AFL-CIO et al., v. INS et al., Civil Action No. 87-1064-LKK (E.D.Cal. May 31, 1988)). As of July 21, 1988, Defendants had not promulgated any regulations.
[13] Congress intended that for purposes of interpretation of the requirements of section 210, 8 U.S.C. § 1160(b)(3)(B) the standards embodied in Fair Labor Standards case law govern. The House Report noted:
in a line of cases leading from Anderson v. Mt. Clemens Pottery Co., 66 S. Ct. 1187 (1946), (including cases which specifically address the unique documentation of work history problems in the agriculture, such as Beliz v. W.H. McLeod Co., 765 F.2d 1317 (1985)), courts have dealt with fact patterns involving employee loss of records, destruction or falsification of records by employers, and other difficult circumstances where precise evidence of hours worked is lacking.
This problem is compounded in agriculture, where pay records may only show piece rate units completed. While this Act will require evidence of hours worked, the lack of hourly records for agricultural employees (which could result from small employer exemptions from wage and hour laws as well as from employment by farm labor contractors or others whose recordkeeping practices are deficient), has led the Conferees to conclude that fairness dictates they create a presumption in favor of worker evidence, unless dispoved [sic] by specific evidence adduced by the Attorney General.
H.R.CONF.REP NO. 99-1000, 99th CONG., 2d SESS. 85, 97, reprinted in 1986 U.S. CODE CONG. & ADMIN. NEWS 5840, 5853 (emphasis added).
[14] 8 C.F.R. § 210.3(c)(3). "The weight and probative value of any affidavit accepted will be determined on the basis of the substance of the affidavit and any documents which may be affixed thereto which may corroborate the information provided." Id.
[15] Defendants testified, however, that in the majority of cases they do not contact the affiant/crew leader to verify the information contained in the I-705 and supporting crew leader affidavits. Similarly, Wayne Joy testified that crew leader affidavits are generally not considered as credible evidence if the farm owner has no independent record regarding the SAW applicant.
[16] Applicants have been denied at the local office because of an inconsistency between the dates the applicants claimed to have worked and a chart or map showing harvest dates to which the examiner referred.
[17] The regulations contemplate the possibility of a second interview required by the RPF "if the alien in the second interview can establish eligibility for approval." 8 C.F.R. § 103.1(n)(2). No evidence suggested that any applicant was given a second interview.
[18] In addition to the lists of suspect individuals utilized at the LO level, Defendant Chambers testified that at the RPF, examiners received reports from the Document Analysis Unit ("DAU") as well as other agencies concerning SAW applicants and affiants suspected of fraud. The DAU regularly prepares reports or bulletins which go to each of the examiners as well as to all LO's in the Region. (Testimony of William Chambers). In general, cases in which fraud was suspected were not denied on the basis of fraud or misrepresentation but on the grounds that the applicant had failed to meet his or her burden of proof. Thus, applicants were not specifically informed that the basis of the denial was evidence concerning a contractor, the nature of that evidence, or of any other evidence which adversely affected their cases.
[19] Plaintiffs Angrand, Cadet, Dieudonne, Neus, Pierre, Tamayo and Vega each received an identical form denial which contained the same two paragraphs:
In support of your application, you have submitted a Form I-705, Affidavit Confirming Seasonal Agricultural Employment, and a written affidavit to establish your eligibility. However, these affidavits were signed by the same affiant, and were not substantiated by any additional credible evidence such as piecework receipts or employers' daily records.
In the Matter of Brantigan, 11 I & N Dec. 493 (BIA 1966), it was held that the burden of proof is upon the alien to establish his or her eligibility for a benefit. Pursuant to Title 8, Code of Federal Regulations, Part 210.3(b)(1), the burden of establishing eligibility for the benefit you seek falls upon you. You have failed to meet this burden.
(emphasis added).
[20] The wire did specify that any denial based upon adverse evidence not supplied to the applicant and prior to issuance of an I-72 notice would be subject to reopening upon a motion by the applicant. The regulations, however, provide no mechanism to reopen and in fact state: "Motions to reopen a proceeding or reconsider a decision under Part 210 or 245a of this chapter shall not be considered." 8 C.F.R. § 103.5 (emphasis added). Although section 103.5 allows the Associate Commissioner Examinations or the Chief of the Administrative Appeals Unit to sua sponte reopen any proceeding under Part 210, no effort to reconsider any decision rendered prior to April 11, 1988, has been made.
[21] Section 210(e), 8 U.S.C. § 1160(e)(2) provides for a single level of administrative appellate review of applications and restricts judicial review to the context of review of an order of exclusion or deportation.
[22] Apart from the federal question jurisdiction raised by the allegation of any constitutional violations is the question of whether an agency deviated from its own regulations and procedures, an issue justifying judicial relief in a case otherwise properly before the court. See Haitian Refugee Center v. Smith, 676 F.2d at 1041 n. 48 (citing United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 267, 74 S. Ct. 499, 503, 98 L. Ed. 681 (1954)).
[23] "That the alleged injury results from the organization's noneconomic interest in encouraging open housing does not affect the nature of the injury suffered, Arlington Heights v. Metropolitian Housing Dev. Corp., 429 U.S. 252, 263, 97 S. Ct. 555, 562, 50 L. Ed. 2d 450 (1977), and accordingly does not deprive the organization of standing." Havens, 455 U.S. at 379 n. 20, 102 S.Ct. at 1125 n. 20.
[24] The court in Action Alliance noted that "dismissal on the pleadings is inappropriate, even if `the extreme generality of [a] complaint' leaves `injury in fact' in doubt, when standing requirements may be satisfied upon affording plaintiffs `an opportunity to make more definite the allegations of the complaint.'" 789 F.2d at 938 (quoting Havens, 455 U.S. at 377-78, 102 S.Ct. at 1123-24).
[25] The question of what constitutes impracticability depends on the particular circumstances in each case. See 7 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure: Civil § 1782. In Armstead v. Pingree, 629 F. Supp. 273 (D.C.Fla.1986), the court found joinder impracticable particularly in light of the class members' economic resources, handicap, and confinement. In the instant case, the putative class members are migrant workers whose economic means militate against individual suits. In addition, the nature of the work requires that its laborers follow the agricultural seasons.
[26] The grant or denial is a decision within the sound discretion of the district court. Lambert, 695 F.2d at 539 (citing Deerfield Medical Center v. City of Deerfield Beach, 661 F.2d 328, 332 (5th Cir.1981)).
[27] In Smith, the court conceded that the right to petition for asylum is "a fragile one," but nevertheless a valuable one to its possessor. 676 F.2d at 1039. Likewise, in this case, the right is invaluable to the applicants seeking residency in this country. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368950/ | 527 F. Supp. 2d 63 (2007)
Michael L. TURNER, Plaintiff,
v.
FEDERAL LAW ENFORCEMENT TRAINING CENTER, et al., Defendants.
Civil Action No. 04-0606 (HHK).
United States District Court, District of Columbia.
December 14, 2007.
*64 *65 John Clifford Floyd, III, Roosevelt F. Brown, III, Washington, DC, for Plaintiff.
Marina Utgoff Braswell, U.S. Attorneys Office for the District of Columbia, Washington, DC, for Defendants.
MEMORANDUM OPINION
HENRY H. KENNEDY, JR., District Judge.
When a person is employed as a United States Park Police Officer, he must complete a training program conducted by the Federal Law Enforcement Training Center ("FLETC") in Glynco, Georgia. In this action, plaintiff Michael Turner ("Turner"), who is Black, alleges that his removal from the FLETC training program after his involvement in a physical altercation with three White recruits was motivated by racial animus in violation of federal civil rights laws, specifically Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq, and 42 U.S.C. § 1981.[1] First Amd. Compl. at 4 (Count I). Turner also asserts causes of action for Wrongful Discharge (Count II), Negligent Accounting (Count III), and Disparate Treatment (Count IV). Id. at 5-6. Before the court is defendants' motion to dismiss and for summary judgment ("Defs.' Mot.") [Dkt. # 34]. The only claims to warrant extended discussion are those alleging that Turner's removal from FLETC training was motivated by racial animus in violation Title VII and the 42 *66 U.S.C. § 1981.[2] Having considered the motion, Turner's opposition thereto, and the record of this case, the court concludes that defendants are entitled to summary judgment.
I. BACKGROUND
The United States Park Police ("USPP") hired Turner as a police officer recruit in October 2001. After completing a weeklong orientation, he began the FLETC training program in Glynco, Georgia as a member of class USPPI-202. According to Turner, he had finished a substantial portion of the program when injuries to his right wrist and fingers sustained during a training exercise prevented him from completing training program. He then returned to Washington, D.C. and worked in the USPP's property office and in its training branch. Turner returned to FLETC in July 2003 as a member of class USPPI-304. During the class orientation he met his classmates, among whom were Sean D'Augostine, Louis Facciponti, and Erick May.
On November 8, 2003, at approximately 11:30 p.m., there was a physical altercation involving Turner, D'Augostine, Facciponti and May in D'Augostine's dormitory room. Certain facts about the altercation are not in dispute. D'Augostine was sitting on his bed, Facciponti was sitting in a chair, and May was standing in the open doorway to D'Augostine's room when Turner came to the room to discuss comments that had been made to him earlier in the evening at a bar by Brenda Jordan, a woman with whom Turner was acquainted and who lived in the dormitory.[3]
Ms. Jordan "confronted [Turner] about Officer Facciponti and Officer D'Augostine" and their warnings to her to "stay away" from him because "he's no good." Turner Dep. 89:4-8. Turner testified as follows:
Q: [Defendants' counsel] Okay. And she told you that Louie Facciponti told her to stay away from you?
A: [Turner] That's correct.
Q: All right. And what else did she tell you?
A: Basically he slandered my name, that I was no good, no one liked me in Washington, D.C., all to that effect.
Q: Okay. Well, let's be very clear about what she told you. She said that [Facciponti] said that she should stay away from you. She said [Facciponti] told her that she should stay away from you. She said [Facciponti] told her no one liked you in D.C. What else did she tell you?
*67 A: Basically, stay away from me, no one liked me in Washington, that I was no good. That's basically all I can remember.
Id. 91:6-21. He further testified:
Q: [Defendants' counsel] What did you say to her after she told you what Louie Facciponti had said about you?
A: [Turner] I stated that that wasn't true and I don't know why he would say anything like that to her. And she didn't know why either, because sheyou know, she basically said, I don't really know you, it's not like we're dating or going out with each other I don'tI guess she got the picture that he thought that we were or were in the midst of a casual relationship, but it never transnever came to pass.
Id. 96:5-15. In addition, Turner stated:
Q: [Defendants' counsel] What else did you say to her?
A: [Turner] Basically, she told me to watch my back and to be careful because evidently these people weren't for me, they were basically against me.
Q: Well, what do you mean, these people? She only talked aboutlet me finish my question. What do you mean these people? She only talked to you about one person.
A: Right. But I guess she was thinking [D'Augostine] was with [Facciponti] in on it. They were together. I'm not sure.
Id. 98:1-12. Shocked, upset, and disappointed, see id. at 100:18-20; 101:11, Turner went to D'Augostine's room to discuss what Ms. Jordan had said to him.
According to Turner, subsequent events unfolded as follows:
Q: [Defendants' counsel] Okay, so a woman has just told you that she's been told, nobody likes you, by Louie Facciponti, and that you should watch you back, and your testimony is that you went in and just very calmly started asking [D'Augostine] about this conversation.
A: [Turner] Yes, I did.
Q: Okay. And what was the first thing you said to him?
A: Basically, he said, no, and I said, well, she just told meand I went into the spiel of what she said, and conversation was getting a little heated. And he denied hehe stated that he didn't know what I was talking about. Then I asked [D'Augostine], I said, you werewere you with Officer Facciponti when this conversation took place. And they both said, no, I don't know what you're talking about.
Q: When you say, got heated, what does that mean?
A: Meaningmeaning that he was getting a little upset about me asking the conversation.
Q: So [Facciponti] was getting upset, but you weren't upset?
A: II wouldn't say upset. I was well, yeah, I guess I would say upset, yeah.
Q: Did you start to raise your voice?
A: Yesyes.
Turner Dep. 106:3-107:11. The conversation "turned into an argument." Id. 111:14-15. At that point, May stepped in and "grabbed [Turner's] hands from behind." Id. 107:16-17; 112:15-22. Turner did not recall whether May said anything; he did tell May to remove his hands. Id. 119;10-19. Facciponti then "jump[ed] in and grabbed [Turner] by the throat." Id. *68 119:20-21. According to Turner, as Facciponti approached him, Facciponti said, "Let's kill this nigger." Id. 120:17-19. May let go of Turner's hands, removed Facciponti's hands from Turner's neck, and stepped between Turner and Facciponti. Id. 121:16-123:6. D'Augostine, who had been seated, stood up "saying something, and he was heated." Id. 123:9-10. Turner was pointing his finger at D'Augostine; D'Augostine "grabbed [Turner's] right index finger and twisted it." Id. 123:12-13. "Everyone is yelling" by this time, and May was trying to calm everyone down. Id. 124:2-10.
Turner left D'Augostine's room and returned to his own room. Turner Dep. 136:11-13. He could not find his keys, however, and he went "to [his] car to see if [his] keys were either left in [the] seat or somewhere." Id. 136:13-16. On his way to the parking lot, he "ran into the FLETC police." Id. 136:21. Turner informed the FLETC officers that he had been attacked. Id. 141:19-22. He had not called the FLETC police himself, however. Id. 145:2-20.
D'Augostine's, Facciponti's and May's versions of the events were consistent but differ from Turner's account. According to D'Augostine, Turner forced his way past May in order to enter the room. Turner yelled at D'Augostine and made statements such as, "I know what you did behind my back," Long Decl., Attach. A (Statement of Sean D'Augostine), and "I'm going to get you two." Bowen Decl., Attach. A (D'Augostine Interview) at 2.[4] D'Augostine did not understand what Turner meant; he asked May to "get [Turner] out of here." Id. He stated that he heard the "slamming of [Turner's] cup hitting the ground" just before Turner "charged after [him;]" Turner was "able to get . . . his right hand on [D'Augostine's] neck and his left hand on [D'Augostine's] collarbone." Id. Facciponti pulled Turner off D'Augostine, and May stepped between Turner and D'Augostine before pushing Turner out the door. According to D'Augostine, there were no punches or kicks. Id. He reported that Turner ripped his shirt, tore a gold chain from around his neck, and caused bruising to his chest area. Id. at 6, 8-9.
Facciponti, too, recalled that Turner made statements such as, "I know what you've been saying about me" and "you guys been are [sic] trying to turn things around on me." Bowen Decl., Attach. A (Facciponti Interview) at 2. He observed Turner try to enter the room but did not because May was blocking the doorway. Id. at 7. Turner "busted through the door . . . [and] basically pushed [] May out of the doorway." Id. Turner "was on [D'Augostine] before [Facciponti] could even react. And he had clasped his hands around [D'Augostine's] neck and he was choking [D'Augostine] on the bed." Id. Facciponti "grabbed [Turner's] hand closest to him . . . [a]nd tried to pull him away." Id. Facciponti stated that he "reverted to like [his] training and [he] went . . . towards [Turner's] thumb and that's how [he] was able to bend [Turner's] thumb. Not physically break it but break the grip via the thumb." Id. At that point, Facciponti held Turner in an "escort hold" and "pushed him out of the door." Id.
May said that he tried to calm Turner down and encourage him to go back to his room. Bowen Decl., Attach. A (May Interview) at 3. He stated that Turner "threw his drink somewhere out on the sidewalk," then "ran past [May] and jumped on *69 [D'Augostine] who was on the bed and then [] jumped around [D'Augostine's] neck and was choking [D'Augostine] or something." Id. May did not understand what Turner and D'Augostine were arguing about, but recalled Turner "yelling and pointing something about `you turned your back on me I know what you did.'" Id.
D'Augostine, Facciponti, and May believed that Turner was drunk. D'Augostine stated that Turner "was visibly intoxicated and had an alcoholic beverage in his hand when he approached the door" that night. Long Decl., Attach. A (Statement of Sean D'Augostine). According to D'Augostine, Turner "could barely stand up" and "was slurring his speech." Bowen Decl., Attach. A (D'Augostine Interview) at 5. D'Augostine smelled alcohol on Turner's breath, id. at 6, and May considered Turner extremely intoxicated. Id., Attach. A (May Interview) at 5. Facciponti realized Turner was drunk when Turner "started speaking and like slurring his words." Id., Attach. A (Facciponti Interview) at 6. Turner admitted that he drank two beers at the Student Center before going to D'Augostine's room but he did not consume mixed drinks, shots, or liquor.[5] He also denied having a drink in his hand when he arrived at D'Augostine's room.
D'Augostine, Facciponti, and May all denied using racial slurs, calling Turner a "nigger," and threatening to kill him. See Bowen Decl., Attach. A (D'Augostine Interview at 10; Facciponti Interview at 11; May Interview at 8).
D'Augostine called security to report that he had been assaulted by Turner. Long Decl., Attach. A (Police Incident Report XX-XX-XX-XXX, Continuation Narrative). Officer Curtis Copeland was the first to arrive on the scene and to talk with D'Augostine, Facciponti and May. Id. He, along with Officer Rowe, then left the scene to find Turner.[6]Id. "Upon [e]xiting room 158 [they walked] right into student Turner, he began yelling that he didn't do nothing [sic] that they attacked him." Id.
Subsequently, Turner gave a statement regarding the altercation as follows:
I Michael L. Turner went to D'Augostine [sic] room to ask them [sic] about a situation that happened Thursday night, and I saw May, D'Augostine, and Facciponti in BLDG 277 Room 158. I started asking question [sic] about lies they told to an individual and they denied what was said; And D'Augostine started stating that I don't like you and I will kill you know I went to step in the room and May grab me from behind and Facciponi [sic] grab [sic] me by the neck. I tried to get out the best way I could, but it was three on one. Facciponi [sic] told May to kill the nigger!!!!! It As [sic] was walking out D'Augostine went for my throat and I throat [sic] and I pushed him on the bed while May blocked the door. I turned to Facciponi [sic] and pointed my finger and said he don't pay; and D'Augostine grab [sic] my finger and twisted it. I threw him off and left.
Long Decl., Attach. A (November 9, 2003 Statement of Michael L. Turner).
According to FLETC's policy on workplace violence, an act of violence includes:
any intentional infliction of physical harm or attempt to inflict physical harm against another or aggressive or threatening behavior which results in emotional harm or otherwise places a person's safety and productivity at risk, or deliberate tampering or damage to another's *70 possessions or property, including any government property[.]
Id., Attach. D (FLETC Manual 67-01, Workplace Violence Program Management) at 1 (page numbers designated in the manual). The term "workplace violence" includes "any act or threat of violence committed by an employee . . . against an employee . . . or on FLETC property[.]" Id. FLETC students are considered employees. Id. at 2.
Robert E. Ray, Chief of FLETC's Training Management and Coordination Division, recommended Turner's dismissal from USPPI-304 for misconduct. Long Decl., Attach. A (November 13, 2003 Memorandum to Bradley W. Smith, Deputy Assistant Director, Office of Training Management) at 1. After reviewing statements provided by D'Augostine, Facciponti, May and Turner, Ray concluded:
I believe that [Turner's] statement of events is not accurate or credible and is intentionally false. This determination is supported by the fact that the incident was reported immediately by [D'Augostine, Facciponti and May], and was not ever reported by [Turner]. This determination is supported further by photographs of the individuals, which show significant bruising to [] D'Augostine consistent with the information provide, and no injuries to [Turner], which is consistent with the information provided by [D'Augostine, Facciponti and May], and inconsistent with the information provided by [Turner].
Id. at 2.
Donald Long, Senior Policy Project Analyst in the Office of Training Management, acting on behalf of Bradley Smith, Deputy Assistant Director of the Office of Training Management, approved the recommendation to remove Turner "in accordance with FLETC Directive 67-35.C, Student Misconduct, for actions which violate both that Directive and FLETC Directive 67-01, Workplace Violence." Long Decl., Attach. A (November 13, 2003 Memorandum to Bradley W. Smith) at 1. In reaching his decision, Long reviewed Turner's FLETC file and Ray's November 13, 2003 Memorandum with attachments regarding the November 8, 2003 altercation. Long Decl. ¶¶ 4-6. Long "did not believe [Turner's] statement of the events [as Long] did not find it to be accurate or credible." Id. ¶ 7. To Long, it was significant that D'Augostine, Facciponti, and May "immediately reported the incident to FLETC security, which indicated to Ihim] that they were not the aggressors in the altercation with [Turner]." Id. In addition, Long found the photographs of the participants in the altercation to be consistent with the statements of D'Augostine, Facciponti, and May. Id. ¶ 8. Long denied making his decision based on Turner's race. Id. ¶ 10.
Turner appealed Long's decision to remove him from USPPI-304 to Bruce J. Bowen, the Assistant Director of FLETC's Office of Training. See Bowen Decl. ¶ 3. Turner argued that the punishment rendered, that is, removal from FLETC training days before graduation, "was unusually harsh and unfair." Id., Attach. B (Feb. 6, 2004 letter from M.E. Fischer).[7] After reviewing the November 20, 2003 Special Investigations and Security Division's Report of Investigation, a memorandum from FLETC's Office of Chief Counsel and other records, Bowen upheld Turner's removal. Id. ¶ 7. He concluded that Turner "had violated FLETC workplace violence policy, and that the violation was a serious one as it was criminal in nature and [Turner] was in training to become a Park Police Officer." *71 Id. ¶ 8. Turner, he found, "had committed an act of violence that warranted his removal from the FLETC training program." Id. ¶ 9. Bowen denied that he based his decision on Turner's race. Id. ¶ 10.
II. DISCUSSION
A. Legal Standards
Under Rule 56 of the Federal Rules of Civil Procedure, a motion for summary judgment should be granted only if it is shown "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party's "initial responsibility" consists of "informing the [trial] court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (internal quotation marks omitted).
If the moving party meets its burden, the burden then shifts to the non-moving party to establish that a genuine issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). To meet his burden, the non-moving party must show that "`the evidence is such that a reasonable jury could return a verdict'" in his favor. Laningham v. United States Navy, 813 F.2d 1236, 1241 (D.C.Cir.1987) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). Such evidence must consist of more than mere unsupported allegations or denials; rather, the non-moving party must set forth specific facts showing that there is a genuine issue for trial. Fed. R.Civ.P. 56(e); Celotex, 477 U.S. at 322 n. 3, 106 S. Ct. 2548. If the evidence is "merely colorable" or "not significantly probative," summary judgment should be granted. Anderson, 477 U.S. at 249-50, 106 S. Ct. 2505.
"While summary judgment must be approached with special caution in discrimination cases, a plaintiff is not relieved of [his] obligation to support [his] allegations by affidavits or other competent evidence showing that there is a genuine issue for trial." Morgan v. Fed. Home Loan Mortgage Corp., 172 F. Supp. 2d 98, 104 (D.D.C. 2001) (citation omitted). When a party, as here, moves for summary judgment, the motion must be "accompanied by a statement of material facts as to which the moving party contends there is no genuine issue, which shall include references to the parts of the record relied on to support the statement." LCvR7(h). Any opposition to the motion must "be accompanied by a separate concise statement of genuine issues setting forth all material facts as to which it is contended there exists a genuine issue necessary to be litigated, which shall include references to the parts of the record relied on to support the statement." Id. (emphasis added).
The statements of material facts are important. "[A] district court should not be obliged to sift through hundreds of pages of depositions, affidavits, and interrogatories in order to make [its] own analysis and determination of what may, or may not, be a genuine issue of material fact." Jackson v. Finnegan, Henderson, Farabow, Garrett & Dunner, 101 F.3d 145, 150 (D.C.Cir.1996) (quoting Twist v. Meese, 854 F.2d 1421, 1425 (D.C.Cir.1988), cert. denied, 490 U.S. 1066, 109 S. Ct. 2066, 104 L. Ed. 2d 631 (1989)). "In determining a motion for summary judgment, the court may assume that facts identified by the moving party in its statement of material *72 facts are admitted, unless such a fact is controverted in the statement of genuine issues filed in opposition to the motion." LCvR 7(h).
Here, while defendants' motion for summary judgment was accompanied by a statement of material facts as to which they contend there is no genuine issue and which references the parts of the record relied on to support the statement, plaintiff's opposition does not include a traversing statement.[8] Thus, the court may and does assume that the facts identified by defendants are admitted.
B. Plaintiff's Title VII and § 1981 Claims
Because there is no direct evidence of race discrimination here, Turner's Title VII and § 1981 claims properly are analyzed under the familiar burden-shifting framework established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973).[9] Under this framework, it is a Turner's initial burden to establish a prima facie case of discrimination by a preponderance of the evidence. McDonnell Douglas, 411 U.S. at 802, 93 S. Ct. 1817; St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 506, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993); Texas Dep't of Cmty. Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981). "[A] plaintiff makes out a prima facie case of disparate-treatment discrimination by establishing that: (1) [he] is a member of a protected class; (2) [he] suffered an adverse employment action; and (3) the unfavorable action gives rise to an inference of discrimination." George v. Leavitt, 407 F.3d 405, 412 (D.C.Cir.2005).
If a plaintiff succeeds in making out a prima facie case of discrimination, the burden shifts to the employer to rebut the presumption of discrimination by producing "evidence that the adverse employment action[ ] [was] taken for a legitimate, nondiscriminatory reason." Aka v. Washington Hosp. Ctr., 156 F.3d 1284, 1289 (D.C.Cir.1998) (en banc) (citation omitted); see Burdine, 450 U.S. at 254, 101 S. Ct. 1089; Carter v. George Washington Univ., 387 F.3d 872, 878 (D.C.Cir.2004). The employer's burden is one of production only, and it "need not persuade the court that [the employment action] was actually motivated by the proffered reasons." Burdine, 450 U.S. at 254, 101 S. Ct. 1089; see also St. Mary's Honor Ctr., 509 U.S. at 509, 113 S. Ct. 2742.
*73 If the employer is successful in carrying its burden, then "the McDonnell Douglas frameworkwith its presumptions and burdensdisappears, and the sole remaining issue [is] discrimination vel non." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 142-43, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000) (internal citations and quotation marks omitted); see Burdine, 450 U.S. at 256, 101 S. Ct. 1089; Dunaway v. Int'l Bhd. of Teamsters, 310 F.3d 758, 761 (D.C.Cir.2002). At this point, in order to survive summary judgment, a plaintiff "must show that a reasonable jury could conclude from all of the evidence that the adverse employment decision was made for a discriminatory reason." Lathram v. Snow, 336 F.3d 1085, 1088 (D.C.Cir.2003); see also Aka, 156 F.3d at 1290. "To make such a showing, the plaintiff must prove that a reasonable jury could infer that the employer's given explanation was pretextual and that this pretext shielded discriminatory motives." Jackson v. Gonzales, 496 F.3d 703, 707 (D.C.Cir.2007). A plaintiff may establish pretext "directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer's proffered explanation is unworthy of credence." Burdine, 450 U.S. at 256, 101 S. Ct. 1089; see also Reeves, 530 U.S. at 143, 120 S. Ct. 2097.
1. Prima Facie Case
Defendants argue that Turner does not present evidence sufficient to show that the circumstances of his removal from the FLETC training program give rise to an inference of discrimination. Because Turner fails to make out a prima facie case of race discrimination, defendants argue, he cannot prevail in this suit.
As is his habit, Turner does not respond directly to defendants' argument. He suggests, however, that he makes out a prima facie case of discrimination because D'Augostine, Facciponti and May suffered no consequences stemming from the November 8, 2003 altercation, and that two White recruits involved in another physical altercation at FLETC neither were removed nor punished as he was. The problem for Turner is that he does not present evidence that would support this method of establishing a prima facie case. It is true that an inference of discrimination arises when "similarly situated employees outside the protected class are treated more favorably" than a plaintiff alleging discrimination. Vargas v. Martinez, No. 03-1259, 2005 WL 975732, at *2 (D.D.C. Apr. 26, 2005) (quoting Stella v. Mineta 284 F.3d 135, 144-45 (D.C.Cir.2002)). However, this method of proof requires a showing that "the individuals with whom the plaintiff seeks to compare [his] treatment dealt with the same supervisor, have been subject to the same standards and have engaged in the same conduct without such differentiating or mitigating circumstances that would distinguish their conduct or the employer's treatment of them for it." Phillips v. Holladay Prop. Servs., 937 F. Supp. 32, 37 (D.D.C.1996) (quoting Mitchell v. Toledo Hosp., 964 F.2d 577, 583 (6th Cir. 1992), aff'd, 1997 WL 411695 (D.C.Cir. June 19, 1997)); see also Holbrook v. Reno, 196 F.3d 255, 261 (D.C.Cir.1999) (plaintiff "must demonstrate that all of the relevant aspects of [his] employment situation were nearly identical to those" with whom he compares himself).
Turner's argument based on the treatment of D'Augostine, Facciponti and May fails because these White recruits are not similarly situated to him. Unlike Turner, they were not found to have engaged in misconduct in violation of FLETC directives; they were not found to have been the aggressors in the altercation. Turner *74 fails to appreciate that it is not this court's prerogative to review FLETC's determination that he was. the aggressor and thus engaged in misconduct, other than to determine whether there is evidence to support his assertion that the determination was infected by racial animus. Turner presents no such evidence.[10] Moreover, Turner cannot rely on innuendo that inheres in his allegation that one of the recruits called him a "nigger" or his suspicion that their reaction to his relationship with a White woman was at the root of their dislike for him. Innuendo and suspicion do not substitute for evidence that the decision to remove him from FLETC training was motivated by considerations of race.
Turner's argument that White recruits engaged in a similar physical altercation were treated move favorably than he was here is no more successful. This argument is based on the testimony of Sergeant Richard Butler, a USPP training coordinator and supervisor of Turner's training class, pertaining to an incident in which two White recruits were "drinking and . . . doing some type of wrestling" in a dorm room. Butler Dep. 83:7-9.[11] Sgt. Butler testified:
Q: [Defendants' counsel] The prior incident that you gave testimony about two individuals who wereI believe you used the word wrestling and one ended up being injured in his head, was your understanding regarding thatwhat was your understanding regarding that incident as to whether there was any intent to injure?
A: [Sgt. Butler] Having spoken with the parties at the hospital, the person that initiatedthat got hurt had initiated it and told me that he was only fooling around, that he was having fun, and that the other individual involved, who also went to the hospital with him, in talking to them separately, they both said it wasn't an assault. They were playing around. He lost his balance and he cracked his head open. That they didn't mean for that to happen. They didn't intend to harm each other. They were just exuberantly playing around. It got out of hand to the sense of somebody got hurt, but they didn't mean for anybody to get hurt, and as soon as that happened, they wanted to get help as soon as possible. And they knew they were going to have to call me and that's why they did.
Id. 97:1-98:3.
Quite clearly the recruits involved in the activity Sgt. Butler describes are not similarly situated to Turner. Although that incident resulted in a head injury to one recruit, it was determined that neither recruit intended to injure the other; they had been engaged in "horseplay." Unlike these recruits, Turner was found to have been engaged in assaultive conduct and to have been the aggressor in the physical altercation in which he was involved.
Because Turner fails to show that his removal occurred under circumstances *75 that give rise to an inference of discrimination, he fails to make out a prima facie case of discrimination. The court's determination that Turner fails to make out a prima facie case is sufficient reason to grant summary judgment. Nevertheless, the court shall proceed to examine whether defendants articulate a nondiscriminatory reason for the decision to remove Turner and, if there is such an explanation, whether there is any evidence upon which a reasonable jury could find that FLETC's explanation is pretextual.
2. Proffered Reason for Removal and Pretext
The stated reason for Turner's removal from the FLETC training program is the FLETC administrators' determination that he had engaged in misconduct by assaulting D'Augostine. This explanation undoubtedly is sufficient to carry defendants' burden to state a legitimate, nondiscriminatory reason for its action because FLETC trainees are subject to directives that prohibit workplace violence. Further, there is no question that the decisionmakers had reason to believe that Turner had committed an act of misconduct. See Defendants' Statement of Facts ¶¶ 6, 10-11, 15-17. Defendants thus rebut Turner's prima facie case by producing "evidence that the adverse employment action[ ] [was] taken for a legitimate, nondiscriminatory reason." Aka, 156 F.3d at 1289.
At this point, Turner "must show that a reasonable jury could conclude from all of the evidence that the adverse employment decision was made for a discriminatory reason." Lathram, 336 F.3d at 1088. Again, Turner presents no such evidence. Instead, Turner refers to his own version of the events surrounding the November 8,2003 altercation and asserts that a proper resolution of this case requires a jury determination as to whose account of the altercation is true. Turner's argument in this regard, in its entirety, is as follows:
The [defendants argue] that Counts I and IV should be dismissed because no legitimate "legitimate issue of material fact" exist. This assertion is at best ludicrous and at worst intellectually dishonest. Plaintiff alleges and testified at deposition that he was physically assaulted and called "nigger" by three white fellow trainees, Misters Facciponti, D'Augostino and May. The trainees admit to the assault but allege plaintiff attacked the three of them. Plaintiff alleges that they assaulted him first. "Three against one" somehow carries the day for the defendants.
A reasonable jury can clearly find in favor of the one. Since Summary Judgment lies when there is no dispute [defendants'] Motion should be denied.
Pl.'s Opp'n at 1-2.
Turner's argument is entirely beside the point. It was not Facciponti, D'Augostino and May who removed Turner from the FLETC training program; FLETC administrators made this decision. That a jury might agree with Turner's version of events says nothing about whether FLETC administrators believed or had reason to believe that Turner's account was or was not credible.
In sum, even if it could be said that Turner presents a prima facie case of discrimination, he fails to present evidence upon which a reasonable jury could determine that the benign reason offered by defendants for his removal was pretext for race discrimination.
III. CONCLUSION
For the foregoing reasons, defendants' motion for summary judgment is granted. *76 An appropriate order accompanies this memorandum.
NOTES
[1] Actually, Turner's amended complaint recites that some of his claims are based upon "the Civil Rights Act of 1871." Amd. Compl. at 4 (Count 1). The court is not familiar with the law to which Turner refers, and he does not provide a citation for any such enactment. The court presumes that Turner means to refer to 42 U.S.C. § 1981, a well-known civil rights statute which prohibits intentional race discrimination in the making and enforcing of contracts with both private and public actors. 42 U.S.C. § 1981(a), (c). The statute's protection extends to "the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." Id. § 1981(b).
[2] As defendants correctly point out, to the extent Turner's "Wrongful Discharge" claim is not a part of his Title VII or § 1981 claim, it fails because it is an allegation of an adverse employment action subject to exclusive review by the Merit System Protection Board. See 5 U.S.C. § 7703 (2005). His claim for "Negligent Accounting," to the extent it states a cause of action at all, fails because Turner has not satisfied certain requirements of the Federal Tort Claims Act, see 28 U.S.C. § 2675 (2005), which would govern suchran action. One such requirement is that a plaintiff file an administrative claim before he files suit in federal court. McNeil v. United States, 508 U.S. 106, 113, 113 S. Ct. 1980, 124 L. Ed. 2d 21 (1993). Nothing in the record indicates that Turner filed an administrative claim, and any claim under the Federal Tort Claims Act would be barred. See id.
[3] Presumably, Ms. Jordan is not the person to whom Turner refers when he alleges in his opposition that "his relationship with a white woman and the only female in the training class appears to be at the core of the enmity that caused the white men to assault him." Opposition to Motion for Summary Judgment ("Pl.'s Opp'n") at 2; see Turner Dep. 96:16-97:15.
[4] The declarations of Donald Long and Bruce J. Bowen are submitted as exhibits to defendants' motion for summary judgment.
[5] This contradicts Turner's deposition testimony, according to which he drank only one beer. Turner Dep. 88:3-7.
[6] The record does not include a statement from Officer Rowe.
[7] Turner was represented by counsel for this appeal. Turner Dep. 164:14-165:6; see Bowen Decl., Attach. B (February 6, 2004 letter from M.E. Fischer, Esq.).
[8] Turner's opposition to defendants' motion for summary judgment is remarkably cursory, consisting of only four pages of the most general and unfocused argument. More significant, however, is Turner's failure to submit a statement of material facts that he asserts are in dispute with references to the pertinent parts of the record. It is not an overstatement to say that Turner's opposition amounts to an argument that (1) anybody can see that the Black recruit was treated unfairly because of his race; and, thus, (2) there is no need to produce evidence that such is so. Turner is wrong with respect to both propositions.
Turner moves to file a sur-reply [Dkt. # 421] noting his "need[] to supplement the record with [a] statement of material facts to which there is a genuine issue." Plaintiffs [sic] Motion for Leave to File Response to Defendants' Reply to Plaintiffs' [sic] Opposition to Motion for Summary Judgment, ¶ 4. The Motion is denied for the reasons set forth in defendants' opposition which, the court notes, is not met as it could have been with a reply responding to the defendants' arguments. As with his other submissions, Turner's motion to file a sur-reply eschews governing principles of law.
[9] The McDonnell Douglas framework governs all of Turner's Title VII and § 1981 claims. See, e.g., Berger v. Iron Workers Reinforced Rodmen Local 201, 843 F.2d 1395, 1412 n. 7 (D.C.Cir.1988) (applying framework to § 1981 claims).
[10] In this regard, defendants are correct in observing that "[w]here there is no evidence that illegal discrimination played a role in an employer's [adverse employment decision], the Court will not sit as a super-personnel department that reexamines an entity's business decisions." Nurriddin v. Goldin, 382 F.Supp,2d 79, 101 (D.D.C.2005) (citation and internal quotation marks omitted), aff'd, 222 Fed.Appx. 5 (D.C.Cir.2007) (per curiam), petition for cert. filed, 76 U.S.L.W. 3305, ___ U.S. ___, ___ S.Ct. ___ (U.S. Nov. 29, 2007) (No. 07-722),
[11] Butler's deposition transcript is submitted as an exhibit to Turner's opposition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2368622/ | 527 F. Supp. 2d 965 (2007)
In re LEVI STRAUSS & CO. SECURITIES LITIGATION.
This Document Relates to: All Actions.
No. C-03-05605 RMW.
United States District Court, N.D. California, San Jose Division.
September 11, 2007.
*966 *967 Robert A. Jigarjian, Robert S. Green, Jill Manning, Alan Schulman, Robert Gans, San Francisco, CA, for Plaintiffs.
Erin Elizabeth Schneider, San Francisco, CA, for Defendants.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS CONSOLIDATED AMENDED COMPLAINT
RONALD M. WHYTE, District Judge.
Defendants Levi Strauss & Co. ("Levi"), Philip Marineau, William Chiasson, Gary Grellman, Peter E. Haas, Sr., Robert Haas, Angela Glover Blackwell, Robert Friedman, James Gaither, Peter Haas, Jr., Walter Haas, F. Warren Hellman, Patricia Salas Pineda, T. Gary Rogers, G. Craig Sullivan, Tully Friedman and Peter Georgescu ("individual defendants")[1] move to dismiss plaintiff's' consolidated amended complaint ("CAC"). Lead plaintiff's General Retirement System of the City of Detroit ("Detroit General"), the Policemen and Firemen Retirement System of the City of Detroit ("Detroit P & F"), and Metzler Investment GmbH ("Metzler") filed claims under §§ 11, 12(a)(2) and 15 of the. Securities Act of 1933 ("Securities Act"), and §§ 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"). The court has reviewed the moving and responding papers and considered the arguments of counsel. For, the reasons set forth below, the court (1) DENIES defendants' motion to dismiss plaintiff's' § 11 claims as to those plaintiff's who purchased Levi registered bonds in the after market traceable to the April 2001 or June 2003 registration statements, (2) DENIES defendants' motion to dismiss plaintiffs' § 15 claims, and (3) GRANTS defendants' motion to dismiss as to plaintiffs' other claims with twenty days' leave to amend.
I. BACKGROUND
Levi is a privately-held company, but it files financial statements and other reports with the U.S. Securities and Exchange Commission ("SEC") in connection with bonds which are publicly-traded. CAC ¶ 18. Plaintiff's seek to bring this action on behalf of themselves and
(i) all persons and entities who purchased or otherwise acquired Levi 11-5/8% and 12-1/4% registered bonds pursuant or traceable to the April 2001 Offering Documents and the June 2003 Offering Documents, respectively, and who were damaged thereby; and (ii) all persons and entities who purchased Levi 11-5/8%, 12-1/4% and 7% registered bonds in the open market between January *968 10, 2001 and October 9, 2003, and who were damaged thereby.
Id. ¶ 36.
A. Registered Bond Offerings
On January 11, 2001 Levi issued $380 million dollar-denominated 11-5/8% notes and 125 million euro-denominated 11-5/8% notes in a private offering. On March 8, 2001 Levi filed a registration statement and prospectus for a proposed exchange offering in which holders of these private notes could exchange their notes for publicly-traded notes which would then be freely tradeable without further registration. Id. ¶¶ 3, 65. On April 6, 2001 Levi completed the exchange offering in which the private notes were exchanged for equal amounts of dollar-denominated and euro-denominated 11-5/8% registered notes due 2008 ("April 2001 Offering"). Id. ¶¶ 3, 64. The registration statement filed in connection with the April 2001 Offering included Levi's income statements for fiscal years 1996 through 2000 and Levi's balance sheets for the fiscal years ended November 28, 1999 and November 26, 2000. Id. ¶¶ 66-67.
On December 4, 2002, January 22, 2003, and January 23, 2003 Levi issued 12-1/4% notes in three private sales totaling $575 million. On April 28, 2003 Levi filed a registration statement and prospectus for a proposed exchange offering in which holders of these private notes could exchange their notes for publicly-traded notes which would then be freely tradeable without further registration. Id. ¶¶ 3, 69-72. On June 16, 2003 Levi completed the exchange offering in which the private notes were exchanged for equal amounts of 12-1/4% registered notes due 2012 ("June 2003 Offering"). Id. ¶ 3. The registration statement filed in connection with the June 2003 Offering included Levi's income statements for fiscal years 1998 through 2002 and Levi's balance sheets for the fiscal years ended November 25, 2001 and November 24, 2002. Id. ¶¶ 69-72.
Plaintiffs' Securities Act claims (pursuant to §§ 11, 12(a)(2) and 15) are based on assertions that the registration statements and prospectuses filed in connection with the registered bond offerings in April 2001 and June 2003 contained false and misleading financial statements. In addition to their Securities Act claims, plaintiffs also allege claims pursuant to § 10(b) of the Securities Exchange Act and regulation 10b-5 promulgated by the Securities and Exchange Commission ("SEC") thereunder for purportedly false and misleading financial statements issued during the class period.
B. Alleged Improper Accounting
Plaintiff's aver that Levi's financials included in its registration statements were misstated because six categories of tax accounting were improper.
1. Excess Tax Reserves
On April 15, 2003 an article in the San Francisco Chronicle reported that two of Levi's former employees, Thomas Walsh ("Walsh") and Robert Schmidt ("Schmidt") were suing Levi alleging improper accounting practices. Id. ¶ 5. That same day, Levi issued a press release denying any improper accounting practices and stating that its financial statements were accurate. Id. ¶ 6. On April 28, 2003 Levi announced that it was initiating a more widespread investigation of its accounting practices. Id. ¶ 6.
On September 15, 2003 Levi issued a press release announcing that between 1994 and 2001 it had established, maintained and released varying amounts of tax reserves that were unrelated to specific tax exposures and were unsupported by "sufficient contemporaneous documentation." In its 2003 Form 10-K, Levi states *969 that on September 15, 2003 "our Audit Committee had completed its investigation of the tax and related accounting issues raised in the wrongful termination suit. The Audit Committee concluded that our tax and related accounting positions were reasonable and legally defensible and noted that in the course of its investigation it did not discover evidence of tax or other fraud." Defs.' RJN, Ex. 1 at 18. According to plaintiffs, Levi improperly released excess reserves of $65 million in 1996, $18 million in 1998, $5 million in 1999, and $12 million in 2000. Id. ¶ 45.
2. Unrealizable Foreign Tax Credits
Plaintiffs allege that Levi improperly recorded unrealizable foreign tax credits as deferred tax assets without corresponding valuation allowances "throughout 1994 and 2002." Id. ¶ 46. Plaintiff's claim that although Levi has foreign tax credits that typically could be applied as tax credits against United States tax on foreign income, Levi effectively cannot ever take such credits. In particular, plaintiffs assert that under Levi's operating structure Levi generates essentially all of its foreign source revenue in jurisdictions where the marginal tax rate is higher than the United States tax rate. Id. ¶ 49. In tax years where the foreign jurisdiction marginal tax rate is higher than the domestic tax rate, the Internal Revenue Service ("IRS") bars the use of the tax credits, although such credits may be carried forward until used or expired. If carried forward for future tax periods, tax credits are reflected as deferred tax assets on the balance sheet. See generally Statement of Financial Accounting Standards ("SFAS") No. 109. Plaintiff's claim that Levi should have created a valuation allowance against the deferred foreign tax credits on its balance sheets to properly reflect that it would not be able to take such credits against taxable income in future years. Because Levi failed to do so, plaintiffs contend, it overstated the assets on its balance sheet (and therefore, its net worth) "throughout 1994 and 2002." CAC ¶¶ 46-53. In 2003 Levi disclosed in its Form 10-K that it increased its valuation allowance for foreign tax credits, domestic net operating loss carryforwards, and alternative minimum tax credits from $32.7 million to $349 million because of unrealizable credits. Id. ¶ 53.
3. Improperly Claimed Tax Deductions
Plaintiffs claim that Levi improperly claimed tax deductions on its income tax returns for bad debt and worthless stock in 1997, 1998, and 1999. Id. ¶¶ 42, 56-60. Plaintiff's appear to allege that Levi took an investment loss deduction in its tax return for subsidiaries classified as branches, which is purportedly improper because there was no "specific triggering event" that could permit such a deduction. Id. ¶ 57. Plaintiff's also allege that Levi improperly took tax deductions for intercompany loans to its branches without meeting the criteria that there be a conclusion that there is no reasonable possibility that the subsidiary will be able to repay the loan. Id. ¶ 59-60. As a result of these improper deductions, Levi deducted at least $200 million in its tax return resulting in the understatement of tax expense on its income statements in 1997 to 1999 by $70 million. Id. ¶ 60.
4. Gain on Liabilities Transferred to Foreign Subsidiary
Plaintiffs claim that defendants set up a "special purpose entity" called "Finserv" to improperly repatriate income. Id. ¶ 55. Plaintiff's allege that Levi reclassified Finserv to be a wholly-owned subsidiary of another Levi subsidiary, Levi Strauss Europe, in 1999. Plaintiffs allege that, at that time, Levi improperly also transferred *970 more than $200 million in hedging contracts with a net liability balance from Levi Strauss Europe to Finserv. According to plaintiff's, this transfer should have resulted in a taxable gain under IRC § 357(c) but, since Levi did not record any tax gain from the transfer, it improperly overstated income tax expense by over $77 million in 1999. Id. ¶ 62.
5. Tax Deduction
On October 10, 2003 Levi restated its fiscal 2001 financial results because it had improperly taken a tax deduction twice for losses related to closures of various manufacturing plants. Id. ¶ 43. As a result, Levi also restated its financials for the third quarter of 2003 for this same transaction. Id. With respect to this restatement, Levi's auditors, KPMG, issued a report identifying material weaknesses in Levi's internal accounting controls for detecting and preventing accounting misstatements. Id. Specifically, KPMG issued the report because Levi had chosen to reflect the error as a change in estimate in the third quarter of 2003 rather than a restatement of 2001 results. Id. ¶ 179. KPMG advised Levi that its global controller's group, corporate controller, and CFO needed to increase their involvement in the review and disclosure of tax items as they relate to GAAP and to appoint individuals in the tax department and controller's group with sufficient expertise in tax GAAP issues. ¶ 179-80. In December 2003, Levi replaced its senior vice president and chief financial officer ("CFO"), defendant William Chiasson ("Chiasson"). Id. ¶ 8.
6. Increase in Tax Valuation Account
On March 1, 2004 Levi reported restated financial results for 2001, 2002, and the first two quarters of 2003. Id. ¶¶ 42, 63. Levi also increased its deferred tax valuation allowance in 2003 by recording a one-time $282 million increase. Id. ¶¶ 42, 53, 63. Plaintiff's allege that this increase was due to understated tax expenses in 2001 and 2002. Id.
C. 2001, 2002, and 2003 Restatements
In May 2002 Levi changed its outside auditors from Arthur Andersen to KPMG LLP ("KPMG"). KPMG reaudited Levi's financial statements for the fiscal years 2001, 2002, and 2003[2] and determined that certain restatements were required for the 2001 and 2002 financial statements, as well as the first two quarters of 2003. See Defs.' Request for Judicial Notice[3] ("Defs.' RJN"), Ex. 1 (2003 Form 10-K) at 81. KPMG issued an unqualified opinion as to the 2001, 2002, and 2003 financial statements, as restated and reflected in the 2003 Form 10-K. Id. Levi's 2003 Form 10-K describes the particular restatements as:
. $24 million increase in tax expense and tax liability in 2001 resulting from the tax deduction taken twice in error for losses related to closures of various plants.
. $19 million of increased tax expense in 2001 and 2002 to properly provide for a valuation allowance against deferred tax assets consisting of foreign net operating losses of subsidiaries in a cumulative loss position.
. $21.2 million of additional rent expense related to periods before 2003, which resulted *971 in $3.7 million of additional rent expense in 2001 and $2.6 million of additional rent expense in 2002 to properly reflect occupancy costs and leases in accordance with GAAP.
. $35.4 million in over-accruals of obsolete inventory, which resulted in the reversal of $17 million of inventory accruals for 2001 and $6.9 million of inventory accruals in 2002.
. $10.4 million reversal of workers' compensation expense in 2001 for an over-accrual of such expenses.
. $8.5 million reversal of incentive compensation expense recorded in 2001 instead of 2000.
. $10.9 million reversal of restructuring costs in 2001 relating to costs improperly accrued.
. $10.4 million reversal of restructuring costs improperly accrued in 2002 and $6.3 million reversal of income from sale of assets in 2003 related to plant closures in 2002.
. $2.6 million of additional restructuring costs that were improperly taken in 1999, but should have been charged to later years.
. $0.9, million reversal of amortization expense in 2001 and $1.8 million reversal of amortization expense in 2002, which expenses should have been recorded in 1999.
Id. at 100-01.
D. Allegations Regarding Scienter
Plaintiff's rely primarily on statements from two former managers in Levi's tax department, Thomas Walsh ("Walsh") and Robert Schmidt ("Schmidt") to support allegations of scienter on the part of defendants.[4] They also offer statements from two confidential witnesses ("CW").
1. Thomas Walsh
Walsh worked for Levi from September 27, 1999 to December 10, 2002, when Levi terminated his employment. He started as an international tax manager in the global tax department, was subsequently promoted to senior tax manager, and on February 28, 2001 was again promoted to international tax director. State Compl. ¶ 85. As one of five, tax directors, Walsh's responsibilities included preparing Levi's worldwide tax return, establishing Levi's worldwide tax provisions, integrating the Asia Pacific tax divisions, and carrying out various duties as a member of Levi's leadership team. CAC ¶ 158. In order to calculate the worldwide tax provision for 2001 and 2002, Walsh was required to analyze, inter alia, how tax accounting reserves were established and released, the availability and prior use of foreign tax credits, and the application of valuation allowances against credits. Id.
Plaintiff's allege that in late 1999 Walsh voiced concerns over various tax positions that he thought were illegal to his supervisor Laura Liang ("Liang"), who at the time was vice president of international tax, and reported directly to defendant Chiasson, Levi's senior vice president and CFO during the Class Period. Walsh specifically questioned Liang about a "conduit financing scheme" that he believed constituted ongoing improper recognition of unrealizable *972 foreign tax credits as deferred tax assets. Id. ¶ 185. Walsh also stated that Liang and Vince Fong, Levi's vice president and tax department head, told him that Levi released reserves to achieve its desired tax rate when he raised the issue of improperly released reserves from 1995 to 2001. Id. ¶ 159. Following his promotion to international tax director in February 2001, Walsh began questioning Fong about tax accounting practices that Walsh felt were improper.[5]Id. ¶ 186. Walsh claims that Fong disregarded these concerns and refused to let him speak to the IRS after he raised the issue of improper use of a tax shelter in 2002. Id. ¶¶ 186, 194-95.
In May 2002 Levi replaced its outside auditor, Arthur Andersen, and Fong convened a meeting to discuss how Levi should work with its new auditor, KPMG. Id. ¶ 187.[6] The attendees included Fong, Walsh, Liang, and other members of the tax leadership team, Mike Woo and Denise Cahalan. Plaintiff's allege that at the meeting, Fong instructed the attendees that "[w]e are only going to show the auditors what we want them to see." Id. In response, Walsh allegedly stated that withholding information from KPMG would constitute fraud and he would not be a party to it. Id. That same month, plaintiff's allege that Walsh informed Chiasson that he believed Levi's reported net income was overstated as a result of Levi's improper release of excess reserves and improper recognition of unrealizable foreign tax credits as deferred tax assets. Id. ¶ 188. As a result, Walsh was "effectively frozen" out of his role on the leadership team and management of the global tax department. On December 10, 2002 Walsh's employment was terminated "for cause." Id. ¶ 189.
2. Robert Schmidt
Schmidt worked in Levi's global tax department from June 18, 2001 to December 10, 2002 as senior manager for international tax until Levi terminated his employment. Id. ¶ 159; State Compl. ¶ 71. As one of his first assignments, Schmidt was to review Levi's LSLA tax shelter and determine how it could be closed. CAC ¶ 192.[7] In January 2002 Fong and Liang assigned Schmidt to manage issues related to the LSLA transaction. Id. ¶ 194.[8] While visiting Brazil, Schmidt discovered a number of non-privileged documents he believed were relevant to Information Document Requests ("IDRs") which had been issued by the IRS. Id. The State Complaint clarifies that Schmidt believed the LSLA's "reconciliation statements" did not reconcile, and that he found a $12,000,000 variance between the books tracking the LSLA's activities in Brazil cruzados, and those tracking the same activities in U.S. dollars. State Compl. ¶ 76. Plaintiff's claim that these transactions resulted in improper tax deductions between 1986 and *973 1994.[9] According to plaintiff's' allegations, after informing Liang and Fong that he believed these documents should be produced to the IRS, Schmidt was directed by Liang and Fong to withhold them, and that same day he was replaced as the primary IRS contact by Jim Fuller of the Fenwick & West law firm ("Fenwick"). CAC ¶ 195. Plaintiff's allege that boxes of materials brought back from Brazil were withheld from the IRS. Id. ¶ 196. On December 10, 2002 Schmidt's employment with Levi was terminated "for cause." Id. ¶ 197.
3. Confidential Witnesses
CW1 worked for Levi from the summer of 2002 to early 2003 as a manager of internal reporting. Id. ¶ 199. CW1 reported directly to Caroline Chow, the director of financial reporting, who reported to defendant Gary Grellman, Levi's vice president and corporate controller during the Class Period. Id. CW1 allegedly was told not to ask any questions or to analyze any of the financial reports of the various subsidiaries to be consolidated. Id. According to CW1, Levi's record keeping was purportedly extremely poor or nonexistent. Id.
CW2 worked for Levi from early 2000 to early 2004 as a certified internal auditor. Id. ¶¶ 200-01. CW2 states that the internal auditors were not allowed to audit tax transactions and entities such as Finserv, and that such audits were outsourced to the outside auditors due to their purportedly being "too technical." Id. However, CW2 contends, the internal auditors audited equally technical and complicated areas. Id. CW2 submits that Levi outsourced the transactions because the outside auditors employed "less due diligence" and shared a long-standing close relationship with Levi. Id.
II. SECURITIES ACT CLAIMS
Counts I through III of plaintiff's' complaint allege violations of the Securities Act based on the April 2001 Offering. Count I alleges a violation of § 11 against Levi and the individual defendants (except Grellman), count II alleges a violation of § 12(a)(2) against Levi and the individual defendants (except Grellman), and count III alleges control person liability against the individual defendants (except Grellman) based on the alleged violations of §§ 11 and 12(a)(2). Counts IV through VI of plaintiffs' complaint allege violations of the Securities Act based on the June 2003 Offering. Count IV alleges a violation of § 11 against Levi and the individual defendants (except Friedman), count V alleges a violation of § 12(a)(2) against Levi and the individual defendants (except Friedman), and count VI alleges control person liability against the individual defendants (except Friedman) based on the alleged violations of §§ 11 and 12(a)(2).
A. Section 11 Claims
Section 11 of the Securities Act provides for a cause of action against, inter alia, signers of the registration statement and directors, for an untrue statement of a material fact or an omission of a material fact in a registration statement:
In case any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring such security (unless it is proved that at *974 the time of such acquisition he knew of such untruth or omission) may, either at law or in equity, in any court of competent jurisdiction, sue. . . .
15 U.S.C. § 77k.
A plaintiff need not allege scienter on the defendants part for liability under § 11. Kaplan v. Rose, 49 F.3d 1363, 1371 (9th Cir.1994) (citing Herman & MacLean v. Huddleston, 459 U.S. 375, 382, 103 S. Ct. 683, 74 L. Ed. 2d 548 (1983)). "[D]efendants will be liable for innocent or negligent material misstatements or omissions." Id. As the Supreme Court has explained, § 11 "was designed to assure compliance with the disclosure provisions of the Act by imposing a stringent standard of liability on the parties who play a direct role in a registered offering":
If a plaintiff purchased a security issued pursuant to a registration statement, he need only show a material misstatement or omission to establish his prima facie case. Liability against the issuer of a security is virtually absolute, even for innocent misstatements. Other defendants bear the burden of demonstrating due diligence. See 15 U.S.C. § 77k(b).
Huddleston, 459 U.S. at 381-82, 103 S. Ct. 683. "The plaintiff in a § 11 claim must demonstrate (1) that the registration statement contained an omission or misrepresentation, and (2) that the omission or misrepresentation was material, that is, it would have misled a reasonable investor about the nature of his or her investment." In re Daou Sys., Inc., 411 F.3d 1006, 1027 (9th Cir.2005) (quoting In re Stac Elecs. Secs. Litig., 89 F.3d 1399, 1403-04 (9th Cir.1996)) (internal quotations omitted).
Defendants argue that plaintiff's have failed to plead that the alleged misstatements and omissions were material and that plaintiffs do not qualify as persons "purchasing" securities pursuant to a registration statement because the plaintiff's acquired their bonds through an exempt Rule 144A private transaction followed by an Exxon Capital exchange. Defendants assert that lead plaintiffs Detroit General and Metzler Investment lack standing to sue under § 11 either for their initial purchase of unregistered bonds in the private placement pursuant to 17 C.F.R. § 230.144A ("Rule 144A") or to the subsequent exchange of the unregistered bonds for publicly registered bonds pursuant to the exchange offering. Defendants also argue that the heightened pleading standard of Fed.R.Civ.P. 9(b) applies as to plaintiff's' pleadings.
Plaintiff's argue that, as a general proposition, profit statements and financial reports are of particular interest to investors and are by their nature relevant to investment decisions. The Supreme Court has held that "[a]n omitted fact [or misstatement] is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote." Basic Inc. v. Levinson, 485 U.S. 224, 231, 108 S. Ct. 978, 99 L. Ed. 2d 194 (1988) (quoting TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S. Ct. 2126, 48 L. Ed. 2d 757 (1976)) (internal quotations omitted). However, "to fulfill the materiality requirement there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available." Id. at 231-32, 108 S. Ct. 978 (quoting TSC Indus., 426 U.S. at 449, 96 S. Ct. 2126) (internal quotations omitted). "[T]o have standing under section 11, plaintiff's must establish that they purchased shares either (1) directly in the public offering for which the misleading registration statement was filed or (2) traceable to that public offering." Guenther v. Cooper Life Sciences, Inc., 759 F. Supp. 1437, 1439 (N.D.Cal.1990). The plaintiff "must have purchased a security issued under [the registration statement *975 alleged to be misleading], rather than some other, registration statement." Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076, 1080 (9th Cir.1999).
1. Initial Private Placement Purchase
As to the initial purchase of unregistered Levi bonds pursuant to private placements, plaintiffs clarify in opposition that they do not seek to base their § 11 claims on the offering documents associated with the private placements. In any event, plaintiff's do not dispute that the initial private placements were made pursuant to Rule 144A or that lead plaintiff's Detroit General and Metzler Investment are considered Qualified Institutional Buyers ("QIB") within the meaning of Rule 144A.[10] Section 11 liability, which applies to misstatements or omissions in registration statements, is not available for Rule 144A offerings. See 17 C.F.R. § 230.144A (Rule 144A offerings are exempt from § 5 registration requirements); In re Refco, Inc. Sec. Litig., 503 F. Supp. 2d 611 (S.D.N.Y.2007).
2. Exxon Capital Exchange
As to the acquisition of registered Levi bonds, defendants point out that Detroit General and Metzler Investment obtained their registered bonds by trading in unregistered bonds they initially purchased in private placements exempt from registration under Rule 144A for identical publicly registered bonds in a transaction known as an Exxon Capital exchange. Although it is not clear from the complaint the manner in which each plaintiff purports to have obtained the publicly registered bonds, plaintiffs do not dispute that those plaintiffs who obtained shares through the Rule 144A private placement followed by the exchange for identical publicly registered bonds obtained their publicly registered bonds in an Exxon Capital exchange. As to those plaintiffs who obtained their publicly registered bonds in this manner, defendants claim that since both the original sale of the unregistered bonds and the subsequent exchange were made to plaintiff's as QIBs in compliance with Rule 144A, defendants are exempt from any registration requirements or liability under § 5.
In an Exxon Capital exchange an issuer registers securities for an exchange offering in which the holders of its unregistered bonds may exchange their bonds for identical publicly registered bonds. See In re Refco, Inc. Sec. Litig., 503 F. Supp. 2d 611, 619 (S.D.N.Y.2007); see also Exxon Capital Holdings Corp., S.E.C. No Action Letter, 1988 WL 234336, publicly available May 13, 1988.[11] In Refco, the company *976 issued senior subordinated notes due in 2012 that were sold to underwriters who immediately resold the bonds to institutional buyers. Id. These transactions were exempt from registration pursuant to Rule 144A since the purchasers were QIBs. Id. Refco subsequently registered bonds in a Form 5-4 Registration Statement for the purpose of allowing holders of the Rule 144A unregistered bonds to exchange their bonds for registered bonds. Id. The unregistered bonds and registered bonds were not alleged to differ in any respect other than that the registered bonds were freely tradeable. Id. at 636.
In Refco, the defendants submitted that there could not be a § 11 claim by plaintiffs who obtained their publicly registered bonds through the Exxon Capital exchange, arguing that the registration statement had nothing to do with the unregistered bondholders' decision to exchange their unregistered bonds for registered bonds. Id. at 633-34. One defendant framed the issue as a failure to plead materiality and another suggested it was an issue of standing. The court observed that "[t]he questions of standing, reliance, materiality, and causation are related, because `materiality is intimately bound up with the concept of reliance,' and `reliance, in turn, is linked to causation.'" Id. (quoting In re McKesson HBOC, Inc. Secs. Litig., 126 F. Supp. 2d 1248, 1260 (N.D.Cal. 2000)). In other words, "a misstatement is material if an investor acted in reliance upon it and was thereby caused to suffer damages." Id. The court recognized that caselaw is not clear as to whether § 11 imposes a reliance requirement, but concluded that the better reading of § 11 seems to be that it "`creates a presumption that any person acquiring such a security was legally harmed by the defective registration statement.'" Id. (quoting APA Excelsior III L.P. v. Premiere Techs., Inc., 476 F.3d 1261, 1271 (11th Cir.2007)) (additional internal quotation marks omitted). The court held that if it is established with certainty that the plaintiff's are not harmed in any way by the relevant misrepresentations, plaintiffs should not be allowed any recovery under § 11 as a matter of law based on either a lack of materiality or a lack of reliance. Id. Therefore, the Refco court concluded, the relevant question is what the unregistered bondholders, who already owned non-tradeable shares of Refco, "could have done differently had the registration statement been fully candid about Refco's alleged foul deeds and dreadful prospects." Id. at 634-35.
The court found that the plaintiff's had not alleged that the unregistered bondholders would have been any less likely to go through with the Exxon Capital exchange had the registration statement been accurate. In particular, based on the nature of the transactionsa Rule 144A exempt transaction followed by an Exxon Capital exchangethe unregistered bondholders were essentially given the opportunity to exchange their unregistered bonds for bonds that are identical in all respects except that they are freely tradeable. Id. at 636. The court inferred that *977 these allegations fail to support a showing of materiality (or reliance) because "[h]ad the plaintiff's known the true state of Refco's affairs, they would have had no reason to avoid making . . . their holdings tradeable; on the contrary, they would have had every reason to rid themselves of the bonds as soon as possible." Id. Therefore, the court dismissed the § 11 claims of those plaintiff's who obtained their registered bonds in the Exxon Capital exchange: Id.
Although the court recognizes that, at least in this circuit, reliance is not an element of a § 11 claim, the court finds the reasoning of the Refco court to be persuasive here on the issue of materiality. Like in Refco, the relevant transactions before this court are initial Rule 144A private offerings by Levi pursuant to which certain QIBs chose to invest in unregistered Levi bonds followed by Exxon Capital exchange offerings in which Levi registered identical bonds for the purpose of allowing the QIBs holding unregistered Levi bonds to exchange their unregistered bonds for registered bonds with the same terms. As in Refco, the only distinction between the QIBs' unregistered bonds and the exchanged bonds is that the exchanged bonds were registered. In other words, they became freely tradeable in the market without further registration. See Exxon Capital Holdings Corp., S.E.C. No Action Letter, 1988 WL 234336. Following the Refco court's reasoning and analysis, then, it does not appear likely that the alleged misstatements or omissions in the registration statements issued to enable the Exxon Capital exchanges could have been material to the unregistered bondholders' decision whether to accept the exchange or hold onto the unregistered bonds they had already purchased via earlier exempt Rule 144A transactions. The purpose of the exchange offerings was to provide the bondholders with freely tradeable bonds without any further registration. See Livent I, 151 F.Supp.2d at 431. As with the unregistered bondholders in Refco, the decision was either to continue to hold the unregistered bonds which, absent registration, could only be sold under certain limited exemptions from the Securities Act, or to exchange the unregistered bonds for registered bonds that were identical in all respects except that they were freely tradeable in the public market without further registration. See also In re Safety-Kleen Corp., 2002 WL 32349819, *1 (D.S.C.2002) (As to a registration statement filed pursuant to the Securities Act to effect an Exxon Capital exchange "for identical bonds that could be exchanged for the unregistered bonds. . . . no damages can be demonstrated because the transaction involves two sets of identical bonds. Furthermore, reliance cannot be demonstrated because any false statements in the registration of the second set of bonds could not have any influence on the purchasers' decision to exchange one set of identical bonds for another.").
The court does not find plausible plaintiffs' assertion that, had the registration statements disclosed the asserted omissions or misstatements, plaintiffs could have decided to retain the unregistered bonds which could be sold to other institutional investors in private transactions as is common practice in the bond industry. Plaintiffs assert no facts to indicate that had the alleged misstatements and omissions been disclosed at the time of the registrations that other institutional investors would have been interested in purchasing their unregistered securities. As noted earlier, registered bonds differ from unregistered bonds in that the registered bonds became freely tradeable, which makes it easier for the bondholders to sell their bonds.
The court is also not persuaded by plaintiff's' additional arguments. Plaintiff's cite 7547 Corp. v. Parker & Parsley Dev. Partners, *978 38 F.3d 211 (5th Cir.1994), for the proposition that an exchange of one security for another pursuant to a registration statement constitutes an "acquisition" for purposes of § 11. In 7547 Corp., the complained of transaction was one where the assets, liabilities, and operations of a partnership in which plaintiff's held interests were combined into a newly-formed corporation. Id. at 214-15. The transaction did not involve an Exxon Capital exchange. Rather, the former partnerships were liquidated and the plaintiffs were given shares of registered stock in the resulting corporation in exchange for their former partnership interests. Id. However, 7547 Corp. is distinguishable. Unlike the case here, the securities formerly held by the 7547 Corp. plaintiff's differed significantly from the stock subsequently issued. Further, unlike the Exxon Capital exchange at issue it the present action, the 7547 Corp. plaintiff's' former partnerships were liquidated and converted into the equivalent value of stock.
Therefore, the court concludes that the alleged misstatements and omissions would not have been material to the, unregistered bondholders' decision whether to exchange unregistered shares they had already chosen to purchase pursuant to the Rule 144A offering documents. Because the unregistered bondholders had already invested in Levi bonds through the Rule 144A offerings, they were not presented with the decision of whether or not to purchase Levi bonds pursuant to the registration statement. Compare In re Livent Noteholders Sec. Litig., 174 F. Supp. 2d 144, 157 (S.D.N.Y.2001) ("Livent II") (allowing plaintiff noteholders' § 11 claim against defendant and underwriter CIBC where the complaint alleged that plaintiff's and other public investors, including QIB's, were solicited personally by and purchased notes directly from CIBC "after they had been registered."). The purpose of the Securities Act's registration requirements is to protect investors. See Huddleston, 459 U.S. at 381-82, 103 S. Ct. 683; Securities and Exchange Commission v. Ralston Purina Co., 346 U.S. 119, 124, 73 S. Ct. 981, 97 L. Ed. 1494 (1953) ("The design of the [Securities Act] is to protect investors by promoting full disclosure of information thought necessary to informed investment decisions."); United States v. Naftalin, 441 U.S. 768, 777-78, 99 S. Ct. 2077, 60 L. Ed. 2d 624 (1979) ("[T]he 1933 Act was primarily concerned with the regulation of new offerings."). Here, the purpose of registering Levi bonds was to give the unregistered bondholders registered bonds, which they could then offload in the public market without further registration. It follows that the purpose of the registration statements at issue was to protect the potential investors in the public market who may be purchasers of the registered bonds not based on a Rule 144A offering documents, but based on the registration statements' disclosures. Accordingly, the court dismisses the § 11 claims as to those plaintiffs who received their registered bonds through an exchange of unregistered bonds acquired in the preceding Rule 144A offerings.
3. Untrue Statement or Omission of Material Fact
Defendants do not argue that plaintiffs who purchased their Levi bonds in the after market lack standing to sue under § 11.[12] However, defendants contend that *979 the § 11 claims should be dismissed on grounds that plaintiff's have failed to state with particularity the untrue statements or omissions of material fact in the registration statements for the April 2001 Offering and the June 2003 Offering when they became effective. In particular, defendants argue that because plaintiff's' § 11 claims are "grounded in fraud" and, therefore, must be pled with specificity pursuant to Fed.R.Civ.P. 9(b). Plaintiff's contend that Rule 8(a) applies because their § 11 claims are based in negligence and pled separately from their § 10(b) claim.
The court concludes that Rule 9(b) applies to plaintiff's' § 11 claims. As the Ninth Circuit stated in In re Dam, 411 F.3d at 1027, "[a]lthough section 11 does not contain an element of fraud, a plaintiff may nonetheless be subject to Rule 9(b)'s particularity mandate if his complaint `sounds in fraud': [T]he plaintiff may allege a unified course of fraudulent conduct and rely entirely on that course of conduct as the basis of a claim." In such a case, "the claim is said to be `grounded in fraud' or to `sound in fraud,' and the pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b)." Id. (quoting Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-05 (9th Cir. 2003)) (internal quotations omitted); see also In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1404-05 (9th Cir.1996) (holding that the particularity requirements of Rule 9(b) apply to claims brought under § 11 where they are grounded in fraud). As defendants point out, although plaintiff's separate allegations supporting their § 11 claims from allegations supporting their § 10(b) claim, the § 11 allegations nevertheless reiterate the same alleged conduct and course of conduct which underlie the § 10(b) claim. Further, as noted by defendants, plaintiff's allege that defendants engaged in "tax fraud" and a "fraudulent tax scheme" resulting in misstated financial statements in the registration statement. These same misstatements are alleged as violations in plaintiff's' § 10(b) claim. Although plaintiff's separate their § 11 allegations from their § 10(b) claim, the added allegations primarily assert additional purported misstatements in Exchange Act filings which are actionable under § 10(b) but not actionable under § 11. Notably, the § 10(b) allegations incorporate all the allegations made in support of plaintiff's' Securities Act claims.
Nevertheless, as the Daou court made clear, that Rule 9(b) applies does not necessarily mean plaintiff's' § 11 claims fail:
In a case where fraud is not an essential element of a claim, only allegations of fraudulent conduct must satisfy the heightened pleading requirements of Rule 9(b). Allegations of non-fraudulent conduct need satisfy only the ordinary notice pleading standards of Rule 8(a). . . . Where averments of fraud are made in a claim in which fraud is not an element, an inadequate averment of fraud does not mean that no claim has been stated. The proper route is to disregard averments of fraud not meeting Rule 9(b)'s standard and then ask whether a claim has been stated.
Id. at 1027 (internal citations and quotations omitted). Here, as to untrue statements in the registration statements, *980 plaintiff's allege, inter alia, that Levi misstated its 2001 financial statements because it has recorded a tax deduction twice. CAC ¶¶ 7, 42-43.[13] Levi initially corrected this error by recording an adjustment in the third quarter of 2003. Id. ¶ 178. However, KPMG determined that the proper correction was a restatement of Levi's 2001 financial statements and Levi's failure to identify the error (or properly correct it) represented a failure in its internal controls for detecting and preventing misstatements of accounting information. Id. ¶ 179. Levi was required to restate its 2001 financial statements to correct for the misstatement. Plaintiffs allege that KPMG identified material weaknesses in Levi's internal accounting controls. Id. ¶ 10, 76. Specifically, KPMG advised Levi that (1) its global controller's group, corporate controller, and CFO needed to increase their involvement in the review and disclosure of tax items as they relate to GAAP and (2) Levi needed to appoint individuals in the tax department and controller's group with sufficient expertise in tax GAAP issues. Id. ¶¶ 178-80. Thus, even absent allegations of fraudulent conduct, plaintiff's have alleged sufficient facts of misstatements in the financial information contained in Levi's registration statements in violation of § 11. See Kaplan v. Rose, 49 F.3d at 1371 ("[D]efendants will be liable for innocent or negligent material misstatements or omissions.") (citation omitted). Accordingly, the court finds that the complaint sufficiently alleges that Levi's registration statements contain an untrue statement or omission of material fact.
B. Section 12(a)(2) Claims
Section 12(a)(2) provides for civil liability of securities sellers to purchasers if the seller used certain instruments, including a prospectus, containing untrue statements or material omissions. 15 U.S.C. § 77I(a)(2)[14]; Falkowski v. Imation Corp., 309 F.3d 1123, 1133-34 (9th Cir.2002). Here, plaintiff's assert that the "prospectuses" containing material false financial information are Levi's prospectus and registration statement for the April 2001 Offering and Levi's prospectus and registration statement for the June 2003 Offering.[15]See CAC ¶¶ 15-17. Defendants argue that plaintiff's' § 12 claims fail for lack of standing. As to those plaintiff's that exchanged their unregistered bonds for registered bonds, defendants contend *981 there is no standing because the bonds were not purchased in a public offering. As to those plaintiff's who purchased their bonds in the after market, defendants submit that there is no standing because § 12 liability only attaches to securities sold in the initial offering, not those purchased in the secondary market.
1. Plaintiff's Who Exchanged Unregistered Bonds for Registered Bonds
In Gustafson v. Alloyd Co., 513 U.S. 561, 115 S. Ct. 1061, 131 L. Ed. 2d 1 (1995), the Supreme Court clarified the meaning of the term "prospectus" for purposes of § 12(a)(2). The Court held that "the liability imposed by § 12[a] (2)[16] cannot attach unless there is an obligation to distribute the prospectus in the first place." Id. at 571, 115 S. Ct. 1061. In addition, "the term `prospectus' relates to public offerings by issuers and their controlling shareholders," and "was well understood to refer to a document soliciting the public to acquire securities from the issuer." Id. at 575-76, 115 S. Ct. 1061. The Court observed that the legislative history "states with clarity and with specific reference to § 12 that § 12 liability is imposed only as to a document soliciting the public." Id. at 581, 115 S. Ct. 1061. In particular, "The House Report stated: `The bill affects only new offerings of securities. . . . It does not affect the ordinary redistribution of securities unless such redistribution takes on the characteristics of a new offering.'" Id. at 580, 115 S. Ct. 1061 (citing H.R.Rep. No. 85, 73d Cong., 1st Sess., 5 (1933)). Moreover, the Court noted, the legislative history "lack[s] . . . any explicit reference to the creation of liability for private transactions." Id. at 582, 115 S. Ct. 1061.
Here, plaintiff's agree that to state a claim for relief under § 12(a)(2), they are required to plead that they purchased a security pursuant to a prospectus, that the prospectus contained an untrue statement, and that the untrue statement was material. Pls.' Opp'n Defs.' Mot. Dismiss at 24:7-10. Plaintiff's assert that the first requirement is met because they have pled that they acquired Levi's registered bonds by means of Levi's prospectuses, that those prospectuses reported false financial statements, and that the false financial information were material. Id. at 24:10-14 (citing CAC ¶¶ 3, 15-17, 65-68, 70-73). However, as discussed in § II.A.2 above, those plaintiffs who exchanged unregistered bonds for registered bonds did not purchase their bonds pursuant to a registration statement. For the same reasons, these plaintiffs did not purchase their bonds pursuant to a prospectus. Rather, their purchases of Levi bonds were made pursuant to private offerings exempt from registration under Rule 144A. In the following Exxon Capital exchange, these plaintiffs merely exchanged their unregistered bonds for bonds that would be freely tradeable in the public market. As discussed in § II.A.2 above, plaintiff's' allegations do not support a plausible inference that any alleged false financial statements in the registration statements or prospectuses were material to the decision of holders of unregistered Levi bonds to exchange such bonds for freely tradeable registered bonds.
The court notes that Levi necessarily had to comply with the registration requirements of the Securities Act in order to issue bonds that would be freely tradeable to the public and, therefore, the prospectuses at issue likely relate to a public offering. However, this does not mean those plaintiff's who merely exchanged their unregistered bonds for registered bonds have standing under § 12(a)(2). As with the § 11 claims, the alleged false *982 financial statements in the registration statements and prospectuses are not material to these plaintiff's. Moreover, the purpose of the registrations were to allow the holders of the unregistered bonds to be able to exchange their holdings for registered bonds that they could then sell to the public. Thus, looking to the substance of the transactions, the purpose of the registration statements and prospectuses was to inform and protect members of the investing public who would be purchasing the registered bonds from those plaintiff's who turned in their unregistered bonds for freely tradeable ones. See In Re Safety-Kleen Corp. Bondholders Litig., 2002 WL 32349819 at *2 (holding that there was no public offering where the securities were sold only to sophisticated QIBs and the exchange transaction was open only to those who had previously purchased the unregistered bonds, namely, the same QIBs); see also SEC v. Ralston Purina Co., 346 U.S. 119, 124-25, 73 S. Ct. 981, 97 L. Ed. 1494 (1953) ("An offering to those who are shown to be able to fend for themselves is a transaction `not involving any public offering.'").
2. Plaintiffs Who Purchased Levi Bonds in the Secondary Market
Plaintiff's assert that Detroit P & F purchased its registered bonds on the open market and, therefore, has standing under § 12(a) (2). It also appears that certain of plaintiff Metzler Investment's purchases were purchased in the after market.[17] Plaintiff's rely upon Feiner v. SS&C Techs., Inc., 47 F. Supp. 2d 250 (D.Conn.1999), to support their proposition. Defendants argue that only plaintiff's who purchase securities pursuant to a prospectus directly from the issuer have standing under § 12(a)(2). Defendants rely upon Gould v. Harris, 929 F. Supp. 353, 358-59 (C.D.Cal. 1996), rev'd in part on other grounds by Hertzberg v. Dignity Partners, Inc., 191 F.3d 1076 (9th Cir.1999).
In Feiner, the district court considered a motion by lead plaintiffs for class certification. 47 F. Supp. 2d at 251. The defendants opposed the motion arguing, inter alia, that the proposed class definition was too broad in that it included persons who purchased shares in the after market rather than in the initial public offering and who therefore lacked standing under §§ 11 and 12. Id. at 251-52. As to § 12(a)(2) claims, the court concluded that Gustafson did not draw a distinction between public offerings and after-market purchases, but rather distinguished public offerings from private ones. Id. at 252-53. Because the registration framework requires delivery of a prospectus for a fixed number of days after the registration statement becomes effective even if the initial distribution has been completed, "sales by means of a prospectus" extends beyond the initial distribution. Id. at 253 (citing 15 U.S.C. §§ 77d-e; 17 C.F.R. § 230.174(d)[18]). The court held § 12(a)(2) extends to aftermarket trading of a publicly offered security, so long as that aftermarket trading occurs `by means of a prospectus or oral communication.'" Id. In other words, § 12(a)(2) liability is coextensive with the statutory and regulatory prospectus-delivery requirements." Id.
In Gould, the district court held that, based on Gustafson, neither § 11 nor § 12 extends to securities purchases that are *983 merely traceable to the public offering. 929 F. Supp. at 359. The court relied in part on In re Valence Technology Securities Litigation, where the court reasoned that because Gustafson held that § 12(a)(2) applies only to a transaction in which delivery of a prospectus is required, "Gustafson makes irrelevant whether the transaction is `traceable' to a public offering." 1996 WL 37788, *4 (N.D.Cal.1996). In Stack v. Lobo, citing Gustafson, the district court similarly held that § 12(a)(2) applies only to public offerings, not after market transactions. 903 F. Supp. 1361, 1375 (N.D.Cal.1995).[19] Likewise, in Murphy v. Hollywood Entertainment Corp., the district court reasoned that although Gustafson's "actual holding was premised upon a public/private distinction rather than the question presented here of the coverage of 12[a] (2) for sales direct from an offering versus after-market transaction, . . . the Court's dicta provides strong support for finding a clear dividing line on shares purchased pursuant to an offering either initial or secondaryas cognizable for private remedies under either the 1933 and/or 1934 Act and shares purchased in the aftermarket with a private right of action existing only under the 1934 Act." 1996 WL 393662, *3 (D.Or.1996).
Although plaintiff's are correct that the Feiner court extended § 12(a)(2) liability to aftermarket transactions, the court did not hold that § 12(a)(2) applies to all aftermarket transactions so long as the transaction is traceable to the public offering. As noted above, at most the court held that § 12(a)(2) liability is coextensive with the prospectus-delivery requirements set forth in § 4(3) applicable to dealers following the effective date of the registration statement (or the first date upon which the securities are bona fide offered to the public). See 15 U.S.C. § 77d(3). This period is generally forty days, but extended to ninety days if the public offering is the issuer's initial public offering of securities. Id. Here, the complaint does not allege when plaintiffs' after market purchases occurred. In any event, the majority of the cases appear to hold that, based on Gustafson, § 12 is limited to transactions purchased pursuant to a public offering and, therefore, does not extend to any after market transactions. Although the Feiner court's reasoning has some appeal, it appears inconsistent with dicta in Gustafson. Notably, the Gustafson Court held that "the term `prospectus' relates to public offerings by issuers and their controlling shareholders" and "was well understood to refer to a document soliciting the public to acquire securities from the issuer." 513 U.S. at 575-76, 115 S. Ct. 1061 (emphasis added). Similarly, the Court has expressed that "[t]he 1933 Act regulates initial distributions of securities, and the 1934 Act for the most part regulates post-distribution trading." See Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 171, 114 S. Ct. 1439, 128 L. Ed. 2d 119 (1994) (citing Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 752, 95 S. Ct. 1917, 44 L. Ed. 2d 539 (1975)). The court concludes that based on Gustafson, § 12(a)(2) does not extend to after market transactions.
C. Control Person Liability
Plaintiff's' third and sixth claims allege control person liability against the individual defendants, except Grellman, *984 pursuant to § 15 of the Securities Act premised on the alleged violations of §§ 11 and 12. Section 15(a) imposes joint and several liability upon every person who controls any person liable under §§ 11 or 12. In re Daou, 411 F.3d at 1029. The SEC has defined "control" to mean: "[Tihe possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract, or otherwise." 17 C.F.R. § 230.405. As alleged by plaintiffs, defendants are either executive officers and directors of Levi or directors of Levi during the relevant period. In addition, all defendants signed at least one of the registration statements at issue. CAC TT 19-34. Thus, the court concludes that these individuals are properly alleged to be control persons within the meaning of § 15 by virtue of their positions and role in the registration statements. See Hollinger v. Titan Capital Corp., 914 F.2d 1564, 1568 n. 4, 1575 (9th Cir.1990) ("The standards for liability as a controlling person under § 15 are not materially different from the standards for determining controlling person liability under § 20(a). . . . [W]e make clear that in an action based on § 20(a), the defendant who is a controlling person, and not the plaintiff, bears the burden of proof as to defendant's good faith. Thus, a plaintiff need not make a showing as to defendant's culpable participation; rather, a defendant has the burden of pleading and proving his good faith.").
III. EXCHANGE ACT CLAIMS
Plaintiff's' seventh claim alleges a violation of § 10(b) of the Exchange Act against Levi, Marineau, Chiasson, and Grellman. Plaintiff's' eighth claim alleges control person liability under § 20(a) of the Exchange Act against Marineau, Chiasson, and Grellman. In order to state a claim under § 10(b) of the Exchange Act and Rule 10b-5, plaintiff's must allege: (1) a misrepresentation or omission of material fact, (2) made with scienter, (3) causation, (4) justifiable reliance by plaintiffs, and (5) proximate causation of the alleged loss. Binder v. Gillespie, 184 F.3d 1059, 1063 (9th Cir.1999); In re Daou, 411 F.3d at 1014 (citations omitted). Under the Private Securities Litigation Reform Act of 1995 ("PSLRA"), the court must determine whether particular facts in the complaint, taken as a whole, raise a strong inference that defendants intentionally or with deliberate recklessness made false or misleading statements to investors. In re Read-Rite, 335 F.3d 843, 846 (9th Cir.2003). The PSLRA mandates that a complaint in private securities fraud litigation plead with particularity both falsity and scienter. In re Vantive Corp. Sec. Litig., 283 F.3d 1079, 1085 (9th Cir.2002); 15 U.S.C. § 78u-4(b)(1); 15 U.S.C. § 78u-4(b)(2). If a plaintiff fails to plead either the alleged misleading statements or scienter with particularity, his or her complaint must be dismissed. America West, 320 F.3d at 931-32; § 78u-4(b)(3)(A).
A. Falsity
Defendants first argue that plaintiffs have failed to allege with particularity any facts suggesting that any representations made by Levi or the other defendants were materially false or misleading. Specifically, defendants contend that plaintiffs' purported allegations of false and misleading statements merely represent the personal disagreement by two former employees of Levi's tax department with various tax positions taken by Levi. To survive the higher pleading standards required by the PSLRA, the complaint must "specify each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which *985 the belief is formed." 15 U.S.C. § 78u-4(b)(1); In re Daou, 411 F.3d at 1014 (internal quotations and citation omitted). "It is not sufficient simply to allege that a statement was false." Ronconi, 253 F.3d at 431; see also In re GlenFeel, Inc. Sec. Litig., 42 F.3d 1541, 1552 (plaintiff's may not "merely proclaim in . . . conclusory fashion that the defendants made false statements"). "When alleging that particular statements were false or misleading, the complaint must make `specific references to specific facts' as the basis for the falsity allegation." In re Splash Tech. Holdings, Inc. Sec. Litig., 160 F. Supp. 2d 1059, 1072 (N.D.Cal.2001) (quoting Wenger v. Lumisys, Inc., 2 F. Supp. 2d 1231, 1251 (N.D.Cal.1998)). "Moreover, the complaint must allege that the `true facts' arose prior to the allegedly misleading statement." Splash Tech. Holdings, 160 F.Supp.2d at 1072 (quoting Wenger, 2 F.Supp.2d at 1250); see also GlenFed, 42 F.3d at 1548.
KPMG reaudited Levi's financial statements for 2001, 2002, and the first half of 2003 after it replaced Levi's former auditors. KPMG audited Levi's 2003 financial statements. As a result of KPMG's audits, Levi was required to restate its financial statements. In October 2003 and March 2004 Levi announced that it would restate its financial statements for 2001, 2002, and the first two quarters of 2003 in several respects. Two of the restatements related to tax matters:
. a $24 million increase in tax expense and tax liability in 2001 resulting from a tax deduction taken twice in error for losses related to closures of various plants; and
. a $19 million increase in tax expense in 2001 and 2002 to properly provide for a valuation allowance against deferred tax assets consisting of foreign net operating losses of subsidiaries in a cumulative loss position.
To the extent plaintiff's allege that Levi's financial statements were materially false and misleading in these two respects, it cannot be disputed that the financials were misstated as to these two aspects.[20]
Nevertheless, the court finds that plaintiff's have failed to allege falsity with sufficient particularity. As described in §§ I.B.1 through 1.8.6 above, plaintiff's' complaint asserts that Levi engaged in six allegedly improper accounting practices that rendered the financial statements and financial disclosures for the relevant period false and misleading. These are (1) reporting the same tax deduction twice; (2) improperly establishing, maintaining, and releasing excess tax reserves; (3) improperly recognizing unrealizable foreign tax credits as deferred tax assets; (4) improperly claiming bad debt and worthless stock as tax deductions in determining tax expenses to report; (5) failing to properly recognize a tax gain after transferring liabilities to a wholly-owned foreign subsidiary; and (6) improperly understating income tax expense in 2001 and 2002 by not making sufficient provisions for a valuation allowance. While the court agrees that the complaint goes into detail as to each of these allegedly improper accounting practices, the complaint, taken as a whole, does not give rise to a plausible inference that any particular statement is materially false and misleading on the asserted bases. The court so concludes for a number of reasons.
First, although plaintiff's contend that Levi engaged in the purported accounting improprieties, Levi's audited financial statements and filings with the SEC do not reflect any restatements for these purported *986 improprieties and there is otherwise no indication that the financial information is materially false or misleading statements in the manner alleged by plaintiffs. See Tellabs, Inc. v. Makor Issues & Rights, Ltd., ___ U.S. ___, ___, 127 S. Ct. 2499, 2509, 168 L. Ed. 2d 179 (2007) ("[C]ourts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice."). Plaintiffs argue that they have properly alleged falsity of Levi's financial statements despite the fact that Levi did not restate its financial statements for each of the alleged accounting improprieties. Plaintiffs rely upon Feiner, 11 F.Supp.2d at 209, to support their contention. However, contrary to plaintiffs' contention, Feiner did not involve allegations that the financial statements were misstated; rather, it involved a false statement in the prospectus describing the issuer's revenue recognition process. The plaintiffs alleged that SS & C recognized revenue when a license or service agreement was signed but disclosed in its prospectus that revenue was recognized only after its obligations to the customer were substantially satisfied, as required by GAAP. Id. at 208. Thus, plaintiffs alleged that defendants' statements in the prospectus falsely described the timing of revenue recognition. In addressing whether the alleged false statements were material to plaintiffs, the district court rejected the defendants' argument that the absence of subsequent restatement or reversal of revenue meant that plaintiffs' allegations of falsity were immaterial as a matter of law. Id. at 209. The court reasoned that the falsity inquiry considers whether the statements were false when made, and SS & C's statement that it recognized revenue after completion of substantially all customer obligations was false when made since it recognized revenue upon signing of the agreement. Id.
Marksman Partners, L.P. v. Chantal Pharm. Corp., 927 F. Supp. 1297 (C.D.Cal. 1996), upon which plaintiffs also rely, is similarly distinguishable. Specifically, plaintiffs note that the Marksman court stated that "Mlle fact that Chantal's independent auditor may have approved the accounting methods will not shield Chantal from liability for deception such methods may have caused." Id. at 1314 n. 13. First, the Marksman court applied the pre-PSLRA "motive and opportunity" test and "conscious misbehavior or recklessness" standard of scienter, both of which have been rejected by the Ninth Circuit following enactment of the PSLRA. Second, as to falsity, the plaintiffs in Marksman alleged that Chantal had improperly recognized revenue upon shipment of products even though the agreement with the distributor permitted, inter alia, return of inventory not sold through to end customers and did not require payment until 90 days after shipment to an end customer. Further, the agreement provided for an option, exercisable by either party, in which Chantal would purchase the distributor for twelve times its earnings value in the preceding three months. Chantal improperly recognized revenue upon shipment without accounting for the right of return. Moreover, the terms of the agreement were not disclosed publicly until a later date. It was later disclosed that Chantal's accounting was probably improper since the products did not appear to transfer to the distributor upon shipment. Chantal then announced it would hire an independent auditor to review its accounting. Id. at 1303. Here, unlike in Marksman, KPMG reaudited the years at issue and issued unqualified opinions. Although KPMG required Levi to restate its financials, those restatements, as discussed *987 above, do not relate to the type of purportedly improper accounting alleged by plaintiffs. Unlike in Marksman where the terms of the sales agreement when compared with the company's actual revenue recognition, demonstrate a violation of GAAP as well as material omissions in the disclosures by the company, there is no corroborative showing to support that the purported accounting practices alleged by plaintiffs resulted in false or misleading financials.
Finally, plaintiffs' reliance upon Aldridge v. A. T. Cross Corp., 284 F.3d 72, 84 (1st Cir.2002), is not persuasive. In Aldridge, the court merely held that "the fact that the financial statements for the year in question were not restated does not end Aldridge's case when he has otherwise met the pleading requirements of the PSLRA." Thus, the court found that where the pleadings otherwise met the PSLRA standards, defendants could not absolve themselves by pointing to the fact that the financial statements had not been restated. The court reasoned, "Rjo hold otherwise would shift to accountants the responsibility that belongs to the courts." Id.
Second, the audit committee's investigation, with the assistance of outside counsel, did not reveal material false or misleading statements based on the improprieties pled by plaintiffs. Although plaintiffs allege that the IRS has opened an investigation into Levi's practices, there are no allegations that the IRS has found any wrongdoing. Third, as defendants note, after the restatements discussed above, KPMG issued unqualified audit opinions as to the financial statements for 2001, 2002, and 2003. Plaintiffs do not allege any facts that suggest KPMG's audits were improper, incomplete, or inaccurate. Rather, plaintiffs rely almost exclusively on information provided by Schmidt and Walsh to support their assertion that Levi's financial statements are false due to the allegedly improper accounting practices. Even accepting all of plaintiffs' factual allegations as true, when viewed in light of the entirety of the complaint as well as the matters of which the court has taken judicial notice, the court does not find that these allegations give rise to an inference of falsity. Compare In re McKesson Sec. Litig., 126 F. Supp. 2d 1248, 1273 (N.D.Cal.2000) (holding that plaintiffs adequately alleged "a fraudulent scheme to inflate revenue by recognizing contingent, consignment, or even non-existent transactions as sales where revenues were subsequently restated, the company's investigators concluded that executives intentionally overstated revenue, and there was evidence that executives obscured financial data by segregating side letters from contracts and deleting critical computer files"). Indeed, it is more plausible, as defendants suggest, that Schmidt and Walsh merely disagree with the tax positions taken by Levi. See Bell Atlantic Corp. v. Twombly, ___ U.S. ___, ___ _ ___, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007) ("Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true.") (citations omitted); Gompper v. VISX, Inc., 298 F.3d 893, 897 (9th Cir.2002) ("[W]hen determining whether plaintiffs have shown a strong inference of scienter, the court must consider all reasonable inferences to be drawn from the allegations, including inferences unfavorable to the plaintiffs.").
In sum, the court agrees with plaintiffs that the lack of restatement or an unqualified independent auditor's opinion does not absolve or shield a defendant from liability. However, here, plaintiffs have failed to plead facts suggesting improper accounting other than the views expressed by two former employees. In light of the unqualified opinions issued after KPMG's audits *988 and the Audit Committee's conclusions that there was no fraud related to Levi's establishment of tax reserves and no material misstatements of tax reserves, the court concludes that the complaint fails to raise a plausible inference that the financial statements were misstated in the manner alleged by plaintiffs. However, based on Levi's actual restatements, the court finds that plaintiffs have alleged the requisite falsity with respect to the asserted misstatements of financial information based on (1) Levi taking a tax deduction twice in 2001, and (2) Levi understating its valuation allowance in 2001 and 2002 for net operating losses of foreign subsidiaries in a cumulative loss position. The court therefore addresses plaintiffs' allegations of scienter with respect to these alleged false statements.
B. Scienter
To satisfy the Ninth Circuit standard for scienter, the required state of mind must be deliberate or conscious recklessness. In re Daou, 411 F.3d at 1015. "[P]laintiffs proceeding under the PSLRA can no longer aver intent in general terms of mere `motive and opportunity' or `recklessness,' but rather, must state specific facts indicating no less than a degree of recklessness that strongly suggests actual intent." Silicon Graphics, 183 F.3d at 979. "To meet this pleading requirement, the complaint must contain allegations of specific `contemporaneous statements or conditions' that demonstrate the defendants knew or were deliberately reckless of the false or misleading nature of the statements when made." Ronconi, 253 F.3d at 432 (citation omitted). "[I]in determining whether the pleaded facts give rise to a `strong' inference of scienter, the court must take into account plausible opposing inferences." Tellabs, Inc., 127 S.Ct. at 2509; see also Gompper, 298 F.3d at 897 (same). "A plaintiff alleging fraud in a § 10(b) action . . . must plead facts rendering an inference of scienter at least as likely as any plausible opposing inference." Id. at 2513.
Plaintiffs allege that defendants knew or were deliberately reckless in not knowing that Levi's financial statements did not properly reflect its tax expenses. Plaintiffs allege that Walsh voiced concern to Liang about a "conduit financing scheme" to improperly recognize unrealizable foreign tax credits as deferred tax assets without a valuation allowance. CAC ¶ 185. In May 2002 Walsh informed Chiasson that he believed Levi's reported net income was overstated because Levi was fraudulently releasing reserves and recording unrealizable foreign tax credits as deferred tax assets. Id. ¶ 187. Fong purportedly stated in a meeting that "[w]e are only going to show the auditors what we want them to see." Id. ¶ 186. Plaintiffs also allege that two KPMG tax partners who questioned the propriety of Levi's use of tax reserves, the failure to establish tax reserves, and the illicit tax schemes were replaced by consultants from Deloitte & Touche who previously were the Arthur Andersen tax partners on Levi's audit account. Id. ¶ 197. According to the complaint, Walsh testified that while he was at Levi, he discovered that between 1999 and 2001 Levi had improperly released $200 million of unspecified tax reserves, and that Liang and Wong told him the company released reserves to achieve its desired tax rate. Id. ¶ 176. Plaintiffs also allege that Schmidt testified that in early 2002 he raised concerns of use of improper tax shelters with Liang and Fong who responded by not letting him speak with the IRS. Id. ¶ 178, 194-95.
In addition, plaintiffs offer the statements of two confidential witnesses. One witness worked at Levi from the summer of 2002 to early 2003 and was told not to ask questions or analyze accounts in the *989 consolidated financial reports. The witness, also states that record keeping at Levi was extremely poor or non-existent. Id. ¶ 199. The second witness worked at Levi from 2000 to 2004 as an internal auditor. This witness claims that Levi sought to have tax and other transactions, such as one involving a subsidiary called Finserv, reviewed by Arthur Andersen with whom it shared a long-standing and close relationship. This witness further asserts that Levi outsourced the work because the external auditors employed less due diligence. Id. ¶¶ 200-01.
1. Taking Tax Deduction Twice in 2001
After considering plaintiffs' scienter allegations and the complaint as a whole, the court does not find that plaintiffs have alleged that Levi acted with scienter when it took a tax deduction twice in 2001 resulting in an understatement of tax expense in its 2001 income statement. In fact, plaintiffs' allegations more plausibly suggest that Levi recorded the deduction twice inadvertently. For example, plaintiffs allege that after KPMG discovered the double deduction it advised Levi that its global controller's group, corporate controller, and CFO needed to increase their involvement in the review and disclosure of tax items as they relate to GAAP and that it needed to appoint tax personnel with sufficient expertise in tax GAAP issues. Id. ¶ 179-80. These allegations do not support an inference that the double deduction resulted from scienter on the part of defendants.
2. Understatement of Valuation Allowance for Foreign Net Operating Losses
As discussed earlier, Levi also restated its 2001 and 2002 valuation allowance to reserve for net operating losses of foreign subsidiaries who were in a cumulative net loss position. A deferred tax asset represents an estimated future tax benefit. See SFAS No. 109, ¶ 8(b). It may result from temporary timing differences[21] or from carryforwards, such as a net operating loss carryforward. Id.; ¶ 17(c). Deferred tax assets (and liabilities) are measured as of the date of the financial statements in accounting for income taxes based on the then-applicable tax rates. Id. However, if available evidence indicates that all or a portion of a deferred tax asset is not expected to be realized, the measurement of the deferred tax asset is reduced accordingly:
Reduce deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50 percent) that some portion or all of the deferred tax assets will not be realized. The valuation allowance should be sufficient to reduce the deferred tax asset to the amount that is more likely than not to be realized.
Id. ¶¶ 8(d), 17(e). "All available evidence, both positive and negative, should be considered to determine whether, based on the weight of the evidence, a valuation allowance is needed." Id. ¶ 20.
KPMG's reaudit of Levi's 2001 and 2002 financial statements revealed that Levi's *990 valuation allowance for deferred' tax assets was understated by approximately $19 million in 2001 and 2002. Specifically, Levi did not record a sufficient valuation allowance against deferred tax assets consisting of net operating loss carryforwards for foreign subsidiaries in a cumulative net loss position. In other words, under SFAS No. 109, KPMG concluded that, based on the available evidence at the time, Levi should have concluded that certain net operating loss carryforwards for its foreign subsidiaries would more likely than not be unrealizable when it issued its financial statements for 2001 and 2002. "Violations of GAAP standards . . . could provide evidence of scienter." Greebel v. FTP Software, Inc., 194 F.3d 185, 203 (1st Cir.1999). Nevertheless, although Levi misstated its 2001 and 2002 financial statements by failing to record a proper valuation allowance, it is unclear from plaintiffs' allegations that such failure was intentional or deliberately reckless. Notably, although plaintiffs point to testimony by Schmidt and Walsh, none of those allegations relates to decisions to understate the valuation allowance for foreign net operating loss carryforwards. Rather, plaintiffs' allegations relate to purported improper establishing, maintaining, and release of excess tax reserves, failure to record valuation allowances for deferred tax assets consisting of foreign tax credits, and engaging in purportedly fraudulent tax shelters and schemes. As such, the court finds that plaintiffs' complaint has failed to allege with particularity a strong showing of scienter with respect to defendants' misstatement of its valuation allowance for foreign net operating loss carryforwards in 2001 and 2002.[22], [23]See Tellabs, 127 S.Ct. at 2510 ("To determine whether the plaintiff has alleged facts that give rise to the requisite `strong inference' of scienter, a court must consider plausible nonculpable explanations for the defendant's conduct, as well as inferences favoring the plaintiff.").
3. Increase in Valuation Allowance in 2003
Plaintiff's also argue that the significant increase in Levi's valuation allowance in 2003 support a conclusion that Levi fraudulently understated its valuation allowance in previous years. The court is unpersuaded. Plaintiffs allege that Levi increased its deferred tax asset valuation allowance account from $32.7 million at the end of the 2002 fiscal year to $349 million at the end of the 2003 fiscal year. CAC *991 ¶¶ 42, 53, 63. Plaintiffs appear to argue that Levi recorded the increase in the valuation allowance in 2003 even though it should have been recorded, at least in part, in earlier years due to misstatements in those prior years. However, plaintiffs' allegations, viewed in light of the complaint and the additional documents for which the court has taken judicial notice, do not support such a contention.
First, the 2003 financial statements, including the need to increase the valuation allowance in 2003, was a product of an audit by KPMG in which KPMG issued an unqualified opinion. Under GAAP, changes in valuation allowances are to be recorded in the period in which the available facts and evidence indicate that it is more likely than not that the associated deferred tax assets will not be realized in future periods; thus, a change in circumstances warranting an increase in the valuation allowance in 2003 would result in an increase in the valuation allowance in 2003. See SFAS No. 109 ("The effect of a change in the beginning-of-the-year balance of a valuation allowance that results from a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years ordinarily shall be included in income from continuing operations."). Second, while the court agrees with plaintiffs that an independent audit cannot shield a corporate defendant from liability for intentional misstatements, see Marksman Partners, 927 F.Supp. at 1314 n. 13; Aldridge, 284 F.3d at 83, here, plaintiffs have alleged no facts suggesting that KPMG did not perform its audit of Levi's 2003 financial statements properly or issued an unqualified opinion in error.[24], [25] Plaintiffs' allegation that Fong remarked at a meeting that "[w]e are only going to show the auditors what we want them to see," without more, is insufficient to support an inference that Levi misled KPMG. Because the court concludes that plaintiffs' allegations are insufficient to show with particularity that defendants acted with scienter as to any material false or misleading statements or omissions, the court dismisses plaintiffs' § 10(b) claim for failure to state a claim.
C. Control Person Liability
Plaintiffs' eighth claim alleges control person liability against Marineau, Chiasson, and Grellman pursuant to § 20(a) of the Exchange Act premised on the alleged § 10(b) violations. "In order to prove a prima facie case under § 20(a), plaintiff must prove: (1) a primary violation of federal securities laws; and (2) that the defendant exercised actual power or control over the primary violator[.]" Howard v. Everex Systems, Inc., 228 F.3d 1057, 1065 (9th Cir.2000). Because the court concludes that plaintiffs have not alleged that defendants violated § 10(b), plaintiffs' § 20(a) claim also fails.
IV. ORDER
For the foregoing reasons, the court (1) DENIES defendants' motion to dismiss *992 plaintiffs' § 11 claims as to those plaintiffs who purchased Levi registered bonds in the after market traceable to the April 2001 or June 2003 registration statements, (2) DENIES defendants' motion to dismiss plaintiffs' § 15 claims, and (3) GRANTS defendants' motion to dismiss as to plaintiffs' other claims with twenty days' leave to amend.
NOTES
[1] For purposes of this motion, unless otherwise specified "Levi" refers to both Levi and the individual defendants.
[2] Levi's fiscal year ends on the last Sunday of November each year. The relevant year end dates are November 25, 2001, November 24, 2002, and November 30, 2003. Defs.' RJN, Ex. 1 at 81.
[3] The court hereby grants defendants' request that the court take judicial notice of Levi's SEC filings referenced in plaintiff's' CAC. See Dreiling v. American Exp. Co., 458 F.3d 942, 946 (9th Cir.2006) (SEC filings proper matter for judicial notice by court).
[4] Schmidt and Walsh have filed a State Complaint, CGG-03-419398, see Req. J. Notice Supp. Def.'s Mot. Dismiss ("Req. J. Notice") Ex. 3, and a Federal Complaint, C-04-01026-RMW, see Req. J. Notice Ex. 2, which add clarification to certain allegations in the Consolidated Amended Complaint ("CAC"). The court takes judicial notice of these complaints. See Fecht v. Price Co., 70 F.3d 1078, 1080 n. 1 (9th Cir.1995) ("documents whose contents are alleged in a complaint and whose authenticity no party questions, but which arc not physically attached to the pleading, may be considered in ruling on a Rule 12(b)(6) motion to dismiss").
[5] Plaintiff's allege that Walsh began questioning Fong about the practices set forth in § B above.
[6] The parties refer to Deloitte & Touche ("Deloitte") as another independent accounting firm retained by the company, but the specific scope and timing of Deloitte's work remain unclear.
[7] Neither party specifies what "LSLA" or "BSEI" stands for.
[8] Specifically, plaintiff's allege that Levi created the LSLA tax shelter in 1976 by making a $100,000 capital investment into the LSLA partnership, which had no business purpose, employees or assets. LSLA then borrowed $10 million in Brazilian currency from local banks in Brazil, and used the funds to buy a minority interest in LS Brazil, an indirectly held subsidiary of Levi. CAC ¶ 194. LS Brazil refinanced a portion of the loan in 1989, and in 1990 the remainder of this loan was refinanced by BSEI, a domestic subsidiary of Levi.
[9] Because the earliest financial statement at issue here is for fiscal year 1996, these allegations are not relevant to the present motion.
[10] Certain institutional investors that own and invest on a discretionary basis at least $ 100 million are known as QIBs.
[11] As explained by the court in In re Livent Noteholders Sec. Litig. ("Livent I"), an Exxon Capital transaction is a capital raising technique where an issuer first sells securities to an initial purchaser in a private offering exempt from the registration requirements of the Securities Act, who is then authorized to sell the unregistered securities to QIBs in a private transaction similarly exempt from registration under Rule 144A. The court elaborated:
Rule 144A offerings are often followed by SEC-registered exchange offers (referred to as "AB exchange offers" or "Exxon Capital exchange offers") where the issuer (usually pursuant to a contractual commitment in the Rule 144A offering documents) offers to holders of the Rule 144A securities to exchange those securities for similar securities which have been registered and, therefore, are freely resalable. Participants in the exchange offer receive freely resalable securities only if they are not affiliated with the issuer, acquired the original securities in the ordinary course of business and do not have an arrangement with the issuer for the distribution of the exchange securities. Under these circumstances, the exchange of privately placed securities for similar registered securities occurs without subjecting the holders to classification as underwriters.
151 F. Supp. 2d 371, 431 (S.D.N.Y.2001) (citing Exxon Capital Holding Corp., SEC No-Action Letter (May 13, 1988), Morgan Stanley & Co. Incorporated, SEC No-Action Letter (June 5, 1991)). By avoiding a designation as an "underwriter," private purchasers are not deemed to be engaged in distribution of covered securities, and are able to resell those securities without filing their own registration statement. See id. (citing Securities Act § 4(1), 15 U.S.C. § 77d(1)). This in turn "enables issuers to raise capital by promoting liquidity in the secondary' markets for the securities and also enhances the attractiveness of domestic markets to foreign and local investors." Id.
[12] The court notes that in Stack v. Lobo, 903 F. Supp. 1361, 1375-76 (N.D.Cal.1995), the court held that § 11 does not extend to after market transactions. On the other hand, the court in Feiner v. SS&C Techs., Inc., 47 F. Supp. 2d 250 (D.Conn.1999), held that "any purchaser has standing to sue under section 11 so long as the securities purchased can be traced back to the offering containing the allegedly defective registration statement." Id. at 252 (citing In re Fine Host Corp. Sec. Litig., 25 F. Supp. 2d 61, 67 (D.Conn.1998)) (internal quotation marks omitted). The court also relied in part on the Second Circuit's interpretation of § 11 in Barnes v. Osofsky, 373 F.2d 269 (2d Cir.1967). The court reasoned that because the case involved an initial public offering, by definition, all shares purchased by the public could be traced back to the initial public offering regardless of whether the shares were purchased during the initial distribution.
[13] The 2001 financials were included in the June 2003 registration statement, but not the April 2001 registration statement.
[14] Section 12(a)(2), codified at 15 U.S.C. § 771(a)(2), provides in relevant part:
Any person who
(2) offers or sells a security (whether or not exempted by the provisions of section 77c of this title, other than paragraphs (2) and (14) of subsection (a) of said section), by the use of any means or instruments of transportation or communication in interstate commerce or of the mails, by means of a prospectus or oral communication, which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable, subject to subsection (b) of this section, to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction, to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if he no longer owns the security.
[15] It is unclear from plaintiff's' complaint whether the alleged false financial information are contained in both the prospectus and the registration statement for each exchange offering.
[16] In 1995 the statute was amended and what was formerly § 12(2) became § 12(a)(2).
[17] It appears undisputed that these purchases were not made directly from Levi.
[18] The regulations generally provide that a dealer has certain obligations to deliver a prospectus for securities transactions during either the 40 or 90 day period after the effective date of a registration statement as specified in § 4(3) of the Securities Act, subject to certain exceptions. Section 4(3) sets forth transactions that are exempt from the registration requirements.
[19] Although the court stated that § 12(a)(2) "applies only to initial public offerings, not secondary transactions," the court's discussion makes clear that it was not distinguishing between an issuer's initial public offering and subsequent public offerings by the issuer (which is sometimes referred to as secondary or follow-on offerings), but rather distinguishing between purchases pursuant to a public offering by an issuer and after market (or secondary) transactions.
[20] However, the court notes that plaintiff's did not allege the financial statements were misstated based on a failure to record a valuation allowance for deferred tax assets consisting of net operating losses of foreign subsidiaries in a cumulative loss position.
[21] Temporary differences result from differences in how tax laws and financial accounting standards (for financial reporting purposes) differ in recognition and measurement of assets, liabilities, equity, revenues, expenses, gains, and losses. For example, an expense properly reflected on the income statement under financial accounting standards but which is not a current year tax expense item results in a deferred tax asset to reflect, on the financial statements, the expected future tax benefit from that expense. See SFAS No. 109 ¶¶ 10-15.
[22] Although plaintiffs allege that defendants were motivated by receipt of stock options based on Levi's reported profit, see CAC ¶ 202, it is undisputed that Levi's stock is not publicly-traded. There are no allegations of insider sales of stock. Plaintiffs also generally allege that Chiasson and Fong received substantial bonuses and salary in 2002 and that absent inflated results they would have received lesser bonuses; however, plaintiffs provide no particularized allegations of how the alleged fraud led to the compensation paid to Chiasson and Fong. Thus, these allegations are insufficient to support a strong inference of scienter. Moreover, Fong is not named as a defendant.
[23] Plaintiffs allege that defendants were motivated to commit or deliberately disregard fraudulent accounting practices because they were highly motivated to raise $1 billion from investors in public offerings. However, as discussed above, Levi raised capital in private offerings exempt under Rule 144A. The subsequent registrations of bonds were in connection with Exxon Capital exchange offers to enable the holders of unregistered Levi bonds to exchange their bonds for freely tradeable registered bonds with the exact same terms. In other words, Levi did not receive any additional capital in connection with the registration of bonds in the April 2001 Offering and the June 2003 Offering. Plaintiffs do not appear to allege that there were any false or misleading statements in the Rule 144A offering documents.
[24] Notably, here, KPMG had notice of the specific allegations made by plaintiffs since they are largely the same complaints plaintiffs made in their state complaints, which were widely publicized at the time. Nevertheless, after investigation, KPMG found only accounting errors that largely do not overlap with plaintiffs' claims.
[25] Plaintiffs note that after KPMG joined as the company's auditors, Levi made three separate disclosures in September 2003, October 2003 and again in February 2004, and that this requires a conclusion that KPMG was less than thorough in performing its audits. Opp. at 9-10. This is at best a neutral fact for plaintiffs, as multiple restatements also could lead to an inference that KMPG was extremely thorough in its audit of Levi. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2660153/ | UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________
)
ANGELA BURNS-RAMIREZ, )
)
Plaintiff, )
)
v. ) Civil Action No. 12-1720 (RMC)
)
JANET NAPOLITANO, Secretary, )
Department of Homeland Security )
)
Defendant. )
_________________________________ )
OPINION
Angela Burns-Ramirez, a former Secret Service employee, brought suit claiming
harassment and discrimination based on her gender and her race (African American) and
retaliation when she complained. These claims are based in part on allegations that she was
subject to adverse employment actions when her Top Secret Security Clearance was suspended
twice and later revoked. Defendant moves to dismiss in part, asserting inter alia that all claims
regarding the Security Clearance are non-justiciable. The motion will be granted with regard to
claims that challenge decisions to investigate, suspend, and/or revoke the Security Clearance of
Ms. Burns-Ramirez. However, the motion will be denied with regard to claims asserting that
agency employees acted with illegal discriminatory or retaliatory motive by knowingly reporting
false information about her to the security division of the Secret Service.
I. FACTS
When she retired in October 2012, Ms. Burns-Ramirez was a GS-14 employee
who had been employed by the Secret Service for almost three decades. This suit relates to
events that occurred during her last three years with the Service. The Amended Complaint [Dkt.
7] alleges as follows:
1
(1) In 2009, Ms. Burns-Ramirez bid on twelve different GS-15 positions but was
not selected due to her gender and race.
(2) In 2009 and 2010, she received low performance evaluations that were
undeserved and discriminatory.
(3) In July 2010, she complained that her first- and second-line supervisors
subjected her to harassment and retaliation. The Service did not investigate her complaint as
they did when a white woman complained.
(4) On March 2, 2011 Secret Service Agents came to her home and confiscated
her weapon, handcuffs, radio, commission book, government car, government computer, and
official credentials; on March 8, 2011, the Service suspended her Top Secret Security Clearance.
About two weeks later, the Service reinstated her Security Clearance.
(5) On June 15, 2011 Ms. Burns-Ramirez’s Security Clearance was suspended
again.
(6) On September 19, 2011 her Security Clearance was revoked. Because a
Security Clearance is mandatory for a Secret Service Agent and she no longer had one, Ms.
Burns-Ramirez retired, effective October 1, 2012.
(7) Ms. Burns-Ramirez alleges that the investigation, suspension, and revocation
of her Security Clearance were due to co-workers’ false statements about her––statements they
made with discriminatory and/or retaliatory motive, knowing them to be false.
Ms. Burns-Ramirez now sues the Department of Homeland Security, asserting
illegal discrimination and retaliation by its constituent agency, the Secret Service. The Amended
Complaint asserts six counts:
2
Count I – Race discrimination in violation of Title VII of the Civil Rights Act, 42
U.S.C. 2000e, et seq. (Title VII);
Count II – Retaliation in violation of Title VII;
Count III – Gender discrimination in violation of Title VII;
Count IV – Hostile work environment in violation of Title VII;
Count V – Discrimination in violation of 42 U.S.C. § 1983; and
Count VI – Discrimination in violation of 42 U.S.C. § 1981.
The Secret Service filed a motion for partial dismissal [Dkt. 10], contending that
(1) all claims relating to Ms. Burns-Ramirez’s Security Clearance are non-justiciable and
(2) Counts V and VI must be dismissed because Title VII provides the exclusive remedy. 1 Ms.
Burns-Ramirez concedes that Counts V and VI can be dismissed with prejudice, see Resp. [Dkt.
12], but insists that all claims regarding her Security Clearance should go forward. See Opp’n
[Dkt. 13]. The motion to dismiss claims relating to the Security Clearance will be granted in
part.
II. LEGAL STANDARD
A motion to dismiss claims as nonjusticiable is a motion to dismiss for lack of
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). When reviewing such a
motion, a court must review the complaint liberally, granting the plaintiff the benefit of all
inferences that can be derived from the facts alleged. Barr v. Clinton, 370 F. 3d 1196, 1199
(D.C. Cir. 2004). Nevertheless, “the court need not accept factual inferences drawn by plaintiffs
if those inferences are not supported by facts alleged in the complaint, nor must the Court accept
plaintiff=s legal conclusions.” Speelman v. United States, 461 F. Supp. 2d 71, 73 (D.D.C. 2006).
1
See Brown v. Gen. Servs. Admin., 425 U.S. 820, 835 (1976) (holding that Title VII provides
the exclusive remedy for claims of discrimination in federal employment).
3
However, a court may consider materials outside the pleadings. Settles v. U.S. Parole Comm’n,
429 F.3d 1098, 1107 (D.C. Cir. 2005). The party claiming subject matter jurisdiction bears the
burden of demonstrating that such jurisdiction exists. Khadr v. United States, 529 F.3d 1112,
1115 (D.C. Cir. 2008); see Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377
(1994) (noting that federal courts are courts of limited jurisdiction and “[i]t is to be presumed
that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests
upon the party asserting jurisdiction.”) (internal citations omitted).
III. ANALYSIS
The Secret Service asserts that the Security Clearance claims are nonjusticiable
under Supreme Court law established in Navy v. Egan, 484 U.S. 518 (1988). Mr. Egan was hired
by the Navy as a laborer, contingent upon his obtaining a security clearance. Because he had a
prior criminal record and a history of alcoholism, clearance was denied. Mr. Egan objected,
asserting the Navy that he had paid his debt to society for his crimes and that he had not abused
alcohol for three years. The only position available required a security clearance, and thus the
Navy removed Mr. Egan from its employment. Mr. Egan sought review by the Merit Service
Protection Board (MSPB). MSPB determined that it had no authority to review the merits of the
security clearance determination; on appeal, the Federal Circuit reversed. The Supreme Court
granted certiorari and held that MSPB lacked authority to review the clearance decision because
such decisions are within the sole province of the Executive. 484 U.S. at 527-30. The
Government has a compelling interest in withholding national security information from
unauthorized individuals and the authority to protect such information rests in the Executive
Branch. Id. at 527. Accordingly, the Court explained:
[T]he protection of classified information must be committed to
the broad discretion of the agency responsible, and this must
include broad discretion to determine who may have access to it.
4
Certainly, it is not reasonably possible for an outside nonexpert
body to review the substance of such judgment and to decide
whether the agency should have been able to make the necessary
affirmative prediction with confidence. Nor can such a body
determine what constitutes an acceptable margin of error in
assessing potential risk. The Court accordingly has acknowledged
that with respect to employees in sensitive positions there is a
reasonable basis for the view that an agency head who must bear
responsibility for the protection of classified information
committed to his custody should have the final say in deciding
whether to repose his trust in an employee who has access to such
information. As noted above, this must be a judgment call.
484 U.S. at 529 (quotations and citations omitted). Because national security policy is in the
province and responsibility of the Executive Branch, courts have been reluctant to intrude. Id. at
529-30.
The D.C. Circuit has applied Egan in Title VII cases, finding that judicial review
of adverse employment actions is barred when the issue is denial or revocation of a security
clearance. See Bennett v. Chertoff, 425 F.3d 999, 1001 (D.C. Cir. 2005); Ryan v. Reno, 168 F.3d
520, 524 (D.C. Cir. 1999). Even so, the D.C. Circuit has carved out a narrow exception: a
plaintiff may proceed on a Title VII claim alleging that agency employees, motivated by
discriminatory or retaliatory animus, falsely reported the plaintiff to the agency’s security
division, knowing the report was false. Rattigan v. Holder (Rattigan I), 643 F.3d 975 (D.C. Cir.
2011), aff’d on rehr’g, 689 F.3d 764 (D.C. Cir. 2012) (Rattigan II). The Circuit decided that this
exception does not conflict with Egan because Egan shields from judicial review only decisions
by security division employees who are trained and authorized to make security clearance
determinations, not the actions of other employees who refer matters to the security division.
Rattigan I, 643 F.3d at 983.
In its motion for rehearing of Rattigan I, the Government argued that judicial
review of employee reports to security would chill such reporting, contrary to national security
5
policy. Rattigan II, 689 F.3d at 766. Executive Order 12,968 provides that employees with
access to classified information “are encouraged and expected to report any information that
raises doubts as to whether another employee’s continued eligibility for access to classified
information is clearly consistent with the national security.” Exec. Order No. 12,968 § 6.2(b), 60
Fed. Reg. 40,245, 40,253 (Aug. 2, 1995). Due to the seriousness of the issue raised, the panel
agreed to rehear the matter, especially with regard to the allegation that potential Title VII
liability would chill the reporting of security concerns. Rattigan II, 689 F.3d at 767.
The Circuit reaffirmed Rattigan I, finding that Egan bars courts from reviewing
only security clearance-related decisions made by trained security personnel and does not bar
courts from reviewing the decisions of nonexpert employees who merely refer a matter to
security. Id. at 767-68. To avoid the risk of chill, however, Rattigan II imposes a scienter
requirement––a Title VII claimant may proceed “only if he can show that agency employees
acted with retaliatory or discriminatory motive in reporting or referring information that they
knew to be false.” Id. at 771 (emphasis added). Because security is not aided by the reporting of
false information, the Circuit ruled that suits alleging knowing false reporting would not impede
the acquisition of useful information. Id. at 770.
In Rattigan II, the Government expressed concern that plaintiffs would “simply
allege knowing falsity in every case.” Id. at 770. The Circuit found this concern insufficient to
justify “sweeping immunity from Title VII,” noting that “though allegations of knowing falsity
may be easy to make, they are, in our experience, far from easy to prove. If this evidentiary
difficulty fails to deter unfounded claims, district courts can be counted upon to weed them out at
summary judgment.” Id. at 771.
6
The Secret Service attempts to distinguish Rattigan I and II from this case by
pointing out that Mr. Rattigan’s clearance was never actually revoked. The FBI initiated a
security clearance investigation, determined that there was no security risk, and closed the
investigation. Rattigan I, 643 F.3d at 979. The Secret Service reasons that the Rattigan
decisions were grounded on this critical fact––“[b]ecause his security clearance was not revoked,
the Court concluded that a judicial inquiry into the propriety of the referrals to the Security
Division would not implicate the merits of a decision to revoke a security clearance.” Reply
[Dkt. 15] at 3. Because Ms. Burns-Ramirez’s Security Clearance was revoked, the Secret
Service insists that permitting her clearance-related claims to go forward would necessarily and
improperly require the Court to look into the merits of the revocation decision. The Service
argues that “to second–guess the reasons for the supervisory referral, or any investigation or
review that resulted from the referral, would be akin to second-guessing [the security division’s]
decision to revoke her [Top Secret Security Clearance].” Id. at 4.
The Secret Service misinterprets the case law. While it is true that Mr. Rattigan’s
security clearance was not revoked, the reasoning of Rattigan I and II was not in any way based
on this fact. The D.C. Circuit carefully balanced the need for security against a Title VII
claimant’s rights, explaining “it is our duty not only to follow Egan, but also to preserve to the
maximum extent possible Title VII’s important protections against workplace discrimination and
retaliation.” Rattigan II, 689 F.3d at 770. The Circuit achieved this compromise by declaring
that a Title VII claimant may proceed only on a claim that an agency employee acted with
retaliatory or discriminatory motive when knowingly reporting or referring false information to
security. Id. at 771.
7
The Secret Service also argues that courts do not have jurisdiction to hear a claim
challenging the “underlying referral or initiation” of a security investigation, relying on decisions
from other circuits. See Reply at 4-5 (citing Hill v. White, 321 F.3d 1334 (11th Cir. 2003);
Becerra v. Dalton, 94 F.3d 145 (4th Cir. 1996); Panoke v. U.S. Army Military Police Brigade,
307 F. App’x 54 (9th Cir. 2009)). The underlying facts in those cases are not clear. Hill and
Becerra held that the “initiation” of a security investigation was unreviewable, see Hill, 321 F.3d
at 1335-36, Becerra, 94 F.3d at 148-49; and Panoke held that “circumstances surrounding” a
clearance revocation were unreviewable. Panoke, 307 F. App’x at 56. These cases may have
dealt with security personnel decisions to investigate (decisions that are not reviewable under
Egan) or they may have dealt with referrals to security by non-security personnel (decisions that
are reviewable under Rattigan I and II).
Even if Hill, Becerra, and Panoke in fact dealt with referrals to security by non-
security personnel, this Court is bound by D.C. Circuit precedent. Rattigan I and II are clear that
security personnel decisions regarding whether to investigate, suspend, or revoke a clearance are
protected from review, but the actions of other employees who knowingly and falsely refer a
matter for investigation due to discrimination or retaliation are not protected from review.
The Amended Complaint here makes claims that are barred by Egan and claims
that may proceed under Rattigan I and II. To the extent that Ms. Burns-Ramirez challenges
decisions by security personnel to investigate, suspend, or revoke her Security Clearance, Egan
makes such claims nonjusticiable, and the Court lacks jurisdiction to address them. However, to
the extent that she challenges the actions of Secret Service employees who allegedly acted with
discriminatory or retaliatory motive by knowingly making false reports to security, such claims
8
may proceed. The Court expresses no opinion whether such claims will pass muster on summary
judgment.
IV. CONCLUSION
For the reasons stated above, the motion to dismiss filed by the Secret Service
[Dkt. 10] will be granted in part and denied in part. The Court lacks jurisdiction to review claims
based on the decisions of security personnel to investigate, suspend, or revoke Ms. Burns-
Ramirez’s Security Clearance, and her claims based on these allegations will be dismissed. On
the other hand, claims based on the actions of Secret Service employees who allegedly acted
with discriminatory or retaliatory motive by making false reports to security, knowing that such
reports were false, may proceed. Further, by agreement of the parties, Counts V and VI will be
dismissed with prejudice. A memorializing Order accompanies this Opinion.
Date: August 27, 2013
/s/
ROSEMARY M. COLLYER
United States District Judge
9 | 01-03-2023 | 04-03-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2699970/ | [Cite as State v. Wilson, 2011-Ohio-4651.]
[Please see nunc pro tunc opinion at 2011-Ohio-5371.]
COURT OF APPEALS
LICKING COUNTY, OHIO
FIFTH APPELLATE DISTRICT
STATE OF OHIO JUDGES:
Hon. William B. Hoffman, P.J.
Plaintiff-Appellant Hon. Sheila G. Farmer, J.
Hon. Julie A. Edwards, J.
-vs-
SHANE WILSON Case No. 11-CA-20
Defendant-Appellee OPINION
CHARACTER OF PROCEEDING: Appeal from the Newark Municipal Court,
Case No. 10TRC09710
JUDGMENT: Reversed and Remanded
DATE OF JUDGMENT ENTRY: September 13, 2011
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
TRICIA M. MOORE DAVID B. STOKES
Assistant Law Director 21 W. Church Street
40 W. Main Street Suite 206
Newark, OH 43055 Newark, OH 43055
Licking County, Case No. 11-CA-20 2
Hoffman, P.J.
{¶1} Plaintiff-appellant State of Ohio appeals the February 11, 2011 Judgment
Entry entered by the Licking County Court of Common Pleas granting Defendant-
appellee Shane Wilson’s motion to suppress.
STATEMENT OF THE FACTS AND CASE
{¶2} On October 10, 2010, officers were dispatched to the scene of an accident
on State Route 79. Ohio State Trooper Thaxton testified he responded to a head on
crash with severe damage to several vehicles involved in the accident. Approximately
four people were transported to the hospital as a result of injuries sustained in the
accident.
{¶3} A Chevy Blazer, later determined to belong to Appellee, was found at the
scene with extensive damage. Ohio State Highway Patrol Trooper Thaxton testified
there was “quite a bit of blood” on the interior of the driver compartment and on the door
pillar. The windshield was broken and there was heavy damage to the left front quarter
panel. Appellee was not at the scene of the accident.
{¶4} State Highway Patrol Trooper Shawn Eitel left the scene of the accident
and proceeded to Appellee’s residential address. Upon arriving at the residence,
Trooper Eitel met up with Deputy Dirk Williamson of the Licking County Sheriff’s Office.
Prior to Trooper Eitel’s arrival, Deputy Williamson made multiple attempts to get
someone to come to the door of the residence, but was unsuccessful.
{¶5} Trooper Eitel testified he noticed a key in the door and a sliver of blood on
the door handle. Trooper Eitel and Deputy Williamson decided to enter the home to
make certain the person involved in the accident did not need medical care. The door
Licking County, Case No. 11-CA-20 3
to the residence was unlocked with the key in the lock. As the officers opened the door,
they announced their presence and called out for Appellee, but no one responded.
They eventually found Appellee in a back bedroom, asleep or passed out on the bed.
They observed injuries to Appellee’s head and arm. Once awake and walking, the
officers smelled a strong odor of alcohol on Appellee and observed Appellee had
difficulty walking.
{¶6} Subsequently, Appellee was cited for operating a motor vehicle while
under the influence of alcohol. On October 26, 2010, Appellee filed a motion to
suppress arguing the State failed to demonstrate exigent circumstances justifying the
warrantless entry into his home. On January 10, 2011, the trial court denied the motion
finding exigent circumstances existed to justify the officers’ warrantless entry into the
residence.
{¶7} On January 28, 2011, Appellee filed a motion to reconsider. On February
11, 2011, the trial court issued a second entry granting the motion to suppress finding
exigent circumstances did not exist to justify the warrantless entry into the home.
{¶8} The State of Ohio now appeals1, assigning as error:
{¶9} "I. THE TRIAL COURT ERRED IN GRANTING THE DEFENDANT'S
MOTION TO SUPPRESS THE WARRANTLESS ENTRY INTO THE APPELLEE'S
HOME BASED ON EXIGENT CIRCUMSTANCE."
{¶10} Appellate review of a trial court's decision to grant a motion to suppress
involves a mixed question of law and fact. State v. Long (1998), 127 Ohio App.3d 328,
1
Appellee asserts the State of Ohio failed to comply with Ohio Criminal Rule 12(K)
when filing the within appeal. Specifically, Appellee maintains the State did not file the
certification required by the rule. Upon review, the record reflects the State filed the
Certification of the Prosecuting Attorney on February 18, 2011, in the trial court docket.
Licking County, Case No. 11-CA-20 4
713 N.E.2d 1. During a suppression hearing, the trial court assumes the role of trier of
fact and, as such, is in the best position to resolve questions of fact and to evaluate
witness credibility. State v. Brooks, (1996), 75 Ohio St.3d 148, 661 N.E.2d 1030. A
reviewing court is bound to accept the trial court's findings of fact if they are supported
by competent, credible evidence. State v. Metcalf (1996), 111 Ohio App.3d 142, 675
N.E.2d 1268. Accepting these facts as true, the appellate court must independently
determine as a matter of law, without deference to the trial court's conclusion, whether
the trial court's decision meets the applicable legal standard. State v. Williams (1993),
86 Ohio App.3d 37, 619 N.E.2d 1141.
{¶11} There are three methods of challenging a trial court's ruling on a motion to
suppress on appeal. First, an appellant may challenge the trial court's finding of fact. In
reviewing a challenge of this nature, an appellate court must determine whether the trial
court's findings of fact are against the manifest weight of the evidence. See State v.
Fanning (1982), 1 Ohio St.3d 19, 1 Ohio B. 57, 437 N.E.2d 583; and State v. Klein
(1991), 73 Ohio App.3d 486, 597 N.E.2d 1141. Second, an appellant may argue that the
trial court failed to apply the appropriate test or correct law to the findings of fact. In that
case, an appellate court can reverse the trial court for committing an error of law. See
State v. Williams (1993), 86 Ohio App.3d 37, 619 N.E.2d 1141. Finally, an appellant
may argue the trial court has incorrectly decided the ultimate or final issues raised in a
motion to suppress. When reviewing this type of claim, an appellate court must
independently determine, without deference to the trial court's conclusion, whether the
facts meet the appropriate legal standard in any given case. State v. Curry (1994), 95
Ohio App.3d 623, 620 N .E.2d 906.
Licking County, Case No. 11-CA-20 5
{¶12} This Court recently addressed the issue raised herein in State v. Bethel
Tuscarawas App. No. 10-AP-35, 2011-Ohio-3020, holding:
{¶13} “The Fourth Amendment of the Constitution of the United States
guarantees each citizen a right to be free from unreasonable governmental intrusions.
Specifically, it states:
{¶14} “‘The right of the people to be secure in their persons, houses, papers,
and effects, against unreasonable searches and seizures, shall not be violated, and no
Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and
particularly describing the place to be searched, and the persons or things to be seized.’
{¶15} “‘The Fourth Amendment's prohibition against unreasonable searches and
seizures has always been interpreted to prevent a search that is not limited to the
particularly described ‘place to be searched, and the persons or things to be seized,’
U.S. Const., Amend. IV, even if the search is made pursuant to a warrant and based
upon probable cause.” Florida v. Royer (1983), 460 U .S. 491, 499, 103 S.Ct. 1319.
{¶16} “The predicate for permitting seizures on suspicion short of probable
cause ‘is that law enforcement interests warrant a limited intrusion on the personal
security of the suspect. The scope of the intrusion permitted will vary to some extent
with the particular facts and circumstances of each case. This much, however, is clear:
an investigative detention must be temporary and last no longer than is necessary to
effectuate the purpose of the stop. Similarly, the investigative methods employed should
be the least intrusive means reasonably available to verify or dispel the officer's
suspicion in a short period of time.’ Id., at 500, citing, e.g., United States v. Brignoni–
Licking County, Case No. 11-CA-20 6
Ponce, 422 U.S., at 881–882, 95 S.Ct., at 2580–2581; Adams v. Williams, 407 U.S., at
146, 92 S.Ct., at 1923.
{¶17} “It is the State's burden to demonstrate that the seizure it seeks to justify
was sufficiently limited in scope and duration to satisfy the conditions of an investigative
seizure.
{¶18} “* * *
{¶19} “An exception to the warrant requirement of the Fourth Amendment
involves exigent circumstances. Exigent circumstances are synonymous with an
emergency, whether it is actual or ongoing. Mincey v. Arizona (1978), 437 U.S. 385, 98
S.Ct. 2408, 57 L.Ed.2d 290. In State v. Hyde (1971), 26 Ohio App.2d 32, 34, 268
N.E.2d 820, the Ninth District Court of Appeals explained the following:
{¶20} “ ‘The right of the police to enter and investigate in an emergency without
accompanying intent to either search or arrest is inherent in the very nature of their
duties as peace officers. * * *.’ United States v. Barone (C.C.A.2), 330 F.2d 543, at 545.
{¶21} “‘Breaking into a home by force is not illegal if it is reasonable in the
circumstances.' ‘The need to protect or preserve life or avoid serious injury is
justification for what would be otherwise illegal absent exigency or emergency.’ State v.
Burgess (Nov. 4, 1999), 5th Dist No. 99–CA–0035, quoting Wayne v. United States
(D.C.Cir.), 318 F.2d 205, at 212. See also, State v. Oliver, 91 Ohio App.3d 607, 632
N.E.2d 1382.
{¶22} “In the treatise, ‘Ohio Arrest, Search and Seizure’ (1999 Ed.), Professor
Lewis Katz discussed the scope of an emergency search at 185–286, Section 10.5, as
follows:
Licking County, Case No. 11-CA-20 7
{¶23} “‘Exigent circumstances create justification for limited warrantless
searches. The duration of the intrusion and the scope of the search are governed by the
constitutional command of reasonableness, which will be evaluated in terms of the
emergency. Once the emergency conditions have been alleviated, further intrusion must
be sanctioned by a warrant. Any other interpretation of the emergency exception would
create another general exception that would swallow the Fourth Amendment principle
that warrantless intrusions are per se unreasonable. Furthermore, searches that extend
beyond the scope of the actual emergency lead to an inference that the emergency is
serving as a pretext to conduct a warrantless search.’ (Footnotes omitted.)”
{¶24} In the case herein, Trooper Eitel testified he observed a lot of damage to
the Chevy Blazer sustained in the accident. He testified there was a lot of blood around
the driver’s door and around the driver’s area. Tr. at 7.
{¶25} Trooper Eitel further testified:
{¶26} “A. Uh…we obtained an address, there was a…I believe it was a phone
bill and talked to some of the people around at the scene to get a description of the
person that fled. And uh…at that point we had called the sheriff’s office and had them
go to that address that we had and uh…see if they could make contact with the
registered.
{¶27} “Q. And who responded from the Sheriff’s Office?
{¶28} “A. Uh…Deputy Williamson.
{¶29} “Q. Okay, and did you go to the house too?
{¶30} “A. Yes, I showed up shortly after he did. He had already arrived.
{¶31} “Q. Okay.
Licking County, Case No. 11-CA-20 8
{¶32} “A. Um…I was kind of monitoring the traffic…his traffic on the scanner.
Um…he said that there was a uh…key in the uh…door.
{¶33} “Q. Now was Deputy Williamson in the house when you arrived?
{¶34} “A. No.
{¶35} “Q. Okay, so he hadn’t made entry in to the house?
{¶36} “A. Had not, no.
{¶37} “Q. Okay, so did you…what happened then?
{¶38} “A. Uh…I arrived at the residence and kind of briefed uh…Deputy
Williamson on what had taken place. Uh…being concerned for the driver that, you
know, with the blood that we saw at the scene uh…with the uh…looking at the vehicles
and the impact, uh…we didn’t know, you know, if he was in the house or if he wasn’t in
the house. Uh…and if he was, you know, was he unconscious? You know, what type
of injuries did he have? Um…because we have had in the past where, you know,
people have uh…died in crashes after, you know, they have been involved in them and
uh…heck we have even had them die after they even went to the hospital.
{¶39} “Q. Okay, and based on your training and experience in these kind of
crashes, could this have possibly been one of those crashes?
{¶40} “A. It could have, yes.
{¶41} “Q. Now when you approached the door um…Deputy Williamson was with
you?
{¶42} “A. Yes.
{¶43} “Q. What…what did you see at this…as far as the condition of the door?
Licking County, Case No. 11-CA-20 9
{¶44} “A. Uh…the door was uh…I can’t remember if it was ajar or not, but uh…I
did see the key in the door, uh…and I saw a uh…just a sliver or drop of blood on the
uh…around where the handle is…the door.
{¶45} “Q. Okay, so what did you do at that point?
{¶46} “A. Uh…at that point uh…both Deputy Williamson and I agreed that we
should make entry to make sure that, uh…you know, this person wasn’t uh…in need of
medical attention.
{¶47} “Q. Now prior to going into the house uh…did you knock on anything, the
door or anything like that to see if anybody would come to the door?
{¶48} “A. I believe deputy Williamson had told me he tried to knock and get
some type of response.
{¶49} “Q. Okay, um…so at that point what did you do?
{¶50} “A. Uh…at that point we made entry…well we opened the door and we
yelled out for uh…Mr. Wilson and got no…
{¶51} “Q. Did you announce who you were?
{¶52} “A. Yes.
{¶53} “Q. Did anybody come out at that time?
{¶54} “A. No.
{¶55} “Q. Okay, then…so after uh…you made that announcement what did you
do?
{¶56} “A. Uh…once we didn’t get any response uh…we went ahead and went
inside and looked for uh…Mr. Wilson.
Licking County, Case No. 11-CA-20 10
{¶57} “Q. And when you uh…did you see any evidence that he may be in the
house uh…when you went through the entry of the door?
{¶58} “A. Uh…when we first made Entry there were some shoes up by the door,
um…but nothing else at that point no.
{¶59} “Q. Were there any clothes there?
{¶60} “A. Yes, as were talking to uh…after we had made contact with Mr. Wilson
there was a uh…some clothes off to the right side of the door um…that were soiled
uh…with mud and uh…debris.
{¶61} “Q. Okay, so after you entered the house where did you go?
{¶62} “A. Uh…after we made entry we checked, you know, we wanted to clear
the rooms and uh, we went to a back bedroom uh…where we found Mr. Wilson asleep
on the bed.
{¶63} “Q. And what did…what was his physical appearance at this time?
{¶64} “A. Uh…he had…when we finally woke him up uh…he had some injuries
to his arm, his left arm and he also had an injury up around his head on the left side.
{¶65} “Q. Was he bleeding?
{¶66} “A. Yes.”
{¶67} Tr. at 9-12.
{¶68} Deputy Williamson testified:
{¶69} “Q. And, did you arrive at the residence prior to Trooper Eitel?
{¶70} “A Yes.
{¶71} “Q. And when you arrived at the residence what did you do?
Licking County, Case No. 11-CA-20 11
{¶72} “A. Uh…I approached the residence, I parked along the road, I
approached the residence um…when I arrived at the residence at the front door, the
lights were out, um…the storm door was hanging open, the interior door had a key in
the doorknob, I knocked several times, like I said there was no lights on in the
residence. Um…I knocked several times, no answer, I did try the door handle just to
see if it was unlocked and it was obviously…when I shook it, it was obviously unlocked.
Um…and I notified my dispatch to notify the post of what I had found and stood by and
waited on them.
{¶73} “Q. Okay, now did you enter the residence at that time?
{¶74} “A. Uh…not until Trooper Eitel arrived.
{¶75} “Q. Okay, so you stated that you were knocking on the door. How long do
you think you were knocking on the door?
{¶76} “A. Oh a good probably at least 5 minutes.
{¶77} “Q. So when Trooper Eitel arrived what did you do?
{¶78} “A. Uh…once Trooper Eitel arrived uh…we made entry into the house.
Uh…we were afraid that there might be somebody from this accident in there that was
bleeding or in danger of expiring, so we made entry in to the house, um…announced
ourselves numerous times that it was the Sheriff’s Office and the State Highway Patrol,
um…and checked the residence and subsequently found a gentleman uh…laying in the
bed uh…either asleep or passed out.
{¶79} “Q. And did you make any physical observations about him at that time?
{¶80} “A. Uh…yes he had um…a plate of half eaten nachos on his stomach,
um…he had some injuries around or about his face.
Licking County, Case No. 11-CA-20 12
{¶81} “Q. Okay, did he appear to be bleeding?
{¶82} “A. Uh…he didn’t appear to be actively bleeding, however he had like
dried blood on his face.”
{¶83} Tr. at 29-31.
{¶84} Upon review of the record and the testimony set forth above, we find the
evidence demonstrates exigent circumstances existed sufficient to justify the
warrantless entry into Appellee’s residence. The officers observed significant damage
to the vehicle involved in the accident, and a lot of blood at the scene around the
driver’s area of the vehicle. Upon arrival to the residence, the officer’s observed a small
amount of blood on the door knob and the key in the door. We find the factual
circumstances surrounding the entry into Appellee’s home justified the officer’s entering
without a search warrant to ensure Appellee was not in need of medical attention due to
injuries sustained in the accident.
{¶85} For the foregoing reasons, we reverse the decision of the Licking County
Court of Common Pleas and remand the matter to the trial court for further proceedings
consistent with this Opinion and the law.
By Hoffman, P. J.
Farmer, J. and
Edwards, J. concur. ___________________________________
HON. WILLIAM B. HOFFMAN
___________________________________
HON. SHEILA G. FARMER
___________________________________
HON. JULIE A. EDWARDS
Licking County, Case No. 11-CA-20 13
IN THE COURT OF APPEALS FOR LICKING COUNTY, OHIO
FIFTH APPELLATE DISTRICT
STATE OF OHIO :
:
Plaintiff-Appellant :
:
-vs- : JUDGMENT ENTRY
:
SHANE WILSON :
:
Defendant-Appellee : Case No. 11-CA-20
For the reasons stated in our accompanying Opinion, the judgment of the Licking
County Court of Common Pleas is reversed and the matter remanded to the trial court
for further proceedings consistent with this Opinion and the law. Costs to Appellee.
___________________________________
HON. WILLIAM B. HOFFMAN
___________________________________
HON. SHEILA G. FARMER
___________________________________
HON. JULIE A. EDWARDS | 01-03-2023 | 08-04-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/3283751/ | Ruby Hunter, the petitioner herein, was adjudged a ward of the juvenile court in and for the county of Butte, in the month of December, 1919, and by such order her status as such ward was fixed until she should attain the age of twenty-one years, or until sooner discharged by the court.
Thereafter, on February 7, 1920, the said court, exercising its jurisdiction over said ward, committed her to the Boys' and Girls' Industrial Home at Lytton Springs, in the county of Sonoma, state of California, said home being conducted by and under the management of the Salvation Army. A limit was likewise placed in said commitment, stating that said ward should remain in said Industrial Home until she should attain the age of twenty-one years, or until the further order of said juvenile court.
An attack was made against these proceedings on habeascorpus, but the proceedings were duly upheld by the appellate court for the third district on January 19, 1920 (Applicationof Hunter for Writ of Habeas Corpus, 45 Cal.App. 505, [188 P. 63]).
While said ward was in the custody of the authorities of said Industrial Home, a petition was signed and filed *Page 287
by the superintendent of said Industrial Home, in the superior court in and for the county of Sonoma, alleging that the said ward had become and was weak and feeble-minded, and was a proper person to be committed to the Sonoma State Home, an institution conducted for the care and treatment of feeble-minded persons, and thereupon the Honorable Emmet Seawell, Judge of the said superior court in and for the county of Sonoma, made an order committing the said ward to the custody of the authorities of the said Sonoma State Home.
Thereafter, a petition for writ of habeas corpus being filed in the said superior court in and for the county of Sonoma by the said ward, Ruby Hunter, the said the Honorable Emmet Seawell, on the fourteenth day of September, 1920, granted the prayer of the petitioner and ordered her discharge from said Sonoma State Home, on the ground that the order committing the said Ruby Hunter to said Sonoma State Home was based upon a petition signed by a person not entitled to sign the same, which signing was in violation of the provisions of section 2192 of the Political Code of the state of California.
After the discharge was so granted, the said Ruby Hunter did not return and was not sent back to the said Industrial Home, and thereafter, to wit, on the sixteenth day of September, 1920, said juvenile court in and for the county of Butte made its order modifying the former order of commitment wherein the said ward was committed to said Industrial Home, and ordered that the said ward be committed to the Butte County Detention Home, and directed that a warrant be issued for her arrest for the purpose of carrying out said order, under which last-mentioned order and commitment the said ward and petitioner herein is now being detained in the Butte County Detention Home.
It is contended by petitioner that her discharge in thehabeas corpus proceedings, involving the defective petition in the matter of the commitment to the Sonoma State Home, also involved the validity of the first commitment by the juvenile court in and for the county of Butte to the said Industrial Home, for the reason, it is claimed, that the said Industrial Home comes within the scope and *Page 288
powers of institutions designated by the statute as "similar state institutions."
A further contention is made that, inasmuch as the said judge of the juvenile court in and for the county of Butte had "knowledge" of and "consented" to the petitioning by the "management" of said Industrial Home to the said superior court in and for the county of Sonoma for the commitment of the said Ruby Hunter to the Sonoma State Home, that this amounted in law to a discharge from said Industrial Home, and that such discharge "so sanctioned by said juvenile court is a bar in this proceeding."
The principal authority cited by petitioner in support of her contention is In re Johnson, 36 Cal.App. 319, [171 P. 1074]. The decision in this case is based upon the construction to be given to section 9 of the Juvenile Court Law (Stats. 1915, p. 1225), which is as follows:
"Any order made by the court in case of any person subject to the jurisdiction of the court under the provisions of any of subdivisions one to thirteen inclusive of section one of this act may at any time be changed, modified or set aside as to the judge may seem meet and proper; provided, however, that nothing in this act contained shall be deemed to interfere with the system of parole and discharge that is now or may hereafter be provided by law, or by rule of the board of trustees of the Whittier State School, the Preston School of Industry or the California School for Girls, or any similar state institution or institutions, respectively, for the parole and discharge of wards of the juvenile court committed to the said schools or to any similar state institutions hereafter created, or with the management of the said schools, save that the court committing a ward to any of said schools may thereafter change, modify or set aside said order of commitment upon ten days' notice of the hearing of the application therefor being served by United States mail upon the superintendent of the said school to which said person has previously been committed, and providing that the court shall not then change, modify or set aside said order without due consideration of the effect thereof upon the discipline and parole system of said school or institution."
An examination of this case will reveal the fact that the court was dealing with one of the exceptions enumerated *Page 289
in the statute, and it did nothing more than to say, in effect, that the plain language of the statute should be followed by the courts. The case was one wherein the juvenile court tried to control the ward after the authorities at the Preston School of Industry had discharged him in accordance with their rules and regulations; but there is nothing in this decision, nor has any decision been called to our attention, wherein the appellate courts have intimated that the powers of the juvenile court should be curtailed in dealing with wards of the court, further than that they are limited by the express letter of the statute.
[1] Learned counsel for petitioner earnestly labor to show that the said Industrial Home conducted by the Salvation Army is an institution such as is named in section 9 of the Juvenile Court Law under the designation, "similar state institution," and upon this they contend that when the superintendent of said Industrial Home obtained the order committing said ward to said Sonoma State Home, that said act thereby operated to discharge said ward from said Industrial Home, and likewise from the order of the juvenile court. With this contention we cannot agree, for to so hold would require a violent construction, as it clearly appears to us that an institution conducted as is the said Industrial Home bears no resemblance to a state institution. Even if it could be shown — which it has not been — that the said Industrial Home had a system of rules and credits entitling an inmate to a discharge under certain conditions, certainly an order of discharge granted by such an institution would not be binding upon the juvenile court.
Petitioner cites the case of Board of Directors of Woman'sRelief Corps Home Assn. of California v. Nye, 8 Cal.App. 527, [97 P. 208], as giving support to her contention that the said Industrial Home may be properly designated as "a similar state institution," but an examination of this case will clearly show that the state did have the management and control of the institution considered in said decision. The trustees were appointed by the Governor, accounts were compelled to be kept; in fact, all expenses for conducting said institution were subject to consideration and ratification by the state authorities.
[2] The fact that the judge of the juvenile court had knowledge or even was agreeable to the proceedings instituted *Page 290
by the superintendent of the said Industrial Home in the effort to confine the said ward in the Sonoma State Home could not oust the juvenile court of Butte County of jurisdiction of the ward, for it is nowhere contended that the said juvenile court, as such court, took any action in regard to the proceedings before the superior court in and for Sonoma County, and any consent to the proceedings manifested by the judge in sending telegrams, letters, etc., would amount to nothing more than the act of a private individual. It is not contended that the judge acted in his official capacity, but even if he had so acted, there seems to be nothing in the Juvenile Court Law inconsistent with such action, and, indeed, it would seem a duty incumbent upon the judge of the juvenile court, constituted as he is, the virtual guardian of the ward, to jealously guard, guide, and protect the ward under all changing conditions, for practically all the duties of a father devolve upon the court then; nor do we believe that after the order is made declaring a child to be a ward of the court, and after the child is committed to an institution or to a private individual for its care, education, support, maintenance, etc., the child should unfortunately become mentally weak, that it would be inconsistent with the court's duty to commit the child to the care of an individual who might restore it to mental health and vigor, or to a private institution for a like purpose, or be instrumental in starting the machinery of the law for the purpose of having a ward committed to a state institution. Could it be contended, then, that because the court was looking out for the child's mental welfare that it would lose its jurisdiction any more than it would if it were looking after the welfare of the child in any other way?
If after the law is invoked, through the instrumentality of the court or otherwise, and the ward is thus placed in a state institution for the benefit of its mental trouble, and after it is freed from such institution by reason of being cured, or for any other reason, may it be contended that by virtue of its incarceration and subsequent grant of freedom it has become absolved from the necessities of ordinary mortals for care, education, support, etc.? If so, upon a parity of reasoning, it may be contended that the natural father loses all control over his child after he has been *Page 291
instrumental, or some other person has been instrumental, in having it committed to an institution for the feeble-minded, and the child upon a writ of habeas corpus obtains its freedom by reason of some defect in the commitment, or by reason of being cured. It is idle to so contend, for the necessity for caring for, controlling, and supporting the child still remains, and this subject matter must still be dealt with by the father or by the juvenile court.
When the superior court of Sonoma County acted, its action each time was in relation to a subject matter separate and apart from that upon which the juvenile court acted, and the restoration of liberty from an institution dealing with the subject matter of the child's mental welfare was not a restoration of liberty from every other tie or obligation resting on the child.
The most that can be said of the discharge by the superior court of Sonoma County is that the ward is left where the court found her. It did nothing more than to undo what it had previously done: It made an order committing the child to the Sonoma State Home, and in another proceeding it found that in so doing it had made a mistake; it then proceeded to undo this action, and, after this was done, the ward then stood where she did before — clothed with all former rights and subject to all former claims and obligations.
Counsel for petitioner seems to take the view that a restoration of liberty under a writ of habeas corpus is a granting of freedom for every purpose and against every claim. In the very nature of things, this could not be so. Taking the petitioner's case, for instance, let us assume that the petitioner after having been committed to the said Industrial Home had committed a felony in Sonoma County, and the authorities there had decided to prosecute her in that county; that she applied for and was granted her discharge on habeascorpus by reason of some deficiency in the proceedings; could it then properly be contended that she was discharged from the order of the juvenile court of Butte County? Or, to further illustrate, assuming that after the commission of a felony, as aforesaid, it was found that she was insane and that she was committed to the State Hospital for the Insane; that she was afterward discharged as cured, or discharged upon a writ ofhabeas corpus by reason of some defect in the proceedings committing her to said *Page 292
state hospital; could it then properly be contended that she was discharged from the order of the juvenile court of Butte County? The result simply would be that the juvenile order would remain dormant and inactive during these periods, as it came in conflict with superior authority, and as soon as the superior authority was removed the juvenile order would begin to function. And so it is in the case at bar; the order of the juvenile court is now in full force and effect, and must be respected.
The writ is discharged and the petitioner remanded.
Hart, J., and Burnett, J., concurred. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2450880/ | 414 F. Supp. 2d 297 (2005)
Vincent TREANOR, Plaintiff,
v.
METROPOLITAN TRANSPORTATION AUTHORITY and Long Island Rail Road, Defendants.
No. 05 Civ. 5586(SAS).
United States District Court, S.D. New York.
December 22, 2005.
*298 Richard A. Dienst, New York, New York, for Plaintiff.
*299 Mary Jennings Mahon, Long Island Rail Road Company, Law Department, Jamaica, New York, for Defendants.
OPINION AND ORDER
SCHEINDLIN, District Judge.
I. INTRODUCTION
Vincent Treanor, a former employee of the Long Island Rail Road ("LIRR"), brings this action against the Metropolitan Transportation Authority ("MTA") and the LIRR alleging employment discrimination on the basis of disability in violation of the New York State Human Rights Law[1] and the New York City Human Rights Law.[2] He also claims that defendants violated the notice requirements of the Consolidated Omnibus Budget Reconciliation Act ("COBRA").[3] The LIRR now moves to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, the LIRR's motion to dismiss is denied.[4]
II. BACKGROUND
Treanor began working at the LIRR on or about April 12, 1989, as a car appearance maintainer.[5] He was promoted to car repairman in August 1999, and then to road car inspector in June 2002.[6] The LIRR learned that Treanor abused drugs and alcohol on or about October 7, 1994.[7] On October 10, 2002, Treanor was involved in a work related accident which resulted in a knee injury requiring arthroscopic surgery.[8] Treanor submitted to a return-to-duty physical examination, which included a drug test, on November 26, 2002.[9] On November 29, 2002, Treanor tested positive for cocaine, and he was removed from service pending a Notice of Trial and Hearing for violation of the Corporate Alcohol and Substance Abuse Policy.[10]
At a February 14, 2003 hearing, Treanor admitted to the charge of violating the substance abuse policy, waived his right to a trial and signed a Last Chance Agreement.[11] Pursuant to the agreement Treanor was required to serve an eleven month suspension and had to be certified ready to return to work by the LIRR Employee Assistance Program ("EAP").[12] Failure to abide by the agreement would result in Treanor's dismissal.[13] As part of his EAP recovery plan, Treanor was required to enroll in an out-patient drug treatment program at Crossings Recovery Center in Deer Park, New York.[14] The cost of the program was paid for by his employer-provided health insurance.[15] On May 14, 2003, Crossing Recovery Center informed Treanor that his medical insurance had been discontinued and that he would have to pay if he wished to continue in the program.[16] Treanor then asked to be drug tested at the LIRR facilities because he *300 could not afford to pay for the tests.[17] Treanor was told that he could not be drug tested at the LIRR facilities and that he had to pay the costs of completing the Crossing Recovery Center program.[18]
On May 15, 2003, Treanor was advised for the first time by his union representative that health insurance coverage ceases when an employee has been out of work for more than six months.[19] Treanor claims he was unable to complete the EAP plan without COBRA replacement insurance because he could not afford to pay for treatment and drug tests.[20] On September 30, 2003, Treanor was charged with violating the Last Chance Waiver Agreement.[21] At the hearing, Treanor was told that he must either resign or be terminated.[22] He was informed that if he was terminated he would lose his LIRR pension, and would not be able to use the LIRR as a reference for future employment.[23] On September 30, 2003, Treanor resigned.[24]
On May 23, 2005, Treanor filed a complaint in the Supreme Court, New York County. Treanor alleged that: (1) the Last Chance Agreement violated COBRA because the LIRR provided a last chance that it knew or should have known could not be completed because the LIRR discontinued his medical insurance;[25] (2) the LIRR discriminated against him on the basis of his disability by treating him differently from other similarly situated employees in violation of the State and City Human Rights Laws;[26] (3) the LIRR constructively terminated him because of his disability;[27] and (4) the LIRR violated' the notice requirements of COBRA.[28]
The LIRR removed the case to this Court and then moved to dismiss, claiming that Treanor's complaint was untimely because it was not filed within one year and thirty days of Treanor's termination.[29] The LIRR also claimed that the Complaint was defective because it failed to allege that at least thirty days had elapsed since the claims upon which the action was founded were presented to the LIRR, and that the LIRR neglected or refused to make adjustment or payment with respect to those claims.[30]
III. LEGAL STANDARD
A. Motion to Dismiss
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure a motion to dismiss should be granted only if "`it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'"[31] The task of the court in ruling on a Rule 12(b)(6) motion is "merely to assess the *301 legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof."[32] When deciding a motion to dismiss courts must accept all factual allegations in the complaint as true, and draw all reasonable inferences in plaintiffs favor.[33] Courts generally do not consider matters outside the pleadings but may consider documents attached to the pleadings, documents referenced in the pleadings, or documents that are integral to the pleadings.[34]
B. New York Public Authorities Law
Section 1276 of the New York Public Authorities Law ("PAL") provides for a shortened limitations period and a thirty-day demand rule for tort actions against the MTA and its subsidiaries, including the LIRR.[35] The statute provides, in relevant part:
(1) As a condition to the consent of the state to such suits against the [LIRR], in every action against the [LIRR] for damages, for injuries to real or personal property or for the destruction thereof or for personal injuries or death, the complaint shall contain an allegation that at least thirty days have elapsed since the demand, claim or claims upon which such action is founded were presented to a member of the [LIRR] or other officer designated for such purpose and that the [LIRR] has neglected or refused to make an adjustment or payment thereof.
(2) An action against the [LIRR] founded on tort, except an action for wrongful death, shall not be commenced more than one year after the cause of action therefor shall have accrued, nor unless a notice of claim shall have been served on the [LIRR] within the time limited by and in compliance with all the requirements of section fifty-e of the general municipal law.[36]
Section 1276(1) of the PAL tolls the one year limitation period of section 1276(2) for thirty days.[37] As a result, the net limitation period governing a tort action against the LIRR is one year and thirty days.[38] Nearly identical requirements apply to actions against the New York City Transit Authority under section 1212 of the PAL,[39]*302 and New York courts have interpreted these provisions consistently.[40] These statutes were "designed for traditional tort actions" and should not be used "as a sword rather than a shield or as a trap to catch the unwary or ignorant."[41]
C. Statute of Limitations Under Section 214 of the New York Civil Practice Law and Rules
Actions to recover upon a liability "created or imposed by statute" are generally governed by the three-year statute of limitations period set forth in section 214(2) of the CPLR, "unless a different time is prescribed by law."[42] This statute of limitations governs claims of employment discrimination on the basis of disability in violation of the New York State Human Rights Law and the New York City Human Rights Law.[43]
Congress neglected to provide a statute of limitations for claims arising under COBRA. Accordingly, a court must apply the limitations period of the state law cause of action most analogous to the COBRA claim.[44] There has not been complete agreement among federal courts on how to analogize COBRA's notice requirements to any state law.[45] Some jurisdictions have determined that the best analogy is to a claim for unfair insurance practices.[46] In Myers v. King's Daughters Clinic, the court held that the purpose of COBRA "was to provide employees with an opportunity to continue to receive group health insurance after the occurrence of a qualifying event, e.g. termination."[47] Failing to notify an employee of his right to receive health insurance can be characterized as an unfair insurance practice. New York has a three-year *303 statute of limitations for claims of unfair insurance practices under section 214(2) of the CPLR.[48] I conclude that New York's three-year statute of limitations applies to claims under COBRA.
III. DISCUSSION
A. Treanor's Claims Are Not Time-Barred Under Section 1276(2) of the PAL
Treanor alleges that he was terminated on September 30, 2003, and that he filed this Complaint on May 23, 2005, within the three-year statute of limitations set forth in section 214(2) of the CPLR. The LIRR argues that Treanor's employment discrimination and COBRA claims are "founded on tort," and therefore time-barred under the one year and thirty day limitations period of section 1276(2) of the PAL.
1. Employment Discrimination Claims
Section 1276(2) of the PAL does not govern Treanor's employment discrimination claims. This Court has already held that a nearly identical section of the PAL, is "not applicable to employment discrimination claims because they are not tort actions."[49] as holding accords with New York cases reasoning that a discrimination claim is not a tort because it is "a new statutory cause of action which was not cognizable at common law."[50]
This Court declines to follow the reasoning of Gaughan v. Nelson, a 1995 Southern District of New York case holding that section 1276(2) applies to discrimination claims.[51]Gaughan relies on a line of cases interpreting section 50-e of the New York General Municipal Law ("GML"), which requires that claimants give notice of any claim "founded upon tort" to the appropriate municipal authority.[52] These cases are not helpful because they interpret section 50-e in conjunction with other statutory provisions which apply to classes of claims that are both broader[53] and narrower[54]*304 than those "founded on tort."[55] In addition, since Gaughan, the majority of cases interpreting section 50-e of the GML have held that it does not apply to discrimination claims.[56]
2. COBRA Claim
Section 1276(2) does not govern Treanor's COBRA claim. COBRA requires an employer to notify its plan administrator of a qualifying event, such as termination, within thirty days of that event.[57] Treanor has alleged that the LIRR's violation of COBRA's notice provisions resulted in his constructive termination.[58] The LIRR argues that section 1276(2) governs Treanor's COBRA claim because it can be analogized to a tort claim for negligence.[59]
But Treanor's claim is not dependent on any tort theory. Like a discrimination claim, a COBRA claim is purely a creature of statute not previously cognizable as a tort at common law. One court has rejected the analogy of a violation of COBRA's notice requirement to a tort such as a personal injury claim or damage to personal property.[60] As noted earlier, the statute of limitations for a COBRA claim is best analogized to a statutory claim of unfair insurance practices.[61] New York courts *305 have held that other insurance-related claims founded on statute are not torts subject to notice of claim requirements under similar statutes.[62]
B. The Thirty-Day Demand Rule of Section 1276(1) of the PAL Does Not Apply to Treanor's Claims
The LIRR argues that even if the statute of limitations of section 1276(2) does not apply to this action, Treanor's claims for damages should be dismissed for failure to comply with the thirty-day demand rule of section 1276(1). Section 1276(1) applies to "every action against the authority for damages, for injuries to real or personal property or for the destruction thereof, or for personal injuries or death." The LIRR argues that the provision should be read broadly to include any action for damages. I have already rejected this same argument in the context of the nearly identical language of section 1212(1) of the PAL, holding that "[c]ourts have refused to interpret [this section] literally and apply the notice of claim requirement to all actions for damages. Rather, courts have limited its application to tort actions.[63] This Court reads the provision narrowly, to include only actions for damages related to injuries to property, personal injuries, or death. It is apparent from the statutory scheme that the provision is intended to apply to tort actions.[64] The LIRR points to no case in which a court applied section 1276(1), or any similar statute, to a claim for damages not sounding in tort. Because Treanor's claims do not sound in tort, the LIRR's motion to dismiss Treanor's claims based on section 1276 is denied.
IV. CONCLUSION
For the foregoing reasons, the LIRR's motion to dismiss is hereby denied. The Clerk of the Court is directed to close this motion [10]. A conference is scheduled for January 6, 2006 at 1 p.m.
SO ORDERED.
NOTES
[1] N.Y. Exec. Law § 296.
[2] N.Y.C. Admin. Code § 8-101.
[3] 29 U.S.C. § 1166.
[4] Defendant MTA was dismissed from this action by stipulation between the parties and ordered by this Court on July 7, 2005.
[5] See Complaint ("Compl.") ¶ 11.
[6] See id. ¶ 12.
[7] See id. ¶ 16.
[8] See id. ¶ 19.
[9] See id. ¶ 22.
[10] See id. ¶ 24.
[11] See id. ¶ 26.
[12] See id. ¶ 27.
[13] See id. ¶ 28.
[14] See id. ¶ 35.
[15] See id. ¶ 36.
[16] See id. ¶ 38.
[17] See id. ¶ 39.
[18] See id. ¶ 40.
[19] See id. ¶ 41.
[20] See id. ¶ 45.
[21] See id. ¶ 46.
[22] See id. ¶ 51.
[23] See id. ¶ 52.
[24] See id. ¶ 54.
[25] See id. ¶ 58.
[26] See id. ¶¶ 60-68.
[27] See id. ¶¶ 70-72
[28] See id. ¶¶ 73-86.
[29] See Defendant's Memorandum of Law in Support of Its Motion to Dismiss and Its Motion for Sanctions ("Def.Mem.") at 4-7 (citing N.Y. Pub. Auth. L. § 1276(2)).
[30] See id. at 8 (citing N.Y. Pub. Auth. L. § 1276(1)).
[31] Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir.2005) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)).
[32] Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of New York, 375 F.3d 168, 176 (2d Cir.2004) (quotation and citation omitted).
[33] See Ontario Pub. Sere. Employees Union Pension Trust Fund v. Nortel Networks Corp., 369 F.3d 27, 30 (2d Cir.2004) (citation omitted).
[34] See Chambers v. Time Warner Inc., 282 F.3d 147, 152-53 (2d Cir.2002); see also In re Initial Public Offering Sec. Litig., 241 F. Supp. 2d 281, 331 (S.D.N.Y.2003).
[35] Although section 1276(6) of the PAL states that "notice of claim" requirements shall not apply to subsidiaries of the MTA, such as the LIRR, New York courts hold that the thirty-day demand rule still applies. See Fleming v. Long Island R.R., 130 A.D.2d 59, 518 N.Y.S.2d 144, 146 (2d Dep't 1987). The statute's demand rule is distinct from the notice of claim requirement. See Andersen v. Long Island R.R., 59 N.Y.2d 657, 661, 463 N.Y.S.2d 407, 450 N.E.2d 213 (1983).
[36] N.Y. Pub. Auth. L. § 1276(1)-(2) (emphasis added).
[37] New York Civil Procedure Law and Rules ("CPLR") provides that "[w]here the commencement of an action has been stayed by statutory prohibition, the duration of the stay is not a part of the time within which the action must be commenced." N.Y.C.P.L.R. § 204.
[38] See Rose v. Metro North Commuter R.R., 143 A.D.2d 993, 533 N.Y.S.2d 629, 631 (2d Dep't 1988).
[39] See N.Y. Pub. Auth. L. § 1212. Similar statutes also apply to other transportation authorities. See, e.g., N.Y. Pub. Auth. L. § 1317 (Capital District Transportation Authority); § 1342 (Central New York Regional Transportation Authority); § 1299-p (Niagara Frontier Transportation Authority); § 1299-rr (Rochester-Genesee Regional Transportation Authority).
[40] See Andersen, 453 N.Y.S.2d at 210 (construing section 1276 of the PAL "in the same manner" as identical provisions of section 1212); Cassandro v. Metropolitan Suburban Bus Auth., 178 Misc. 2d 484, 679 N.Y.S.2d 523, 526 (N.Y.Sup.1998) (construing section 1276 based on cases interpreting "nearly identical" provisions of section 1212).
[41] City of Syracuse v. Utica Mut. Ins. Co., 83 A.D.2d 116, 443 N.Y.S.2d 901, 906 (4th Dep't 1981), aff'd, 61 N.Y.2d 691, 472 N.Y.S.2d 600, 460 N.E.2d 1085 (1984) (quotation marks omitted) (holding that notice of claim requirements which apply to "any case founded upon tort" did not apply to insurance claim against city).
[42] N.Y.C.P.L.R. § 201.
[43] See, e.g., Flaherty v. Metromail Corp., 293 F. Supp. 2d 355, 358 (S.D.N.Y.2003).
[44] See Sandberg v. KPMG Peat Marwick, LLP, 111 F.3d 331, 333 (2d Cir.1997); see also Downes v. JP Morgan Chase & Co., No. 03 Civ. 8991, 2004 WL 1277991, at *6 n. 7 (S.D.N.Y. Jun. 8, 2004).
[45] Compare Mattson v. Farrell Distributing Corp., 163 F. Supp. 2d 411 (D.Vt.2001) (rejecting argument that COBRA should be analogized to personal injury or property damage claims and holding that a COBRA claim was most analogous to a claim for economic damages under Vermont law) with Lopez v. Premium Auto Acceptance Corp., 389 F.3d 504 (5th Cir.2004) (rejecting arguments that COBRA claims should be analogized to an action sounding in contract and holding that COBRA should be analogized to an action for unfair insurance practices because an employer's duty under the Act related to the provision of insurance coverage).
[46] See Lopez, 389 F.3d at 510 (applying the Texas Insurance Code's unfair insurance practices limitation); Harvey v. Mingo Logan Coal Co., 274 F. Supp. 2d 791, 795 (S.D.W.V. 2003) (finding West Virginia's statute of limitations applicable to unfair insurance related practices should be applied to COBRA's notice claims).
[47] 912 F. Supp. 233, 237 (W.D.Tex.1996).
[48] See Gaidon v. Guardian Life Ins. Co. of Am., 96 N.Y.2d 201, 208, 727 N.Y.S.2d 30, 750 N.E.2d 1078 (2001).
[49] Schlesinger v. New York City Transit Auth., No. 00 Civ. 4759, 2001 WL 62868, at *11 (S.D.N.Y. Jan. 24, 2001) (interpreting N.Y. Pub. Auth. L. § 1212). Accord Zerilli v. New York City Transit Auth., 973 F. Supp. 311, 325 (E.D.N.Y.1997); Cervenka v. New York City Transit Auth., 216 A.D.2d 511, 628 N.Y.S.2d 405, 405 (2d Dep't 1995) (citing Lane-Weber v. Plainedge Union Free School Dist., 213 A.D.2d 515, 624 N.Y.S.2d 185, 186 (2d Dep't 1995)).
[50] Picciano v. Nassau Co. Civil Service Comm'n, 290 A.D.2d 164, 170, 736 N.Y.S.2d 55 (2d Dep't 2001). Accord Monsanto v. Electronic Data Sys. Corp., 141 A.D.2d 514, 515, 529 N.Y.S.2d 512 (2d Dep't 1988) (citing Murphy v. American Home Products Corp., 58 N.Y.2d 293, 293, 461 N.Y.S.2d 232, 448 N.E.2d 86 (1983)) ("[A] discrimination claim under the Human Rights Law is an action created by statute, which did not exist at common law, and therefore cannot give rise to tort liability.").
[51] See Gaughan v. Nelson, No. 94 Civ. 3859, 1995 WL 575316, at *7 (S.D.N.Y. Sep. 29, 1995) (dismissing claim as time barred) (citing Page v. New York City Off-Track Betting, No. 90 Civ. 6367, 1993 WL 426865, at *3 (S.D.N.Y. Oct. 22, 1993)).
[52] Page, 1993 WL 426865, at *3 (citing Mills v. County of Monroe, 59 N.Y.2d 307, 308, 464 N.Y.S.2d 709, 451 N.E.2d 456 (1983)) (holding that employment discrimination sounds in tort).
[53] See, e.g., Mills, 59 N.Y.2d at 308, 464 N.Y.S.2d 709, 451 N.E.2d 456 (dismissing discrimination claims for failure to provide notice under section 50-e of the GML in conjunction with section 52 of County Law, which requires notice of any action against a county for "for damage, injury or death, or for invasion of personal or property rights") (emphasis added). "[Mills] dealt not with the notice requirements of [section 50-e of] the General Municipal Law, but with those of [section 52 of] the New York County Law, which are broader." Brodie v. New York City Transit Auth., No. 96 Civ. 6813, 1998 WL 599710, at *10 (S.D.N.Y. Sept. 10, 1998). Accord Aguilar v. New York Convention Center Operating Corp., 174 F. Supp. 2d 49, 53-55 (S.D.N.Y.2001); Peart v. City of New York, No. 87 Civ. 4932, 1991 WL 206315, at *3 (S.D.N.Y. Sept.27, 1991).
[54] See, e.g., Bogart v. New York City Health and Hospitals Corp., No. 98 Civ. 6118, 2001 WL 504874, at *4 (S.D.N.Y. May 11, 2001) (refusing to dismiss discrimination claims for failure to provide notice under section 50-e of the GML in conjunction with section 50-i, which "define[s] the torts for which a notice of claim is required as personal injury, wrongful death, or damage to property claims only").
[55] The LIRR also argues that Andersen v. Long Island Railroad, establishes that the term "tort" in section 1276(2) refers to any claim for damages. 88 A.D.2d 328, 453 N.Y.S.2d 203, 210 (2d Dep't 1982), aff'd, 59 N.Y.2d 657, 463 N.Y.S.2d 407, 450 N.E.2d 213 (1983) ("the term `tort' encompasses all of the actions referred to in [section 1276(1)], including death"). But this case stands for the unremarkable proposition that a wrongful death action is a tort.
[56] See Brodie v. New York City Transit Auth., No. 96 Civ. 6813, 1998 WL 599710, at *10 (S.D.N.Y. Sept.10, 1998) ("the weight of recent authority holds that an employment discrimination action under HRL § 296 is not a tort action"); Hamm v. New York City Office of Comptroller Alan Hevesi, No. 95 Civ. 6367, 1998 WL 92395, at *6 (S.D.N.Y. Mar.4, 1998) ("Wile Court aligns itself with the line of cases holding that discrimination claims brought under Executive Law § 296 are not tort actions"); Sussman v. New York City Health and Hospitals Corp., No. 94 Civ. 8461, 1997 WL 334964, at *14 (S.D.N.Y. Jun.16, 1997) ("a claim pursuant to Executive Law § 296 is neither a claim for personal injuries nor a tort claim"); Dimonda v. New York City Police Dep't, No. 94 Civ. 0840, 1996 WL 194325, at *6 (S.D.N.Y. Apr.22, 1996) ("the most recent case law from the Appellate Division of the New York State Supreme Court . . . hold[s] that the notice of claim provisions embodied in §§ 50-e and 50-i are not applicable to claims of discrimination brought pursuant to Executive Law § 296"); Picciano, 290 A.D.2d at 170, 736 N.Y.S.2d 55. But see Duck v. New York City Dep't of Transp., No. 91 Civ. 7388, 1994 WL 440666, at *5-6 (S.D.N.Y. Aug.12, 1994) (applying section 50 to discrimination claim), Larry v. New York City Dep't of Sanitation, No. 92 Civ. 0913, 1994 WL 121816, at *5 (S.D.N.Y. Apr.7, 1994) (same).
[57] See 29 U.S.C. § 1166(a)(2).
[58] See Compl. ¶¶ 37-87.
[59] See Def. Mem. at 7.
[60] See Mattson, 163 F.Supp.2d at 417.
[61] Cf. Clempner v. Town of Southold, 154 A.D.2d 421, 546 N.Y.S.2d 101, 104 (2d Dep't 1989) (claim was not "founded on tort" because it was more analogous to a constitutional takings claim than an action for trespass).
[62] See, e.g., State Farm Mut. Auto. Ins. Co. v. Olsen, 22 A.D.3d 673, 802 N.Y.S.2d 725, 725 (2d Dep't 2005) ("a statutory arbitration proceeding to resolve a coverage dispute concerning an uninsured motorist claim is not a claim founded upon a tort") (emphasis in original); City of Syracuse, 443 N.Y.S.2d at 905-06 (insurer's claim for reimbursement under no-fault insurance statute not "founded on tort" because it was not a traditional tort action).
[63] Schlesinger, 2001 WL 62868, at *11. Accord Brodie, 1998 WL 599710, at *10 ("While the defendants' reading of § 1212 has literal appeal, the Court finds that plaintiff's position is supported by the case law and rejects defendants' interpretation of § 1212.").
[64] See Davis v. New York City Transit Auth., 96 A.D.2d 819, 465 N.Y.S.2d 567, 571 & n. 2 (2d Dep't 1983) (O'Connor, J., concurring), rev'd on other grounds sub nom., Giblin v. Nassau County Med. Ctr., 61 N.Y.2d 67, 471 N.Y.S.2d 563, 459 N.E.2d 856 (1984) (surveying similar statutes and noting that although "the Legislature has yet to settle upon a single, simple formula", it expresses its intent to limit a provision to tort claims via a "few formulas," such as the language of 1276(1) of the PAL). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2451298/ | 534 F. Supp. 2d 37 (2008)
UNITED STATES of America
v.
David NIKOLOW, Defendant.
Criminal No. 08-013(RCL).
United States District Court, District of Columbia.
January 31, 2008.
*38 MEMORANDUM AND ORDER
ROYCE C. LAMBERTH, District Judge.
Defendant David Nikolow has been charged with conspiracy to transport stolen goods and receipt or possession of stolen goods.[1] Following a hearing on January 31, 2008, this Court ordered that the defendant be detained pending trial, pursuant to 18 U.S.C. § 3141. Upon consideration of the arguments and evidence introduced at the hearing, this Court finds that no condition or combination of conditions will reasonably assure the safety of the community if the defendant were to be released pending trial. See 18 U.S.C. § 3142(e). Accordingly, the Court ORDERS that the defendant be detained without bond pending trial.
DISCUSSION
Under the Bail Reform Act,[2] in order to detain a defendant pretrial, the government bears the burden of establishing "that no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of the community." 18 U.S.C. § 3142(e). The facts supporting a finding that no condition or combination of conditions will reasonably assure the safety of the community must be supported by clear and convincing evidence. 18 U.S.C. § 3142(f). Pursuant to 18 U.S.C. § 3142(f)(1)(E), the government may request detention in a case that involves "any felony that is not otherwise a crime of violence that involves . . . the possession or use of a firearm or destructive device." 18 U.S.C. § 3142(f)(1)(E). Upon motion of the government, "the judicial officer shall hold a hearing to determine whether any condition or combination of conditions set forth in subsection (c) . . . will reasonably assure the appearance of such person as required and the safety' of any other person and the community." 18 U.S.C. 3142(f)(1). Further, the Court must conduct an independent assessment of four factors listed in § 3142(g) to determine whether pretrial detention is appropriate.[3]
The evidence in this case is sufficient to conclude that no condition or set of conditions will reasonably assure the safety of the community. At the hearing, the government made unopposed representations that its searches of defendant's liquor store and residence revealed 15 firearms, including rifles, handguns, and semi-automatic weapons.[4] These 15 firearms constitute *39 a virtual arsenal in the District of Columbia where possession of any one of these firearms is patently illegal under District of Columbia law. While the charges against the defendant do not involve violent acts, the defendant's illegal possession of 15 firearms in his store, and his residence renders him a danger to the community. Having established that no set of conditions would assure the safety of the community, the Court must now independently assess the four factors enumerated in § 3142(g) to determine whether the evidence clearly and convincingly supports the fats used to support the Court's finding. Here, the evidence supports a finding of potential danger to the community and weighs in favor of the defendant's detention pending trial.
First, the nature and circumstances of the offenses charged against the defendant, considered in isolation, would not ordinarily favor detention. Here, the defendant is charged with conspiracy to transport stolen goods and receipt or possession of stolen goods. However, "[b]y directing a Court to examine the`nature and circumstances' of the charge rather than just the charge itself, Congress intended for courts to examine a defendant's actions in the context of all relevant background evidence." United States v. Abdullahu, 488 F. Supp. 2d 433, 439 (D.N.J. 2007). In the instant matter, the government has represented that it seized such an abundance of stolen property from the defendant's store and residences that it has rented warehouses to store the goods, and used tractor trailers to haul the goods to storage. The government further represents that the sheer amount of stolen property found indicates that defendant also sells stolen goods. Viewing defendant's possession of this massive amount of stolen goods in the context of all of the evidence, the government asserts that defendant likely engages in illegal sales of stolen firearms. As such, the circumstances surrounding defendant's charged offenses demonstrate that defendant is dangerous to other individuals in the community.
Second, the weight of the evidence against the defendant also heavily favors detention. The firearms at issue here were found in the store owned by the defendant as well as in defendant's own residence. Moreover, the government's uncontroverted representation that defendant possessed 15 firearms in multiple locations in a jurisdiction where possession of any one of those firearms is banned, overwhelmingly shows that defendant is a danger to the community.
Third, the nature and seriousness of the danger to the community that would be posed by the defendant's. release also weighs significantly in favor of the government. The sheer number of weapons seized in the District of Columbia properties where possession of such weapons is illegal and at defendant's Maryland property, clearly show that the defendant is a danger to the community.
Finally, the Court must consider the history and characteristics of the defendant, including his ties to the community. The defendant has one prior conviction dating back to 1986. He has been a resident of the District of Columbia for the past 30 years, where he lives with his wife of 28 years. Defendant's history and characteristics alone would ordinarily weigh against pretrial detention. These facts, however, cannot overcome the sheer weight of the evidence against the defendant and the nature and seriousness of the danger posed by defendant's release in light of the full context of the charged offenses.
*40 CONCLUSION
For the aforementioned reasons, the Court finds that pretrial detention of the defendant is appropriate in this case because there is clear and convincing evidence that no conditions of release will reasonably assure the safety of the community. Accordingly, it is hereby
ORDERED that the defendant be detained without bond pending trial.
SO ORDERED.
NOTES
[1] These counts are in violation of 18 U.S.C. § 371, and 18 U.S.C. § 2315.
[2] 18 U.S.C. § 3141 et seq.
[3] Those factors are: (1) the, nature and circumstances of the offense charged, including whether the offense is a crime of violence; (2) the weight of the evidence against the defendant; (3) the history and characteristics of the person, including the defendant's ties to the community; and (4) the nature and seriousness of the danger to any person or the community that would be posed by the person's release. See 18 U.S.C. § 3142(g).
[4] These 15 firearms do not include five additional firearms that the government seized from a residential property in Maryland that is owned by the defendant, but currently occupied by a tenant. Nor does this amount reflect the government's ongoing searches of multiple properties owned by the defendant. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2470893/ | 359 F. Supp. 2d 994 (2005)
Michael CROWE, et al., Plaintiffs,
v.
COUNTY OF SAN DIEGO, et al., Defendants. And Related Actions
No. 99CV0241 R (RBB).
United States District Court, S.D. California.
February 28, 2005.
*995 *996 *997 *998 *999 Milton J. Silverman, JR., Law Offices of Milton Silverman, Robert J. Francavilla, Casey Gerry Reed and Schenk, Dennis A. Schoville, Schoville and Arnell, San Diego, CA, for Plaintiffs.
Guylyn Remmenga Cummins, Sheppard Mullin Richter and Hampton, San Diego, CA, for Intervenor.
Deborah Lynn Nash, George W. Brewster, JR., County of San Diego Office of County Counsel, Kenneth H. Moreno, Murchison and Cumming, Luther W. Horton, Horton and Ryan, San Diego, CA, Diana L. Field, Ferguson Praet and Sherman, Santa Ana, CA, Mark A. Waggoner, City of Escondido Office of the City Attorney, Escondido, CA, Richard J. Schneider, Daley and Heft, Solana Beach, CA, Hugh G. Radigan, Koester and Walker, Glendale, CA, for Defendants.
ORDER RE: SUMMARY JUDGMENT MOTIONS
RHOADES, District Judge.
INTRODUCTION
The tragic facts of this case arise out of the murder of young Stephanie Crowe in her home on the evening of January 20, 1998, and the ensuing investigation. Stephanie's murder was investigated by members of the Escondido Police Department, including defendants Mark Wrisley, Ralph Claytor, Barry Sweeney, and Phil Anderson (collectively, "defendants"), who bring the present motions for summary judgment. The investigation of Stephanie's death initially led to the arrest and indictment of Stephanie's brother, Michael Crowe, and his two friends, Joshua Treadway and Aaron Houser (collectively, "the boys"), all juveniles at the time. Prior to the boys' trial, evidence was discovered which resulted in the District Attorney dropping the charges against the boys without prejudice. The boys and their families then brought this civil action for damages for violation of their federal constitutional rights pursuant to 42 U.S.C. § 1983 as well as for violation of state law. This court previously entered summary judgment on many of plaintiffs' claims. See Crowe v. County of San Diego, 303 F. Supp. 2d 1050 (S.D.Cal.2004). Subsequent to the entry of that order, Richard Tuite was convicted of Stephanie's murder. This court is now confronted with a second round of motions for summary judgment filed by defendants Wrisley, Claytor, *1000 Sweeney and Anderson as to claims brought by Michael, his sister, Shannon, his parents, Cheryl and Stephen Crowe, and his grandmother, Judith Kennedy (collectively, "plaintiffs").
FACTUAL BACKGROUND
To provide context to this order, the court provides a brief account of the relevant facts. A more thorough presentation of the relevant factual background can be found in Crowe, 303 F.Supp.2d at 1058-1062.
On the night of January 20, 1998, the police received phone calls that Tuite, a transient, was bothering people in the vicinity of the Crowe residence. Tuite appeared drunk or high. One witness heard Tuite yell "I'm going to kill you you fucking bitch." Another witness saw Tuite spinning around in circles.
Between 7:00 and 8:00 p.m. that night, Tuite entered one house after the occupant, Dannette Mogelinski, mistaking his knock for that of a neighbor, invited him in. Tuite repeatedly asked for Tracy. Mogelinski said she did not know Tracy. Tuite left but then opened the door and again asked for Tracy. Mogelinski again said she did not know Tracy, and Tuite left.
Around 9:28 p.m., Gary West, a neighbor of the Crowes, called police to report a transient who had knocked on his door and said he was looking for a girl. Escondido police officer Scott Walters, not a defendant in this action, was dispatched to the area. While investigating this call, Officer Walters drove up to the Crowe house. As he drove up, the door next to the garage door closed. He couldn't see who closed it. Officer Walters left the Crowe house and indicated in his log that the transient was "gone on arrival."
Stephanie was found dead by Judith Kennedy around 6:30 a.m. on January 21, 1998. An autopsy determined that Stephanie was stabbed numerous times with a knife with a 5-6 inch blade. Police questioned all of the members of the Crowe household on January 21, 1998. Michael was questioned several times.
On January 22, 1998, Escondido Police Detectives Lanigan and Naranjo, not defendants in this case, went to the Treadway residence to speak with Joshua. The detectives saw a knife in plain view on top of a couch in the living room.
Michael was arrested for Stephanie's murder on January 23, 1998.
On January 26, 1998 Detective Han obtained a search warrant for the Treadway residence. Probable cause for the warrant was predicated upon the fact that Michael had been arrested for the murder, Michael had stated that Joshua was his best friend, Michael had called Joshua from the police station on the morning of the murder, and a knife meeting the description of the murder weapon had been seen at the Treadway residence.
On January 27, 1998, prior to the execution of the search warrant for the Treadway residence, Aaron's mother alerted police to the fact that a knife with a 4-5 inch blade which belonged to her son was missing from his collection. Based on this information, Detective Han sought and obtained a warrant to search the Houser residence. Defendants also questioned Aaron that same day.
The warrants for the Treadway and Houser residences were executed on the evening of January 27, 1998. While the warrant for the Treadway residence was being executed, Joshua was being questioned by police. During his questioning, the search of the Treadway residence revealed two knives under his bed. One had a 5½ inch blade, and the other had a 6 inch blade. Joshua was then arrested for stealing Aaron's knife. After being read his *1001 Miranda rights, Joshua admitted taking the knife from Aaron, but denied any involvement in Stephanie's death. However, over the course of further questioning, Joshua changed his story. He told defendants that he had gotten the knife from Aaron and that Aaron had told him it was the knife used to kill Stephanie. Joshua was allowed to go home after the questioning.
Joshua was questioned again on February 10, 1998. This time, Joshua gave what appeared to be a detailed account of the events leading up to the murder and stated that he had acted as a lookout while Aaron and Michael committed the murder. Joshua's confession, which was ruled voluntary by the state court trial judge, suggested that Michael killed Stephanie because he did not like her. At some point during the questioning, Joshua was arrested for Stephanie's murder.[1]
On the morning of February 11, 1998, defendant Claytor obtained search warrants for Aaron's residence and school locker. Those warrants were executed on the morning of February 11 by defendants Sweeney and Anderson.
Aaron was arrested on February 11, 1998, and questioned for a second time. Aaron did not admit involvement in Stephanie's murder. However, during this questioning, Aaron explained how he would kill Stephanie if he was going to kill her.[2]
In late May 1998, the grand jury issued indictments against the boys. Prior to the boys' trial, drops of Stephanie's blood were found on Tuite's sweatshirt. The charges against the boys were dismissed without prejudice, and this action followed.
ANALYSIS
I. The General Law of Qualified Immunity
Because the resolution of the current motions hinges in large part on the proper application of the doctrine of qualified immunity, the court begins by setting forth the relevant law regarding the general application of that doctrine.
Qualified immunity is immunity from suit, not simply immunity from liability. Mitchell v. Forsyth, 472 U.S. 511, 526, 105 S. Ct. 2806, 86 L. Ed. 2d 411 (1985). Thus, it must be determined at the earliest possible stage of the litigation. Hunter v. Bryant, 502 U.S. 224, 227, 112 S. Ct. 534, 116 L. Ed. 2d 589 (1991) (per curiam). The requirement that qualified immunity be determined at the earliest possible stage of the litigation "calls upon courts, not juries, to settle the ultimate questions of qualified immunity." Johnson v. County of Los Angeles, 340 F.3d 787, 791 (9th Cir.2003); see also Lindsey v. Shalmy, 29 F.3d 1382, 1384 (9th Cir.1994) ("The question of immunity is not to be `routinely place[d]... in the hands of the jury.'") (quoting Hunter, 502 U.S. at 227, 112 S. Ct. 534). Otherwise, qualified immunity would rarely be decided until after trial, which defeats the purpose of having qualified immunity from suit.
Whether a defendant is entitled to qualified immunity is a two-part inquiry. The first step is to ask: "Taken in the light most favorable to the party asserting the injury, do the facts alleged show the officer's conduct violated a constitutional right?" Saucier v. Katz, 533 U.S. 194, 201, 121 S. Ct. 2151, 150 L. Ed. 2d 272 (2001). In Saucier, the Supreme Court disapproved *1002 of the Ninth Circuit's former practice of denying summary judgment "any time a material issue of fact remains" because such a practice "could undermine the goal of qualified immunity to `avoid excessive disruption of government and permit the resolution of many insubstantial claims on summary judgment.'" Saucier, 533 U.S. at 202, 121 S. Ct. 2151 (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982)).
As the First Circuit noted in Riverdale Mills Corp. v. Pimpare, 392 F.3d 55, 61-62 (1st Cir.2004), given that Saucier involved a motion for summary judgment, the Court in Saucier created an ambiguity regarding a plaintiff's evidentiary burden when qualified immunity is raised in the summary judgment context by stating that courts must "determine whether, on the facts alleged, a constitutional violation could be found...." Saucier, 533 U.S. at 207, 121 S. Ct. 2151. However, like the First Circuit, this court concludes that the Supreme Court in Saucier did not intend by its choice of language to nullify Fed.R.Civ.P. 56(c)[3] and (e)[4] and overrule its well-established precedent interpreting Rule 56 as requiring a plaintiff to come forward with sufficient evidence in the form of depositions, answers to interrogatories, admissions on file and affidavits from which a factfinder at trial could rule in the plaintiff's favor. See First Nat. Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289, 88 S. Ct. 1575, 20 L. Ed. 2d 569 (1968) ("What Rule 56(e) does make clear is that a party cannot rest on the allegations contained in his complaint in opposition to a properly supported summary judgment motion made against him."); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) ("[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.") (emphasis added); Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) ("In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.").
First, other portions of Saucier are written in such a way as to suggest that the Court did not intend to dispense with the requirements of Rule 56 in the context of a qualified immunity analysis brought at the summary judgment stage. For example, the Court states that "if a violation could be made out on a favorable view of the parties' submissions, the next, sequential step is to ask whether the right was clearly established." Saucier, 533 U.S. at 201, 121 S. Ct. 2151 (emphasis added); see also Saucier, 533 U.S. at 211, 121 S. Ct. 2151 ("I agree that Katz's submissions were too slim to put officer Saucier to the burden of trial.") (Ginsburg, J., concurring in the judgment). Second, it is difficult to conclude that the Supreme Court, if it intended to overrule its earlier and well-established *1003 precedent regarding a plaintiff's summary judgment burden, would do so tacitly in a case where the issue was never raised. Finally, as the First Circuit explained, "[s]ubsequent Supreme Court cases have clarified, implicitly if not explicitly, that courts assessing the first prong at summary judgment should look beyond the complaint to the broader summary judgment record." Riverdale Mills Corp., 392 F.3d at 62 (citing Groh v. Ramirez, 540 U.S. 551, ___, 124 S. Ct. 1284, 1293, 157 L. Ed. 2d 1068 (2004) and Hope v. Pelzer, 536 U.S. 730, 734 n. 1, 122 S. Ct. 2508, 153 L. Ed. 2d 666 (2002)). For example, in Groh, the Supreme Court, in determining whether the defendants had violated the plaintiff's rights in the context of a motion for summary judgment on qualified immunity grounds, explained that "`[t]he evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in [her] favor.'" Groh, 540 U.S. at 562, 124 S. Ct. 1284 (quoting Anderson v. Liberty Lobby, 477 U.S. at 255, 106 S. Ct. 2505) (emphasis added). For these reasons, this court will construe the facts here in the light most favorable to plaintiffs only to the extent that the facts alleged by plaintiffs are supported by evidence of record as required by Rule 56(c) and (e) and Supreme Court case law interpreting these summary judgment rules.
If, construing the evidentiary record in the light most favorable to the plaintiff, a court concludes that the plaintiff's rights were violated, then the court must proceed to the second step of the qualified immunity analysis, pursuant to which the officer is entitled to qualified immunity if the law was not "clearly established," i.e., if it would not have been clear to a reasonable officer that his conduct was unlawful under the circumstances. Saucier, 533 U.S. at 202, 121 S. Ct. 2151. "Whether the law was clearly established is a pure question of law for the court to decide." Carnell v. Grimm, 74 F.3d 977, 978 (9th Cir.1996). The clearly-established inquiry, "it is vital to note, must be undertaken in light of the specific context of the case, not as a broad general proposition...." Saucier, 533 U.S. at 201, 121 S. Ct. 2151 (emphasis added). Thus, "[t]he relevant, dispositive inquiry" is "whether it would be clear to a reasonable officer that his conduct was unlawful in the situation he confronted." Id. at 202, 121 S. Ct. 2151. "If the law did not put the officer on notice that his conduct would be clearly unlawful, summary judgment based on qualified immunity is appropriate." Id.
It is important to note that courts of appeal have been tempted to meld the two prongs of the qualified immunity test, particularly in the Fourth Amendment context. The argument is that it is inappropriate to give qualified immunity to officials who have violated the Fourth Amendment by unreasonably searching or seizing because qualified immunity is intended to protect reasonable official action. In other words, the argument is that "[i]t is not possible ... to say that one `reasonably' acted unreasonably." Anderson v. Creighton, 483 U.S. 635, 643, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987). However, such an argument has been squarely rejected by the Supreme Court. See id.; Saucier, 533 U.S. at 203-04, 121 S. Ct. 2151.
Most recently, in Brosseau v. Haugen, ___ U.S. ___, 125 S. Ct. 596, 160 L. Ed. 2d 583 (2004) (per curiam), the Supreme Court reversed the Ninth Circuit's opinion denying qualified immunity to an officer who shot a fleeing suspect in the back. The Court criticized the Ninth Circuit for finding that the law was clearly established based on the very general test of Graham v. Connor that "use of force is contrary to the Fourth Amendment if it is excessive under objective standards of reasonableness." Brosseau, ___ U.S. at ___, 125 *1004 S.Ct. at 599. The Court explained that although such a general test may "in an obvious case" clearly establish that an officer's conduct was unlawful, such a general standard is not sufficient to clearly establish the law where the case is not one involving run-of-the-mill facts. Id. The Court went on to consider the "handful of cases relevant to the `situation [Brosseau] confronted': whether to shoot a disturbed felon, set on avoiding capture through vehicular flight, when persons in the immediate area are at risk from that flight." Id. at ___, 125 S.Ct. at 600. The Court concluded that the "cases taken together undoubtedly show that this area is one in which the result depends very much on the facts of each case." Id. Noting that none of the cases squarely governed but did suggest that Brosseau's actions "fell in the `hazy border between excessive and acceptable force,'" the Court concluded that these cases did not "clearly establish" that Brosseau's act of shooting the plaintiff in the back violated the Fourth Amendment. Brosseau, ___ U.S. at ___, 125 S.Ct. at 600 (quoting Saucier, 533 U.S. at 206, 121 S. Ct. 2151).
Keeping in mind this analytical framework, the court now turns to the claims that are the subject of defendants' motions.
II. First Claim for Relief Violation of the Fourth Amendment
Michael's Arrest
Michael contends that defendants violated his Fourth Amendment right to be free of unreasonable seizures by arresting him without probable cause.[5]See Beck v. Ohio, 379 U.S. 89, 90-91, 85 S. Ct. 223, 13 L. Ed. 2d 142 (1964) (holding that the Fourth Amendment to the United States Constitution, applicable to the states through the Fourteenth Amendment, prohibits arrests without probable cause); McKenzie v. Lamb, 738 F.2d 1005, 1007 (9th Cir.1984) (explaining that arrests without probable cause give rise to a § 1983 damages action). Defendants seek summary judgment on the merits as well as on qualified immunity grounds.
A. An Issue for the Court
As set forth in section I, supra, in determining whether defendants are entitled to qualified immunity, the court must necessarily address the merits of Michael's claim. See Brosseau, ___ U.S. at ___, 125 S.Ct. at 598 ("When confronted with a claim of qualified immunity, a court must ask first the following question: `Taken in the light most favorable to the party asserting the injury, do the facts alleged show the officer's conduct violated a constitutional right?'") (quoting Saucier, 533 U.S. at 201, 121 S. Ct. 2151). Thus, although the question of whether there was probable cause to arrest is generally an issue for the jury in the context of a § 1983 action, see McKenzie, 738 F.2d at 1008, where, as here, a defendant seeks summary judgment based on the doctrine of qualified immunity, the existence of probable cause is necessarily an issue for the court. See Saucier, 533 U.S. at 207, 121 S. Ct. 2151 (instructing "district courts and courts of appeals to concentrate at the outset on the definition of the constitutional right and to determine whether ... a constitutional violation could be found"). *1005 Again, this is because qualified immunity is immunity from suit, not simply immunity from liability, see Mitchell, 472 U.S. at 526, 105 S. Ct. 2806, and therefore it must be determined at the earliest possible stage of the litigation. Hunter, 502 U.S. at 227, 112 S. Ct. 534.
Thus, the initial issue this court must ask and answer in order to determine whether defendants are entitled to summary judgment on qualified immunity grounds with respect to Michael's Fourth Amendment claim is whether, considering all of the evidence presented on summary judgment in the light most favorable to Michael, there was probable cause for his arrest.
B. Standard for Determining Probable Cause
A warrantless arrest must be supported by probable cause. See United States v. Bueno-Vargas, 383 F.3d 1104, 1107 (9th Cir.2004). "The long-prevailing standard of probable cause protects `citizens from rash and unreasonable interferences with privacy and from unfounded charges of crime,' while giving `fair leeway for enforcing law in the community's protection.'" Maryland v. Pringle, 540 U.S. 366, 370, 124 S. Ct. 795, 157 L. Ed. 2d 769 (2003) (quoting Brinegar v. United States, 338 U.S. 160, 176, 69 S. Ct. 1302, 93 L. Ed. 1879 (1949)). For purposes of the Fourth Amendment,[6] "[p]robable cause exists when, under the totality of the circumstances known to the arresting officers, a prudent person would have concluded that there was a fair probability that [the suspect] had committed a crime." Peng v. Mei Chin Penghu, 335 F.3d 970, 976 (9th Cir.2003) (quoting United States v. Buckner, 179 F.3d 834, 837 (9th Cir.1999) (citations and quotations omitted)). In other words, "[a]rresting officers have probable cause to make warrantless arrests if, at the moment of arrest, facts and circumstances within their knowledge and of which they have reasonably trustworthy information are sufficient to warrant a prudent man in believing that the arrested person had committed or was committing an offense." United States v. Hillison, 733 F.2d 692, 697 (9th Cir.1984) (emphasis added).
Michael contends that in determining whether his warrantless arrest is supported by probable cause, the court is confined to considering the facts set forth in the declaration of probable cause that was filed with the state court in support of Michael's arrest as required by California law. It is well-established that "[t]he validity of a search warrant depends upon the sufficiency of what is found within the four corners of the underlying affidavit." United States v. Taylor, 716 F.2d 701, 705 (9th Cir.1983) (emphasis added); see also United States v. Rubio, 727 F.2d 786, 795 (9th Cir.1983); United States v. Martinez, 588 F.2d 1227, 1234 (9th Cir.1978); United States v. Anderson, 453 F.2d 174, 177 (9th *1006 Cir.1971). Moreover, in United States v. Castillo, 866 F.2d 1071 (9th Cir.1988), the Ninth Circuit applied the "four corners" rule where a defendant challenged a magistrate judge's determination that there was probable cause to issue an arrest warrant. However, the parties have failed to cite, and the court's own research has failed to reveal, a case holding that for purposes of determining whether a warrantless arrest violated the Fourth Amendment, a court is confined to considering the facts in a declaration of probable cause.
None of the cases Michael cites for this proposition People v. Privett, 55 Cal. 2d 698, 12 Cal. Rptr. 874, 361 P.2d 602 (1961), People v. Talley, 65 Cal. 2d 830, 56 Cal. Rptr. 492, 423 P.2d 564 (1967) or Beck v. Ohio, 379 U.S. 89, 85 S. Ct. 223, 13 L. Ed. 2d 142 (1964) so hold. To the contrary, these cases are authority for the proposition that "[w]hen the constitutional validity of an arrest is challenged, it is the function of a court to determine whether the facts available to the officers at the moment of the arrest would `warrant a man of reasonable caution in the belief' that an offense has been committed." Beck, 379 U.S. at 96, 85 S. Ct. 223 (quoting Carroll v. United States, 267 U.S. 132, 162, 45 S. Ct. 280, 69 L. Ed. 543 (1925)) (emphasis added); see also Privett, 55 Cal.2d at 701, 12 Cal. Rptr. 874, 361 P.2d 602 ("The question of probable cause to justify the arrest of Edwards and the search of the premises incident thereto must be tested upon the facts which the record shows were known to the officers at the time the arrest was made."); Talley, 65 Cal.2d at 835, 56 Cal. Rptr. 492, 423 P.2d 564 ("The question of probable cause to justify an arrest without a warrant must be tested by the facts which the record shows were known to the officers at the time the arrest was made."). Although Privett and Talley refer to the need to consider the facts "which the record shows were known to the officers," neither case mentions a declaration of probable cause, and nothing in either case suggests that "the record" in that case consisted of a declaration of probable cause.
Moreover, the court has been unable to find a single case in which the Ninth Circuit has confined its probable cause analysis to the four corners of a probable cause declaration when evaluating the constitutionality of a warrantless arrest. Rather, the Ninth Circuit has consistently evaluated the legality of warrantless arrests by considering all of the facts known to the officers at the time of the arrest. See United States v. Martin, 509 F.2d 1211, 1213 (9th Cir.1975) (explaining that in determining whether a warrantless arrest is supported by probable cause, a court "must consider all the facts known to the officers and consider all the reasonable inferences that could be drawn by them before the arrest") (emphasis added); United States v. Bernard, 623 F.2d 551, 559 (9th Cir.1980) (citing Martin); Hillison, 733 F.2d at 697 ("Arresting officers have probable cause to make warrantless arrests if, at the moment of arrest, facts and circumstances within their knowledge and of which they have reasonably trustworthy information are sufficient to warrant a prudent man in believing that the arrested person had committed or was committing an offense."). The conclusion that a probable cause determination is not confined to the four corners of the declaration of probable cause is further supported by the fact that the Ninth Circuit has specifically considered such factors as the officer's experience and expertise and the knowledge and testimony of other officers at the scene in determining whether a warrantless arrest is supported by probable cause. See Hillison, 733 F.2d at 697 (explaining that in considering whether there was probable cause to make a warrantless arrest, "the court properly could take into account the experience and expertise *1007 of Drug Enforcement Administration agents observing" the defendant's activity); United States v. Del Vizo, 918 F.2d 821, 826 (9th Cir.1990) (explaining that in evaluating probable cause for a warrantless arrest, "[w]hen there has been communication among agents, probable cause can rest upon the investigating agents' `collective knowledge'") (quoting Bernard, 623 F.2d at 560-61); see also United States v. Valencia, 24 F.3d 1106, 1108 (9th Cir.1994) (quoting Del Vizo). Thus, the probable cause analysis here will not be confined to the facts set forth in the declaration for probable cause that was executed in support of Michael's arrest.
C. No Fourth Amendment Violation
The court concludes that defendants had probable cause to arrest Michael, and therefore did not violate the Fourth Amendment by arresting him, given all of the information in defendants' possession at the time of the arrest (including information regarding the time of Stephanie's death and the position and state of Stephanie's body, Michael's statements regarding seeing Stephanie's door closed at 4:30 a.m., and the state of the windows and doors) and considering all of the reasonable inferences that could be drawn from those facts. See Martin, 509 F.2d at 1213 (explaining that in determining whether a warrantless arrest is supported by probable cause, a court "must consider all the facts known to the officers and consider all the reasonable inferences that could be drawn by them before the arrest") (emphasis added). Although in determining the facts in defendants' possession the court construes the evidence in the light most favorable to Michael, in determining the reasonable inferences that could be drawn from those facts, the court need not accept only the inferences posited by Michael because the court must consider "all the reasonable inferences" that could be drawn from the facts. See id. As the First Circuit has explained, "the availability of alternative inferences does not prevent a finding of probable cause so long as the inference upon which the officer relies is reasonable." Cox v. Hainey, 391 F.3d 25, 32 (1st Cir.2004); cf. United States v. Arvizu, 534 U.S. 266, 277, 122 S. Ct. 744, 151 L. Ed. 2d 740 (2002) ("A determination that reasonable suspicion exists, however, need not rule out the possibility of innocent conduct.").
1. Information Defendants Had Regarding Time of Death
As Michael admits in his opposition, Stephanie was stabbed to death between 10:00 and 11:00 p.m., and defendants had this information at the time of his arrest. See Plaintiff Michael Crowe's Points and Authorities in Opposition to Defendants Ralph Claytor, Mark Wrisley, Barry Sweeney, Phil Anderson, and City of Escondido's Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment of the Claims Asserted by Michael Crowe ("Michael's Opposition") at 19:4-17.
2. Information Defendants Had Regarding Stephanie's Body
A review of the crime scene photographs reveals that Stephanie was wearing jeans and a shirt at the time of her death. Cheryl stated during her videotaped interview that it was "weird" that Stephanie was found in her clothes because, although she sometimes fell asleep in her clothes, she usually slept in a big T-shirt and sweats. Transcript of Videotaped Examination of Cheryl Ann[sic] Crowe, January 21, 1998, at 35:1-14. A reasonable officer could have surmised from this statement that it was possible that Stephanie was awake at the time her killer entered her room. Given the fact that no one in the house heard Stephanie scream or heard the Crowe family dog bark, a reasonable officer could *1008 have suspected that the murderer was not a stranger to Stephanie.
Defendants arrived at the crime scene after the emergency medical technicians, John Peters and Steve Mandich. Peters and Mandich have testified that when they arrived Stephanie's body was in the position depicted in the actual crime scene photographs. See Deposition of John Peters at 48:6-9 and Deposition of Steve Mandich at 28:8-29:5 (Exhibits B and C, Defendants' NOL re: Michael's Claims filed April 26, 2004). A review of the crime scene photographs reveals that Stephanie's body was in the doorway of her bedroom with the door opening into the bedroom. See Exhibit I, attached to Defendants' Reply to Michael Crowe's Opposition to Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment. It is undisputed that, unlike Michael's bedroom door, Stephanie's bedroom was not directly off of the main hallway, but, rather, an alcove connected Stephanie's bedroom to the main hallway. Deposition of Stephen Crowe at 85:28-86:17 (Exhibit 13, Michael's Exhibits). It cannot be disputed that if one were to draw a line to represent the bedroom door in a closed position, Stephanie's head in the crime scene photographs would be on the alcove side of that line while the remainder of her body would be on the bedroom side of that line. It also cannot be disputed that if Stephanie died in this position, with her head in the alcove, the door was open when she died because it would be physically impossible for the door to be closed with her in that position.
The position of Stephanie's body is important to the probable cause analysis because, as will be discussed in section II.C.3, infra, Michael made statements to the police that he saw Stephanie's door closed at 4:30 a.m., which would have been impossible had Stephanie been dead in the doorway of her bedroom by 11:00 p.m.
Much of Michael's brief is devoted to attempting to create a genuine issue of material fact regarding the location of Stephanie's body when she died by demonstrating that a reasonable factfinder could find that the family members moved the body prior to the arrival of the EMTs. However, the relevant inquiry in a probable cause analysis is not whether Stephanie was actually moved prior to the EMT's arrival but, rather, what information, if any, the police had at the time of Michael's arrest that suggested that one or more of the family members moved the body prior to the EMT's arrival and that, therefore, Stephanie did not die in the position that she was found by the EMTs. See Martin, 509 F.2d at 1213; Bernard, 623 F.2d at 559; Hillison, 733 F.2d at 697.
a. What Cheryl and Stephen Told Defendants Prior To Michael's Arrest
A review of Cheryl's videotaped questioning by police reveals that she did not tell defendants that she moved Stephanie's body. Moreover, Cheryl drew a diagram of the crime scene for defendant Sweeney which a reasonable officer could interpret as showing Stephanie's head in the alcove, consistent with the crime scene photographs. See Exhibit K, attached to Defendants' Reply to Michael Crowe's Opposition to Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment.
A review of Stephen's videotaped questioning by police reveals that Steven did not tell defendants that he moved Stephanie's body or that she was found in her room with the door closed. In fact, Stephen denied moving the body, as illustrated by the following colloquy between Stephen and defendant Sweeney at the police station:
Q. Think of this though, Steve. After you tried to use the phone, you tried *1009 to pick her up. Did you move her at all?
A. No. I couldn't move her. She was stiff. She was all stiff and I couldn't move her....
Transcript of Videotaped Examination of Stephen Crowe, January 21, 1998, at 15:20-24. Stephen did not make any statements in his recorded interview about the position of the body vis-a-vis the doorway.
Cheryl and Stephen now both state in their declarations filed in opposition to the motion for summary judgment: "Every time I was interviewed by the police I told them the true position of Stephanie's body, which was inside the room." See Omnibus Decl. of Stephen Crowe ¶ 3 (Exhibit 44), Plaintiff Michael Crowe's List of Documents Presented in Opposition to [Defendants'] Motion for Summary Judgment or in the Alternative, Partial Summary Judgment of the Claims Asserted by Michael Crowe ("Michael's Exhibits"); Omnibus Decl. of Cheryl Crowe ¶ 4 (Exhibit 45, Michael's Exhibits). Moreover, Cheryl now states that she believes that she moved Stephanie, while Stephen states that he did move Stephanie. See Omnibus Decl. of Cheryl Crowe ¶ 24; Omnibus Decl. of Stephen Crowe ¶ 3. However, there is a videotape of Cheryl and Stephen being interviewed by the police officer defendants, and it cannot be disputed that during these tape recorded interviews not only did Cheryl and Stephen not make statements indicating that Stephanie's entire body, including her head, was inside the room or that her body was moved but they made statements to the contrary. Moreover, Stephen testified at his civil deposition that when he found Stephanie her head was in the alcove and the remainder of her body was in her room. Specifically, Stephen testified:
Q. When you got out into the hallway and you got to Stephanie, where was she?
A. She was laying on the floor. There's an alcove that goes back and it's the depth of the closet. It's about three feet. Her head was lying her body was inside her room and her head was right at the doorjamb.
Q. If you drew a line at the position where the door would be if it was fully shut if you drew that line across the doorjamb, was her head or any part of her body on the hallway side or the alcove side of that line?
A. Yes, her head was. Q. How much of her head?
A. Just from the neck up.
Q. So if you drew that line across there, it would bisect her neck; is that correct?
A. That's correct.
Deposition of Stephen Crowe at 85:28-86:17 (Exhibit 13, Michael's Exhibits). Thus, Cheryl and Stephen's statements regarding what they remember telling police more than six years ago, which are inconsistent with their recorded statements to police and with Stephen's deposition testimony, are not sufficient to require this court to assume on this motion for summary judgment that defendants knew or should have known that the body was not initially in the position depicted in the crime scene photographs. See Burrell v. Star Nursery, Inc., 170 F.3d 951, 954 (9th Cir.1999) (refusing to reverse district court's grant of summary judgment based on plaintiff's affidavit, which contained allegations that "appeared for the first time" in the affidavit and which contradicted her earlier deposition testimony); Kennedy v. Allied Mutual Ins. Co., 952 F.2d 262, 266 (9th Cir.1991) ("The general rule in the Ninth Circuit is that a party cannot create *1010 an issue of fact by an affidavit contradicting his prior deposition testimony.").
Moreover, even if Cheryl and Stephen were interviewed by police at another time, which it is not clear on this record that they were, the fact that they may have at that time told the police that Stephanie had been moved and was not in the position in which she was found by the EMTs does not establish that, for purposes of the probable cause analysis, defendants were required to assume that Stephanie died inside her bedroom with the door closed. Police officers are constantly required to sift through volumes of evidence and witness statements that are not always consistent, and the police must make judgment calls regarding which witness statements to believe and which not to believe. Given the statements of Cheryl and Stephen in their recorded interviews, it was not unreasonable for defendants to conclude, for purposes of determining whether there was probable cause to arrest Michael, that Stephanie died in her doorway with the door open. This is true even if Cheryl and Stephen made other, unrecorded statements to the contrary.
b. What Kennedy Told Defendants Prior to Michael's Arrest
A review of Kennedy's videotaped questioning by police reveals that Kennedy did not tell police that she moved the body.[7] Although Michael contends that Kennedy told defendants prior to Michael's arrest that when she found Stephanie, Stephanie was in her room and that the door was closed, this is a mischaracterization of her statements, as the following colloquy between defendant Wrisley and Kennedy illustrates:
W: When you got up due to the alarm and you went out and you found Stephanie in the doorway I guess there
K: Uh-huh [yes][8]
W. Did you go into her room at all?
K: No, I just stepped inside and I saw her laying there and I thought this is something's wrong here....
Transcript of Videotaped Examination of Judith Ann Kennedy, January 21, 1998, at 22:14-18. Having reviewed this portion of the videotape, it is clear that Kennedy did not correct defendant Wrisley when he referred to Stephanie being "in the doorway" and that Kennedy answered "no" to the question of whether she went into Stephanie's room. As noted, it is undisputed that, unlike Michael's bedroom door, Stephanie's bedroom was not directly off of the main hallway, but, rather, an alcove connected Stephanie's bedroom to the main hallway. Thus, it was entirely reasonable for defendant Wrisley to believe that Kennedy was referring to "stepping inside" the alcove and not Stephanie's bedroom.
In addition, it must be noted that because the relevant question here is what evidence defendants had in their possession regarding the position of Stephanie's body at the time they arrested Michael for her murder, Michael's assertion to the contrary notwithstanding, it is irrelevant what Kennedy stated about the position of the body at the proceeding (referred to as a "707 hearing")[9] which was held in order to *1011 determine whether Michael should be tried in adult rather than juvenile court, as that hearing occurred after his arrest.
Finally, because the probable cause inquiry is whether the inferences defendants drew from the facts in their possession were reasonable, that plaintiffs' expert, Victor Cestaro, has, based on blood smears, opined[10] that Stephanie died inside her bedroom with the door closed does not mean that a reasonable officer could not have concluded based on all of the information in defendants' possession that Stephanie died with her head in the alcove and door open as depicted in the crime scene photographs. See Cox, 391 F.3d at 32 ("[T]he availability of alternative inferences does not prevent a finding of probable cause so long as the inference upon which the officer relies is reasonable.").
In conclusion, given that (1) when defendants arrived on the scene Stephanie's body was in the doorway, in that her head was in the alcove and the rest of her body was in the bedroom; (2) defendants had in their possession statements by the family that were consistent with Stephanie's body being found in the doorway; (3) and it would be physically impossible for the door to be closed with Stephanie's body in that position, a reasonable officer could have based his probable cause determination on the assumption that Stephanie died in the doorway of her bedroom with the door open.
3. Michael's Story
It is undisputed that in two different interviews Michael told defendants that he woke up at 4:30 a.m. and went to the kitchen to get some Tylenol because he had a headache. In both interviews, Michael stated that there was enough light that he could see that Stephanie's door was shut. Specifically, during one questioning, Michael stated as follows:
Q. What was the next thing that you remember?
A. I woke up and I turned on the TV so I could see, and I think the clock said 4:30.
. . .
Q. Did you turn the TV on to watch it or just turn it on to
A. Turned it on to see around the room.
Q. Kind of using that for light?
A. Yes.
Q. Then what did you do?
A. I had a horrible headache, so I got up out of bed, went to the kitchen.
Q. Now, your bedroom door is open or closed?
A. When I sleep?
Q. No. When you woke up and you went on your way to the kitchen, was it opened or closed.
A. I think I left it open.
Q. When you went out, I know you got to into the hallway to get to the kitchen, correct?
A. Yes.
Q. How could you see where you were going?
A. I think the light by what you call the front doors, the double doors, that light was on. I think there is an automatic switch on it.
. . .
Q. How about the hallway light, is it on or off?
A. I'm pretty sure it was off.
Q. And obviously when you leave your room, your view is right across to *1012 Stephanie's room. And is her room opened or closed?
A. Closed.
Q. And you see nothing unusual at all?
A. Nothing unusual.
Q. Did you go to the kitchen?
A. Yes.
. . .
Q. How long were you in the kitchen?
A. Fifteen minutes. When I got back I left the TV on and I think it said 4:45.
. . .
Q. So Stephanie's door was shut?
A. Yes.
Q. And what about mom and dad's door?
A. I believe it was shut, too.
Q. And grandma and Shannon's?
A. I believe everything was shut.
Q. If the only light is coming from like here, how could you tell if the doors were shut?
A. I believe I turned on my own light and my door was left open, so I could see the rest of the hallway.
Q. You turned on your bedroom light before you left the room?
A. Yes.
Q. So when you returned back to the room, the light was still on?
A. And that kind of illuminated the hallway a little?
Q. Yes.
. . .
Q. ... When you got back to your room, you again didn't notice anything?
A. Didn't notice anything.
Q. Nothing unusual?
A. Nothing unusual.
Q. When you got back to your room, what was the next thing you did?
A. I dropped [sic] the milk, took the Tylenol in my room, set the box over there. Then I turned off my light and turned off the TV.
Police Interview of Michael Crowe Taken at the Polinsky Center January 22, 1998, at 21:23-25:28 (Exhibit K, Defendants' NOL re: Michael's claims filed April 26, 2004) (emphasis added). Later that day, Michael again told the police that Stephanie's door was closed:
A. The next thing I remember after that I woke up with a bad headache. I turned on the TV so I could see in my room because it was dark. The clock on the TV, I think it said 4:30. So I got up and I opened the door, turned on the light, you know, went down to the kitchen to get some Tylenol for my headache. I took the Tylenol and drank the milk. I turned off my light, turned off the TV. I shut my door and went to sleep....
Q. Okay. Can you tell me about the lighting in the house?
A. One light, I think, was left on. I turned on my light and I left my door open and I went to the kitchen, so I could see fairly I'm pretty sure. I was half asleep and I had a headache, so I think I turned on the kitchen light, as well....
. . .
A. I remember when I walked back all the doors being shut.
Q. Okay. You remember them all being shut. Can you define that for me?
A. All the doors in the hallway, all four, all five of them but the bathroom.
Q. And you're pretty sure about that?
*1013 A. I'm pretty sure.
. . .
Q. ... And the door to Stephanie's room?
A. Yeah, I think that was shut.
Q. That was shut. You're pretty confident about 4:30?
A. Yes.
Q. And could you briefly describe the lighting in the hallway?
A. I didn't turn on the hallway light, I don't think, but I did have my door open with my light on. So it was dim, but I could still see pretty well. Like I said I was still half asleep at the time. I kind of stumbled into the kitchen.
Videotaped Interview of Michael Stephen Crowe, January 22, 1998 at 7:27-10:17 (Exhibit U, Defendants' NOL re: Michael's claims filed April 26, 2004) (emphasis added).
Given that the information in defendants' possession suggested that Stephanie was dead by 4:30 a.m. and that she died in her doorway with the door open, Michael's statements that Stephanie's door was closed at 4:30 a.m. would have given a reasonable officer reason to believe that Michael was lying and was involved in Stephanie's murder.
Michael's contention in his declaration that he initially stated to defendants in an unrecorded interview that he did not know whether Stephanie's door was closed when he went to the kitchen at 4:30 a.m. does not change the fact that, as detailed supra, Michael made later, unequivocal statements that there was sufficient light to see and that he was certain that Stephanie's door was closed. Michael fails to cite any authority for the proposition that his later statements cannot be considered in determining whether there was probable cause to arrest him because these statements were made, in some instances, in response to leading questions. A reasonable officer could have relied on these later statements in making a probable cause determination.
4. The state of the windows and doors
Finally, the state of the windows and doors is another factor upon which a reasonable officer could have relied in forming the belief that Michael was involved in Stephanie's murder.
a. The laundry room or "front" door
Construing the facts in the light most favorable to Michael, at the time of Michael's arrest, defendants knew that fellow officer Scott Walters saw the door to the Crowe house close at approximately 9:58 p.m. on the night of the murder. However, a reasonable officer could have concluded that an intruder[11] was not entering through the laundry room door at that time. Although defendants knew that the members of the Crowe household denied that they were the ones who closed the door, Michael operates under the mistaken assumption that a police officer must believe everything a suspect says, and that when a suspect is arrested based on facts that are different than those relayed by the suspect, probable cause cannot exist. This is not, however, the standard. See Ahlers v. Schebil, 188 F.3d 365, 371 (6th Cir.1999) ("In fact, law enforcement `is under no obligation to give any credence to a suspect's story [or alibi] nor should a plausible *1014 explanation in any sense require the officer to forego arrest pending further investigation if the facts as initially discovered provide probable cause.'") (quoting Criss v. City of Kent, 867 F.2d 259, 263 (6th Cir.1988)); see also Taylor v. Paladines, 983 F. Supp. 750, 753 (N.D.Ill.1997) (concluding that police officer was entitled to qualified immunity where the officer arrested an innocent individual who provided an explanation for her actions prior to her arrest). If this were the standard, confronted with two conflicting sets of facts with one set of facts being relayed by the suspect the police would certainly hesitate to arrest a suspect unless they were sure that the evidence proved beyond a reasonable doubt that the suspect was guilty. Otherwise, the police would risk the suspect not being convicted and then suing them. Again, "[t]he long-prevailing standard of probable cause protects `citizens from rash and unreasonable interferences with privacy and from unfounded charges of crime,' while giving `fair leeway for enforcing law in the community's protection.'" Pringle, 540 U.S. at 369, 124 S. Ct. 795 (quoting Brinegar, 338 U.S. at 176, 69 S. Ct. 1302). This probable cause standard recognizes that the police will not always arrest the right person and must be able to weigh evidence and make reasonable judgment calls about who is lying to them and who is not.
That a police officer need not believe every piece of information a suspect conveys is particularly true when information gained from the suspect is inconsistent with other evidence. Here, it is undisputed that in an unrecorded interview prior to Michael's arrest, Kennedy told defendant Sweeney that before going to bed at approximately 9:00 p.m. she checked the sliding glass door and the laundry room door to see if they were locked. See Exhibit 295. Michael concedes that Kennedy told Sweeney that the lock was "right." See Michael's Opposition at 25:4. Michael has presented evidence from which it could be concluded that given the way that lock on the laundry room door operates, Kennedy could have been indicating that the door was unlocked. However, the inquiry is what defendants could have reasonably believed based on Kennedy's statement that the lock was "right." See Reynolds v. County of San Diego, 84 F.3d 1162, 1170 (9th Cir.1996) (explaining that the fact that there might be "`another reasonable or more reasonable interpretation of events'" does not mean that a reasonable officer could not have believed that his conduct was justified), overruled on other grounds by Acri v. Varian Assocs. Inc., 114 F.3d 999 (9th Cir.1997) (quoting Hunter, 502 U.S. at 228, 112 S. Ct. 534). It was not unreasonable for defendants to interpret Kennedy's statement as a statement that the door was locked when she checked it, because a reasonable officer could conclude that one would not check a door to see if it was locked but not lock it if it was found to be unlocked.
Moreover, Stephen Crowe told defendants that the laundry room door, which the family referred to as the "front door," was locked the morning that Stephanie was discovered murdered. Specifically, he stated:
Q. And Cheryl's mom usually goes and checks to make sure the doors are all locked also. In fact, the door to the laundry room was locked this morning also. The dead bolt was latched. So I tried to unlock (inaudible) door. I pulled on the door and it wouldn't open because someone locked the dead bolt. That's why I would assume Cheryl's mom shut the front door before retiring.
A. Okay. I know. You call that the laundry door?
Q. Yeah. The far door (inaudible).
Transcript of Videotaped Examination of Stephen Crowe at 9:18-27 (emphasis added). *1015 Thus, even though each of the family members denied being the one who opened and closed the door at approximately 9:58 p.m., given the evidence suggesting to defendants that Kennedy locked the door at approximately 9:00 p.m., it would not be unreasonable for defendants to conduct their investigation based on the assumption that it was possible that it was not an intruder who Officer Walters saw closing the laundry room or "front" door at 9:58 p.m.
Michael points out that according to Sweeney's notes from an unrecorded interview of Kennedy, Kennedy said that the family never used the deadbolt on that door. See Exhibit 295. However, given all of the other information in defendants' possession regarding the state of the doors and windows and the state of the laundry room door in particular and given that Stephen appeared to assume that Kennedy was the one who deadbolted the door, this statement by Kennedy does not serve to negate the existence of probable cause to arrest Michael.
b. Stephanie's Window
A reasonable officer could have concluded that the killer did not enter or exit through Stephanie's bedroom window. Stephanie's window, which was a metal slider, was not locked nor completely closed due to a phone cable leading from the outside which entered the room through the window in the bottom corner. However, a review of the crime scene photographs shows two flag-like objects hanging underneath the windows as decorations which appear undisturbed. A review of the photograph of this window also reveals that it is some distance from the ground and that, although someone could certainly enter the room through the window, the window would not provide easy ingress or egress.
Michael notes that Stephanie's friend, Amanda Reidy, told defendants that she was talking to Stephanie between 9:45 and 10:00 p.m. and Stephanie stated that the cat had come in through her window. However, the fact that Stephanie's window was open during her telephone conversation is not a fact that would compel the police to conclude that the killer came through the window because Stephanie could have closed the window after the conversation.
c. The sliding doors off of the kitchen
A reasonable officer could have concluded that the killer did not enter the house through either of the sliding glass doors off of the kitchen. One of the sliding glass doors was found to be closed and locked during the investigation. Although defendants found the other sliding door closed but unlocked, Stephen Crowe stated in his videotaped interview that he unlocked that sliding door on the morning of the murder. See Transcript of Videotaped Examination of Stephen Crowe at 8:17-9:16.
d. The master bedroom sliding glass door
Michael contends that the police should have concluded that killer was an intruder who either entered or exited through the sliding door in the master bedroom door because the door was unlocked[12] and because, *1016 although the vertical blinds covering the door were closed, one of the blinds was hung up on the handle of the door and the screen on the door was partially opened, which was consistent with someone going through the door with the blinds closed. Therefore, Michael argues, defendants should have known that Michael was not the killer.
Although the state of the door may have been consistent with someone passing through the door, the other evidence defendants had in their possession suggested that the killer did not pass through this door on the night of the murder. Although Cheryl stated that she was in her bedroom by 10:00 p.m., she also stated to police that she did not go to sleep until 11:00 p.m. which, as Michael admits in his opposition, is the latest time at which Stephanie was alive. See Transcript of Videotaped Examination of Cheryl Ann[sic] Crowe at 14:4-6; Michael's Opposition at 19:4-7. Given the fact that defendants had reason to believe that Stephanie was dead by the time that Cheryl went to sleep, the unlocked state of the door and the state of the vertical blinds did not negate the existence of probable cause to believe that Michael was involved in Stephanie's murder.
d. The garage door
The door to the double-car garage was closed but not locked. Michael makes much of this fact; however, no reasonable officer could have concluded that it was possible for the killer to enter the house through the garage door because a review of crime scene photograph 4, which according to the date stamp was taken approximately a week after the murder, reveals that the garage door swings out, and photographs 3 and 5, which were taken the day Stephanie's body was discovered as evidenced by the ambulance in the driveway, reveals that there were two vehicles parked in front of the door, which would have made it impossible for someone to open the garage door. See also Escondido Police Department Evidence Report, Exhibit F, Defendants' NOL re: Crowe Family's Claims filed April 26, 2004 (noting that two vehicles were parked in front of the garage door on the morning of the murder).
e. The remaining doors and windows
It is undisputed that the remaining doors and windows were locked. Michael notes that the double doors that most would refer to as the front doors to the house have the type of lockset that allows one to exit even though the door is locked to the outside. Therefore, an intruder could have left the house by means of these doors. However, as noted, a reasonable officer could have concluded from all of the evidence in defendants' possession regarding the state of the windows and doors that an intruder did not enter the Crowe house on the night of the killing, and therefore the fact that an intruder could have escaped through the front door did not negate the existence of probable cause to believe that Michael was involved in Stephanie's killing.
5. Why the information the police had regarding Tuite did not negate the existence of probable cause
Michael spends numerous pages of his opposition setting forth facts and arguments regarding why Tuite, the transient *1017 who was ultimately convicted of Stephanie's murder, was the real killer. Michael contends that it was Tuite that Officer Walters saw entering the Crowe house at approximately 9:58 p.m. and that after, killing Stephanie, Tuite exited either through the master bedroom sliding glass door or through the double front doors. Michael's tack is unavailing, however.
The issue here is not who killed Stephanie but, rather, whether reasonable, not perfect, police officers could have believed at the time of Michael's arrest that Michael was involved in Stephanie's murder. As will be demonstrated, even though defendants did have evidence in their possession placing Tuite in the vicinity of the Crowe house at the time of the murder, a reasonable officer possessing this evidence could have nonetheless concluded at the time of Michael's arrest that Michael, not Tuite, was involved in Stephanie's murder.
Michael correctly notes that at the time of Michael's arrest, defendants had eye witness accounts placing Tuite in the neighborhood of the Crowe house at the time of the murder. Those eye witness accounts described an individual who was loud, drunk or high, and agitated and who was knocking on doors looking for "Tracy." See Crowe, 303 F.Supp.2d at 1075. However, as noted in section II.C.4, supra, a reasonable officer could have concluded from the information defendants had regarding the state of the windows and doors that Tuite's only means of ingress was Stephanie's window or the Crowe master bedroom sliding glass door. Specifically, given that a reasonable officer could have believed that the laundry room or "front" door was locked by Judith Kennedy at 9:00 p.m., and given that Stephen stated that this door was locked in the morning, a reasonable officer could have concluded that Tuite did not enter the Crowe house through that door at approximately 10:00 p.m. Given that the clothed state of Stephanie's body suggested that she was awake when the killer entered her room and given that no one in the house heard Stephanie scream, a reasonable officer could have concluded that a loud and agitated individual such as Tuite did not enter Stephanie's room through her window. Given that Stephanie was dead by 11:00 p.m. and given that Cheryl Crowe told defendants that she did not go to sleep until 11:00 p.m., see Transcript of Videotaped Examination of Cheryl Ann[sic] Crowe at 14:4-6, a reasonable officer could have concluded that a loud and agitated individual such as Tuite did not enter or exit the Crowe house through the master bedroom sliding door on the night of the murder.
That a reasonable officer could have discounted the theory that Tuite was the killer is not altered by the fact that both Cheryl and Michael reported hearing banging at some point in the night. Cheryl was not sure what time she heard the banging, and by her own account she thought at the time that she was dreaming. Transcript of Videotaped Examination of Cheryl Ann[sic] Crowe at 16:15-17:12. Similarly, when asked what time he heard the banging, Michael was unable to pinpoint a time, stating simply that he thought it was before midnight. See Police Interview of Michael Crowe Taken at the Polinsky Center January 22, 1998, at 19:12-21:14 (Exhibit K, Defendants' NOL re: Michael's claims filed April 26, 2004). However, importantly, Cheryl reported that she heard the banging after she went to sleep, and defendants had reason to believe that Stephanie was dead by the time that Cheryl went to sleep. See section II.C. 1, supra. Because a reasonable officer could have concluded from Cheryl and Michael's statements that the banging occurred after Stephanie's death, and because both Cheryl and Michael indicated that they thought that the banging came *1018 from the laundry room door, which as explained in Section II.C.4.a, supra, a reasonable officer could have believed was locked, a reasonable officer could have discounted the fact of the banging in determining there was probable cause to arrest Michael.
Michael also points to several statements made by Cheryl that defendants had in their possession at the time of Michael's arrest. First, Cheryl reported in her videotaped interview that her bedroom door opened and closed twice "in the middle of the night." Specifically, Cheryl reported:
Something weird happened. I don't know if it was (inaudible) something opened my door twice. I don't know what it was in the middle of the night. I thought it was the cats, but I don't know how it could have been the cats, cause we have cats. They opened it and then shut it. Opened it and then shut it. (inaudible) I fell back to sleep. I feel really bad because I didn't get up. Why didn't I get up? (inaudible) More I think about it, the more I think the cats can't shut the door and open it. (inaudible) I don't know. That wasn't a real (inaudible) woke up.
Transcript of Videotaped Interview of Cheryl Ann [sic] Crowe at 23:23-24:5 (emphasis added). Michael contends Tuite was the one who opened the master bedroom door and defendants should have known this. However, as detailed in this section, supra, the evidence defendants possessed at the time of the arrest suggested that Tuite did not enter the Crowe house. Moreover, given that the information defendants possessed suggested that Stephanie was dead by the time that Cheryl Crowe went to sleep, if Tuite was the one who opened the master bedroom door in the middle of the night after Cheryl went to sleep, Tuite would have had to have remained in the Crowe house undetected for some time after the killing, a proposition that a reasonable officer could have found to be unlikely given Tuite's agitated state.
6. The Alleged Conspiracy to "Pin" the Crime on Someone in the House
A significant part of Michael's brief is also devoted to demonstrating that there was a conspiracy amongst the defendants to "pin" the crime on one of the members of the Crowe household. However, this tack is availing, as the motive of the police in arresting a defendant is irrelevant to a determination of whether there was probable cause to arrest. See Whren v. United States, 517 U.S. 806, 813, 116 S. Ct. 1769, 135 L. Ed. 2d 89 (1996) ("Subjective intentions play no role in ordinary, probable-cause Fourth Amendment analysis."); Scott v. United States, 436 U.S. 128, 138, 98 S. Ct. 1717, 56 L. Ed. 2d 168 (1978) ("[T]he fact that the officer does not have the state of mind which is hypothecated by the reasons which provide the legal justification for the officer's action does not invalidate the action taken as long as the circumstances, viewed objectively, justify that action."); Lee v. Gregory, 363 F.3d 931, 935 (9th Cir.2004) ("Gregory is correct that allegations of ulterior motives cannot invalidate police conduct that is justified by probable cause.") (citing Whren v. United States, 517 U.S. 806, 811-15, 116 S. Ct. 1769, 135 L. Ed. 2d 89 (1996)).
Finally, in a footnote, Michael criticizes the police for apparently failing to ask if anything in the house was moved or was out of place, a question which, if asked, may have led to the discovery of facts that may have led to a belief early on that Tuite was the murderer. However, the Fourth Amendment does not guarantee citizens that the police will conduct a perfect crime scene investigation or that they will arrest the right person the Fourth Amendment *1019 simply guarantees that the police will not arrest without probable cause. As one district court has explained:
Although this standard may seem harsh from the perspective of one who is wrongfully arrested, it is well grounded in policy and the real-world life of investigating officers. Often, officers must make arrest decisions based upon information that is incomplete and still developing. To subject officers to liability for wrong decisions or for not conducting a thorough investigation would chill investigative work and, no doubt, result in guilty parties being allowed to flee or intimidate witnesses.
Ahlers v. Schebil, 994 F. Supp. 856, 877 (E.D.Mich.1998), aff'd, 188 F.3d 365 (6th Cir.1999). It is not the place of the judiciary to dictate the manner of homicide investigations after the fact. Rather, it is the role of the judiciary to evaluate whether, given the facts in the possession of the police at the time of the arrest, a reasonable police officer could have believed that the individual arrested committed the crime. That standard is met here.
D. Even Absent Probable Cause to Arrest, Defendants are Entitled to Qualified Immunity
Even if it were to be determined that there was not probable cause to arrest Michael, a reasonable police officer confronted with the facts outlined above could have believed there was probable cause to arrest Michael for Stephanie's murder, and therefore defendants would be entitled to qualified immunity. See Johnson, 340 F.3d at 793-4 ("Because we conclude that Deputy Woodard did not violate Johnson's Fourth Amendment rights, we need not reach the immunity inquiry. However, had we concluded that the use of force was not objectively reasonable, we could not conclude that it was a violation of Johnson's clearly established rights.") (internal citation omitted).
As the Supreme Court has explained, in the Fourth Amendment context, it is "inevitable that law enforcement officials will in some cases reasonably but mistakenly conclude that probable cause is present," and "in such cases those officials like other officials who act in ways they reasonably believe to be lawful should not be held personally liable." Anderson, 483 U.S. at 641, 107 S. Ct. 3034. As the Ninth Circuit aptly noted in Smiddy v. Varney, 665 F.2d 261 (9th Cir.1981), "[i]t is necessary that police officers be immune when they reasonably believe that probable cause existed, even though it is subsequently concluded that it did not, because they `cannot be expected to predict what federal judges frequently have considerable difficulty in deciding and about which they frequently differ among themselves.'" Id. at 266 (quoting Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 456 F.2d 1339, 1349 (2d Cir.1972) (Lumbard, J., concurring)). Thus, a police officer is entitled to qualified immunity if a reasonable officer possessing the same facts as the defendant officer could have reasonably believed that the search or arrest was supported by probable cause even if a court later determines it was not. See Bilbrey v. Brown, 738 F.2d 1462, 1467 (9th Cir.1984) ("Appellees could therefore qualify for immunity from damages if they reasonably, but mistakenly, believed that they had reasonable cause or probable cause to search appellants."); see also Forster v. County of Santa Barbara, 896 F.2d 1146, 1147-1148 (9th Cir.1990) (finding an officer is "qualifiedly immune from a suit for damages ... unless `a reasonably well-trained officer in [his] position would have known that his affidavit failed to establish probable cause and that he should not have applied for the warrant'") (quoting Malley v. Briggs, 475 U.S. *1020 335, 345, 106 S. Ct. 1092, 89 L. Ed. 2d 271 (1986)).
Even though the court must take the facts in the light most favorable to Michael, the court need not accept only Michael's version of what constitutes a reasonable inference from those facts, as the inquiry is not whether every reasonable officer would have believed there was probable cause but whether any reasonable officer could have believed there was probable cause based on the facts in defendants' possession and the reasonable inferences that could be drawn from those facts. See Reynolds, 84 F.3d at 1170 (explaining that a police officer should not be denied qualified immunity simply because other officers could disagree with the challenged conduct). As the Fourth Circuit has explained in the context of a qualified immunity analysis, to the extent there is a factual dispute concerning what the police officer knew, the dispute must be resolved in the § 1983 plaintiff's favor; however, to the extent a police officer decided to discount conflicting evidence in his possession, the court "need not accept such discounted evidence in the light most favorable to" the plaintiff. Gomez v. Atkins, 296 F.3d 253, 261 (4th Cir.2002), cert. denied, 537 U.S. 1159, 123 S. Ct. 964, 154 L. Ed. 2d 893 (2003). Otherwise, the possibility of qualified immunity would be eliminated in § 1983 cases because "the officer could never be deemed to have acted reasonably." Id. Thus, to the extent an officer discounted certain evidence, the court "must assess whether, in so doing, he acted in an objectively reasonable manner...." Id.
Ninth Circuit case law is in accord. For example, the Ninth Circuit has held that "[t]he fact that an expert disagrees with an officer's actions does not render the officer's actions unreasonable" because "[t]he inquiry is not `whether another reasonable or more reasonable interpretation of events can be constructed ... after the fact.'" Reynolds, 84 F.3d at 1170 (quoting Hunter, 502 U.S. at 228, 112 S. Ct. 534). "Rather, the issue is whether a reasonable officer could have believed that his conduct was justified." Reynolds, 84 F.3d at 1170. "'This is so notwithstanding that reasonable officers could disagree on the issue.'" Id. (quoting Act Up!/Portland v. Bagley, 988 F.2d 868, 872 (9th Cir.1993)) (emphasis added).
As detailed supra, defendants had a number of facts in their possession from which a reasonable officer could have believed there was probable cause to arrest Michael Crowe. First, Stephanie was found dead in her clothes, which her mom thought was "weird" and which could have suggested to a reasonable officer that Stephanie was awake when her attacker entered her room. Combined with the fact that none of the other five members of the household heard Stephanie scream, a reasonable factfinder could have suspected that Stephanie knew her attacker. Although defendants knew that a crazed transient was in the neighborhood and that members of the Crowe household denied that they were the ones who Officer Walters saw opening and closing the laundry room or "front" door around 10:00 p.m., given the fact that Kennedy told police that she checked that door around 9:00 p.m., a reasonable officer could have believed that the door was locked by 10:00 p.m. and therefore the killer was not a transient who came in through that door.
Moreover, a reasonable officer could have found Michael's statements regarding Stephanie's door being closed to be suspicious. Even assuming that the police had some information in their possession suggesting that Stephanie died completely inside her bedroom, they had contrary videotaped statements by Cheryl and Stephen suggesting that Stephanie died in her doorway and was not moved prior to the arrival of the EMTs. Furthermore, a reasonable officer could have interpreted *1021 Kennedy's statements as being consistent with Stephanie's body being in the doorway. Thus, a reasonable officer could have pursued the investigation based on the belief that Stephanie died no later than 11:00 p.m. with the door open.
Furthermore, even if Michael initially stated to police that he did not know whether Stephanie's door was open or closed when he went to the kitchen at 4:30 a.m., it is undisputed that he subsequently stated unequivocally in two subsequent taped or videotaped interviews that he saw that Stephanie's door was closed. In light of these facts, it would not have been clear to a reasonable officer that there was no probable cause to arrest Michael, even taking into account the additional evidence defendants had at that time regarding Tuite.
Finally, it is irrelevant whether defendants were engaged in a conspiracy to "pin" the murder on Michael because qualified immunity is not to be denied because of a police officer's subjective beliefs or motives. See Anderson, 483 U.S. at 641, 107 S. Ct. 3034 ("The relevant question in this case, for example, is the objective ... question whether a reasonable officer could have believed Anderson's warrantless search to be lawful, in light of clearly established law and the information the searching officers possessed. Anderson's subjective beliefs about the search are irrelevant.").
Strip Search of Michael Crowe
On January 21, 1998, Michael Crowe underwent a strip search whereby he removed all of his clothes except his underwear and was photographed. A strip search is constitutional if the individual to be searched gives consent, if the consent is freely given. Good v. Dauphin County Social Servs., 891 F.2d 1087, 1093 (3rd Cir.1989).
A review of Michael's civil deposition testimony reveals that he gave his consent to the search and the photographs and that his consent was freely given. Specifically, Michael testified:
Q. Do you recall anything else your father said about the subject of the photographs?
A. Later, right before he did it, he told us just to go ahead and do it and help them out. Just do whatever we could to help.
Q. Did he say why he wanted you to go ahead and do the photos to help out?
A. He just told us to go do the photos to help out.
Q. When he said to help out, did you understand that to mean that he was asking you to go ahead with the photographs to help the officers determine what had happened to Stephanie?
A. Yes.
Q. Were you willing to do that then?
A. Yes.
Q. Then did you voluntarily partake in the photographing process?
A. Yes.
Deposition of Michael Crowe at 139:12-140:1 (Exhibit Q, Defendants' NOL re: Michael's claims filed April 26, 2004) (emphasis added). Moreover, in his papers Michael does not deny that he gave consent, nor does he contend that his consent to the search and the photographs was not voluntary. Accordingly, defendants are entitled to summary judgment to the extent that Michael contends that his Fourth Amendment right to be free of unreasonable searches was violated by the strip search.
*1022 Strip Search of the Crowe Family
On January 21, 1998, the Crowe family was subjected to strip searches and photographs. Defendants have failed to demonstrate that, as a matter of law, any consent that Cheryl, Stephen or Shannon gave to the strip searches was given freely. Moreover, defendants have failed to demonstrate that the strip search of these plaintiffs was constitutionally reasonable.[13] In addressing the constitutionality of strip searches, the Supreme Court in Bell v. Wolfish, 441 U.S. 520, 99 S. Ct. 1861, 60 L. Ed. 2d 447 (1979) explained:
The test of reasonableness under the Fourth Amendment is not capable of precise definition or mechanical application. In each case it requires a balancing of the need for the particular search against the invasion of personal rights that the search entails. Courts must consider the scope of the particular intrusion, the manner in which it is conducted, the justification for initiating it, and the place in which it is conducted.
Id. at 559, 99 S. Ct. 1861. The most important factors here are the scope of the strip searches and the justification for them.
The searches of Cheryl, Stephanie and Stephen were extremely intrusive. Stephen was photographed completely nude. Cheryl was photographed without her underwear and Shannon was photographed without a bra.
On the other hand, the justification for initiating these strip searches was nonexistent. Defendants contend that the stripping and photographing of Shannon was necessary to ensure that Shannon had no injuries or signs of mistreatment. However, defendants have failed to demonstrate that they had sufficient reason to believe that Shannon was the subject of abuse to subject her to such a search. Moreover, defendants fail to explain why it was necessary for Shannon to take off her bra in order to determine whether Shannon was the victim of abuse of why it was necessary to photograph her given that no signs of abuse were discovered.
Defendants contend that the stripping and photographing of Cheryl and Stephen was necessary because it was reasonable for the police to check for signs of struggle such as scratches, cuts and bruises. However, defendants have failed to demonstrate that there was sufficient reason to believe at the time of the strip searches that either Cheryl or Stephen were involved in Stephanie's murder.
Finally, defendants contend that because Cheryl was found lying on top of Stephanie and because Cheryl was later seen hugging the other family members, "[e]vidence from the crime scene and from the body could have thus been transferred at least to Cheryl Crowe and then to the remaining members of the Crowe Family in the very minutes after the murder was discovered." Memorandum of Points and Authorities in Support of [Defendants'] Motion for Summary Judgment, or in the Alternative, Partial Summary Judgment of the Claims Asserted by the Crowe Family at 11:17-19. While this reasoning might justify the collection of the families' clothes, it does not justify requiring Cheryl, Shannon or Stephanie to submit to a strip search and photographing, as occurred here.
For purposes of the analysis of defendants' motion, the court concludes that defendants violated the Fourth Amendment by requiring Cheryl, Shannon and Stephen to submit to a strip search. Moreover, a reasonable officer under the *1023 same circumstances would have known that there was not sufficient justification to support the searches. Accordingly, defendants' motion for summary judgment is denied with respect to this claim.
Seizure of Hair and Blood from Michael
On January 27, 1998, Detective Claytor sought and obtained a warrant to collect hair and blood samples from Michael. See Exhibit W, Defendants' NOL re: Michael's claims filed April 26, 2004. "Intrusions into the human body, including the taking of blood, are searches subject to the restrictions of the Fourth Amendment." United States v. Wright, 215 F.3d 1020, 1025 (9th Cir.2000). To be consistent with the Fourth Amendment, a warrant for such an intrusion must be supported by probable cause. Id. The specific inquiry is whether there is "probable cause to believe that the suspect has committed an offense of which the current state of [his] blood will constitute evidence." United States v. Chapel, 55 F.3d 1416, 1419 (9th Cir.1995).
As explained in detail, supra, there was probable cause to arrest Michael. Therefore, given the brutality of the murder, the amount of blood at the scene, and the hair evidence that was collected, there was probable cause to believe that Michael's blood and hair would constitute evidence.
Alternatively, because a reasonable officer could have believed that there was probable cause to arrest Michael, a reasonable officer could have believed that Michael's blood would constitute evidence.
Accordingly, defendants are entitled to summary judgment as to the seizure of Michael's blood and hair.
Seizure of Blood From Cheryl and Stephen
On February 5, 1998, defendant Claytor sought and obtained search warrants for blood samples from Cheryl and Stephen. On February 6, 1998, Cheryl and Stephen provided blood samples pursuant to the warrants.
The validity of this search warrant "depends upon the sufficiency of what is found within the four corners of the underlying affidavit." Taylor, 716 F.2d at 705. In the affidavit in support of the warrant, defendant Claytor represented (1) that Stephanie Crowe had been stabbed to death in her home; (2) that Cheryl and Stephen Crowe were in the house at the time of Stephanie's death; (3) that blood analysis would tend to show that a "particular" (but unspecified) person committed the murder; and (4) that to have valid test results, all persons that had contact with the victim needed to be eliminated as a source of the blood. See Exhibits P and Q, Defendants' NOL re: Crowe family's claims filed April 26, 2004. Nothing in defendant Claytor's affidavit establishes probable cause to believe that Cheryl and Stephen were involved in Stephanie's death, and, in fact, defendants do not argue that there was probable cause to believe at the time the warrant was obtained that Cheryl and Stephen were involved in Stephanie's death. Rather, defendants argue that the seizure of the blood was supported by probable cause because the blood was sought to prove that someone other than Cheryl or Stephen killed Stephanie by eliminating Cheryl and Stephen as the source of the blood at the scene of the crime. This argument is unavailing because pursuant to Supreme Court case law "[t]he substance of all the definitions of probable cause is a reasonable ground for belief of guilt, and that the belief of guilt must be particularized with respect to the person to be searched or seized." Pringle, 540 U.S. at 371, 124 S. Ct. 795 (internal quotation marks and citations omitted) (emphasis *1024 added); see also Ybarra v. Illinois, 444 U.S. 85, 91, 100 S. Ct. 338, 62 L. Ed. 2d 238 (1979) ("Where the standard is probable cause, a search or seizure of a person must be supported by probable cause particularized with respect to that person.") (emphasis added). Ninth Circuit case law is in accord. See Marks v. Clarke, 102 F.3d 1012, 1027 (9th Cir.1996) (citing Ybarra); Rise v. State of Or., 59 F.3d 1556, 1560 (9th Cir.1995) ("[T]he drawing of blood from free persons generally requires a warrant supported by probable cause to believe that a person has committed a criminal offense and that his blood will reveal evidence relevant to that offense....") (emphasis added), overruled on other grounds by City of Indianapolis v. Edmond, 531 U.S. 32, 121 S. Ct. 447, 148 L. Ed. 2d 333 (2000); see also Wright, 215 F.3d at 1025-26 (finding probable cause to order defendant to provide blood sample in robbery case where robber, who was shot, left blood at the scene and where a tip, combined with additional pieces of evidence, established a fair probability that the defendant was the robber); Chapel, 55 F.3d at 1419 (requiring probable cause to believe that the suspect has committed an offense and that the state of his blood will constitute evidence). In light of this case law, a warrant to draw blood is not supported by probable cause where the evidence is sought to prove that another individual has committed a crime by demonstrating that the individual subject to the blood draw did not commit the crime. Because the facts in the warrant did establish there was a reason to believe that Cheryl or Stephen Crowe were involved in Stephanie's murder, the search warrant for the seizure of their blood was not valid.
Having concluded that the warrant was not supported by probable cause, the next issue is whether defendant Claytor is nonetheless entitled to qualified immunity because it would not have been clear to a reasonable officer that there was no probable cause for the seizure of Cheryl's and Stephen's blood. Where a police officer obtains a warrant, immunity will be lost "where the warrant application is so lacking in indicia of probable cause as to render official belief in its existence unreasonable." Mills v. Graves, 930 F.2d 729, 731 (9th Cir.1991); see also Malley, 475 U.S. at 344-5, 106 S. Ct. 1092 ("[W]here the warrant application is so lacking in indicia of probable cause as to render official belief in its existence unreasonable ... the shield of immunity be lost."); Forster, 896 F.2d at 1147-48 ("A police officer is qualifiedly immune from a suit for damages arising from an allegedly illegal arrest or search unless `a reasonably well-trained officer in [his] position would have known that his affidavit failed to establish probable cause and that he should not have applied for the warrant.'") (quoting Malley, 475 U.S. at 345, 106 S. Ct. 1092); Marks, 102 F.3d at 1026 n. 31 (quoting Malley). In light of cases such as Ybarra and Marks, which were decided prior to the obtaining of the warrant and which require probable cause particularized with respect to the person subject to the search or seizure, a reasonably well-trained officer in defendant Claytor's position would have known that his affidavit failed to establish probable cause and that he should not have applied for the warrant.
This court notes that California law provides that "[a] search warrant may be issued ... [w]hen the property or things to be seized consist of any item or constitute any evidence that tends to show a felony has been committed, or tends to show that a particular person has committed a felony." West's Ann.Cal.Penal Code § 1524(a)(4). Defendant Claytor's apparent reliance on this statute does not, however, entitle him to qualified immunity, as the contours of the Fourth Amendment *1025 are not dictated by state law. See Knowles v. Iowa, 525 U.S. 113, 116, 119 S. Ct. 484, 142 L. Ed. 2d 492 (1998) (answering in the affirmative the question "whether the search at issue, authorized as it was by state law, nonetheless violates the Fourth Amendment"); United States v. Becerra-Garcia, 397 F.3d 1167, 2005 WL 237647 (Feb. 2, 2005) ("The weight of authority establishes that the test of whether a search or seizure violates the Fourth Amendment `is one of federal law, neither enlarged by what one state court may have countenanced, nor diminished by what another may have colorably suppressed.'") (quoting Elkins v. United States, 364 U.S. 206, 224, 80 S. Ct. 1437, 4 L. Ed. 2d 1669 (1960)); see also Henry v. County of Shasta, 132 F.3d 512, 522 (9th Cir.1997) (reversing and remanding grant of summary judgment on plaintiff's Fourth Amendment claim because the district court failed to "address the fundamental question whether the officers' conduct, while consistent with the California statutes, was constitutional."). Because it was clearly established at the time the warrant for the Crowes' blood was obtained that a search that comports with state law does not automatically comport with the Fourth Amendment, see Henry, 132 F.3d at 522, a reasonable officer would not have believed that he was entitled to seek the warrant simply because state law appeared to authorize a warrant under the circumstances.
Accordingly, the motion for summary judgment is denied with respect to this claim.
Search of the Crowe Residence
The Crowes bring a Fourth Amendment claim arising out of the search of the house in which they were living at the time of Stephanie's murder. Defendants seek summary judgment with respect to this claim.
"Probable cause to search exists when the known facts and circumstances are sufficient to warrant a reasonable person to conclude that contraband or evidence of a crime will be found." United States v. Ibarra, 345 F.3d 711, 716 (9th Cir.2003). The Crowes do not dispute that the warrant to search the house was supported by probable cause or that they gave their consent to search the house. Rather, plaintiffs challenge the extent to which the house, which they were renting, was damaged by defendants in the course of gathering evidence.
In executing a search warrant, officers may need to damage property. See Mena v. City of Simi Valley, 226 F.3d 1031, 1041 (9th Cir.2000); Liston v. County of Riverside, 120 F.3d 965, 979 (9th Cir.1997); Dalia v. United States, 441 U.S. 238, 258, 99 S. Ct. 1682, 60 L. Ed. 2d 177 (1979). "Therefore, the destruction of property during a search does not necessarily violate the Fourth Amendment." Mena v. City of Simi Valley, 226 F.3d at 1041; see also United States v. Becker, 929 F.2d 442, 446 (9th Cir.1991). "`[O]nly unnecessarily destructive behavior, beyond that necessary to execute a warrant effectively, violates the Fourth Amendment.'" Mena, 226 F.3d at 1041 (quoting Liston, 120 F.3d at 979); see also Becker, 929 F.2d at 446.
According to Cheryl's declaration, when the family returned to the house it was in "rack and ruin." Omnibus Decl. of Cheryl Crowe ¶ 16 (Exhibit 45, Michael's Exhibits). The police had taken "all of the carpet in the hallway, from Stephanie's room, and all of the hallway drywall by Stephanie's room." Id. ¶ 17. So much drywall and carpet had been removed that the family had to move out of the house, which they were renting. Moreover, according to Cheryl's declaration, "the removal was so extensive that the structure was affected" and the city had to "come in and shore it up." Id. at ¶ 17. The Crowes *1026 had to vacate the house because the owner couldn't afford to make the repairs.
Although one can certainly sympathize with a family who, after experiencing the horrific death of their child, is forced to move out of the house they call home, the test is whether defendants engaged in unnecessarily destructive behavior, beyond that needed to execute the warrant effectively.[14] That is not the case. The Crowes have failed to provide any evidence suggesting that defendants took carpeting or drywall from other than the immediate crime scene area the hallway carpet and drywall and the carpet from Stephanie's room. Given the potential of the carpet and drywall to yield clues in the form of blood, fiber, hair and fingerprints, it cannot be said on this record that defendants crossed over the line drawn by the Fourth Amendment when they removed these items from the house, thereby damaging the house in the process.
Moreover, even if defendants did cross over the line in their collection of evidence, which they clearly did not, a reasonable officer could have believed that removing the carpet and drywall from the crime scene and the immediate surrounding area was necessary and, therefore, constitutional. Thus, defendants would be entitled to qualified immunity.
Accordingly, defendants are entitled to summary judgment with respect to this claim.
The Detention of the Crowes at the Police Station
Cheryl and Stephen bring a Fourth Amendment claim based upon their alleged detention at the police station. According to plaintiffs, when Cheryl and Stephen attempted to leave the police station through a secured door, defendant Wrisley pulled out his gun and pointed it at Stephen's chest, and ordered Stephen and Cheryl back upstairs, where defendant Wrisley told the couple after 15 to 30 minutes that they had to go to a hotel and couldn't go with Stephen's brother, as Stephen had requested. See Omnibus Decl. of Stephen Crowe ¶¶ 20, 21 (Exhibit 44, Michael's Exhibits). Stephen further states that defendant Wrisley "said we had to say there and couldn't leave unless we called him first and got permission and told him where we wanted to go." Id. at ¶ 21.
"A `seizure' triggering the Fourth Amendment's protections occurs only when government actors have, `by means of physical force or show of authority, ... in some way restrained the liberty of a citizen.'" Graham, 490 U.S. at 395 n. 10, 109 S. Ct. 1865 (quoting Terry v. Ohio, 392 U.S. 1, 19, n. 16, 88 S. Ct. 1868, 20 L. Ed. 2d 889 (1968)). Taking the facts in the light most favorable to plaintiffs, defendants used a show of authority to detain Cheryl and Stephen for 15 to 30 minutes, which constitutes a seizure triggering the Fourth Amendment's protection.
Because defendants have failed to explain why they were justified in restraining Cheryl and Stephen's liberty or why a reasonable officer would have believed there was justification for restraining their liberty, this claim cannot be resolved on summary judgment.
III. Second Claim for Relief Violation of the Fifth Amendment
Defendants seek summary judgment with respect to Michael's claim for violation *1027 of the Fifth Amendment privilege against self-incrimination. The court previously addressed the scope of § 1983 liability for violation of the Fifth Amendment self-incrimination clause. See Crowe, 303 F.Supp.2d at 1086-93. A review of Michael's opposition to the current motion does not change this court's previous conclusion regarding the scope of § 1983 liability for violation of the Fifth Amendment.
The Fifth Amendment, which applies to the States via the Fourteenth Amendment, Malloy v. Hogan, 378 U.S. 1, 6, 84 S. Ct. 1489, 12 L. Ed. 2d 653 (1964), provides that no person "shall be compelled in any criminal case to be a witness against himself...." U.S. CONST. amend. V. As the court explained in its previous order, the operation of the Fifth Amendment is clear in some respects. For example, the Fifth Amendment clearly affords one the right to assert the privilege of silence when being questioned in criminal or civil proceeding "wherever the answer might tend to subject to criminal responsibility him who gives it." McCarthy v. Arndstein, 266 U.S. 34, 40, 45 S. Ct. 16, 69 L. Ed. 158 (1924). Moreover, if the assertion of that privilege is ignored or the privilege is involuntarily waived, it is clear that the Fifth Amendment operates to preclude the government's use of the resulting compelled testimony at trial in its case in chief. See Oregon v. Elstad, 470 U.S. 298, 306-7, 105 S. Ct. 1285, 84 L. Ed. 2d 222 (1985). What is not entirely clear is when a § 1983 action may be predicated upon a violation of the Fifth Amendment.
The Supreme Court in Chavez v. Martinez, 538 U.S. 760, 123 S. Ct. 1994, 155 L. Ed. 2d 984 (2003) was confronted with the issue of whether the § 1983 plaintiff, Martinez, had made out a Fifth Amendment claim where the police had compelled statements from Martinez during interrogation but where those statements were never used by the police or prosecutors because Martinez was never charged with a crime. Justice Thomas, joined by the Chief Justice and two other Justices, concluded:
Here, Martinez was never made to be a "witness" against himself in violation of the Fifth Amendment's Self-Incrimination Clause because his statements were never admitted as testimony against him in a criminal case. Nor was he ever placed under oath and exposed to "`the cruel trilemma of self-accusation, perjury or contempt.'" Michigan v. Tucker, 417 U.S. 433, 445, 94 S. Ct. 2357, 41 L. Ed. 2d 182 (1974) (quoting Murphy v. Waterfront Comm'n of N.Y. Harbor, 378 U.S. 52, 55, 84 S. Ct. 1594, 12 L. Ed. 2d 678 (1964)).
Chavez, 538 U.S. at 767, 123 S. Ct. 1994 (emphasis added) (Thomas, J.). This same plurality also explained that although the Supreme Court has "permitted the Fifth Amendment's self-incrimination privilege to be asserted in noncriminal cases, that does not alter our conclusion that a violation of the constitutional right against self-incrimination occurs only if one has been compelled to be a witness against himself in a criminal case." Id. at 770, 123 S. Ct. 1994 (internal citations and quotations omitted) (first and third emphasis added). Although declining to define the term "criminal case," this plurality concluded that a "criminal case" does not include an interrogation. See id. at 766-7, 123 S. Ct. 1994 ("We need not decide today the precise moment when a `criminal case' commences; it is enough to say that police questioning does not constitute a `case' any more than a private investigator's precomplaint activities constitute a `civil case.'").
Although agreeing that Martinez was not entitled to pursue a damages claim for violation of his Fifth Amendment rights, Justice Souter, joined by Justice Breyer, *1028 approached the issue before the Court from a policy perspective, concluding that Martinez' claim should fail on the ground that Martinez could not "make the `powerful showing,' subject to a realistic assessment of costs and risks, necessary to expand protection of the privilege against compelled self-incrimination to the point of the civil liability he asks us to recognize here." Id. at 778, 123 S. Ct. 1994 (Souter, J., concurring in the judgment) (quoting Miranda v. Arizona, 384 U.S. 436, 515, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966) (Harlan, J., dissenting)).
After Chavez, it is clear that the mere act of coercing a confession is not a Fifth Amendment violation upon which a § 1983 claim may be predicated. However, by failing to define "criminal case" as that term is used in the Fifth Amendment, the Thomas plurality left open the issue of whether a § 1983 plaintiff may predicate a Fifth Amendment claim on the use of a coerced confession short of use at trial. Moreover, the Justices in Chavez did not directly address a second issue raised here: whether, as Michael urges, a § 1983 plaintiff may predicate a Fifth Amendment claim on the use of a coerced confession at the trial of another. As set forth in detail in Crowe, 303 F.Supp.2d at 1086-91, this court has concluded that a § 1983 claim cannot be predicated upon the use of a coerced confession short of use at trial because "criminal case" means "criminal trial." The court need not repeat its reasoning here. Rather, the court now turns to Michael's contention that his statements were used against him at two trials: his and that of Richard Tuite.
Michael's argument that the use of his statements by Tuite in an attempt to demonstrate Tuite's innocence is use "against" Michael and that such use satisfies the requirements of the Fifth Amendment is simply unavailing. As noted, the Fifth Amendment provides that no person "shall be compelled in any criminal case to be a witness against himself...." U.S. CONST. amend. V (emphasis added). Moreover, Justice Thomas in Chavez repeatedly noted that the Fifth Amendment is only violated when a statement is used against the speaker. See 538 U.S. at 767, 123 S. Ct. 1994 ("Here, Martinez was never made to be a `witness' against himself in violation of the Fifth Amendment's Self-Incrimination Clause because his statements were never admitted as testimony against him in a criminal case.") (emphasis added); id. at 768, 123 S. Ct. 1994 ("[W]e have long permitted the compulsion of incriminating testimony so long as those statements (or evidence derived from those statements) cannot be used against the speaker....") (emphasis added); id. at 769, 123 S. Ct. 1994 ("[M]ere coercion does not violate the text of the Self-Incrimination Clause absent use of the compelled statements in a criminal case against the witness.") (emphasis added); id. at 770, 123 S. Ct. 1994 (concluding "that a violation of the constitutional right against self-incrimination occurs only if one has been compelled to be a witness against himself in a criminal case") (emphasis added); id. at 772, 123 S. Ct. 1994 (explaining that "the core constitutional right defined by the Self-Incrimination Clause [is] the right not to be compelled in any criminal case to be a witness against oneself.") (emphasis added); id. at 772-73, 123 S. Ct. 1994 ("And the absence of a `criminal case' in which Martinez was compelled to be a `witness' against himself defeats his core Fifth Amendment claim.") (emphasis added). Furthermore, the Supreme Court in Kastigar v. United States, 406 U.S. 441, 92 S. Ct. 1653, 32 L. Ed. 2d 212 (1972) explained that the Fifth Amendment insures that the use of compelled testimony "cannot lead to the infliction of criminal penalties on the witness." Id. at 453, 92 S. Ct. 1653 (emphasis added). The *1029 use of Michael's confession by Tuite's defense team at Tuite's trial in an attempt to create reasonable doubt as to whether Tuite murdered Stephanie could not lead to the infliction of criminal penalties on the witness: Michael. Thus, Michael cannot predicate his Fifth Amendment claim on Tuite's use of Michael's statements at Tuite's trial.
Counselman v. Hitchcock, 142 U.S. 547, 12 S. Ct. 195, 35 L. Ed. 1110 (1892), cited by Michael, is not to the contrary. In Counselman, the Supreme Court was confronted with the issue of under what circumstances a witness may assert the Fifth Amendment privilege and refuse to provide testimony. The Court rejected the contention that "a witness is not entitled to plead the privilege of silence, except in a criminal case against himself...." Id. at 562, 12 S. Ct. 195 (emphasis added). The Court explained:
It is impossible that the meaning of the constitutional provision can only be that a person shall not be compelled to be a witness against himself in a criminal prosecution against himself. It would doubtless cover such cases; but it is not limited to them. The object was to ensure that a person should not be compelled, when acting as a witness in any investigation, to give testimony which might tend to show that he himself he committed a crime.
Id. at 562, 12 S. Ct. 195. It is upon this language that Michael seizes; however, in Counselman, the issue was whether Counselman could be held in contempt for failing to answer questions posed by a grand jury on the ground that his answer would be incriminating, i.e. whether he could be punished for asserting the privilege, not whether the use of his compelled statements in a grand jury proceeding or in the criminal trial of another violates the Fifth Amendment. Thus, the Supreme Court's conclusion in Counselman that the privilege of refusing to testify and remaining silent may be asserted in a proceeding other than one's one criminal prosecution and that it violates the Fifth Amendment to punish one for asserting this privilege under such circumstances does not answer the question here: whether the use of compelled statements at another's trial is a Fifth Amendment violation cognizable in the context of a § 1983 action. See United States v. Antelope, 395 F.3d 1128, 1141 (9th Cir.2005) (explaining that "[c]ritical to the reasoning of all six justices [in Chavez] was the simple principle that the scope of the Fifth Amendment's efficacy is narrower when used as a sword in a civil suit than when used as a shield against criminal prosecution"); Chavez, 538 U.S. at 769, 123 S. Ct. 1994 (explaining that "contrary to the Ninth Circuit's view, mere coercion does not violate the text of the Self-Incrimination Clause absent use of the compelled statements in a criminal case against the witness") (Thomas, J.) (emphasis added); see also id. at 770, 123 S. Ct. 1994 (explaining that although the Supreme Court has "permitted the Fifth Amendment's self-incrimination privilege to be asserted in noncriminal cases, that does not alter our conclusion that a violation of the constitutional right against self-incrimination occurs only if one has been compelled to be a witness against himself in a criminal case") (Thomas, J.) (internal citations omitted) (first and third emphases added).
Michael also contends that his statements were used at his own criminal trial because they were introduced into evidence during his pretrial motion proceedings as the subject of motions in limine. This court concludes that this argument is unavailing because the Fifth Amendment is only violated by the introduction of a statement at trial in the government's case-in-chief or in its rebuttal.
*1030 First, the point of a court holding a pretrial hearing to determine whether a defendant's statements were coerced, and therefore should be excluded as evidence at trial, is to ensure that the defendant's Fifth Amendment rights are protected. It would make little sense to conclude that a defendant's Fifth Amendment rights are violated by the introduction of compelled statements at a motion in limine hearing where the court holds that the statements are inadmissible at trial because they were compelled. Nor does it make sense to conclude that a defendant's Fifth Amendment rights are violated where his statements are introduced at a motion in limine hearing and ruled admissible at trial but the trial never occurs.
Second, the Fifth Amendment ensures that one who is compelled to make statements does not suffer criminal penalties from use of the statement. See Kastigar, 406 U.S. at 453, 92 S. Ct. 1653. One does not suffer criminal penalties from use of a compelled statement at a motion in limine hearing, even if the court ultimately holds that the statement is admissible. One is only subjected to criminal penalties from use of a compelled statement if it is actually introduced by the government at the speaker's trial.
Finally, even if it can be said that the Fifth Amendment is violated by the introduction of coerced statements at a motion in limine hearing, defendants would be entitled to summary judgment. For reasons set forth in the court's previous order, defendants would not be the proximate cause of any such Fifth Amendment violation. See Crowe, 303 F.Supp.2d at 1091-92. Moreover, one need only read the numerous and varied opinions in Chavez to conclude that the law in this area is not clearly established.
Accordingly, the court grants the motion for summary judgment filed by defendants with respect to Michael's Fifth Amendment claim.
IV. Fourth Claim for Relief-Fourteenth Amendment Substantive Due Process Clause ("Shocks the Conscience")
Michael's claim
Defendants bring a motion for summary judgment as to Michael's claim for violation of the Fourteenth Amendment substantive due process clause. A review of Michael's opposition reveals that this claim is predicated upon the manner of his interrogation. In light of the Supreme Court's decision in Chavez, it is clear that a substantive due process claim may be predicated upon the manner of police interrogation.[15]
A. An Issue of Law for the Court
Although Michael contends that whether defendants' conduct "shocks the conscience" is an issue for the jury, he has failed to cite any case law in support of his contention, and the court's own research reveals case law holding that this determination is an issue of law for the court. See Hayes v. Faulkner County, 388 F.3d 669, 674-5 (8th Cir.2004); Armstrong v. Squadrito, 152 F.3d 564, 581 (7th Cir.1998); *1031 Benn v. Universal Health System, Inc., 371 F.3d 165, 174 (3d Cir.2004). Although the Ninth Circuit in Onossian v. Block, 175 F.3d 1169, 1172 (9th Cir.1999) stated in passing that "it is clear that no reasonable trier of fact could find that defendants' actions shock the conscience," there is no basis for drawing the conclusion from this passage that it is Ninth Circuit law that this is an issue of fact for the jury, where nothing in Onossian suggests that "[t]he issue was fairly presented to [the panel] and refined through the adversary process" and decided "after careful analysis." United States v. Johnson, 256 F.3d 895, 916 (9th Cir.2001) (en banc) (Kozinski, J., concurring); see also Miranda B. v. Kitzhaber, 328 F.3d 1181, 1186 (9th Cir.2003) (per curiam) ("`[W]here a panel confronts an issue germane to the eventual resolution of the case, and resolves it after reasoned consideration in a published opinion, that ruling becomes the law of the circuit ....'") (quoting Johnson, 256 F.3d at 914) (Kozinski, J. concurring); United States v. Brandon P., 387 F.3d 969, 974 (9th Cir.2004). Moreover, the Ninth Circuit has long held in criminal cases that whether police conduct has violated the due process clause is a question of law for the court, not an issue for the jury. See United States v. Wylie, 625 F.2d 1371, 1378 (9th Cir.1980) ("And finally, the defendants argue that an instruction on outrageous involvement should have been submitted to the jury. It was entirely proper for the district court to deny this request. The question of the outrageous involvement of government agents is a question of law for the court."); United States v. Ramirez, 710 F.2d 535, 539 (9th Cir.1983) ("The existence of police misconduct that contravenes constitutional due process is a question of law."). Given, as will be discussed in greater detail infra, that the issue is whether defendants' conduct is shocking to the conscience in "a constitutional sense," County of Sacramento v. Lewis, 523 U.S. 833, 847, 118 S. Ct. 1708, 140 L. Ed. 2d 1043 (1998), it is appropriate for this court, not a jury, to make that determination. See Armstrong, 152 F.3d at 581 ("Viewed in the totality of the circumstances, does the defendants' conduct in depriving Armstrong of a constitutional right shock the conscience? Because this inquiry ultimately defines the parameters of the Fourteenth Amendment, we approach the subject as a question of law.").
Moreover, in any event, it is clear that to the extent that the court must reach the merits of Michael's claim as the first step in determining whether defendants are entitled to qualified immunity, the issue of whether defendants violated Michael's rights, i.e., engaged in conduct that "shocks the conscience" in a constitutional sense, is an issue of law for the court in the first instance. See Saucier, 533 U.S. at 207, 121 S. Ct. 2151 (referring to the Supreme Court's "instruction to the district courts and courts of appeals to concentrate at the outset on the definition of the constitutional right and to determine whether, on the facts alleged, a constitutional violation could be found").
B. Defendants' Questioning of Michael Does Not "Shock the Conscience" in the Constitutional Sense
In determining whether police conduct violates the Fourteenth Amendment substantive due process clause, the Ninth Circuit uses the "shocks the conscience" test. See Fontana v. Haskin, 262 F.3d 871, 882 n. 7 (9th Cir.2001) (citing Lewis, 523 U.S. at 846, 118 S. Ct. 1708). The Supreme Court has made it is clear that this standard requires more than that "private sentimentalism" is offended. Rochin v. California, 342 U.S. 165, 172, 72 S. Ct. 205, 96 L. Ed. 183 (1952). Instead, the inquiry focuses on whether the challenged conduct *1032 is "`shocking to the universal sense of justice.'" Lewis, 523 U.S. at 850, 118 S. Ct. 1708 (quoting Betts v. Brady, 316 U.S. 455, 462, 62 S. Ct. 1252, 86 L. Ed. 1595 (1942)). In other words, the challenged conduct must be "`conscience shocking, in a constitutional sense.'" Lewis, 523 U.S. at 847, 118 S. Ct. 1708 (quoting Collins v. City of Harker Heights, 503 U.S. 115, 128, 112 S. Ct. 1061, 117 L. Ed. 2d 261 (1992)) (emphasis added). Some courts have gone so far as to hold that "the ultimate standard for evaluating a substantive due process claim is whether the challenged government action `shocks the conscience' of federal judges." Ruiz v. McDonnell, 299 F.3d 1173, 1183 (10th Cir.2002); see also Cruz-Erazo v. Rivera-Montanez, 212 F.3d 617, 622-623 (1st Cir.2000) ("The question now before the Court is whether the particular conduct alleged by appellants in this case was so egregious that it can properly be said, under these circumstances, to shock the conscience. We find the question to be a close one, as the alleged facts seem to fall in between the extremes of conduct which have previously been found to shock or not to shock the judicial conscience.") (internal footnote omitted); Uhlrig v. Harder, 64 F.3d 567, 573 (10th Cir.1995) (reading the Supreme Court case of Collins v. City of Harker Heights as "explain[ing] that the standard for judging a substantive due process claim is whether the challenged government action would `shock the conscience' of federal judges").
In the few cases in which it has applied a "shocks the conscience" standard, the Supreme Court has consistently focused on the brutality of conduct that it has found to shock the conscience.[16]See Crowe, 303 F.Supp.2d at 1096-7 (detailing Supreme Court case law on this point); see also Braley v. City of Pontiac, 906 F.2d 220, 226 (6th Cir.1990) ("Most cases alleging police conduct that shocks the conscience have involved allegations of excessive force or physical brutality."). For example, in the classic case of Rochin, the Supreme Court concluded that the conduct of the police shocked the conscience, and that the use of the evidence at trial violated the defendant's Fourteenth Amendment right to substantive due process,[17] where the police, who saw the defendant put something in his mouth when they entered his house, directed a doctor to force an emetic solution through a tube into the defendant's stomach against his will to obtain evidence after struggling unsuccessfully with the defendant to obtain the evidence from his mouth. The Supreme Court, which throughout its opinion focused on the physical brutality of the police conduct, noted that the methods by which the evidence was obtained were "bound to offend even the most hardened *1033 sensibilities" and were "too close to the rack and the screw to permit of constitutional differentiation." Rochin, 342 U.S. at 172, 72 S. Ct. 205.
In contrast, in Breithaupt v. Abram, 352 U.S. 432, 77 S. Ct. 408, 1 L.Ed.2d 448(1957), the Supreme Court rejected the defendant's claim that his conviction for involuntary manslaughter arising out of a vehicular collision violated the substantive due process clause because at trial the government introduced blood evidence that was seized from him by use of a needle while he was unconscious. The Court explained that the distinction between that case and Rochin was that "there is nothing `brutal' or `offensive' in the taking of a sample of blood when done, as in this case, under the protective eye of a physician." Id. at 435, 77 S. Ct. 408. The Court went on to explain that "[t]his is not to say that the indiscriminate taking of blood under different conditions or by those not competent to do so may not amount to such `brutality' as would come under the Rochin rule." Id. at 437-38, 77 S. Ct. 408.
Similarly, in Irvine v. People of State of California, 347 U.S. 128, 74 S. Ct. 381, 98 L. Ed. 561 (1954), the defendant sought to invalidate his conviction on the ground that, while he was away, the police had a locksmith make a key to his house and then entered and installed a microphone in the house. The Court declined the defendant's attempt to "bring [his] case under the sway of" Rochin because Rochin "presented an element totally lacking here-coercion ... applied by a physical assault upon his person to compel submission to the use of a stomach pump." Id. at 133, 74 S. Ct. 381 (emphasis added).
Most recently in Chavez, the Supreme Court again highlighted the fact that the focus of a Fourteenth Amendment substantive due process analysis is the brutality of the police conduct. For example, a plurality of four Justices explained that the Fourteenth Amendment substantive due process clause is applicable in cases involving "police torture or other abuse that results in a confession," 538 U.S. at 773, 123 S. Ct. 1994 (Thomas, J.) (emphasis added), and that "[c]onvictions based on evidence obtained by methods that are `so brutal and so offensive to human dignity' that they `shoc[k] the conscience' violate the Due Process Clause." Id. (quoting Rochin, 342 U.S. at 172, 72 S. Ct. 205). Similarly, Justice Stevens concluded that "brutal" police conduct that is "the functional equivalent of an attempt to obtain an involuntary confession from a prisoner by tortuous methods" constitutes a due process violation as a matter of law. Chavez, 538 U.S. at at 783-4, 123 S. Ct. 1994 (Stevens, J., concurring in part and dissenting in part).
As the Supreme Court explained in Lewis, "[d]eliberate indifference that shocks in one environment may not be so patently egregious in another, and our concern with preserving the constitutional proportions of substantive due process demands an exact analysis of circumstances before any abuse of power is condemned as conscience shocking." 523 U.S. at 850, 118 S. Ct. 1708. Having reviewed the audiotapes and videotapes of Michael's interviews and interrogations in their entirety as well as the transcripts thereof, and having considered the circumstances surrounding the interrogations, the court concludes that defendants' behavior during the interviews and interrogations, although far from laudable, was not "so egregious, so outrageous, that it may fairly be said" to "shock the conscience" in "a constitutional sense." Fontana, 262 F.3d at 882 n. 7; Lewis, 523 U.S. at 847, 118 S. Ct. 1708.
Certainly, it cannot be forgotten that Michael was a juvenile at the time of the interrogations, that his sister had just been killed, that he was suffering from a *1034 cold, and that at least one of the interrogations was quite long. However, the interrogations were not sufficiently egregious or outrageous to be "shocking to the universal sense of justice" in the constitutional sense. The facts surrounding the questioning of Michael are quite distinct from the facts surrounding the interrogation in Chavez. As in Rochin, the police conduct in Chavez was "brutal." See Chavez, 538 U.S. at 784, 123 S. Ct. 1994 (Stevens, J., concurring in part and dissenting in part). "The District Court found that Martinez `had been shot in the face, both eyes were injured; he was screaming in pain, and coming in and out of consciousness while being repeatedly questioned about details of the encounter with the police.'" Id. at 798, 123 S. Ct. 1994 (Kennedy, J., concurring in part and dissenting in part). Justice Kennedy, joined by Justices Stevens and Ginsburg, concluded that the record supported a finding that the defendant police officer intended to exploit Martinez's physical pain and that Martinez "thought his treatment would be delayed, and thus his pain and condition worsened, by refusal to answer questions." Id. at 797, 123 S. Ct. 1994.
Here, while not necessarily pleasant, Michael's questioning lacked such a brutal nature. Defendants did not yell at Michael or even raise their voices. Michael was given food and water and bathroom breaks, even if not always immediately. Although defendants employed a "good cop/bad cop" approach during some of the interviews, such a manner of interrogation is relatively common and certainly not shocking, even when juveniles are involved. Moreover, although defendants continued to push Michael to answer questions after he insisted that he did not remember anything, on this record such conduct simply is not shocking. Although defendants also lied to Michael at times, for example, by stating that Michael's hairs were found in Stephanie's hand, the Ninth Circuit has concluded that such conduct is not necessarily coercive. See Pollard v. Galaza, 290 F.3d 1030, 1034 (9th Cir.2002) ("[W]e have explained that misrepresentations made by law enforcement in obtaining a statement, while reprehensible, does not necessarily constitute coercive conduct."); see also United States v. Orso, 266 F.3d 1030, 1039 (9th Cir.2001) (en banc) (same). If not coercive, such conduct certainly cannot be deemed shocking. This conclusion is not altered here by the fact that Michael was a juvenile, particularly given that Michael was, by all accounts, an intelligent juvenile who enjoyed sophisticated computer and fantasy games.
Similarly, it is not outrageous in the constitutional sense that defendants attempted to extract confessions from Michael by telling him that he could get treatment rather than jail if he confessed given that the Ninth Circuit has held that such representations do not even rise to the level of being coercive. See Cunningham v. City of Wenatchee, 345 F.3d 802, 810 (9th Cir.2003) ("Perez's suggestion that Cunningham's cooperation could lead to treatment rather than prison is also not coercive.").
Moreover, although Michael appears quite emotional during much of the questioning, the use of questions that elicit an emotional response does not necessarily transform the interrogation into one that "shocks the conscience." Cf. Id. ("Perez's questions may have unsettled Cunningham, but mere emotionalism and confusion do not invalidate confessions."). In evaluating whether Michael's emotionalism is evidence of a reaction to the type of "brutal" police conduct that would support a substantive due process violation, the court finds somewhat significant Michael's abrupt change in demeanor prior to his final interrogation. Although Michael appeared upset during much of his questioning, *1035 during his last interrogation, Michael calmly and cooly made chilling statements regarding his hatred of Stephanie, and a viewer of this portion of the videotape could certainly question the sincerity of the emotion displayed during the earlier interrogations.
The court notes that the parties dispute the significance of the fact that Michael told defendants toward the end of his interrogation that they had been "nice" to him. Defendants contend that this is evidence of the fact that the manner of the interrogation was not shocking to the conscience in the constitutional sense, while Michael contends that this statement is consistent with Stockholm Syndrome, which Michael contends is a defense mechanism by which an individual unites with his attackers.
For the record, the diagnostic label of Stockholm Syndrome is counsel's, not Dr. Colarusso's. Moreover, a review of the report of Dr. Colarusso, a psychiatrist, reveals that he does not specifically address the question of why Michael would say that defendants were nice to him. However, in any event, regardless of the motivation for Michael's statement that defendants were nice to him, the court concludes that such statement does little to inform the analysis of whether the interrogations were "shocking to the conscience" in a constitutional sense.
Similarly, the court notes that Michael has presented evidence in the form of (1) a declaration by a lay person, Margaret Hublar, who has viewed the videotapes of his interrogations and opined that defendants' conduct shocked her conscience, see Crowe Family's Exhibit 18F, and (2) a report by Dr. Colarusso, who opines that defendants' conduct during the interrogations constituted "emotional child abuse." See Michael's Exhibit 60 at 12. Such evidence does not suffice to defeat summary judgment.
Again, whether defendant's behavior "shocks the conscience" for Fourteenth Amendment purposes is an issue of law for the court. Hayes, 388 F.3d at 674-75; Armstrong, 152 F.3d at 581; Benn, 371 F.3d at 174. The relevant inquiry is whether defendants' conduct shocks "`the universal sense of justice,'" Lewis, 523 U.S. at 850, 118 S. Ct. 1708 (quoting Betts, 316 U.S. at 462, 62 S. Ct. 1252), not whether it offends the "private sentimentalism" of a lay person such as Ms. Hublar or a retained expert such as Dr. Colarusso. Rochin, 342 U.S. at 172, 72 S. Ct. 205. Moreover, defendants' conduct must shock the conscience" `in a constitutional sense.'" Lewis, 523 U.S. at 847, 118 S. Ct. 1708 (quoting Collins, 503 U.S. at 128, 112 S. Ct. 1061). In other words, defendant's conduct must be viewed through a legal and constitutional prism that has been narrowly crafted by the Supreme Court, not through the very different prisms of a lay person and a psychiatrist. Thus, neither Ms. Hublar nor Dr. Colarusso are in a position to opine as to whether defendants' conduct shocks the conscience for purposes of the Fourteenth Amendment, and their declarations do not suffice to defeat summary judgment.
Although the Ninth Circuit has not always required the type of physical brutality identified by the Supreme Court as necessary for a substantive due process claim, it is clear that even under Ninth Circuit case law, Michael must demonstrate "something more" than that defendants' conduct produced involuntary statements on his part.[18] Michael's reliance on *1036 Cooper v. Dupnik, 963 F.2d 1220 (9th Cir.1992) (en banc) as authority to the contrary is simply unavailing. In fact, a careful reading of Cooper reinforces the conclusion that the mere act of coercing a confession does not arise to the level of conduct that "shocks the conscience." In Cooper, the defendants did not simply coerce a confession from a suspect. Rather, as they freely admitted in their depositions, they subjected the suspect, Cooper, to a method of interrogation that they had specifically devised to compel a confession and to hinder Cooper's ability to defend himself at trial, which method involved ignoring Cooper's invocation of the right to remain silent and the right to counsel. As the Ninth Circuit explained:
The core of their plan was to ignore the suspect's Constitutional right to remain silent as well as any request he might make to speak with an attorney in connection therewith, to hold the suspect incommunicado, and to pressure and interrogate him until he confessed. Although the officers knew any confession thus generated would not be admissible in evidence in a prosecutor's case in chief, they hoped it would be admissible for purposes of impeachment if the suspect ever went to trial. They expected that the confession would prevent the suspect from testifying he was innocent, and that it would hinder any possible insanity defense.
Id. at 1224 (emphasis added). In accordance with the plan, the police officers ignored Cooper's statement of unwillingness to talk as well as his request to consult with an attorney. See id. at 1231.
As in this case, Cooper was not actually tried for the crime for which he was arrested and interrogated, and Cooper sued the police pursuant to § 1983 alleging, inter alia, that the defendants' conduct violated the Fourteenth Amendment substantive due process clause under a "shocks the conscience" theory. In concluding that the police officer's behavior "shocked the conscience," the Ninth Circuit concluded that the "primary aggravating circumstance" was the police officers'"purpose of making it difficult, if not impossible, for a charged suspect to take the stand in his own defense...." Id. at 1249. The court explained that the defendants'"purpose was not just to be able to impeach him if he took the stand and lied, but to keep him off the stand altogether." Id. The court went on to explain that "[t]he unlawful nature of this aspect of the plan is exacerbated by the plan's second purpose of curtailing an accused suspect's right to present an insanity defense." Id. at 1250. Thus, the "shocking" conduct in Cooper was not the mere coercion of a confession but, rather, the coercion of a confession pursuant to a conscious and premeditated plan to ignore the suspect's invocation of his Fifth and Sixth Amendment rights so as to compel a confession, which would then hinder the suspect's ability to present a defense at trial. These "aggravating circumstances" noted by the Ninth Circuit in Cooper are simply not present here. See id. at 1249.
In summary, the manner in which Michael was interrogated does not approach the type of police conduct that has been found in Rochin and other cases to be "shocking" in the constitutional sense and to, therefore, violate the Fourteenth Amendment substantive due process clause.
C. Qualified Immunity: the Second Step of the Analysis
Even if the court were to determine that defendants' conduct did violate substantive due process, defendants would still be entitled to qualified immunity because it would not have been clear to a reasonable officer that the manner in which Michael's interrogations were conducted amounted to a violation of his Fourteenth *1037 Amendment right to substantive due process given that the interrogations lacked the brutality that has previously marked the police conduct found by the Supreme Court to be "shocking to the conscience." Although Michael contends that it was clearly established in Rochin that "[p]olice conduct which `shocks the conscience' constitutes a violation of substantive due process" and that it was clearly established in Cooper v. Dupnik "that obtaining involuntary statements through psychological coercion violated the due process clause of the Fourteenth Amendment," Michael's Opposition at 82:24-28, Michael's reliance on these two cases is unavailing here.
Again, as explained by the Supreme Court most recently in Brosseau, in a case such as this, a plaintiff cannot defeat a summary judgment motion on qualified immunity grounds simply by pointing to case law clearly establishing a general proposition such as the proposition that police conduct that shocks the conscience violates substantive due process. See Brosseau, ___ U.S. at ___, 125 S.Ct. at 599; see also Saucier, 533 U.S. at 202, 121 S. Ct. 2151. Rather, the inquiry is whether it was clearly established that it shocks the conscience, and therefore violates substantive due process, to interrogate a juvenile in the manner in which Michael was interrogated. The court concludes that a reasonable officer in defendants' position would not necessarily have known that the police conduct here would meet that standard.
Plaintiffs have failed to identify any relevant case law addressing the issue of when the interrogation of a juvenile crosses the constitutional line and "shocks the conscience" for substantive due process purposes. Nor has the court's attention been directed to any case, other than Cooper, involving interrogations in the adult which was in existence at the time of Michael's interrogation and therefore would have been available to guide defendants' action. As noted, the interrogation in Cooper employed different means (blatantly ignoring the defendant's invocation of the right to remain silent and the right to counsel) in order to accomplish different ends (to extract a confession which would keep the defendant off the stand and which preclude the defendant from presenting an insanity defense at trial), and the Ninth Circuit in Cooper focused on these means and ends in reaching its conclusion that the police officer's conduct "shocked the conscience." See Cooper, 963 F.2d at 1249, 1250 (explaining that the "primary aggravating circumstances" were the defendants' purposes of keeping Cooper from testifying in his own defense and precluding him from presenting an insanity defense and concluding that "[w]hat made these purposes unacceptable" was "the unconstitutional methods chosen to pursue them," which included the disregard of Cooper's invocation of his right to remain silent and his right to counsel). Because the aggravating circumstances in Cooper are simply not present here, the facts of Cooper would not necessarily put a reasonable officer on notice that the conduct in the present case was so egregious as to "shock the conscience" in a constitutional sense.
Moreover, although Chavez had not been decided at the time of Michael's interrogation, even if it had, it would not have clearly established that the manner of Michael's interrogation violated substantive due process. First, it should be noted that four Justices in Chavez concluded that the questioning of Martinez, the plaintiff in that case, did not "shock the conscience" despite the fact that (1) Martinez was clearly suffering from physical pain as well as mental anguish at the time;[19] (2) three *1038 different Justices concluded that the police officer exploited Martinez's pain and suffering "with the purpose and intent of securing an incriminating statement," Chavez, 538 U.S. at 797, 123 S. Ct. 1994 (Kennedy, J.); and (3) Justice Stevens characterized the questioning as "brutal" and "the functional equivalent of an attempt to obtain an involuntary confession from a prisoner by tortuous methods." Chavez, 538 U.S. at 783-4, 123 S. Ct. 1994 (Stevens, J., concurring in part and dissenting in part). Because the police conduct in the present case was far less egregious than the conduct in Chavez, and because four Supreme Court justices in Chavez concluded that the conduct in Chavez was not shocking to the conscience, one must conclude that, even after Chavez, a reasonable officer could believe that the conduct in the present case did not shock the conscience.
D. Conclusion
Defendants are entitled to summary judgment with respect to Michael Crowe's claim that the manner in which defendants conducted his questioning violated the substantive due process clause of the Fourteenth Amendment under a "shocks the conscience" theory.
The Crowe Family's Claims
The entire Crowe family brings a claim for violation of the Fourteenth Amendment based on their belief that defendants posted the strip search photographs taken of the family on a widely visible bulletin board in the police station. Assuming, without deciding, that such conduct could support a Fourteenth Amendment claim, this claim must nonetheless fail because the Crowes have failed to come forth with evidence from which a factfinder could find that pictures of the Crowes were in fact posted on a bulletin board in the police station. The only evidence that plaintiffs have presented is that they saw pictures similar to theirs posted and, therefore, they assumed that theirs were posted at some point. Such assumptions are not sufficient to support the denial of defendants' motion, and the motion is granted with respect to this claim.
In addition, it appears that Cheryl and Stephen[20] are bringing a claim based upon the drawing of a gun in their presence after they attempted to leave the police station through a secured door. Taking the evidence in the light most favorable to plaintiffs, as Stephen was about to open the door, a large number of police officers, including defendant Wrisley, appeared. Defendant Wrisley had his gun drawn and pointed at Stephen, and Wrisley yelled at Stephen "This is a secure area. Get back upstairs. Now." Omnibus Decl. of Stephen Crowe ¶ 20 (Exhibit 44, Michael's Exhibits). The other officers had their hands on their guns but did not have them drawn. Id.
Factors to consider in evaluating a substantive due process excessive force claim include the need for force, the amount of force used, the extent of injury inflicted, and whether force "was applied in a good faith effort to maintain or restore discipline or maliciously and sadistically for the very purpose of causing harm." Carr v. Tatangelo, 338 F.3d 1259, 1271 (11th Cir.2003). An officer is entitled to qualified immunity if, considering these factors, a reasonable officer could have believed that the use of force under the circumstances was lawful. See id.
*1039 Here, although it is somewhat questionable whether defendant Wrisley needed to draw his gun, no actual force was used, and no injury was inflicted. Moreover, it appears that the force was applied in an effort to maintain security and not for the purpose of causing harm. Under these facts, defendant Wrisley's conduct toward Cheryl and Stephen is not shocking in the constitutional sense.
Moreover, even if defendant Wrisley did violate Cheryl and Stephen's substantive due process rights, plaintiffs have failed to cite any case law suggesting that the threatened use of force under these facts violates the Fourteenth Amendment substantive due process clause, and such a violation is not obvious. Thus, a reasonable officer could have believed that the minimal use of force employed by defendant Wrisley was lawful.
Accordingly, to the extent that Cheryl and Stephen are raising such a claim, defendants' motion for summary judgment is granted as to it.
V. Fifth Claim for Relief Fourteenth Amendment Substantive Due Process (Deprivation of Familial Companionship)
Arising Out of Michael's Arrest
A substantive due process claim for deprivation of the right to familial companionship is recognized where the deprivation is the result of "unwarranted" governmental interference. Smith v. City of Fontana, 818 F.2d 1411, 1418 (9th Cir.1987), overruled on other grounds by Hodgers-Durgin v. de la Vina, 199 F.3d 1037 (1999). As discussed supra, Michael's arrest was supported by probable cause. Thus, the state's interference with the Crowes' familial relationship as the result of Michael's arrest was not "unwarranted." See Schaefer v. Goch, 153 F.3d 793, 799 (7th Cir.1998) ("Because we have concluded that Sergeant Goch did not violate Kathy Nislowski's rights under the Constitution, her parents' claims based on the loss of her society and companionship necessarily fail as well."). Thus defendants are entitled to summary judgment with respect to this claim.
Moreover, as detailed in § II.D, supra, even if it were determined that Michael's arrest was not supported by probable cause, a reasonable officer could have believed that it was supported by probable cause. Therefore, defendants would be entitled to qualified immunity under the second prong of the Saucier test because a reasonable officer could have believed that Michael's arrest constituted a warranted interference with the right of companionship.
Accordingly, defendants are entitled to summary judgment with respect to this claim.
Arising Out of Michael's and Shannon's Placement in Protective Custody
Defendants also seek summary judgment to the extent this Fourteenth Amendment claim is predicated upon the placement of Michael and Shannon in protective custody at the Polinsky Children's Center prior to Michael's arrest. Defendants contend that the interference with companionship was warranted pursuant to California's Welfare and Institutions Code § 305(a), which provides that a police officer may, without a warrant, take a child into temporary custody "[w]hen the officer has reasonable cause for believing that the minor is a person described in Section 300, and, in addition, that the minor has an immediate need for medical care, or the minor is in immediate danger of physical or sexual abuse, or the physical environment or the fact that the child is left unattended poses an immediate threat to the child's health or safety." Defendants have failed to demonstrate that the placement *1040 of Michael and Shannon at the Polinsky Children's Center was warranted under this provision.
First, defendants have failed to demonstrate that there was reasonable cause for believing that Michael or Shannon were in immediate danger of physical abuse. Moreover, defendants have failed to demonstrate that there was reasonable cause for believing that they were minors within the meaning of § 300, as there was not reasonable cause for believing that there was "a substantial risk that the child will suffer[] serious physical harm inflicted nonaccidentally upon the child by the child's parent or guardian." Wel. & Inst.Code § 300(a). Moreover, there was no basis for concluding that Cheryl and Stephen Crowe caused Stephanie's death through abuse or neglect. See Cal. Welf. & Inst.Code § 300(f).
Moreover, on these facts, no reasonable police officer could have believed there was reasonable cause for Michael's and Shannon's placement in protective custody. Accordingly, defendant's motion is denied with respect to this claim.
VII. Ninth Claim for Relief False Arrest/False Imprisonment
Michael's Claim
Defendants seek summary judgment on Michael's claim for false arrest/false imprisonment. Under California law, no cause of action may be brought against a police officer for false arrest or false imprisonment arising out of any arrest when "[t]he arrest was lawful, or the peace officer, at the time of the arrest, had reasonable cause to believe the arrest was lawful." California Penal Code § 847(b)(1). Penal Code § 836(a)(3) provides that a warrantless arrest is lawful when a police officer has "probable cause to believe that the person to be arrested has committed a felony, whether or not a felony, in fact, has been committed." As is the case with federal law, California law provides that "the court must look to the facts known to the peace officer at the time of the arrest" in determining whether there is probable cause for a warrantless arrest. Giannis v. City and County of San Francisco, 78 Cal. App. 3d 219, 224, 144 Cal. Rptr. 145 (1978). "The issue of whether an arrest was made with reasonable cause is an issue of law to be decided by the court." Id. at 225, 144 Cal. Rptr. 145.
For the reasons set forth in section § II.D, supra, defendants had reasonable cause to believe that Michael's arrest was lawful. Therefore, California Penal Code § 847 shields defendants from liability for Michael's arrest. Accordingly, defendants are entitled to summary judgment with respect to Michael's claim for false arrest/false imprisonment.
VI. Eleventh and Twelfth Claims for Relief Intentional and Negligent Infliction of Emotional Distress
All Plaintiffs
Defendants seek summary judgment with respect to the claims of Michael and the rest of the Crowe family for intentional and negligent infliction of emotional distress. It is impossible from a review of the complaint to determine upon which acts of defendants these claims are predicated. Moreover, in their oppositions, neither Michael nor the rest of the Crowe family illuminates the basis of their claims and neither sets forth arguments explaining how the evidence presented is sufficient to withstand a motion for summary judgment directed at these claims. Accordingly, the court finds that Michael and the rest of the Crowe family have failed to meet their summary judgment burden, and defendants' motion is granted with respect to these claims.
*1041 CONCLUSION
In the ensuing years, since that fateful and tragic night in January of 1998, there has been a fundamental change in the law, a change that affected the outcome of these motions. As this court noted in its previous order, "[a]t the time of the boys' interrogations, Ninth Circuit case law held that a Fifth Amendment violation occurs at the moment police officers coerce a confession from a suspect." Crowe, 303 F.Supp.2d at 1086. However, after Chavez v. Martinez, 538 U.S. 760, 123 S. Ct. 1994, 155 L. Ed. 2d 984 (2003), "it is clear that a § 1983 plaintiff cannot succeed on a Fifth Amendment self-incrimination claims predicated solely upon coercive police interrogation resulting in an involuntary confession." Crowe, 303 F.Supp.2d at 1098. Rather, in order for Michael to have a viable Fifth Amendment claim against defendants, Michael must demonstrate that his coerced statements were used against him in a criminal trial, which he is unable to do. This sea change in the law undermined and brought to naught the Fifth Amendment self-incrimination claims of Michael and the other boys, which claims were originally, in many ways, the heart of this lawsuit. It is because of this change in the law that the motion for summary judgment is granted as to Michael's Fifth Amendment self-incrimination claim.
As for Michael's substantive due process claim, although defendants should not be proud of their conduct, defendants' conduct did not rise to the level of being shocking to the conscience in the constitutional sense. Accordingly, the motion for summary judgment is granted as to Michael's substantive due process claim.
As for Michael's Fourth Amendment claim arising out of his arrest, while the conviction of Tuite for Stephanie's homicide might appear, to those unversed in the law, to lend credence to plaintiffs' arguments that Michael's arrest was not supported by probable cause, Tuite's conviction, which occurred many years after the murder and Michael's arrest, does not, under the law, affect the determination as to whether Michael's Fourth Amendment rights were violated in 1998. See Graham, 490 U.S. at 396, 109 S. Ct. 1865 ("The Fourth Amendment is not violated by an arrest based on probable cause, even though the wrong person is arrested...."). The issue is whether there was probable cause to arrest Michael, which requires consideration of the facts that defendants had in their possession at the time of Michael's arrest. See Beck, 379 U.S. at 96, 85 S. Ct. 223. Because there was probable cause to arrest Michael given the facts in defendants' possession at that time, the motion for summary judgment is granted with respect to this claim. Moreover, because there was probable cause to arrest Michael, the motion for summary judgment is granted with respect to Michael's claim for false arrest/false imprisonment.
As for the Crowes' Fourth Amendment claims arising out of the strip searches, the motion is granted as to Michael's claim but denied as to the claims brought by the rest of the family. Similarly, the motion for summary judgment is granted with respect to Michael's Fourth Amendment claim based on the seizure of his hair and blood, but denied with respect to Cheryl and Stephen's Fourth Amendment claim based on the seizure of their hair and blood.
The motion for summary judgment is granted with respect to the Crowes' Fourth Amendment claim arising out of the search of their residence.
The motion for summary judgment is denied as to the Cheryl and Stephen's Fourth Amendment claim arising out of their detention at the police station.
*1042 The motion for summary judgment is granted as to the Crowe family's Fourteenth Amendment substantive due process claims based upon the posting of photographs, as there is no evidence that the photographs were posted. The motion for summary judgment is also granted as to Cheryl and Stephen's Fourteenth Amendment substantive due process claims based upon the pointing of a gun at Stephen.
The motion for summary judgment is denied as to the substantive due process claim for deprivation of familial companionship arising out of Michael and Shannon's placement in protective custody but is granted to the extent that claim arises out of Michael's arrest.
In addition, the motion for summary judgment is granted as to the state law claims for intentional and negligent infliction of emotional distress.
Finally, although one could certainly criticize the manner in which the investigation of Stephanie's murder was conducted, it must be remembered that the sine qua non of a § 1983 action is whether there has been a constitutional violation. It is not enough that the police may have been heavy-handed, mendacious and unprofessional. Cf. Atwater v. City of Lago Vista, 532 U.S. 318, 121 S. Ct. 1536, 149 L. Ed. 2d 549 (2001). The acts of the police officers must be found to be in violation of the Constitution. While the court may not approve and condone the methods that the police employed, the court's personal predilections are necessarily irrelevant in a constitutional analysis.
IT IS SO ORDERED.
NOTES
[1] For a more detailed account of Joshua's interrogations, see Crowe, 303 F.Supp.2d at 1060-61.
[2] For a more detailed account of Aaron's interrogations, see Crowe, 303 F.Supp.2d at 1059-61.
[3] Rule 56(c) provides in relevant part that "[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
[4] Rule 56(e) provides in relevant part that "[w]hen a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denial of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial."
[5] Although defendants, apparently out of an abundance of caution, address the constitutionality of Michael's placement at the Polinsky Children's Center under the Fourth Amendment, the court does not address this argument, because a review of the complaint and Michael's opposition to the motion suggests that Michael is not pursuing a Fourth Amendment claim predicated upon his placement at the Polinsky Children's Center. However, in section V, infra, the court addresses Michael's Fourteenth Amendment challenge to his placement there.
[6] The standard for a warrantless arrest under California law has been stated slightly differently in some cases. For example, the Ninth Circuit, citing California case law, has stated that "[u]nder California law, an officer has probable cause for a warrantless arrest `if the facts known to him would lead a [person] of ordinary care and prudence to believe and conscientiously entertain an honest and strong suspicion that the person is guilty of a crime.'" Peng v. Mei Chin Penghu, 335 F.3d 970, 976 (9th Cir.2003) (quoting People v. Adams, 175 Cal. App. 3d 855, 221 Cal. Rptr. 298, 301 (1985) (citation and quotations omitted)). However, other California cases have set forth the standard in language identical to the Fourth Amendment standard in all relevant respects. See People v. Talley, 65 Cal. 2d 830, 835, 56 Cal. Rptr. 492, 423 P.2d 564 (1967) ("Reasonable or probable cause exists when the facts and circumstances within the knowledge of the officers at the moment of the arrest are sufficient to warrant a prudent man in believing that the defendant has committed an offense.").
[7] In fact, Judith Kennedy has consistently maintained throughout this civil litigation that she did not move the body. See Judith Kennedy DT p. 16:1-4 (Exhibit D, Response of Defendant Barry Sweeney to Plaintiffs' Supplemental Reference to the Evidence in Opposition to MSJ or in the Alternative, Partial Summary Judgment)
[8] This utterance by Kennedy is not reflected in the transcript of the videotape but is clearly evident to a listener of the videotape.
[9] See Cal. Welf. & Inst.Code 707.
[10] See Exhibits 56 and 57, Michael's Exhibits.
[11] Certainly, the police could have believed that someone entered the house through that door. However, because, as will be explained, the evidence suggested that the laundry room door was locked by 9:00 p.m., see Exhibit 295, the police could have believed that the individual who closed the door as Officer Walters looked on was not an intruder in the classic sense.
[12] Although Michael contends that the master bedroom door was partially open, there is no evidence of record suggesting that the master bedroom door was partially open. When asked about the condition of the master bedroom door, Sweeney testified that he believed "it was closed but not locked." Deposition of Barry Sweeney at 143:7 (Exhibit 14, Michael's Exhibits). When later asked whether the door was slid into the frame, Sweeney answered, "I don't recall how closed it was. If it was open, it was only about an inch or two inches, but I don't recall how closed it was." Id. at 144:4-6. Officer Houchin testified that he was aware that the door was unlocked. See Deposition of John Houchin at 141:23-25 (Exhibit 16, Michael's Exhibits). Officer Houchin did not testify that the door was partially open. Nowak's report states that the door was unlocked but closed. See Exhibit 93 to Plaintiffs' Supplemental List of Evidence Supporting Opposition to Sweeney's Motion.
[13] Plaintiffs do not raise the issue of whether the police must obtain a warrant to perform a strip search under circumstances such as were present here, where plaintiffs were not in custody at the time of the search. Therefore, the court does not consider this issue.
[14] Clearly, under such a test, defendant's motives or subjective intentions in conducting the search are irrelevant. Thus, the Crowes' attempt to demonstrate that the resulting damage was due to defendant's malicious motives and not due to their interest in collecting evidence is unavailing. See Whren, 517 U.S. at 813, 116 S. Ct. 1769 (explaining that an officer's subjective intentions are irrelevant in a Fourth Amendment analysis).
[15] Four Justices in Chavez concluded that the Fourteenth Amendment substantive due process clause "would govern the inquiry" in cases involving "police torture or other abuse that results in a confession...." 538 U.S. at 773, 123 S. Ct. 1994 (Thomas, J.). Although this plurality did not find that the Fourteenth Amendment substantive due process clause was violated under the facts of that case, the remaining five Justices voted to remand the case to the Ninth Circuit to address the defendant's due process claim based on the manner of his interrogation. Thus, it appears that the Supreme Court unanimously agrees that, under the right circumstances, the manner in which police interrogation is conducted may lead to a claim for violation of the Fourteenth Amendment substantive due process clause.
[16] Cases such as Spano v. New York, 360 U.S. 315, 79 S. Ct. 1202, 3 L. Ed. 2d 1265 (1959) are not to the contrary. The issue in Spano was whether the admission of a coerced confession at trial was a violation of the defendant's Fourteenth Amendment right to due process. See id. at 315, 79 S. Ct. 1202 ("This is another in the long line of cases presenting the question whether a confession was properly admitted into evidence under the Fourteenth Amendment.") (emphasis added). Spano did not apply a "shocks the conscience" standard and did not hold that the police violate the Fourteenth Amendment substantive due process clause merely by procuring a coerced confession.
[17] Although the Rochin court did not speak specifically in terms of "substantive" due process, it is nonetheless understood that the Rochin decision was based in substantive due process law. See Hammer v. Gross, 884 F.2d 1200, 1203 (9th Cir.1989). Interestingly, however, the Supreme Court has explained that "Rochin, of course, was decided long before Graham v. Connor (and Mapp v. Ohio), and today would be treated under the Fourth Amendment, albeit with the same result." Lewis, 523 U.S. at 850, 118 S. Ct. 1708.
[18] The wisdom of such a requirement is obvious. One can only imagine the Pandora's box that would be opened if a substantive due process claim could be predicated upon the mere coercion of a confession without use of the confession at trial or without additional "aggravating circumstances" such as were present in Cooper, as discussed infra.
[19] As noted by Justice Kennedy, Martinez "had been shot in the face, both eyes were injured; he was screaming in pain, and coming in and out of consciousness while being repeatedly questioned...." Chavez, 538 U.S. at 798, 123 S. Ct. 1994
[20] Neither the Shannon, Michael, nor Judith Kennedy were present during this alleged incident. Therefore, they cannot bring a claim arising out of this incident. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2517870/ | 196 F. Supp. 2d 1016 (2002)
Charles W. BRADY, Plaintiff,
v.
Dr. ATTYGALA, Peter Rembulat, C/O Madrigal, and Dr. Decastro, Defendants.
No. CV 01-4549-CAS (SGL).
United States District Court, C.D. California.
April 17, 2002.
*1017 Charles W. Brady, Pro Se, California State Prison, Represa.
Susan E. Myster, Atty for Defendants, Deputy Attorney General, San Diego.
AMENDED ORDER RE: EXHAUSTION OF ADMINISTRATIVE REMEDIES[1]
LARSON, United States Magistrate Judge.
Charles W. Brady has filed a civil rights complaint against various prison officials, claiming that while he was incarcerated at Lancaster State Prison correctional officers allowed another inmate to injure him and that prison doctors were deliberately indifferent to his medical needs in how they treated a laceration under his right eye he suffered during the fight with the other inmate. Defendants have asserted that, despite representations in his complaint, Brady failed to exhaust the administrative remedies provided by the California Department of Corrections prior to filing this action.
BACKGROUND
Brady alleges in his complaint that on May 3, 1999, he informed prison officials that he did not want to have Darren Coleman as his cell mate because Coleman was a "gang member"; it turns out that Coleman and Brady did not get along on account of Coleman being a Muslim. (Compl. Ex. A at 2; Am. Compl. ¶ 1). On May 7, 1999, while directing inmates back to their respective cells after the morning meal, Correctional Officer Peter Rembulat observed Coleman standing in front of another inmate's cell. (Compl. Ex. A at 1). Officer Rembulat ordered Coleman back to his assigned cell. (Compl. Ex. A at 1). Coleman, allegedly in plain view of Officer Rembulat, grabbed a broom as he headed back toward his cell and broke it over his knee into two pieces. (Am. Compl. ¶ 2; Compl. Ex. A at 1). Brady was already in the cell when Coleman arrived at the door.
Correctional Officer Madrigal then purportedly opened the cell door for Coleman to enter even though he observed him carrying the broken broom sticks. (Am. Compl. ¶ 3). At no time did Officer Rembulat seek to stop Coleman before he reentered his assigned cell or to confiscate the broom sticks. (Am.Compl. ¶ 2). When he entered the cell, Coleman swung one of the broom sticks at Brady, hitting him under the right eye. Upon seeing Coleman make a striking motion with the broom handle, Officer Rembulat quickly activated his personal alarm device and ordered Coleman to get down on the ground. (Compl. Ex. A at 1-2; Am. Compl. ¶ 4). Coleman was later reassigned to a different cell in another section of the prison. (Compl. Ex. A at 2).
Brady was initially seen by Mary Hoag, a medical assistant, who determined that Brady had suffered a one-inch laceration below his right eye. (Compl. Ex. A at 2). Brady complained of dizziness, blurred vision, and pain in his eye while he was being treated by the medical assistant. (Compl. Ex. A at 7). Hoag determined that Brady required further medical treatment and sent him to the prison infirmary, where he was treated by Dr. Decastro. (Compl. Ex. A at 2; Am. Compl. ¶ 5). Dr. Decastro applied two sutures to Brady's wound and gave him some Motrin for the pain. (Am. Compl. ¶ 5; Compl. Ex. C *1018 at 3). Brady alleges that at no time during this examination did Dr. Decastro provide any further treatment, such as performing a visual examination of the back of his eye or ordering that a x-ray be taken. (Am.Compl. ¶ 5). When the sutures were later removed by Dr. Attygala, Brady's right eye was still swollen and his pupil was "sluggish to light." (Compl. Ex. C at 4-5). He complained to Dr. Attygala that he could no longer see out of his right eye and that he continued to feel a "sharp and throbbing" pain in his eye. (Am. Compl. ¶ 6-7; Compl. Ex. C at 4-5, 9).
Over the course of the next month Brady repeatedly demanded to be seen by an outside eye specialist. (Compl.Ex. B). When his pleas allegedly went unheeded, Brady initiated a grievance requesting that he be seen by a eye specialist. On June 24, 1999, Brady was seen by an outside ophthalmologist, who purportedly informed him that his "eye was infected," that it "could not be saved," and that "his vision could not be restored." (Am. Compl. ¶ 8; Compl. Ex. C at 10; Pl's Notice of Administrative Remedies, Ex. A-2). Brady then filed this suit.
In the process of screening Brady's complaint, see 42 U.S.C. § 1997e(c), the Court noted that, despite specific requirements set forth in the pre-approved civil rights complaint form prepared for inmates, Brady had failed to attach "copies of papers related to the grievance procedure." Given the discrepancies between the parties contentions regarding exhaustion and Brady's failure to produce documentation related to the exhaustion of administrative remedies, the Court issued an order on November 2, 2001, requiring Brady to file a document containing "copies of papers related to the grievance procedure and the exhaustion of administrative remedies."
Brady in response submitted a pleading captioned "Notice of Administrative Remedies." Brady asserts that after the sutures were removed several times he informally requested to be seen by an ophthalmologist, but that each time his request was either rebuffed or ignored by the prison medical staff. (Am.Compl. ¶ 7). He then filed a formal grievance on a CDC 602 inmate appeal form contesting the treatment he received by the prison doctors and requesting that he be seen by an outside eye specialist. (Pl's Notice of Administrative Remedies at 2). The inmate appeal form was eventually forwarded to the chief medical officer for a second level response on June 24, 1999, the same day Brady was seen by an ophthalmologist. (Pl's Notice of Administrative Remedies, Ex. A-1). Brady submitted copies of his appeal form and the response thereto by the appeals coordinator to substantiate his assertion. (Notice, Ex. A1 & A2). The health care manager who conducted the second level response, Dr. Raj Sethi, granted Brady's appeal on July 2, 1999. (Pl's Notice of Administrative Remedies, Ex. A-2).
Under the section "Appeal Issue," Dr. Sethi wrote that the substance of Brady's grievance was a request that he "be taken out to the [eye] specialist." (Pl's Notice of Administrative Remedies, Ex. A-2). Dr. Sethi then noted under the section "Appeal Response" that on June 24, 1999, Brady was in fact seen by an outside ophthalmologist. (Pl's Notice of Administrative Remedies, Ex. A-2). This prompted Dr. Sethi's decision to grant Brady's appeal: "[T]his appeal is GRANTED in that you have been seen by a `specialist.'" (Pl's Notice of Administrative Remedies, Ex. A-2). Brady never appealed this decision to the director for the Department of Corrections, the final arbiter of prison administrative appeals. (Decl. Linda Rianda ¶ 3).
ANALYSIS
The Prison Litigation Reform Act of 1995 amended 42 U.S.C. § 1997e(a) to provide that:
*1019 No action shall be brought with respect to prison conditions under section 1983 of this title, or any other Federal law, by a prisoner confined in any jail, prison, or other correctional facility until such administrative remedies as are available are exhausted.
There is no doubt in this case that Brady's complaint must comply with the exhaustion requirement set forth in § 1997e(a). The essence of his complaint concerns the manner in which prison officials treated his ailments or failed to protect him from fellow inmates while he was confined in prison. Such assertions necessarily touch upon "prison conditions" as they concern everyday aspects of an inmate's life in prison. See Porter v. Nussle, 534 U.S. 516, 122 S. Ct. 983, 992, 152 L. Ed. 2d 12 (2002) ("The PLRA's exhaustion requirement applies to all inmate suits about prison life"); White v. Fauver, 19 F. Supp. 2d 305, 313-314 (D.N.J.1998) (noting that § 1997e(a)'s reference to "prison conditions" includes "the conditions of confinement or the effects of actions by government officials on the lives of persons confined in prison").
The real question presented is whether the granting of Brady's appeal at the second administrative level was enough to exhaust his administrative remedies when there still remained a possible appeal to the director for the Department of Corrections.
Before delving into the legal issues, some background on the operation of the prison grievance process is required. The State of California provides its inmates the right to file an administrative grievance with "any department decision, action, condition, or policy which they can demonstrate as having an adverse effect upon their welfare." CAL. CODE REGS. tit. 15, § 3084.1(a). The grievance system, however, allows for the award of prospective relief, but not monetary damages (aside from a nominal amount for property damage). See Rumbles v. Hill, 182 F.3d 1064, 1068 (9th Cir.1999). The Department of Corrections' grievance process is comprised of a four-tiered hierarchy. See CAL. CODE REGS. tit. 15, § 3084.5.
In order to exhaust their administrative remedies, inmates must first attempt to informally resolve the problem with the "staff involved in the action or decision being appealed." CAL. CODE REGS. tit. 15, § 3084.5(b). If unsuccessful there, inmates must then submit a formal appeal on an approved inmate appeal form to the correctional institution's appeals coordinator, id., and if unsuccessful there, submit another formal appeal for a second level of review conducted by the warden or his or her designee. See CAL. CODE REGS. tit. 15, §§ 3084.5(c) & 3084.5(e)(1). If the warden rejects the appeal, prisoners must then submit a formal appeal to the director for the California Department of Corrections. See CAL. CODE REGS. tit. 15, § 3084.5(e)(2). The director's decision "shall be final and exhausts all administrative remedies available in the Department [of Corrections]." CALIFORNIA DEPARTMENT OF CORRECTIONS OPERATIONS MANUAL § 54100.11.
Defendants argue that Brady's failure to take an appeal to the director after his appeal was granted at the second level mandates a finding that he has failed to exhaust his administrative remedies. According to defendants, section 1997e(a)'s exhaustion requirement carries with it no exceptions, even when an inmate's grievance has been granted at a lower level in the administrative process. Such a hard line approach they maintain is mandated by the Supreme Court's construction of the statutory language in Booth v. Churner, 532 U.S. 731, 121 S. Ct. 1819, 149 L. Ed. 2d 958 (2001).
The Court was presented in Booth with the question of whether the statute's call for an inmate to exhaust "such administrative *1020 remedies as are available" applied when the inmate sought only monetary damages but the prison administrative process, although providing some sort of relief, did not allow for the awarding of damages. Id. at 1821. The Court held that, under such circumstances, the statute required the inmate to pursue the prison administrative process "regardless of the fit between a prisoner's prayer for relief and the administrative remedies possible." Id. at 1824.
In the course of reaching its conclusion, the Court noted that it would "not read futility or other exceptions" into section 1997e(a)'s exhaustion requirement. Id. at 1825 n. 6. The Court went on to hold that "an inmate must exhaust irrespective of the forms of relief sought and offered through administrative avenues." Id. It is these statements in the Court's opinion that defendants argue require an inmate to continue to appeal his grievance even after winning at a lower level in the administrative process. The problem is that these statements say nothing about when an inmate is considered to have actually exhausted his administrative remedies. Instead, the statements merely indicate that an inmate must exhaust his remedies regardless of the relief he seeks or the relief offered by the prison grievance system. See id. at 1823 (explaining that the phrase "such administrative remedies as are available" requires an inmate to exhaust whatever grievance procedures are available, "whether or not the possible responses cover the specific relief the prisoner demands" in his federal complaint). One must look to another section of the Court's opinion for an answer to the question of when a inmate is considered to have exhausted his remedies.
The Court noted at the outset of its opinion that its analysis was premised upon the assumption "that some redress for a wrong is presupposed by the statute's requirement of an `available' `remedy.'" Id. at 1822. So long as there exists a "possibility of some relief for the action complained of," an available remedy still exists for the inmate to exhaust. Id. at 1824. To the Court it is the possibility of relief that is critical in determining when an inmate has exhausted his administrative remedies. "Without the possibility of some relief, the administrative officers would presumably have no authority to act on the subject of the complaint, leaving the inmate with nothing to exhaust." Id. at 1822 n. 4. Further pursuit of an administrative appeal is therefore not required when no relief whatsoever is left available for the inmate to obtain through the prison administrative process. At that point, the inmate has "nothing [left] to exhaust." Id.
Other courts have also recognized that inmates do not need to continue to pursue administrative remedies when there is nothing left to obtain from the administrative process. The Seventh Circuit, in a hypothetical similar to the facts in this case, noted:
It is possible to imagine cases in which the harm is done and no further administrative action could supply any "remedy." ... Suppose the prisoner breaks his leg and claims delay in setting the bone is cruel and unusual punishment. If the injury has healed by the time suit begins, nothing other than damages could be a "remedy," and if the administrative process cannot provide compensation then there is no administrative remedy to exhaust. Perez ... alleges that his medical problems are ongoing and that his treatment remains deficient, so Wisconsin can provide him with some "remedy" whether or not its administrative process offers damages.
Perez v. Wisconsin Dept. of Corrections, 182 F.3d 532, 538 (7th Cir.1999).[2]
*1021 Decisions after Booth have reached similar conclusions. In one case, an inmate filed a suit alleging that a correctional officer failed to protect him from a cell mate who beat and sexually assaulted him. See Nitz v. Correctional Officer French, 2001 WL 747445 (N.D.Ill. July 2, 2001). The inmate filed an administrative grievance seeking relief from the threatening situation and was later transferred to another prison while his grievance was pending. Id. at *3. The inmate never pursued his grievance after his prison transfer. Id. The defendant sought to dismiss the inmate's civil rights complaint, arguing that because the inmate had not pursued his grievance to the highest possible level of the administrative process he had not exhausted his administrative remedies. The court rejected that argument, noting that once the inmate was transferred to another prison "he had received all the `relief' that administrative procedures could give." Id. The court noted that to require otherwise would lead to absurd results. "It would be a strange rule that an inmate who has received all he expects or reasonably can expect must nevertheless continue to appeal, even when there is nothing to appeal." Id.
In another case, an inmate filed a suit alleging that the prison medical staff were deliberately indifferent in treating and providing him information about hepatitis C. See Gomez v. Winslow, 177 F. Supp. 2d 977 (N.D.Cal.2001). He filed a grievance seeking not only interferon treatment for his hepatitis but also medical information on how the interferon would affect his other medical conditions. Id. at 979. Just prior to his grievance being heard at the second formal level of review, the inmate was provided the medical information that he requested and soon thereafter began receiving interferon treatments. Id. at 979-980. This change in conditions prompted the prison appeals coordinator to partially grant the inmate's appeal. The inmate did not pursue his appeal after this partial grant. Id. at 980. The defendants later filed a motion to dismiss the complaint, asserting that the inmate's failure to appeal his grievance to the director for the Department of Corrections (that is, to the third, and last, formal level of review) demonstrated that he had not exhausted his administrative remedies. The court rejected this argument, noting that "because [the inmate] had, in essence, `won' his inmate appeal, it would be unreasonable to expect him to appeal that victory before he is allowed to file suit." Id. at 985.
The facts in this case are not unlike those in Nitz and Gomez. Brady, like the inmates in Nitz and Gomez, sought through his grievance that certain actions be taken by prison officials, namely, that he be seen by an outside eye specialist. During the pendency of his grievance, Brady similarly received the action he sought. This action on the prison officials part in turn short-circuited the consideration of his grievance. Just as in Gomez, Brady's appeal was granted at a lower level of the administrative process precisely because he had received the medical treatment he requested in his grievance. When Brady's grievance was "granted" at the second level of review, there was little else he could seek or expect from the prison administrative process; he had "won" his appeal and had been granted all the relief he sought in his grievance. Nowhere have the defendants articulated what other types of relief were still available from the administrative process for Brady to pursue after his appeal was granted. Nor does it appear that any in fact do exist. California's grievance *1022 process only requires an inmate to appeal to the director if their "appeal [is] not resolved at [the] second level." CAL. CODE REGS. tit. 15, § 3084.5(d). Because Brady's appeal was granted at the second level, the Department of Corrections' own regulations would appear to indicate that further exhaustion on his part was not required. "Without the possibility of some relief" remaining available, Booth mandates a finding that Brady has exhausted his administrative remedies. 121 S. Ct. at 1822 n. 4.
The defendants, however, contend that other courts have required such exhaustion under similar circumstances. In particular, they direct this Court's attention to an unpublished decision from the Northern District of California, Long v. Gomez, No. C 98-02679 SBA (N.D.Ca. Jan. 3, 2002), for support. According to the defendants this unpublished decision shows that "[t]he Northern District has addressed this issue ...." (Def's Mot. Recons. at 5). Apparently, defendants are unaware of the district court's decision in Gomez v. Winslow, an earlier, published decision from the same district that is to the contrary. Be that as it may, the Court does not find the decision in Long particularly persuasive.
In that case, the inmate requested in his grievance for an investigation into him being shot by a prison guard. This request was later granted at a lower level in the administrative process. The inmate was apparently satisfied with this result and did not further pursue his appeal. This lack of action prompted the court to find that the inmate had not exhausted his administrative remedies. The court noted at the outset that, "[s]o long as the administrative system can provide some redress, the plaintiff must pursue his claims through that system until they can be pursued no further." Id, slip op. at 12. From this the Court then leaped to the conclusion that the inmate did not exhaust his remedies because "he did not appeal to the final administrative level." Id. Nowhere does the court explain why such a conclusion is mandated by the inmate's simple failure to appeal after winning at a lower administrative level. The court does not identify what "redress," if any, still remained for the prison to provide after it agreed to investigate the shooting. Such an omission is particularly striking given that the court itself stated that exhaustion is only required so long as "some redress" can be provided. The court did, however, opine that were it to hold otherwise it would circumvent the policies underlying § 1997e(a)'s exhaustion requirement. This argument simply does not hold up under scrutiny.
The Supreme Court noted that one of the purposes for the exhaustion requirement was to force an inmate to go through the administrative process so as to give prison officials an opportunity to take corrective action that would keep the inmate from filing a lawsuit. See Porter, 534 U.S. at ___, 122 S.Ct. at 988 ("In some instances, corrective action taken in response to an inmate's grievance might improve prison administration and satisfy the inmate, thereby obviating the need for litigation"); Booth, 121 S.Ct. at 1823 ("exhaustion in these circumstances would produce administrative results that would satisfy at least some inmates who start out asking for nothing but money, since the very fact of being heard and prompting administrative change can mollify passions even when nothing ends up in the pocket"). If an inmate was forced to continue pursuing an appeal even after prison officials took the corrective action sought in his grievance, there arises the very real possibility of negative action being taken on the inmate's appeal at a later stage in the administrative process. If, for example, the inmate in Nitz continued to pursue his appeal, it is plausible that the earlier decision *1023 to transfer him to another prison might have been reversed and the inmate placed back in the cell with the inmate who beat him. The court in Long in fact recognized such a possibility: "Appealing a satisfactory response in general risks the possibility that the higher levels of review will reverse the lower level response; thus leaving the [inmate] in a worse position than had he not appealed." Long, No. C 98-02679, slip op. at 12.
Construing § 1997e(a) to mandate that an inmate continue to appeal even after obtaining all the relief he can extract from the prison administrative process therefore undercuts one of the very policies underlying it: To allow prison officials an opportunity to take corrective action so as to satisfy the inmate and perhaps prevent the filing of a lawsuit. Continuing to appeal even after winning at a lower administrative level will not give the inmate anymore than what he already has obtained. Instead it will only provide the opportunity that the corrective action taken earlier (which may have kept the inmate from later filing suit) will later be undone.
Instead, both common sense and the Supreme Court's decision in Booth require a finding that Brady exhausted his administrative remedies after his appeal was "granted" at a lower level in the administrative process.
Since filing his Notice, Brady has filed a copy of his proposed amended complaint and a motion for leave to file said complaint. The Court hereby GRANTS Brady's motion for leave to file his amended complaint.
NOTES
[1] The Court's opinion filed March 14, 2002, is amended to take into consideration the arguments raised by defendants in their motion for reconsideration filed on April 2, 2002.
[2] The Seventh Circuit also required in that case that inmates exhaust their administrative remedies even when the grievance process did not provide for monetary relief well before the Supreme Court required the same in Booth. See 182 F.3d at 537. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2592824/ | 722 F. Supp. 235 (1989)
UNITED STATES of America
v.
255.21 ACRES IN ANNE ARUNDEL COUNTY, MARYLAND, et al.
Civ. No. PN-87-2810.
United States District Court, D. Maryland.
September 21, 1989.
*236 Donald F. Rosendorf, U.S. Dept. of Justice, Washington, D.C., for plaintiff.
C. Elyse Vinitsky, Washington, D.C., and Leonard R. Goldstein, Goldstein & Baron, Chtd., College Park, Md., for defendant B W Parkway Associates.
Christopher Sanger, Tucker, Flyer, Sanger & Lewis, Washington, D.C., for defendants B W Parkway Associates and Ameribanc Investors Group.
OPINION AND ORDER
NIEMEYER, District Judge.
In response to the complaint filed by the United States Government to condemn 255 acres of land adjacent to the National Security Agency in Anne Arundel County, Maryland, the defendant B W Parkway Associates Limited Partnership (Parkway Associates) filed a counterclaim in two counts. Count one alleges inverse condemnation based on conduct engaged in by the Government before this action was commenced and demands $10,000 in damages. Count two alleges "tortious injury to property" arising from the same conduct and demands $80 million in damages.
The Government filed a motion to dismiss the counterclaim on the grounds that (1) it has not consented to be sued by way of counterclaim; (2) count two is in reality an inverse condemnation claim which, under the Tucker Act, must be brought in the United States Claims Court; (3) count two, even if a tort claim, does not allege a claim that complies with the Federal Tort Claims Act; and (4) the counterclaim is barred by applicable statutes of limitations. For the reasons that are given hereafter, the Court will grant the Government's motion in part and transfer the counterclaim to the United States Claims Court.
I.
The Government first argues that defendant's counterclaim should be dismissed because the United States cannot be sued by way of counterclaim without its consent.
The United States as a sovereign "is immune from suit save as it consents to be sued ... and the terms of its consent to be sued in any court define the court's jurisdiction to entertain the suit." United States v. Sherwood, 312 U.S. 584, 586, 61 S. Ct. 767, 769, 85 L. Ed. 1058 (1941). This immunity extends to counterclaims brought in actions initiated by the Government. See, e.g., United States v. Shaw, 309 U.S. 495, 60 S. Ct. 659, 84 L. Ed. 888 (1940).
Although Federal Rule of Civil Procedure 13(a), which requires a defendant's answer to state any counterclaim which arises out of the transaction or occurrence that is the subject of the original complaint, operates to mandate a waiver of immunity against counterclaims, Rule 13(d) states that the rules governing counterclaims should not "be construed to enlarge beyond the limits now fixed by law the right to assert counterclaims or to claim credits against the United States...." In light of Rule 13(d), Rule 13(a) has been construed as a limited waiver of immunity in suits brought by the United States, allowing only counterclaims which act as a recoupment to the action. See, e.g., United States v. Agnew, 423 F.2d 513, 514 (9th Cir.1970). Because the Government is not seeking a monetary award in this action, defendant's counterclaims are of the nature of an affirmative action, rather than of a recoupment. Therefore, Rule 13(a) will not be construed to waive the government's immunity from this counterclaim.
Defendant contends that the Government has waived its immunity to its counterclaims through the Tucker Act, 28 *237 U.S.C. § 1346(a)(2) and § 1491, (which permits the Government to be sued under the Constitution or upon an express or implied contract with the Government), and the Federal Tort Claims Act, 28 U.S.C. § 1346(b), § 2671 et. seq. The Government argues that even if defendant could bring an original action against the Government under one of these statutes, such an action could not be brought as a counterclaim because the Government has not consented to be sued under these statutes by way of counterclaim.
A number of cases have addressed the question whether a claim which could be brought as an original action against the government can be brought as a counterclaim. The traditional view is that even if the original action would be proper, the claim cannot be brought as a counterclaim. In United States v. Joseph Behr & Sons, Inc., 110 F. Supp. 286 (N.D.Ill.1953), the court applied this rule:
The Court ... has no jurisdiction to render an affirmative judgment against the United States on a counterclaim. The provision[s] of the Tucker Act, 28 U.S. C.A. § 1346, giving the District Court jurisdiction over certain suits against the United States do not permit the recovery of demands against the United States on counterclaims but refer to original suits and prescribe procedure inconsistent with its use as the basis for a counterclaim.
Id. at 287, citing U.S. v. Nipissing Mines Company, 206 F. 431 (2nd Cir.1913), cert. dismissed 234 U.S. 765, 34 S. Ct. 673, 58 L. Ed. 1582 (1914).
In a number of more recent cases, influenced by concerns for judicial economy, courts have departed from the traditional rule and have allowed claims which could have been brought in an original action to be brought as a counterclaim in an action initiated by the United States. See Wright & Miller § 1427, at 144, n. 13 and cases cited therein. In Thompson v. United States, 250 F.2d 43 (4th Cir.1957), the Fourth Circuit reviewed the decision of a district court to dismiss counterclaims asserted by the defendant in a breach of contract action initiated by the United States. Although the Fourth Circuit dismissed the appeal, deciding that it was premature, it stated its position on the merits:
[A]ll of the judges of this court are of the opinion that the counterclaims here involved may be asserted in the action instituted by the United States. They arise out of contract and involve less than the sum of $10,000. Congress has given its consent in the Tucker Act, 28 U.S.C. § 1346(a)(2), that the United States be sued on such claims in the District Courts; and we can think of no sound reason why the suit should not take the form of counterclaim filed to a suit instituted by the United States in a District Court, where the amount of the counterclaim does not exceed $10,000.
Id. at 44. The court then quoted Chief Judge Magruder, speaking for the First Circuit in United States v. Silverton, 200 F.2d 824, 827 (1st Cir.1952):
It is conceded by the government that the defendant in this case could have brought an original action in the court below against the United States for breach of contract, under the Tucker Act. If he had done so, of course the court below, under Rule 42 F.R.C.P., 28 U.S.C., could have consolidated such action with the pending action brought by the United States. It would be the emptiest technicality to hold that the same jurisdiction could not be invoked by way of counterclaim in the action already brought by the United States.
The instant case is distinguishable from Thompson in that the counterclaim in that case was of the nature of a recoupment, arising from the same transaction the plaintiff sued upon, whereas the counterclaim in the instant action (1) requests an affirmative recovery and (2) arguably arises from a separate transaction. Nevertheless, because the statutes under which defendant brings its claim concededly authorize suit against the Government in an original action, the reasoning of Thompson and Silverton is persuasive.
*238 When the Government has consented to be sued with respect to a particular claim, this Court can perceive no legitimate reason why the claim should not be asserted in any manner that the procedural rules permit, whether as an original action, a counterclaim, a cross-claim or a third party claim. Cf. United States v. Yellow Cab Co., 340 U.S. 543, 554, 71 S. Ct. 399, 406, 95 L. Ed. 523 (1971) ("[W]e should not, by refinement of construction, limit that consent [given by the Federal Tort Claims Act] to cases where the procedure is by separate action and deny it where the same relief is sought in a third-party action.") At the hearing on its motion in this case, the Government candidly admitted that it knew of no reason why the Tucker Act or the Federal Tort Claims Act should be interpreted as waiving immunity only as to those claims asserted as original actions. The language of these statutes does not require so restrictive an interpretation. Moreover, with the availability of procedural rules for consolidation of actions and severance, the narrow interpretation urged by the Government would at most be a formality. This Court therefore will follow the line of recent cases that permit the counterclaim. See, e.g., United States v. Drinkwater, 434 F. Supp. 457 (E.D.Va. 1977). In Drinkwater, the United States sued to quiet title to certain property located in Virginia Beach, Virginia. The defendants filed a counterclaim under the Tucker Act claiming less than $10,000 for the fair rental value of their property and their economic loss due to the cloud on their title since 1969. Deciding that it had jurisdiction over the defendants' claim, the court denied the Government's motion to dismiss, which was based on the fact that the claim was asserted by way of counterclaim.
For all of the reasons given, the Court does not believe that defendant's claims must be dismissed merely because they are asserted as counterclaims. The Court therefore will not grant the Government's motion on this ground.
II.
The Government next urges that the Court dismiss count two of the counterclaim for lack of jurisdiction.
In count two of its counterclaim, Parkway Associates attempts to state a cause of action under the Federal Tort Claims Act, demanding $80 million in damages. This Court would have exclusive jurisdiction over count two if it did indeed state a claim under the Federal Tort Claims Act. Title 28, U.S.C. § 1346(b) provides, in pertinent part:
[T]he district courts ... shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages ... for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, 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.
The Government contends, however, that count two is not a Federal Tort Claims Act action, but an inverse condemnation action, which must be brought under the Tucker Act. Observing that actions under the Tucker Act for more than $10,000 cannot be heard in district court, the Government urges this Court to dismiss count two.
The Tucker Act allows claims which are founded, inter alia, "upon the Constitution" or "upon any express or implied contract with the United States" to be brought against the government in the United States Claims Court:
The United States Claims Court shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort.
28 U.S.C. § 1491. Those claims not exceeding $10,000 may be brought in either district court or the United States Claims Court. See 28 U.S.C. § 1346(a)(2).
*239 If, as the Government argues, count two is actually an inverse condemnation action, then, because of the amount in controversy, this Court does not have jurisdiction to hear the action. The Court must therefore determine whether count two is a Federal Tort Claims Act action or an inverse condemnation action. In making this determination, the Court must look beyond the way in which plaintiff characterized his action and consider the actual substance of the allegations. Cf. Burgess v. Charlottesville Savings and Loan Ass'n, 477 F.2d 40, 43 (4th Cir.1973) (to sustain federal question jurisdiction, a complaint must allege federal grounds "`not in mere form, but in substance' and `not in mere assertion, but in essence and effect.'") (citations omitted).
In San Diego Gas and Electric Co. v. San Diego, 450 U.S. 621, 101 S. Ct. 1287, 67 L. Ed. 2d 551 (1981), Justice Brennan defined "inverse condemnation" as follows:
The phrase "inverse condemnation" generally describes a cause of action against a government defendant in which a landowner may recover just compensation for a "taking" of his property under the Fifth Amendment, even though formal condemnation proceedings in exercise of the sovereign's power of eminent domain have not been instituted by the government entity.
Id. at 638, n. 2, 101 S. Ct. at 1297, n. 2 (1981) (Brennan, J. dissenting).
An action for inverse condemnation may be brought under the Tucker Act both because it is founded "upon the Constitution" and because it is founded upon an "implied contract with the United States." See, e.g., Roman v. Velarde, 428 F.2d 129 (1st Cir.1970).
Count two of the counterclaim alleges that the defendant Parkway Associates has been the fee simple record owner of the 255 acres in question since the early 1960's and that since that time, defendant's efforts to develop the property have been thwarted by the Government. The Government allegedly hindered the property's development by engaging "in a continual, concerted and intentional scheme of actions and conduct intended to preclude or prevent Parkway Associates from being able to go forward with constructing improvements upon the subject property, without payment of any compensation to Parkway Associates therefor." The count enumerates a number of specific actions allegedly taken by the Government in furtherance of this scheme. These actions include: failing to honor promises made to Parkway Associates that the Government would allow Parkway Associates to build two large buildings on the property and lease these buildings from Parkway Associates; failing to follow through promptly with representations that the Government would condemn the property; attempting to change utility and road planning in the vicinity of the property in order to delay the availability of sewer and water lines and vehicular access to Parkway Associates' property; and hindering Parkway Associates' efforts to obtain a building permit when Parkway Associates attempted to initiate a limited development of the property. The count alleges that these actions were
wrongful, in knowing fraud and misrepresentation and/or in total disregard of the Constitutional right of BWPA [Parkway Associates] to be protected against deprivation of its property without due process of law under the Fifth and Fourteenth Amendments, and had the effect of wrongfully and tortiously converting BWPA's property and property rights to the Government's exclusive use, benefit and enjoyment during the entire relevant period prior to the date the Declaration of Taking was filed in this action.
Even though defendant repeatedly recites tortious conduct in count two of the counterclaim, in each case it describes the effect of the conduct as a "taking" of property at a time earlier than the time when the Declaration of Taking was filed in this case. Defendant confirmed at oral argument that its complaint amounts to a claim that the Government deprived it of property interests without compensation. This is the specific claim made in paragraph 19 of the counterclaim, where it is alleged that the Government's tortious conduct "had the effect of wrongfully and tortiously converting *240 [defendants'] property and property rights to the Government's exclusive use, benefit and enjoyment during the entire relevant period prior to the date the Declaration of taking was filed" in violation of constitutional due process as secured by the Fifth and Fourteenth Amendments. Whatever the means used, the Government is accused of having taken defendants' property before the formal condemnation. This is a claim for inverse condemnation.
This conclusion is supported by the First Circuit case of Roman v. Velarde, 428 F.2d 129 (1st Cir.1970), in which the court reviewed a district court's decision to dismiss a Federal Tort Claims Act action based upon the government's allegedly wrongful occupation of land claimed to be owned by the plaintiffs. The district court had decided that the government had not consented under the Federal Tort Claims Act to suit on a claim for trespass to land where the issue of title was involved. The First Circuit disagreed, finding that there was nothing in the Federal Tort Claims Act which excepted the tortious conduct alleged in that case from the tortious conduct upon which the government had given its consent to be sued. Nevertheless, the court found that the district court did not have jurisdiction over the claim because it was more appropriately brought in the Court of Claims under the Tucker Act. The court stated, "the FTCA does not provide a supplementary forum for plaintiffs demanding compensation for land permanently taken." Id. at 132.
In the instant case, as in Roman, even if the Government's actions were tortious, the injury claimed is the permanent taking of plaintiffs' property and the action is thus one for inverse condemnation. Such an action must be brought under the Tucker Act, not under the Federal Tort Claims Act.
Parkway Associates has cited a number of cases for the proposition that the Government actions they complain of have been found not to constitute inverse condemnation. See, e.g., Pitman v. United States, 546 F.2d 431 (Ct.Cl.1976) (a mere threat to condemn does not constitute a taking); De-Tom Enterprises, Inc. v. United States, 552 F.2d 337 (Ct.Cl.1977) (Air Force's "lobbying" against a requested change of zoning which would allow residential development near an Air Force base did not constitute a taking). The fact that the conduct involved in these cases may not have risen to the level of a taking, however, does mean that they are not inverse condemnation claims. Moreover, these cases certainly do not stand for the proposition that actions alleging similar conduct should be brought as Federal Tort Claims Act claims.
Parkway Associates also places great reliance on a statement made by the Court of Claims in De-Tom Enterprises, supra. Addressing the plaintiff's contention that the Air Force had wrongfully influenced a County Board of Supervisors in a zoning decision, the court stated: "[W]e are plainly without jurisdiction because ... we have no original jurisdiction in tort." Id. at 339. That statement, however, does not support the proposition that conduct such as that allegedly engaged in by the Air Force is tortious. As is clear from the context of the statement, the court decided that it need not consider plaintiff's argument that the government's conduct was tortious because it had no original jurisdiction to hear such a claim.
The Government also advanced contentions in this case that the Federal Tort Claims Act cannot serve as the basis for count two because (1) the Act does not permit a claim based upon the failure to exercise or perform a discretionary function, whether or not the discretion involved was abused (28 U.S.C. § 2680(a)); (2) it does not permit any claim arising out of misrepresentations, deceit or interference with contract rights (28 U.S.C. § 2680(h)); (3) the defendant did not first present the claim to the appropriate federal agency and have it finally denied in writing (28 U.S.C. § 2675); and (4) the defendant did not file a claim within two years of the time that the action accrued with the appropriate agency (28 U.S.C. § 2401).
While the defendant sought to amend his counterclaim at the hearing by deleting *241 certain claims for misrepresentation, that amendment would not cure all the problems associated with bringing count two as an action under the Federal Tort Claims Act. Although an opportunity to permit formal amendment might eliminate some of the tort language relating to claims barred by § 2680(h), if the statute were fairly applied to the essence of count two, little, if anything, would remain. What would remain is the claim for inverse condemnation which, because of the amounts claimed, could only be brought in the Claims Court.
For the foregoing reasons, the Court decides that the exclusive forum for adjudicating the claims of Count II is the United States Claims Court.
III.
The facts giving rise to the allegations in both counts one and two are the same and were incorporated into each count by reference. Count two additionally characterized the Government's conduct as "wrongful," "knowing fraud," "misrepresentation," and "motivated by its perceived requirement" to reserve the land for future use by the National Security Agency. However, no new allegations of conduct are alleged in count two. The nature of the damage alleged in each count is also essentially similar. Count one alleges that the United States "deprived [defendant] of all substantial or reasonable use, enjoyment, economic benefit or economic expectation of or from the subject property" and that the Government's conduct constituted a taking in violation of the Fifth and Fourteenth Amendments. Count two alleges:
The said actions and conduct were wrongful, were in knowing fraud and misrepresentation and/or in total disregard of the Constitutional right of BWPA to be protected against deprivation of its property without due process of law under the Fifth and Fourteenth Amendments, and had the effect of wrongfully and tortiously converting BWPA's property and property rights to the Government's exclusive use, benefit and enjoyment during the entire relevant period prior to the date the Declaration of Taking was filed in this action.
Because count one alleges inverse condemnation and the court has determined that count two makes the same claim, the two counts are therefore the same claim based on the same conduct. Defendant's reason for alleging only $10,000 in damages in count one was to give this Court jurisdiction over the claim. See 28 U.S.C. § 1346(a)(2). As mentioned above, when the amount of a Tucker Act claim exceeds $10,000, the United States Claims Court has exclusive jurisdiction. See 28 U.S.C. § 1491.
Even though count one, which seeks damages of $10,000 under an inverse condemnation claim, appears to be within this Court's jurisdiction, Parkway Associates may not split its cause of action for inverse condemnation merely to obtain jurisdiction in a district court. See, e.g., State of Washington v. Udall, 417 F.2d 1310, 1320-21 (9th Cir.1969); Eccles v. United States, 396 F. Supp. 792, 795 (D.N.D.1975). Because there is no difference between the allegations in counts one and two, the Court will treat the counts as one claim seeking damages of $80,010,000 under an inverse condemnation theory. Only the United States Claims Court has jurisdiction to hear this claim.
The circumstances under which this Court may transfer an action over which it does not have jurisdiction to another court are delineated in 28 U.S.C. § 1631:
Whenever a civil action is filed in a court as defined in section 610 of this title or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was *242 actually filed in or noticed for the court from which it is transferred.
Thus, if the Court finds that (1) the claim could have been brought in the Claims Court and (2) a transfer were in the interest of justice, it can transfer the counterclaim to the Claims Court under § 1631. As discussed above, the first element of this test has been met, as this claim can only be heard in the Claims Court.
In determining whether a transfer is in the interest of justice, the court may consider whether the applicable statute of limitations might prejudice the claimant if, instead of being transferred, the action were dismissed and refiled in the proper court. See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467, 82 S. Ct. 913, 916, 8 L. Ed. 2d 39 (1962). Because factual questions remain in this case as to when the applicable statute of limitations will run, if indeed it has not already run, the Court believes that the interests of justice require that Parkway Associates be given the advantage, in the Claims Court, of the date it filed the counterclaim in this action. Therefore, the Court will transfer Parkway Associates' action to the Claims Court, rather than dismiss the counterclaim and force Parkway Associates to refile with that court.
For the reasons given it is hereby ORDERED this 20th day of September, 1989, that:
1. The motion of the United States to dismiss the counterclaim of Parkway Associates is hereby granted;
2. The counterclaim (and all counts thereof which the Court has determined are in reality one claim) is severed from this action and transferred to the United States Claims Court; and
3. The Clerk of this Court is directed to transfer copies of the appropriate papers together with this Opinion and Order to the Clerk of the United States Claims Court and to mail a copy of this Opinion and Order to counsel of record. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580558/ | 60 F. Supp. 2d 629 (1998)
Clyde P. LUTTRELL, et al., Plaintiffs,
v.
COOPER INDUSTRIES, INC., et al., Defendants.
No. Civ.A. 97-575.
United States District Court, E.D. Kentucky, London Division.
October 27, 1998.
*630 Charles L. Cunningham, Jr., Louisville, KY, Donna Keene Holt, Knoxville, TN, for Plaintiffs.
Harry K. Herren, Woodward, Hobson & Fulton, Louisville, KY, Clifford J. Zatz, Akin, Gump, Strauss, Hauer & Feld, Washington, DC, Jill F. Lowenbraun, Woodward, Hobson & Fulton, Louisville, KY, John A. Berger, Amy Tieman Potter, Busald, Funk & Zevely PSC, Florence, KY, for Defendants.
ORDER
COFFMAN, District Judge.
This matter is before the court upon motion by the defendants, Cooper Industries, McGraw-Edison Co., and American Laundry Machinery, Inc., for summary judgment. The defendants argue that a general release executed by the parties settling a previous suit bars the plaintiffs from bringing this action. The court, having heard the arguments of counsel and being otherwise sufficiently advised, will grant the defendants' motion.
Summary of the Facts
The parties to this case executed a release on November 25, 1995 resolving a lawsuit over the disposal of chemicals by the defendants on the plaintiffs' farm. The applicable portions of the release read:
[The plaintiffs] fully and finally release and discharge the [defendants] from any and all claims and demands, rights and causes of action of every type or kind, known and unknown, which the undersigned had, have now, or may have in the future ... or may have or claim to have as a result of or arising out of the alleged dumping and disposal of waste products.... This includes, but not by way of limitation, dismissal of all claims for ... personal injury ... and all other environmentally related claims which were raised or asserted or could have bean raised or asserted in the ... Civil Action No. 89-155 ... [The plaintiffs] acknowledge and agree that this Release shall apply to, and constitute full satisfaction of, any and all known, unknown and unanticipated injuries and damages arising out of or related to the subject matter of the above styled action. (emphasis added)
In November of 1996, Virginia Luttrell was diagnosed with cancer, and the plaintiffs filed a second personal injury suit against the defendants.
In the prior suit, the plaintiffs alleged that they "may have suffered physical injury and therefore have an increased risk of future complications or harm" due to the defendants' conduct. The plaintiffs offered evidence that they suffered cellular damage that had yet to be manifested as physical injuries. The district court dismissed the plaintiffs' claims for increased risk of cancer and for medical monitoring because any physical injury had not yet manifested itself and due to a failure to show that any injury had been caused by the defendants' conduct.
When the parties executed the release, the only claims still pending at trial concerned damage to the plaintiffs' property. The trial court had granted the defendants summary judgment on the personal injury issues, although the plaintiffs had not yet pursued an interlocutory appeal. The plaintiffs now argue that during settlement negotiations they intended to limit the scope of the release to include only those property claims. The defendants counter that the release unambiguously encompassed all present and future claims for personal injury and precludes the plaintiffs from pursuing this present action.
*631 Analysis
The terms of an unambiguous contract cannot be varied by extrinsic evidence. O.P. Link Handle Co. v. Wright, 429 S.W.2d 842 (Ky.1968). Thus, a court may not consider parol evidence when interpreting a contract unless the contract is ambiguous. Schachner v. Blue Cross and Blue Shield of Ohio, 77 F.3d 889, 893 (6th Cir.1996). Contract language is not ambiguous unless it is subject to two reasonable interpretations. Id. at 893. The ambiguity must be patent and apparent on the face of the contract. Id.
The determination that a contract suffers from ambiguity must be based upon the common, plain meaning of the language of the contract. Kentucky-West Virginia Gas Co. v. Browning 521 S.W.2d 516 (Ky.1975). A court, however, is not required to read a contract in a vacuum: "A contract is to be construed as a whole so as to ascertain and give effect to the true intent of the parties, and the circumstances under which the contract was executed and the conduct of the parties thereafter can be considered by the Court in determining what their intention was, without it becoming a violation of the parol evidence rule." Rudd-Melikian, Inc. v. Merritt, 282 F.2d 924, 928 (6th Cir.1960). Nevertheless, before a court may consider extrinsic evidence of the parties' intent, "it must find an ambiguity on the face of the contract." Schachner, 77 F.3d at 893.
Parol evidence consists of evidence of agreements between or the behavior of the parties prior to or contemporaneous with the contract. This includes "evidence of a contemporaneous oral agreement on the same subject matter, verifying, modifying, contradicting or enlarging" a contract. M.R. Kopmeyer Co. v. Barnes, 276 S.W.2d 21, 23-24 (Ky.1955). Barring an ambiguity, such evidence cannot be admitted. "If the language is unambiguous, the meaning of the language is a question of law, and the intent of the parties must be discerned from the words used in the instrument." Taggart v. U.S. 880 F.2d 867, 870 (6th Cir.1989).
In this case, the language of the release is not ambiguous. The court will not create an ambiguity where none exists. See Friction Materials Co., Inc. v. Stinson, 833 S.W.2d 388 (Ky.Ct.App.1992). The plaintiffs executed the release as part of a bargained-for settlement. At the time of the settlement, the plaintiffs were aware that they were at a heightened risk for cancer; they had brought claims for the increased risk of such an injury. The claims now brought in this suit seem to fall within the general spectrum of the claims contemplated during the earlier suit and released in the settlement.
The release states that it covers all present and future claims, including those for personal injury, arising from the disposal of waste products by the defendants on the plaintiffs' farm. The phrases, "any and all claims ... which the undersigned ... may have in the future ... arising out of the alleged dumping and disposal of waste products," and "this Release shall ... constitute full satisfaction of any and all known, unknown, and unanticipated injuries and damages arising out of or related to the subject matter of the above styled action" could not be made more clear. See Taggart, 880 F.2d at 870. The release unequivocally covers the claims brought in the present case. The reading sought by the plaintiffs contradicts the clear meaning of the release and seeks to have the court read key phrases out of context.
As the contract is unambiguous, the parol evidence rule precludes the consideration of evidence regarding oral statements made prior to or contemporaneously with the execution of the release to contradict or alter the express written terms of the release. The plaintiffs now cannot vary the terms of the agreement by arguing that they intended to reserve future personal injury claims or that they relied upon the defendants' assertions regarding such claims. Nowhere in the contract is the retention of the right to bring a personal *632 injury claim reserved. The release does not exclude from its broad terms, either explicitly or implicitly, the claim which the plaintiffs seek to bring in their present suit. The court must consider the meaning of what the parties said, not what they intended to say. Central Bank & Trust, 617 S.W.2d at 33. Therefore, the court holds that the release unambiguously bars the plaintiffs from pursuing this action.
The release of the plaintiffs' future claims for cancer is enforceable. Mrs. Luttrell's personal injury claim for cancer had not accrued at the time of the earlier lawsuit. See Capital Holding Corp. v. Bailey, 873 S.W.2d 187 (Ky.1994). A plaintiff, however, may waive a future cause of action, even one yet to accrue, predicated on the tortious conduct of a defendant antecedent to the settlement. In this case, the defendants' allegedly tortious conduct occurred before the parties reached a settlement agreement, and all the parties had knowledge of the nature, scope, and implications of the defendants' relevant conduct. In such circumstances, the waiver of future claims is permitted. See, e.g. Babbitt v. Norfolk & Western Ry. Co. 104 F.3d 89 (6th Cir.1997); Adams v. Philip Morris., Inc. 67 F.3d 580, 584 (6th Cir.1995); Rogers v. General Electric Co., 781 F.2d 452 (5th Cir.1986). Furthermore, the release was voluntarily and knowingly entered into and signed for valuable consideration. See Shaheen v. B.F. Goodrich Co., 873 F.2d 105, 107 (6th Cir.1989). Therefore, the release is dispositive of the claims brought in the present suit and is a bar to the cause of action. Accordingly,
IT IS ORDERED that the defendants' motion for summary judgment is GRANTED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580666/ | 313 F. Supp. 2d 1295 (2004)
Robert WHITE, Plaintiff,
v.
BOMBARDIER CORPORATION, et al., Defendants.
No. 3:03CV562/RV/MD.
United States District Court, N.D. Florida, Pensacola Division.
March 19, 2004.
*1296 Timothy M. O'Brien, Levin, Papantonio, Thomas, Etc., Pensacola, FL, for Robert White, Plaintiff.
Hillary Jacey Kaps, Rumberger, Kirk & Caldwell, Miami, FL, Scott Michael Sarason, Rumberger Kirk & Caldwell, Miami, FL, for Bombardier Corporation, Bombardier Inc., Bombardier-Rotax GMBH & Company KG, Destiny Aircraft Corporation, Destiny Powered Parachutes, Defendants.
ORDER
VINSON, Chief Judge.
Plaintiff Robert White brought this action in state court against the defendants, Bombardier Corporation; Bombardier, Inc.; Bombardier-Rotax GMBH & Co., K.G.;[1] Destiny Aircraft Corporation; and Destiny Powered Parachutes, LLC.[2] The Bombardier defendants removed the action to this court, and the plaintiff now moves to remand. (Doc. 6).
I. FACTUAL BACKGROUND
On February 10, 2003, the plaintiff filed this action in the Circuit Court for Escambia County, Florida, against defendants Bombardier Corporation; Bombardier, Inc.; Destiny Aircraft Corporation; and Destiny Powered Parachutes, LLC. Though Destiny Powered Parachutes, LLC, was clearly identified as a limited liability company, the complaint refers to Destiny Aircraft Corporation and Destiny Powered Parachutes, LLC collectively as "a Michigan Corporation conducting business at 1444 KDF Drive, Three Rivers, Michigan." The complaint further alleges that assertion of personal jurisdiction over the Destiny defendants by a Florida court is appropriate because "Destiny regularly *1297 places its products for sale in the stream of commerce which includes the state of Florida. Destiny also has authorized dealers, who sell and/or resell Destiny products, situated and located in Florida cities, such as the following: Dunellon; Jacksonville; Port Saint Lucie." The complaint alleges that Bombardier Corporation is a Vermont corporation conducting its business in Barre, Vermont, and that Bombardier, Inc., is a Canadian corporation conducting its business in Montreal, Quebec.
According to the complaint, at their plant in Michigan, the Destiny defendants were engaged in the manufacture, assembly, and distribution of "powered parachutes" or "powerchutes", which are mobile, propeller driven carts to which a parachute can be attached for the purpose of gaining altitude. Some time prior to November 15, 2000, Charles Smith, a former military pilot, purchased a two-seat powerchute from one of Destiny's authorized dealers in Nicholson, Georgia. On November 15, 2000, Smith invited the plaintiff to his home in Pensacola to help Smith in the maintenance of the powerchute engine. Smith and the plaintiff started the powerchute engine, which, because the engine has no clutch, also engaged the propeller. While the plaintiff was helping Smith start the engine, the cart began moving, ran over the plaintiff, and the propeller struck and severely injured him, rendering him permanently disabled. Count I of the complaint alleges common law negligence in the design and manufacture of the powerchute and engine. Count II alleges strict products liability. Count III alleges negligent failure to warn.
In February of 2001, because Smith had informed the plaintiff's attorney that he intended to repair the powerchute, the plaintiff's attorney's private investigator had taken custody of the powerchute to have it examined by a professional engineer. The plaintiff's attorney sent a letter by certified mail to Destiny Powered Parachutes inviting it to attend the inspection or to independently inspect the powerchute before it was repaired. The letter stated that, "In the very near future, we will be filing suit against your company for the severe injuries suffered by Mr. White as a result of the improper design of the Destiny Powerchute."[3] After he received the letter, a man named John Rivers from Destiny Powered Parachutes contacted the plaintiff's attorney, who referred the call to the private investigator. Rivers expressed uncertainty about whether the Destiny defendants would send an expert to examine the powerchute and identified an attorney in Michigan that handled the corporation's general business matters.
Summonses were issued on the complaint by the state court on February 11, 2003. The plaintiff's research of the state of Michigan's business records revealed, and the Bombardier defendants do not dispute, that John Rivers was the registered agent for both Destiny Aircraft Corporation and Destiny Powered Parachutes, LLC. The plaintiff's public records research indicated that 1444 KDF Drive, Three Rivers, Michigan, was the Destiny defendants' registered address, and the documents given to Smith about his Destiny Powerchute also indicate that the same address was their physical address. The plaintiff obtained the services of Bruce Morse, a deputy sheriff in St. Joseph County, Michigan, who is authorized to serve process under Michigan law, to serve the summons and complaint on Rivers at *1298 the "1444 KDF Drive" address in Three Rivers, Michigan. On February 24, 2003, Morse went to that address, found Rivers there, and personally served him. A signature that, though difficult to discern, appears to be that of Rivers acknowledges receipt of service on behalf of the Destiny defendants on the return of service which was executed by Morse and later filed with the state court in Florida. The Bombardier defendants do not dispute that Rivers was personally served at the 1444 KDF Drive address by Morse. However, they contend that the 1444 KDF Drive address could not possibly have been the Destiny defendants' registered address because, on February 24, 2003, another business, Alliant Aviation, LLC, occupied that address. The Bombardier defendants submit the affidavit of Robert Taylor, the manager of Alliant Aviation, LLC, who avers that neither of the Destiny defendants did business at the 1444 KDF Drive address on the date of service and that he believes that the Destiny defendants were no longer in business. The return of service for Bombardier Corporation was filed on March 4, 2003.
The Destiny defendants did not respond to the complaint. On May 13, 2003, the plaintiff filed a motion for entry of default against the Destiny defendants under Florida Rule of Civil Procedure 1.500(a), due to their failure to respond. The state court clerk entered a default. On October 2, 2003, Bombardier Corporation filed a request for admissions, asking the plaintiff to admit that his damages exceeded $75,000. After some degree of difficulty, the plaintiff eventually served Bombardier, Inc. Apparently before the return of service was filed, on October 24, 2003, the plaintiff filed an amended complaint, naming Bombardier-Rotax GMBH & Co., K.G., an Austrian corporation, as an additional defendant, though that defendant has still not been served. On November 14, 2003, the plaintiff responded to Bombardier Corporation's request for admissions, admitting that his damages exceeded $75,000. On December 12, 2003, Bombardier Corporation and Bombardier, Inc. filed a notice of removal, which was filed in state court on December 16, 2003. The action was removed to this court without the consent of the Destiny defendants, and the plaintiff now moves to remand.
II. DISCUSSION
A. Standard of Review
Any civil case filed in state court may be removed to federal court by the defendant if the case could have been brought originally in federal court. See 28 U.S.C. § 1441(a); Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987); B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir.1981). A removing defendant has the burden of establishing both federal jurisdiction and compliance with the procedures for removal, as a matter of fact and law. See Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir.2002); Perez v. AT & T Co., 139 F.3d 1368, 1373 (11th Cir.1998). In considering a motion to remand when a plaintiff and defendant disagree on issues of jurisdiction, statutes authorizing removal of actions to federal courts are to be strictly construed against removal and questions or doubts are to be resolved in favor of returning the matter to state court. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994); Russell Corp. v. Am. Home Assurance Co., 264 F.3d 1040, 1050 (11th Cir.2001); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th *1299 Cir.1994). The asserted federal jurisdiction in this case is based on diversity of citizenship under Title 28, United States Code, Section 1332. In order for a federal court to have jurisdiction over a case pursuant to the diversity statute, the amount in controversy must exceed $75,000, exclusive of costs and interest, and there must be complete diversity of citizenship. See 28 U.S.C. § 1332. There appears to be no dispute that this action satisfies the requirements of Section 1332. The parties are of diverse citizenship, and the plaintiff seeks damages in excess of $75,000. The only question concerns whether the Bombardier defendants needed to obtain the consent of the Destiny defendants to remove the action to this court.
B. The Rule of Unanimity
"[T]he law is well settled that in cases involving multiple defendants all defendants must consent to the removal of a case to federal court." Russell Corp., supra, 264 F.3d at 1049; In re Bethesda Mem'l Hosp., 123 F.3d 1407, 1410 (11th Cir.1997)("The failure to join all defendants in the petition is a defect in the removal procedure"). This judicially created rule is often referred to as the unanimity requirement. "Like all rules governing removal, [the] unanimity requirement must be strictly interpreted and enforced because of significant federalism concerns arising in the context of removal jurisdiction." Russell Corp., supra, 264 F.3d at 1044. To satisfy the unanimity requirement, each defendant must join in the removal by signing the notice of removal or by explicitly stating for itself its consent on the record, either orally or (preferably) in writing, within the thirty day time period prescribed in Title 28, United States Code Section 1446(b). Roe v. O'Donohue, 38 F.3d 298, 301 (7th Cir.1994); Diebel v. S.B. Trucking Co., 262 F. Supp. 2d 1319, 1328 (M.D.Fla.2003). Here, it is undisputed that the Destiny defendants did not, and have not, expressly consented to the Bombardier defendants' removal, though the thirty day time period for expressing such consent has long since passed.
It is incumbent upon a party desiring to effect removal to provide "a short and plain statement of the grounds for removal" in its notice of removal. 28 U.S.C. § 1446(a). A petition for removal filed by less than all of the named defendants "is considered defective if it fails to contain an explanation for the absence of co-defendants." Northern Illinois Gas Co. v. Airco Indus. Gases, 676 F.2d 270, 273 (7th Cir.1982).[4] Thus, a removing defendant who fails to obtain the consent of a codefendant must explain in its petition for removal why that consent was not obtained. Such an explanation may involve an analysis of why one of the non-consenting codefendants falls within one of the recognized exceptions to the unanimity requirement.
There are at least four recognized exceptions to the unanimity requirement for removing defendants who are not federal officers or agencies. A removing defendant need not obtain consent: (1) of a defendant who has not yet been served with process;[5] (2) of a formal or nominal *1300 defendant;[6] (3) of a defendant who has been fraudulently joined; and (4) where, as provided in Title 28, United States Code, Section 1441(c), the case involves at least one "separate and independent" claim asserting a federal question.[7] It is undisputed that defendant Bombardier-Rotax GMBH & Company, KG, had not been served prior to removal, and thus its consent was not required. The record plainly reveals that the Destiny defendants, as the parties who actually manufactured the powered parachute which injured the plaintiff, are not formal or nominal defendants. The Bombardier defendants do not argue that the Destiny defendants have been fraudulently joined. Instead, the Bombardier defendants stated in their petition for removal, and argue in their memorandum in opposition to the plaintiff's motion to remand, that the Destiny defendants were not properly served with process and that the state court lacked personal jurisdiction over the Destiny defendants.
1. Whether the Destiny Defendants were Properly Served
I construe the Bombardier defendants' service of process argument to be that the Destiny defendants fall under the first exception to the unanimity requirement. Although it is unclear whether a defendant must be properly served in order to necessitate its consent to removal, the Bombardier defendants' argument that effective service of process is necessary in order for a defendant's consent to be required is supported by the recent decision of the Supreme Court of the United States in Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 119 S. Ct. 1322, 143 L. Ed. 2d 448 (1999). In Murphy Brothers, Inc., the Supreme Court stressed the importance of formal service of process (or waiver by the defendant) to bring a named defendant under the power of the court issuing process and to require the defendant to take action in the case. Id. at 350, 119 S. Ct. 1322 ("Unless a named defendant agrees to waive service, the summons continues to function as the sine qua non directing an individual or entity to participate in a civil action or forgo procedural or substantive rights."). I agree with the Bombardier defendants that, in order for a defendant's consent to removal to be required, the defendant must have been properly served with process prior to the filing of the notice of removal.
The sufficiency of service of process prior to removal is determined under the law of the state from whence the case was removed. Norsyn, Inc. v. Desai, 351 F.3d 825, 829 (8th Cir.2003); Lee v. City of Beaumont, 12 F.3d 933, 936-37 (9th Cir.1993). The Bombardier defendants contend that service of process on Rivers was ineffective because Rivers was not served at the "registered" or "principal" office of the Destiny defendants. The Bombardier *1301 defendants do not, however, offer any proof that 1444 KDF Drive was not the registered office of the Destiny defendants on the date of service. The record is undisputed that, on the date of service and unbeknownst to the plaintiff, the Destiny defendants were no longer in business at the 1444 KDF Drive address. However, that does not mean that their registered address was not 1444 KDF Drive or that Rivers was not present at that address when served. Regardless of whether service of process on the Destiny defendants must comply with Michigan or Florida law, it appears that the Destiny defendants were properly served by serving their registered agent at the registered address.[8] The Bombardier defendants have failed to demonstrate that service on either of the Destiny defendants was insufficient.
2. Whether the State Court Had Personal Jurisdiction over the Destiny Defendants
The Bombardier defendants also contend that the consent of the Destiny defendants was not required because the plaintiffs insufficiently pled allegations of personal jurisdiction regarding the Destiny defendants, and thus (apparently) the state court had no personal jurisdiction over the Destiny defendants even though they were, as discussed above, properly served. The unanimity requirement may not be excused merely because a removing defendant posits that the state court from whence the case was removed lacked personal jurisdiction over a non-consenting codefendant.[9] There are good reasons such an exception has not been recognized. Lack of personal jurisdiction is a personal defense. In diversity cases, proper consideration a court's personal jurisdiction over a defendant involves (1) evaluation of the complaint to determine if it adequately alleges either the language of the state long arm statute or facts sufficient to bring the complaint within the purview of a provision of that statute, and (2) the fact intensive inquiry into whether a defendant has sufficient contacts with a forum to comport with due process such that the defendant might reasonably anticipate being haled into court there. Posner v. Essex Ins. Co., 178 F.3d 1209, 1214 (11th Cir.1999); Execu-Tech Bus. Sys. v. New Oji Paper Co., 752 So. 2d 582, 584 (Fla.2000); Venetian Salami Co. v. Parthenais, 554 So. 2d 499, 502 (Fla.1989).
Allowing a defendant to remove a case without the consent of a codefendant based on the removing defendant's interpretation of the jurisdictional allegations of a complaint would give the removing defendant a right to assert another defendant's personal defense without that defendant's consent. A removing defendant could conceivably determine for itself that a state court lacks personal jurisdiction over a non-consenting codefendant and remove a case against the will of a non-consenting codefendant, circumventing the unanimity requirement altogether. *1302 Where, as here, only the jurisdictional allegations in a pleading are attacked, more specific allegations could be made by pre-removal amendment. Pluess-Staufer Indus., Inc. v. Rollason Eng'g & Mfg., Inc., 597 So. 2d 957 (Fla. 5th DCA 1992) (remanding for district court to set aside default based on complaint with insufficient allegations and to permit plaintiff to file an amended complaint). Also, absent a showing that the non-consenting defendant was fraudulently joined or that consent could not be obtained through the exercise of reasonable diligence, adjudication of the factual issues in the personal jurisdiction inquiry would be inappropriate without the participation of the defendant whose contacts are being examined.
Further, the defense of lack of personal jurisdiction is waivable by a defendant, either expressly or through conduct. Fla. R. Civ. Proc. 1.140(b); PaineWebber, Inc. v. Chase Manhattan Private Bank (Switzerland), 260 F.3d 453, 461 (5th Cir.2001)("[T]he requirement of personal jurisdiction is a waivable right, [and] `there are a variety of legal arrangements by which a litigant may give express or implied consent to the personal jurisdiction of the court.'", quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, n. 14, 105 S. Ct. 2174, 85 L. Ed. 2d 528, 540 (1985)). It is possible (though maybe unlikely) that the Destiny defendants may subsequently, either expressly or impliedly, consent to litigating this case in Florida[10] in state court. "Removal, in and of itself, does not constitute a waiver of any right to object to lack of personal jurisdiction...." Nationwide Eng'g & Control Sys., Inc. v. Thomas, 837 F.2d 345, 347-48 (8th Cir.1988)(citing 5 C. Wright & A. Miller, Federal Practice and Procedure § 1395 but holding that a defendant's general appearance in state court by filing an answer and asserting affirmative defenses waived defense of lack of personal jurisdiction under state law); see also Silva v. City of Madison, 69 F.3d 1368 (7th Cir.1995)(removal did not obligate a defendant, who filed no other papers in state or federal court, to respond to complaint prior to proper service). If removing a case does not waive a defense of lack of personal jurisdiction, consenting to removal certainly does not, and the Destiny defendants would have suffered no prejudice to any defense by expressing their consent (or possibly objection) to removal and making a special appearance (in this court or the state court) to contest personal jurisdiction. I conclude that a removing defendant may not circumvent its obligation to obtain the consent of a codefendant by merely making a facial attack on the complaint's jurisdictional allegations as to the non-consenting codefendant.[11]
*1303 3. The State Court's Entry of Default against the Destiny Defendants
Although the Bombardier defendants have not expressly argued that the default entered against the Destiny defendants eliminated any need to obtain their consent, that occurrence does not necessarily, by itself, eliminate the consent requirement. My research has revealed no reported federal appellate court decision where a removing defendant has been excused from obtaining the consent of a codefendant who as been personally served, but against whom a default has been entered for failure to appear and answer the complaint. All of the other judicially recognized exceptions to the unanimity requirement that relate to a defendant's status involve named defendants who either have not been properly made a party to the action or who have been named fraudulently to defeat removal, and thus are not proper parties at all. As discussed above, neither is the case here. However, I can appreciate the difficulty, under certain circumstances, with obtaining the consent of a defaulted co-defendant, and for that reason this issue warrants further discussion.
Under Florida law (at least since 1984), the entry of default against a defendant by the clerk does not terminate a defendant's participation in a case. Even after the entry of default, the defaulting party may continue to file pleadings and papers with the court, but the clerk is required to notify the party of the entry of default. Fla. R. Civ. Proc. 1.500(c); In re Amendments to the Rules of Civil Procedure, 458 So. 2d 245, 255 (Fla.1984)("Amendments"). Allowing such post-default filing "enable[s] the court to judge the effect, if any, of the filing of the paper upon the default and the propriety of entering final judgment without notice to the party against whom the default was entered." Amendments, supra, 458 So.2d at 255. The merits of such post-default filings may not be considered by a state court without an indication of a basis for setting aside the default by showing: (1) excusable neglect, (2) a meritorious defense, and (3) due diligence in seeking relief. Johnson v. Johnson, 845 So. 2d 217, 220 (Fla. 2d DCA 2003); Smith v. Rheaume, 623 So. 2d 625, 626 (Fla. 5th DCA 1993). However, Florida courts liberally construe motions to set aside defaults because of the public policy favoring deciding actions on their merits. Johnson, supra, 845 So.2d at 220. A party in default admits the complaint's well pleaded factual allegations, but not the complaint's conclusions of law, and may appear and contest the amount of damages prior to the entry of a default judgment. Hospitality Ventures of Coral Springs, L.C. v. Amer. Arbitration Ass'n, Inc., 755 So. 2d 159, 160 (Fla. 4th DCA 2000); Days Inns Acquisition Corp. v. Hutchinson, 707 So. 2d 747, 749 (Fla. 4th DCA 1997). Where, as here, "an action involves unliquidated damages, a party against whom a default has been entered is entitled to notice of an order setting the matter for trial, and must be afforded an opportunity to defend." Pierce v. Anglin, 721 So. 2d 781, 783 (Fla. 1st DCA 1998); see also Fiera.com, Inc. v. DigiCast New Media Group, Inc., 837 So. 2d 451, 452 (Fla. 3d DCA 2002).
I conclude that, consistent with a strict interpretation of the removal statutes in *1304 favor of remand, it is possible under some circumstances for the unanimity requirement to be excused with respect to a defaulted defendant who has not appeared. However, in order to excuse such consent, the removing defendant must allege with specificity in its petition for removal,[12] and prove upon challenge by a timely motion to remand, that the removing defendant has unsuccessfully exhausted all reasonable efforts to locate the defaulted defendant to obtain its consent. Conclusory allegations in an affidavit are insufficient. Instead, to sustain its burden on removal, the removing defendant must describe what efforts it took and those efforts must be consistent with the exercise of reasonable diligence, similar to that necessary for a plaintiff to establish a basis for substitute service. See, e.g., Chapman v. Sheffield, 750 So. 2d 140, 143 (Fla. 1st DCA 2000); Linn v. Kidd, 714 So. 2d 1185, 1188 (Fla. 1st DCA 1998); Cross v. Kalina, 681 So. 2d 855, 856 (Fla. 5th DCA 1996).
Here, the Destiny defendants were still a part of this action, despite the entry of default against them for their failure to answer the complaint. The Destiny defendants could have filed a consent to removal in the state court even after the entry of default without waiving any challenge to personal jurisdiction. In this case, the registered agent of the Destiny defendants was personally served by the plaintiff, and the Bombardier defendants have made no showing that they have made any effort to contact the Destiny defendants to obtain their consent, though the Bombardier defendants have plainly had contact with the Destiny defendants' successor at the Destiny defendants' former place of business. Absent a showing by the Bombardier defendants that, despite the exercise of reasonable diligence, the Destiny defendants could not be located to obtain their consent to removal, such consent remained required, despite the entry of default against the Destiny defendants. However, in the interests of justice, I will afford the Bombardier defendants an opportunity to make such a showing.
III. CONCLUSION
Within fourteen (14) days, the Bombardier defendants are granted leave to file with this court any evidentiary materials and argument in support of their unsuccessful exhaustion of reasonable efforts to locate and obtain the consent of the Destiny defendants, in lieu of which this action shall be remanded to state court. Within fourteen (14) days after the Bombardier defendants' filings, the plaintiff may file a response.
ORDER
The Bombardier defendants have failed to timely file any materials demonstrating their effort to obtain the consent of the Destiny Defendants. Therefore, for the reasons stated in my order of March 19, 2004, their removal was procedurally defective, and the plaintiff's motion to remand (doc. 6) is GRANTED. This action is REMANDED to the Circuit Court for Escambia County, Florida. However, because a reasonable basis existed for the Bombardier defendants' removal, the plaintiff's request for costs and fees is DENIED.
NOTES
[1] For the sake of simplicity, I refer to Bombardier Corporation and Bombardier, Inc. collectively as the "Bombardier defendants." Bombardier-Rotax GMBH & Co., K.G., has not yet been served.
[2] I refer to Destiny Aircraft Corporation and Destiny Powered Parachutes, LLC collectively as the "Destiny defendants." I assume for purposes of this order, based on the affidavits of the parties, that Destiny Aircraft Corporation actually exists or existed. All of the other evidence in the record refers to Destiny Powered Parachutes, LLC.
[3] The letter was apparently sent to 1444 KDF Drive, Three Rivers, Michigan.
[4] Of course, a removal petition may be freely amended within the thirty day period specified in Title 28, United States Code, Section 1446(b). Northern Illinois Gas Co. v. Airco Indus. Gases, 676 F.2d 270, 273 (7th Cir.1982).
[5] Salveson v. Western States Bankcard Ass'n, 731 F.2d 1423, 1429 (9th Cir.1984); P.P. Farmers' Elevator Co. v. Farmers Elevator Mut. Ins. Co., 395 F.2d 546, 547-48 (7th Cir.1968).
[6] Tri-Cities Newspapers, Inc. v. Tri-Cities Printing Pressmen & Assistants' Local 349, 427 F.2d 325, 327 (5th Cir.1970); Diebel v. S.B. Trucking Co., 262 F. Supp. 2d 1319, 1329 (M.D.Fla.2003); BLACK'S LAW DICTIONARY 1145 (7th deluxe ed. 1999)(A nominal party is "a party who, having some interest in the subject matter of a lawsuit, will not be affected by any judgment but is nonetheless joined in the lawsuit to avoid procedural defects.").
[7] Henry v. Indep., Amer. Sav. Ass'n, 857 F.2d 995, 999 (5th Cir.1988).
[8] Both Florida and Michigan law permit effective service upon a corporation's or limited liability company's registered agent at the registered address. §§ 48.081(3), 608. 463(1), Fla. Stat. (2003); §§ 450.4207(2), 600.1920(1), Mich, Comp. Laws (2003).
[9] Of course, were the jurisdictional allegations and forum contacts regarding a codefendant so tenuous such that no forum state court could exercise personal jurisdiction over the codefendant, the removing defendant could possibly argue that the non-consenting codefendant was fraudulently joined. However, the Bombardier defendants do not argue that the Destiny defendants were fraudulently joined.
[10] Ironically, I note that, for the relevant analysis in this diversity case, this court's jurisdiction over the Destiny defendants is coterminous with that of the Florida courts. Meier ex. rel. Meier v. Sun Int'l Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir.2002); Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 917-19 (11th Cir.1989). Thus, were the Bombardier defendants' argument accepted, this court, too, would lack jurisdiction over the Destiny defendants.
[11] Although I need not decide the issue, the plaintiff's complaint appears to allege facts which bring it within the purview of Section 48.193(1)(f)(2), Florida Statutes (2003), which specifically applies to products liability actions like this case. See Davis v. Pyrofax Gas Corp., 492 So. 2d 1044, 1046 (Fla.1986); Wetzel v. Fisherman's Wharf of Pompano Beach, Inc., 771 So. 2d 1195, 1198 (Fla. 4th DCA 2000)("A defendant's connection to Florida making it amenable to suit under the long-arm statute is established by the defendant's `business activities in Florida' and not by focusing solely on how the product causing the injury entered the state."). The complaint alleges that, during Smith's maintenance of the powerchute in Florida, personal injuries were caused to the plaintiff in Florida by the Destiny defendants' negligent and/or defective design and manufacture of the powerchute in Michigan, and that at that time the Destiny defendants sold their products in Florida through their authorized dealers.
[12] A requirement which I will excuse here due to the novelty of the issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1687815/ | 846 F. Supp. 798 (1994)
Sondra L. ENGLAND, Plaintiff,
v.
JOHN ALDEN LIFE INSURANCE CO., Defendant.
No. 93-0084-CV-W-2.
United States District Court, W.D. Missouri, W.D.
January 21, 1994.
*799 William G. Cownie, II, Collins & Cownie, Lee's Summit, MO, for plaintiff.
Keith A. Rabenberg, Gerald A. King, Armstrong, Teasdale, Schlafly & Davis, St. Louis, MO, for defendant.
ORDER
GAITAN, District Judge.
I. INTRODUCTION
In the above titled action, plaintiff brings a claim for health care payments under an Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461, benefits plan. Plaintiffs husband, Earl Darling, was covered by a group health insurance plan issued by the defendant to Mr. Darling's employer. Coverage under this plan became effective on September 1, 1990.
In late 1990, Mr. Darling was diagnosed as having vascular disease and in 1991 underwent surgery twice for this condition. On both occasions his admission to the hospital was pre-certified in accordance with the health insurance plan. Defendant denied coverage for Mr. Darling's surgeries on the basis that his vascular disease was a preexisting condition.
*800 Mr. Darling died of a brain hemorrhage on June 21, 1991. Plaintiff brings this claim as the personal representative of Darling's estate. Pending before the court is plaintiff's motion for summary judgment and defendant's cross-motion for summary judgment.
II. STANDARD FOR SUMMARY JUDGMENT
Rule 56(c) of the Federal Rules of Civil Procedure permits summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."
The key to determining whether summary judgment is proper is ascertaining whether there exists a genuine issue of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). A genuine issue of material fact exists if: (1) there is a dispute of fact; (2) the disputed fact is material to the outcome of the case; and (3) the dispute is genuine, that is, a reasonable jury could return a verdict for either party. The party moving for summary judgment has the burden of proving that these requirements for summary judgment have been met. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608, 26 L. Ed. 2d 142 (1970).
In a summary judgment analysis, a court must first consider whether there are any issues of fact. If the only issues are issues of law, then summary judgment is appropriate. Sheline v. Dun & Bradstreet, 948 F.2d 174, 176 (5th Cir.1991).
If issues of fact are raised, a court must consider whether these issues are material to the outcome of the case. Materiality is identified by the substantive law that is to be applied. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. Factual disputes that are collateral to the substantive law will not preclude summary judgment. See id.
In addition to the requirement that a dispute of fact be material, the dispute must also be genuine. A dispute of fact is considered genuine if the non-moving party has produced sufficient evidence such that a reasonable jury could return a verdict for that party. Id. at 249, 106 S.Ct. at 2510. When considering a motion for summary judgment, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor. Id. at 255, 106 S.Ct. at 2513. If the evidence submitted by the non-moving party is merely colorable or is not significantly probative, then summary judgement may be granted. Id. at 249-50, 106 S.Ct. at 2510-11.
Where the party moving for summary judgment does not bear the burden of proof at trial, that party must show "that there is an absence of evidence to support the non-moving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 2554, 91 L. Ed. 2d 265 (1986). This burden is met when the moving party identifies portions of the record demonstrating an absence of a genuine issue of material fact. Id. at 323, 106 S.Ct. at 2552. If the moving party meets the requirement, the burden shifts to the non-moving party who "must set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. The trial judge then determines whether a trial is needed. "[W]hether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. at 2511.
III. ANALYSIS
A. Undisputed Facts
The facts in this case are undisputed. Earl Darling's coverage under the health insurance plan issued by defendant began on September 1, 1990. In November 1990, Mr. Darling saw his personal physician, Robert Cooper with complaints of claudication[1] which he referred to as a "charley horse" in his leg. Cooper referred Mr. Darling to a vascular surgeon, Charles Barbee, who diagnosed his condition as vascular disease.
*801 In January and April 1991, Mr. Darling underwent surgery for his vascular disease. Both hospital admissions were certified by the defendant as required by the health insurance plan. In preparation for the January surgery, Dr. James Nanson, in his consultation notes wrote that Mr. Darling's claudication had begun nine months before. Because Mr. Darling's health insurance coverage under defendant's policy began on September 1, 1990, the first signs of claudication began prior to the effective date of the policy. Based on Nanson's notation regarding Mr. Darling's claudication symptoms, defendant denied coverage for Mr. Darling's surgeries due to a pre-existing condition limitation in the health insurance policy. The pre-existing condition limitation stated as follows:
A pre-existing condition is any illness or injury for which you received any diagnosis, medical advice or treatment or had taken any prescribed drug, or where distinct symptoms were evident, during the 12 months just before the effective date of your Major Medical coverage. Covered Medical Charges do not include any charges incurred in connection with a pre-existing condition, except those charges incurred after:
1. you have been insured for Major Medical coverage under this plan for 12 months in a row; or
2. you have had no medical advice, care or treatment, have had no distinct symptoms, and taken no prescribed drugs, for that condition for a period of 6 months in a row while insured for Major Medical coverage under this plan.
Because of the absence of a genuine dispute of material facts summary judgment is appropriate in this case. Therefore, the court will proceed to examine the arguments in support of plaintiff's motion for summary judgment and defendant's cross-motion for summary judgment.
B. Standard of Review for Denial of Benefits
This case involves a denial of benefits under an ERISA benefit plan. Consequently, this court may review the decision to deny benefits under a de novo standard of review. Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 956, 103 L. Ed. 2d 80 (1989).
C. Plaintiff's Motion for Summary Judgment
Based on the foregoing facts, plaintiff sets forth five arguments for why summary judgment should be granted in her favor.
1. Trust Law
Plaintiff correctly states that principles of trust law are incorporated into ERISA. See Firestone, 489 U.S. at 111, 109 S.Ct. at 954. Plaintiff appears to argue that, pursuant to trust law principles, defendant breached its fiduciary duty to Mr. Darling by twice certifying his admission to the hospital and then denying coverage for charges incurred for these hospitalizations.
The court finds this argument unpersuasive. The pre-certification notices sent to Mr. Darling prior to both hospitalizations clearly state:
This certification does not guarantee payment of benefits under your John Alden Life group insurance plan. Benefits are subject to all terms and provisions as described in your certificate of group insurance.
Mr. Darling was notified that pre-certification did not guarantee that benefits would be paid. Consequently, plaintiff's claim that an alleged fiduciary duty was breached by defendant must fail.
2. Waiver and Estoppel
Plaintiff contends that defendant's failure to make prompt claim decisions prevented Mr. Darling from seeking alternative care at a less expensive facility. Plaintiff claims that defendant should be estopped from denying coverage of Mr. Darling's hospitalization costs because defendant did not refuse coverage until after the hospitalization.
Defendant asserts that a claim of estoppel and waiver must be denied because to allow such a claim would modify the written terms of the certificate of insurance, *802 which is not allowed under ERISA. While the circuits are divided on the issue of whether principles of equitable estoppel may be applied to an ERISA claim, the Eighth Circuit has not yet decided this issue. Slice v. Norway, 978 F.2d 1045, 1047 (8th Cir.1992). District courts within the Eighth Circuit, however, have been willing to recognize estoppel claims for benefits under employer welfare plans (i.e. health insurance policies). See, e.g., Coonce v. Aetna Life Ins. Co., 777 F. Supp. 759, 770-71 (W.D.Mo.1991).
Plaintiff's claim regards benefits under an employer welfare plan. Even if an estoppel claim is allowable in this case, plaintiff has not established the elements necessary for an estoppel claim. One element of equitable estoppel is a misstatement of a material fact. Id. at 772 n. 12. Plaintiff bases this estoppel claim on the fact that defendant failed to make prompt claim decisions. This contention cannot support an estoppel claim because there was no misstatement by the defendant that Mr. Darling's hospitalization would be covered under the insurance policy. Thus, plaintiff's motion for summary judgment based on a theory of equitable estoppel must be denied.
3. The Relationship Between the Certification Clause and the Pre-Existing Illness Clause
Plaintiff argues that the only way to give effect to both the certification clause and the pre-existing illness clause in the insurance policy issued by defendant is to find that the pre-existing illness clause does not apply in cases where certification is granted. Plaintiff, thus, contends that because Mr. Darling's hospitalization was pre-certified, defendant is denied from invoking the pre-existing illness clause.
The court finds this interpretation of the policy unpersuasive. As stated in the pre-certification notices sent to Mr. Darling on December 29, 1990 and May 2, 1991, the purpose of pre-certification was to insure that hospitalization was medically necessary. The pre-existing illness clause, on the other hand, was a substantive provision of the policy which precluded coverage under certain conditions. The two clauses are compatible in that coverage applied when a hospitalization was certified as medically necessary and when it did not involve a pre-existing illness. The court finds that the two clauses are not mutually exclusive and rejects plaintiff's interpretation of the policy.
4. Public Policy
Plaintiff contends that defendant's pre-existing illness clause is contrary to the public policy of ERISA. Plaintiff cites no case law to support this argument. Moreover, the court, through its own research, has failed to find any cases in which a pre-existing illness clause was found to be contrary to the policy of ERISA. In fact, a similar clause was given force and effect by the Eighth Circuit in an ERISA claim. See Kirk v. Provident Life and Accident Ins. Co., 942 F.2d 504, 506 (8th Cir.1991). Plaintiff's motion for summary judgment based on the theory that defendant's pre-existing illness clause is contrary to the policy of ERISA is, therefore, denied.
5. Mo.Rev.Stat. § 376.426(5)
Plaintiff states that Mo.Rev.Stat. § 376.426(5) limits application of pre-existing illness clauses to "a disease or physical condition for which medical advice or treatment was received by the person during the twelve months prior to the effective date of the person's coverage." Plaintiff contends that because Mr. Darling did not receive medical advice or treatment for his vascular disease within twelve months preceding his coverage under the insurance policy, pursuant to section 376.426(5), the defendant cannot deny benefits.
Section 376.426(5) applies to group health insurance policies "delivered in this state." Defendant has submitted the affidavit of Joseph Radigan, Senior Area Vice President of defendant, stating that the group policy under which Mr. Darling was insured was issued through a trust located in Memphis, Tennessee. Plaintiff has not refuted this affidavit. Defendant states *803 that because the policy was "delivered" in Tennessee, Missouri law does not apply and, consequently, section 376.426(5) does not apply.
In Nash by Nash v. Krivaja Beechbrook Corp., 866 F.2d 1053 (8th Cir.1989), the Eighth Circuit interpreted a similar Missouri statute under circumstances similar to this case. In Nash, a policy was issued to an employer through a trust located in Washington, D.C. Id. at 1056. The Eighth Circuit upheld the district court's findings that a Missouri statute which applied to policies "delivered or issued for delivery" in Missouri did not apply because the policy was issued in Washington, D.C. Id. The Nash decision supports defendant's claim that Mo.Rev.Stat. § 376.426(5) does not apply to the policy at issue in this case. Therefore, plaintiff's motion for summary judgment based on Mo.Rev.Stat. § 376.426(5) must be denied.
D. Defendant's Cross-Motion for Summary Judgment
Defendant's argument for summary judgment can be outlined as follows. Mr. Darling suffered from claudication prior to the effective date of his coverage under the insurance policy issued by defendant. The policy excluded coverage for any illness in which distinct symptoms were evident during the twelve months prior to the effective date. Defendant has submitted expert depositions stating that claudication is a distinct symptom of the vascular disease suffered by Mr. Darling. Therefore, defendant contends that denial of benefits for Mr. Darling's hospitalization due to his vascular disease was appropriate and summary judgment should be granted in favor of defendant.
Plaintiff has failed to establish any dispute of material facts in this case. Plaintiff has failed to dispute that Mr. Darling complained of claudication prior to the effective date of the policy or that claudication is a distinct symptom of vascular disease. While plaintiff argues that Mr. Darling did not know of his illness prior to the effective date of the insurance policy, this is not a material fact. The pre-existing illness provision of the policy defined a pre-existing illness as any illness or injury for which the insured had "received any diagnosis, medical advice or treatment or had taken any prescribed drug, or where distinct symptoms were evident." Knowledge of the illness or injury was not a necessary element for a pre-existing illness under the policy. Consequently, Mr. Darling's lack of knowledge regarding his illness is irrelevant to the facts of this case.
Plaintiff also opposes defendant's motion for summary judgment by restating the arguments made in support of her motion for summary judgment. These arguments were addressed in the discussion of plaintiff's motion for summary judgment and were found to be ineffective.
The court finds, based on the undisputed facts, that Mr. Darling suffered from a distinct symptom of his vascular disease prior to the effective date of his policy. Thus, the denial of benefits by the defendant was appropriate under the pre-existing illness clause of Mr. Darling's health insurance policy. Furthermore, the Eighth Circuit has upheld the denial of insurance benefits under similar circumstances based on similar pre-existing illness clauses. See Kirk, 942 F.2d at 505-06. Consequently, defendant's motion for summary judgment is granted.
Accordingly, it is ORDERED that:
(1) plaintiff's motion for summary judgment is DENIED;
(2) defendant's cross-motion for summary judgment is GRANTED.
JUDGMENT IN A CIVIL CASE
____ Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict.
x Decision by Court. This action came before the Court. The issues have been determined and a decision has been rendered.
*804 IT IS ORDERED AND ADJUDGED
that plaintiff's motion for summary judgment is DENIED.
that defendant's cross-motion for summary judgment is GRANTED.
NOTES
[1] Claudication is the medical term for muscle pain, usually in the legs, brought on by exertion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1748449/ | 163 F. Supp. 13 (1958)
John AARON et al., Plaintiffs,
v.
William G. COOPER et al., Members of the Board of Directors of the Little Rock, Arkansas Independent School District, and Virgil T. Blossom, Superintendent of Schools, Defendants.
No. 3113.
United States District Court E. D. Arkansas, W. D.
June 20, 1958.
On Motion for Supersedeas June 23, 1958.
*14 Thurgood Marshall, New York City, Wiley A. Branton, Pine Bluff, Ark., and U. Simpson Tate, Dallas, Tex., for plaintiffs-respondents.
A. F. House and R. C. Butler, Little Rock, Ark., for defendants-petitioners.
On Plaintiffs' Motion for Supersedeas June 23, 1958.
LEMLEY, District Judge.
This cause is now before the Court upon the petition of the defendants, members of the School Board of Little Rock, Arkansas, and the Superintendent of Schools, for an order permitting them to suspend until January, 1961, the operation of the plan of gradual racial integration in the Little Rock public schools, which plan was adopted by the Board in 1955, and was approved by the Court in 1956, the Court of Appeals affirming. Aaron v. Cooper, D.C.Ark., 143 F. Supp. 855, affirmed 8 Cir., 243 F.2d 361. This petition has been tried to the Court and the Court having considered the pleadings, briefs and evidence, and being well and fully advised, doth file this memorandum opinion, incorporating herein its findings of fact and conclusions of law.
In order that the issues tendered by the Board's petition may be intelligently understood, a brief history of this litigation is desirable:
Prior to the decisions of the Supreme Court of the United States in the Brown cases (Brown v. Board of Education, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873, and 349 U.S. 294, 75 S. Ct. 753, 99 L.Ed. *15 1083) the public school system in Little Rock, like all other public school systems in the State of Arkansas, was operated on a racially segregated basis. A few days after the first Brown decision was rendered the Board announced that it was commencing studies looking toward the establishment of an integrated school system; and in 1955, a few days prior to the rendition of the second Brown decision, the Board announced a plan of gradual integration extending over a period of years, the plan to go into operation with respect to the high school grades at the commencement of the 1957-58 school year.[1]
Thereafter, the plaintiffs in this case, who are Negro children of school age residing within the Little Rock School District, commenced a class action against the members of the Board and the Superintendent of Schools attacking the plan. The case was tried by Judge John E. Miller of Ft. Smith, who was sitting in the Eastern District of Arkansas under a special assignment. As indicated, the plan was approved, and the Court dismissed the prayer of the complaint for declaratory and injunctive relief, and retained jurisdiction of the case for the purpose of entering such other and further orders as might be necessary to obtain the plan's effectuation.[2]
At the time the plan was adopted, the Board recognized that the vast majority of the people of Little Rock was opposed to integration, but it was felt by the Board that the plan would be acceptable as the best one obtainable under the circumstances, and that it would be workable if put into operation in September, 1957. As time went on, however, opposition to integration increased in intensity not only in Little Rock but throughout the State as a whole, as is shown by the fact that in the general election in November, 1956, the people of the State by substantial majorities adopted: (a) Amendment No. 44 to the Arkansas Constitution of 1874, which amendment directed the Arkansas Legislature to take appropriate action and pass laws opposing "in every Constitutional manner" the decisions of the Supreme Court in the Brown cases; (b) A resolution of interposition which, among other things, called upon the people of the United States and the governments of all of the separate states to join the people of Arkansas in securing the adoption of an amendment to the Constitution of the United States, which would provide that the powers of the federal government should not be construed to extend to the regulation of the public schools of any state, or to include a prohibition to any state to provide for the maintenance of racially separate but substantially equal public schools within such state; (c) A pupil assignment law dealing with the assignment of individual pupils to individual public schools.
And the 61st General Assembly, which met in January, 1957, passed four statutes, one of which established a State Sovereignty Commission; another of which relieved school children of compulsory attendance in racially mixed public schools; the third of which required certain persons and organizations engaged in certain activities, including those affecting integration, to register with and make periodic reports to the State Sovereignty Commission; and the fourth of which authorized local school boards to expend district funds in employing counsel to assist them in the solution of problems arising out of integration.
In August, 1957, Mrs. Clyde Thomason, a white person, filed a suit against the Board and the Superintendent in the *16 Chancery Court of Pulaski County, the purpose of which suit was to enjoin them from putting the plan into operation; that suit was based, in part at least, upon the legislation heretofore mentioned. A hearing was held before the Chancellor, and on August 29, 1957, a temporary restraining order was issued. At that time Judge Ronald N. Davies of Fargo, North Dakota, was sitting in the Eastern District of Arkansas under special assignment, and on August 30, upon the application of the Board in this cause, he enjoined further proceedings by the plaintiff in the state court litigation. His decision was appealed, and he was affirmed. Thomason v. Cooper, supra.
The 1957-58 school year was due to commence on September 3, 1957, and the Board had arranged to enroll nine Negro students in the formerly all-white Central High School pursuant to the plan. On the night of September 2, however, the Governor of the State of Arkansas announced that in the interest of preserving the public peace and tranquility he had called out units of the Arkansas National Guard and had directed that the white schools be placed "off limits" to Negro students, and that the Negro schools be placed "off limits" to white students. The Board, learning of the Governor's action, requested the nine Negro students not to attempt to enter the school the following day, and on the morning of September 3 the Board applied to Judge Davies for instructions. As a result of that application Judge Davies entered an order on the same day directing the Board to put its plan of integration into operation "forthwith."
On September 4 the Negro students attempted to enter the school but were turned away by the national guardsmen. The next day the Board filed a petition for a temporary suspension of the operation of the plan, which petition upon a hearing by Judge Davies was denied.
On September 9, 1957, Judge Davies entered an order inviting the Government to come into the case as amicus curiae and to commence injunction proceedings against the Governor and his subordinates "to prevent the existing interferences with and obstructions to the carrying out of the orders heretofore entered by this Court in this case." Thereupon the Government intervened, and after a hearing held on September 20, a preliminary injunction was entered restraining the Governor, the Adjutant General of the State of Arkansas, and the Unit Commander of the guardsmen on duty from "(a) obstructing or preventing, by means of the Arkansas National Guard; or otherwise, Negro students eligible under said plan of school integration to attend the Little Rock Central High School, from attending said school or (b) from threatening or coercing said students not to attend said school or (c) from obstructing or interfering in any way with the carrying out and effectuation of this Court's orders of August 28, 1956 and September 3, 1957, in this case, or (d) from otherwise obstructing or interfering with the constitutional right of said Negro children to attend said school." See Aaron v. Cooper, D.C.Ark., 156 F. Supp. 220.
The Governor obeyed the order entering the temporary injunction just mentioned, while at the same time prosecuting an appeal therefrom, and withdrew the national guardsmen. Judge Davies' decision in question was affirmed by the Court of Appeals on April 28 of the current year. Faubus v. United States, 8 Cir., 254 F.2d 797. On Monday, September 23, the Negro students entered Central High School under the protection of the police department of the City of Little Rock and of certain members of the Arkansas State Police. A large and demonstrating crowd, however, had gathered around Central High School, which crowd the officers on duty could hardly control, and they advised the Superintendent to remove the Negro children from the school which was done.
A short time later the Negro students were readmitted to the school under the protection of combat troops of the regular United States Army which the *17 President sent into Little Rock for that purpose, and eight of these students remained enrolled for the balance of the school year which closed on May 28, 1958. During the entire school year the grounds and interior of Central High School were patrolled first by regular army troops and later by federalized national guardsmen.
The petition for a stay with which we are concerned was originally filed by the Board on February 20, 1958; that pleading, reduced to essentials, alleged that federalized national guardsmen were on duty at the school and were preventing interference with the attendance of the Negro students, that a small group of students with the encouragement of certain adults had created almost daily incidents making it difficult for pupils to learn and teachers to teach, that there existed unrest among students, parents and teachers which likewise made it difficult for the school district to maintain a satisfactory educational program, and that educational standards were being impaired. The prayer of the original petition was that "the plan of integration heretofore ordered by this Court be realistically reconsidered in the light of existing conditions and that in the interest of all pupils the beginning date of integration be postponed until such time as the concept of `all deliberate speed' can be clearly defined and effective legal procedures can be obtained which will enable the District to integrate without impairment of the quality of education it is capable of providing under normal conditions." On February 25, 1958, the plaintiffs filed a motion to dismiss the petition on the ground that it stated no claim upon which relief could be granted, and on the further ground that it stated no claim for relief from a judgment or order cognizable under Rule 60(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A.
Although this case had never been on our docket, due to the fact that at the time there was no other judge regularly commissioned in the Eastern District of Arkansas, and in view of the public interest involved in the Board's petition, the Honorable Archibald K. Gardner, Chief Judge of the Court of Appeals for this Circuit, on April 18, 1958, designated us to hear and determine the issues presented by the petition, "and to do such work as may be necessary and incidental to acting upon said petition." This special assignment was made to run from April 21, 1958, to September 1, 1958, both dates inclusive.
On April 28, 1958, we held a preliminary proceeding in this matter, in the course of which we read a prepared statement, which, among other things, directed that the original petition be amended so as to disclose whether the Board desired time to reconsider the plan, or whether it simply wanted a "moratorium" or a "cooling off period," and also so as to give a reasonable indication of how long a postponement the Board felt that it needed at this time.
Subsequently, the Board filed a substituted petition containing allegations more or less similar to those of its original pleading, and praying that a stay be granted until January, 1961. In that connection, it was alleged: "Petitioners cannot with certainty determine how long operations under the plan should be postponed, but in the light of existing conditions hereinabove mentioned and in the light of conditions as they will probably exist in the foreseeable future, they are of the opinion that a suspension of operations under the plan until January, 1961 is reasonable and advisable."
The plaintiffs filed a response to the substituted petition wherein they renewed their motion to dismiss, on which motion ruling had been reserved at the preliminary proceeding above referred to, and in which they denied that the Board is entitled to the relief sought. In addition, on behalf of the Negro students admitted to the school in September, 1957, it was alleged that their rights to finish their high school education in Central High School have become vested, and that "defendants are without right at law or equity to frustrate said vested rights in this or any other proceeding."
*18 When this matter was called for trial on the morning of June 3, the Board, without objection on the part of the plaintiffs, filed an amendment to the substituted petition alleging more definitely the respects in which it contends that the educational program at Central High School has been impaired due to the alleged situation at Little Rock. It is said in the amendment that the educational program has suffered and will continue to suffer; that the Board has had to divert funds in an attempt to solve the problems with which it has been faced, which funds would otherwise have been used for normal educational purposes such as teachers' salaries, plant maintenance and new construction; that under the conditions that existed at Central High School during the school year just past, and under the conditions likely to exist in the foreseeable future, both the Negro and the white students have suffered and will continue to suffer unless the requested delay is granted; and that the problems caused by operation under the court orders that have been mentioned have taken and will continue to take "an undue amount of time, talent and energy of school personnel, all of which has been and will continue to be a severe strain on said personnel, and which has prevented and will continue to prevent said personnel from performing many of their regular duties."
While the plaintiffs have not filed any formal pleading directed at the amendment to the substituted petition, we shall treat the amendment as traversed, and will also consider that the plaintiffs' motion to dismiss extends to the same, as well as to the other pleadings filed by the Board.
It is the theory of the Board, reflected in its pleadings, evidence and briefs, that the plan of integration which it adopted in 1955, upon the assumption that it would be acceptable and workable, has broken down under the pressure of public opposition, which opposition has manifested itself in a number of ways hereinafter mentioned, and that as a result the educational program at Central High School has been seriously impaired, that there will be no change in conditions between now and the time that school opens again in September, 1958, and that if the prayer for relief is not granted the situation with which the Board will be confronted in September will be as bad as, if not worse than the one under which it has labored during the past school year, and that it is in the public interest that the requested delay be granted.
While the plaintiffs deny, at least formally, that the educational standards at Central High School have been impaired, it seems to us that their fundamental position is, that even if it be assumed that everything that the Board alleges is true from a factual standpoint, nevertheless the Board's difficulties stem entirely from popular disagreement with the principle of integration, which disagreement does not form a proper legal basis for permitting the Board to postpone the operation of its plan. This contention is summarized in the plaintiffs' pre-trial brief in the following language: "The defendants' case for suspension of the injunctions is predicated upon problems allegedly created by community oppositions to continued nonsegregation at Central High School. Such an approach is without legal foundation."
In addition, the plaintiffs contend that the Board does not actually stand in need of any relief. As touching the situation inside the school, they urge that the Board could have solved its problems during the year just past had it taken a firmer disciplinary stand, and that if such a stand is taken this fall the problems can still be solved; and they contend still further that if a stay should be granted it will be more difficult to put the plan back into effect in 1961 than it would be for the Board to persevere with it this coming year. With regard to the situation outside the school, the plaintiffs argue that the Board's proper remedy is the commencement of criminal proceedings or the seeking of injunctive relief against the persons responsible for the disorders.
*19 Those conflicting theories present two basic questions for our decision, namely, whether or not this Court, sitting as a court of equity, has the power to grant the relief sought, and, if so, whether or not the Board has made a showing sufficient to justify the granting of that relief. In that connection we might call attention to the fact that in the prepared statement that we read at the preliminary proceeding held on April 28 we took occasion to say, among other things: "* * * let me make it clear that if the Board makes a case for relief under the law and the evidence, then appropriate relief will be granted. But, on the other hand, if the Board fails to make a case, either from a legal or a factual standpoint, its petition will have to be denied."
As to the first question, there can be no doubt that this Court has "jurisdiction," in the sense of "power to act," to grant the relief sought. Such power is to be found in Rule 60(b) (5) and (6) authorizing a federal court to grant relief from a judgment when it is no longer equitable for the same to have prospective application, or for "any other reason justifying relief from the operation of the judgment"; and in their response to the substituted petition the plaintiffs admit: "* * * that Rule 60(b) (5) and (6) empowers the Court to grant, upon such terms as are just, relief from a judgment or order."
Aside from Rule 60(b), jurisdiction to grant relief here may be predicated upon the inherent power of a court of equity with respect to its injunctive decrees. United States v. Swift & Co., 286 U.S. 106, 114-115, 52 S. Ct. 460, 76 L. Ed. 999; United States v. Little Rock Packing Co., D.C.Ark., 104 F. Supp. 527; Tobin v. Little Rock Packing Co., affirmed 8 Cir., 202 F.2d 234, certiorari denied 346 U.S. 832, 74 S. Ct. 26, 98 L. Ed. 355. And, more cogently, the existence of such jurisdiction in a case of this kind appears to have been specifically recognized in the second Brown opinion wherein it was said:
"In fashioning and effectuating the decrees, the courts will be guided by equitable principles. Traditionally, equity has been characterized by a practical flexibility in shaping its remedies and by a facility for adjusting and reconciling public and private needs. These cases call for the exercise of these traditional attributes of equity power. At stake is the personal interest of the plaintiffs in admission to public schools as soon as practicable on a nondiscriminatory basis. To effectuate this interest may call, for elimination of a variety of obstacles in making the transition to school systems operated in accordance with the constitutional principles set forth in our May 17, 1954, decision. [Brown v. Board of Education, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873; Bolling v. Sharpe, 347 U.S. 497, 74 S. Ct. 693, 98 L. Ed. 884]. Courts of equity may properly take into account the public interest in the elimination of such obstacles in a systematic and effective manner. But it should go without saying that the vitality of these constitutional principles cannot be allowed to yield simply because of disagreement with them.
"While giving weight to these public and private considerations, the courts will require that the defendants make a prompt and reasonable start toward full compliance with our May 17, 1954, ruling. Once such a start has been made, the courts may find that additional time is necessary to carry out the ruling in an effective manner. The burden rests upon the defendants to establish that such time is necessary in the public interest and is consistent with good faith compliance at the earliest practicable date. * *" Brown v. Board of Education, supra, 349 U.S. at page 300, 75 S.Ct. at page 756, emphasis supplied.
*20 To hold that once a plan of integration has been approved and ordered into effect by a federal court, all of the details of that plan, including the commencing date and the rate of progress toward complete elimination of compulsory segregation, become immutably fixed would negate the concept of equity's "practical flexibility" in shaping its remedies, and would be an unwarranted limitation upon its "facility for adjusting and reconciling public and private needs." And it should be noted in this connection that although in the Arlington County, Virginia case the district judge ordered the Board there involved to commence integration by a certain time and to complete it by a certain time, he expressly reserved the power "to enlarge, reduce, or otherwise modify the provisions of said injunction or of this decree." Thompson v. County School Board of Arlington County, Va., D.C.Va., 144 F. Supp. 239, 241, affirmed School Board of City of Charlottesville, Va., v. Allen, 4 Cir., 240 F.2d 59, certiorari denied County School Board of Arlington County, Va., v. Thompson, 353 U.S. 910, 77 S. Ct. 667, 1 L. Ed. 2d 664.
As we approach the second question in this case, it should first be said that it cannot be seriously contended that the Board did not make a "prompt and reasonable start" toward a transition from a racially segregated to a racially integrated public school system. As stated, the Board announced its intention to move in that direction a very few days after the first Brown decision, and it actually announced its plan some days before the second and implementing decision in that litigation; and, in spite of the difficulties that have been outlined, it put the plan into operation and maintained it during the past school year. Hence the real problem is whether or not the Board now needs more time to make the transition "in an effective manner," and whether or not the granting of such time "is necessary in the public interest and is consistent with good faith compliance at the earliest practicable date."
At the hearing on the petition, which extended from June 3 into the afternoon of June 5, the Board called to the stand its president, Mr. Wayne Upton, its Superintendent of Schools, Mr. Virgil T. Blossom, certain members of the administrative staff of the high school, and certain class-room teachers. While the attorneys for the plaintiffs diligently cross-examined the main witnesses called by the Board, they did not put on any proof of their own tending to contradict the factual aspects of the testimony of the Board's witnesses, but confined their evidence to the testimony of two expert witnesses, namely, Dr. Virgil M. Rogers, Dean of the School of Education of Syracuse University, Syracuse, New York, and Dr. David G. Salten, Superintendent of Schools at Long Beach, Long Island, New York. Those witnesses gave it as their opinion in general that to grant the petition would be unnecessary and undesirable, and that the Board should keep its plan in operation while using stricter disciplinary procedures against those in the school who might become involved in racial incidents such as were described by the Board's witnesses; and they also were of the opinion that stricter procedures should have been used during the past school session.
From the practically undisputed testimony of the Board's witnesses we find that although the continued attendance of the Negro students at Central High School was achieved throughout the 1957-58 school year by the physical presence of federal troops, including federalized national guardsmen, nevertheless on account of popular opposition to integration the year was marked by repeated incidents of more or less serious violence directed against the Negro students and their property, by numerous bomb threats directed at the school, by a number of nuisance fires started inside the school, by desecration of school property, and by the circulation of cards, leaflets and circulars designed to intensify opposition to integration. Mr. J. O. Powell, the vice-principal for boys at the high school, summed the situation up by saying *21 that the first year of operation under the plan was one of "chaos, bedlam and turmoil" from the beginning.
The incidents and other matters just referred to, plus the presence of the troops, which was in and of itself a distracting influence, created throughout the year a situation of tension and unrest among the school administrators, the class-room teachers, the pupils, and the latters' parents, which inevitably had an adverse effect upon the educational program; and we find that said program was seriously impaired, that the orderly administration of the school was practically disrupted, and that educational standards have suffered. We further find that unless a stay is granted, the same situation will prevail when school opens in September, and that the impairment of the educational program and standards will continue, and will probably grow worse.
Before discussing further the adverse effect of the events that transpired during the past school year, we desire to point out that the Board and the school administration had no authority over individuals or groups outside the school, and while they undertook to handle and control the situation within the school by the employment of normal disciplinary procedures, they were unable to do so because of the nature and source of the opposition to integration both inside and outside the school.
It is important to realize, as is shown by the evidence, that the racial incidents and vandalism which occurred in Central High School during the past year did not stem from mere lawlessness on the part of the white students in the school, or on the part of the people of Little Rock outside the school; nor did they stem from any malevolent desire on the part of the students or others concerned to bomb the school, or to burn it down, or to injure or persecute as individuals the nine Negro students in the school. Rather, the source of the trouble was the deep seated popular opposition in Little Rock to the principle of integration, which, as is known, runs counter to the pattern of southern life which has existed for over three hundred years. The evidence also shows that to this opposition was added the conviction of many of the people of Little Rock, that the Brown decisions do not truly represent the law, and that by virtue of the 1956-57 enactments, heretofore outlined, integration in the public schools can be lawfully avoided.
In this connection, the president of the Board, Mr. Upton, testified that between the spring and fall of 1957 there was a marked change in public attitude towards the plan, that persons who had formerly been willing to accept it had changed their minds and had come to the conclusion "that the local School Board had not done all it could do to prevent integration, and that we didn't have to have integration"; and Vice-principal Powell testified that he believed that the white children involved in the incidents "feel that they are morally correct in their attitude and in their opposition," and that such is due to the "cultural patterns and sociological patterns in this community for many years," and that the students who created the incidents felt that it was wrong to integrate the Negro children into Central High School.
With respect to the effects of the 1956 constitutional amendment and initiated acts and of the 1957 statutes, Mr. Blossom testified that those enactments had their effect at Little Rock and throughout the State in stiffening opposition to the plan and in persuading people that there was no necessity for integration at this time.
Mr. Blossom further testified that the opposition to integration and the feeling that it was not required at this time had been greatly strengthened by numerous newspaper articles and advertisements, and by circulars and cards distributed in Little Rock, copies of which were introduced in evidence. Without prolonging this opinion by undertaking to abstract or quote from individual exhibits, we may say that we agree with Mr. Blossom's appraisal of their effect. *22 Those exhibits, in general, condemn the principle of integration; some of them condemn the Board and the Superintendent for alleged precipitateness in adopting the plan, and for their alleged mistreatment of white students during the past year; and many of them emphasize the idea that integration can be avoided by legal, constitutional means.
Regardless of the merits of the sociological and legal views expressed in those exhibits, the conclusion is inescapable that they are shared, in whole or in part, by a majority of the population of Little Rock, representing a cross section of the people of that city. On that point, Mr. Upton was asked in the course of his examination whether or not the people who had raised with him the questions which we have previously mentioned were fairly intelligent people, and he replied that they were, and that they were generally people who recognized him and who knew him. And Mr. Blossom expressed the opinion that the doubts and questions in the minds of many people were honest ones, and that it was his opinion that the great majority of the people of the community, from the contacts he had had with it, do not favor integration.
With further reference to the 1956-57 enactments it should be said that at least some of them are now involved in litigation pending in the state courts and after that litigation is decided by the trial courts, appeals will doubtless be taken to the Supreme Court of Arkansas, which alone can finally and authoritatively construe the same, and can, in the first instance, pass upon their validity; after the Supreme Court of Arkansas has ruled, these matters may well be carried to the Supreme Court of the United States for final review, all of which will take time. On that subject Mr. Blossom testified: "If you take the suits that are now pending and recognize the ones that are now being proposed, and none of them have been cleared out, the opinion that I would have would be that there are many, many months ahead before there will be any decision on them, to where there is a clear-cut situation between state and federal law on this problem, and that, in itself, creates this dilemma. You don't know where you are."
Getting back to the effects of the events of the past school year on the educational program at Central High School, we find more specifically that those events have had a serious and adverse impact upon the students themselves, upon the class-room teachers, upon the administrative personnel of the school, and upon the overall school program. In addition, said events have cast a serious financial burden upon the school district, which it has had to meet at the expense of normal educational and maintenance functions.
As far as the students themselves are concerned, we think it obvious that the incidents and conditions that have been described could not have been good for them emotionally; but aside from that, their education has certainly suffered and under existing conditions will continue to suffer, as is shown by the testimony of the class-room teachers called by the Board.
For example, Mr. W. P. Ivey, who has taught mathematics in the Little Rock school district for 34 years and who has been on the faculty of Central High School ever since that school was opened in 1927, testified that the presence of the Negro students created a tension on the part of both students and teachers that was noticeable every day, and that this tension impaired his ability to teach and the receptivity of his students. On cross-examination he stated that the final results obtained by him in his classes were not as good as they had been in prior years, as evidenced by his tests and also by comparison of the grades made in his classes which included Negro students with the grades made in his classes not attended by any of the Negroes.
Another member of the faculty who described the adverse effect that the presence of the Negro students, and all that went with it, had on educational *23 standards was Mrs. Govie Griffin, who has taught chemistry for 13 terms at Central. The subject that she teaches is an elective course, taken principally by those who plan to go to college and who presumably are interested in mastering the subject. It was her observation that the presence of the troops in the school, their standing outside of class-room doors during recitations, and their actions in walking up and down the halls, occasionally dropping their clubs, all had a disturbing effect on pupils and teachers alike. Due to that situation and the prevailing tension and unrest, the amount of subject matter that she was able to offer in her chemistry course was so seriously curtailed that she had to request that standard achievement tests usually given at the close of the school year be not given; and her request was granted. She said in this regard: "In the past we have always given standardized tests at the close of the school year, and the pupils have always been far above the national norm. This year I requested they not be given the test in all fairness to the students because we had not covered the material we had in the past years."
As to the effect of the events of the past session on the class-room teachers and administrative staff personally, the observations and experiences of Mrs. Elizabeth Huckaby, vice-principal for girls, who has been at Central since 1930, are informative. She stated that normally in addition to her administrative duties she taught two English classes, but that during the past year she has been compelled to give up those classes and to devote all of her time to administrative duties, and that from 75 to 90 percent of her time was devoted to problems created by integration. These problems, and the unrest and tension in the school had an adverse effect upon her nerves and physical well being. She testified that apprehension over existing conditions caused her to lose sleep, which problem she had never had before; that she had no social life because of her exhaustion at the end of each day, and that on week ends she and her husband would go to the country and relax, and that by noon on Sunday she "would begin to revive enough to face the next week." Mrs. Huckaby also observed that other teachers were likewise suffering ill effects; she stated that some would come to her trembling, and that others would come weeping because of the events that were transpiring, and she pointed out in this connection that teachers in the main are not accustomed to violence.
Mrs. Huckaby's testimony as to the effect of the integration problems on the class-room teachers was corroborated by that of Mrs. Margaret Ryman, a mathematics teacher, and of Mrs. Shirley Stancil, a guidance counsellor, and likewise by the testimony of Mr. Blossom. The latter stated that one of his greatest concerns during the year was the health and welfare of the teachers, and that he felt very strongly that the teachers were under more strain than the students since they had upon their shoulders the responsibility for the physical welfare and educational progress of every student in the school, and that "they took that responsibility to heart and it affected many of them and that was reflected in many of the conferences I had with them as individuals."
The tension and strain to which the administrative staff was subjected did not terminate with the close of the school day. Mr. Powell stated that on a typically difficult day his phone would commence ringing as soon as he got home from school, the calls coming from people desiring various types of information; that he has spent as much as three hours on certain days "answering the telephone, or in making calls or dodging calls;" that he has had to work long hours during the evenings and nights on many occasions, and that his social life and normal rest had been interfered with to a definite extent during the entire school year.
Along the same lines Mr. O. W. Romine, Director of School Plant Services for the entire school district, testified that under normal conditions he worked *24 from eight in the morning until five in the afternoon, and that after hours' duty was rare. During the past year, however, he had been on call 24 hours a day, and had received hundreds of calls at all hours of the night; on many occasions when his telephone had rung, and he had picked up the receiver, he found no one on the line. At one stage of the troubles he was away from home so much at night that he did not see his youngest child for four days, since he would get in at night after the child had gone to bed and would be gone in the morning before the child awoke.
The subject matter of some of the exhibits introduced by the Board consisted, in part at least, of personal attacks on the Board members and the administrative staff, which could not have failed to have reacted unfavorably upon them personally. In addition, Mr. Blossom was the recipient of many threats against his physical safety and well being. Of the Board members, Mr. Upton, at least, was subjected to much personal harrassment, mainly by telephone calls, and to such an extent that he had to take an unlisted number.
It is too clear to require discussion that the experiences of the classroom teachers and of the administrative staff must have produced at least some loss of personal efficiency on their part, with corresponding damage to the educational program. More serious, however, is the fact that it has been necessary to divert the time and talents of the trained administrative personnel from their normal duties in dealing with the many complex problems involved in the operation of a high school like Central to purely disciplinary matters; and we find, as alleged by the Board, that the efforts of the administrative staff to cope with the integration problems with which they have been confronted have consumed an undue amount of their time and energy; and we agree with Mr. Blossom in his statement that the diversion of administrative skills and energies to discipline maintenance during the past year may have been one of the highest prices that the school district has had to pay. At least one serious result of such diversion is that the curriculum planning which had been previously emphasized at Central, has been seriously impeded. In addition, the building program has been held up although the District's enrollment is rapidly increasing, with an accompanying need for more facilities.
As stated, the evidence further showed that the school district has had to shoulder substantial financial burdens on account of integration, and that this has been at the expense of other school programs. Mr. Romine testified, for example, that it was necessary to employ five additional night watchmen at the high school and that the cost for this item alone was between nine and ten thousand dollars; further, when it became necessary to relieve Mr. Powell and Mrs. Huckaby of their teaching duties so that they could devote their energies to the administrative problems with which the school was confronted, substitutes had to be hired to take their places in the classrooms. Moreover, the Board had to spend money to repair the damages to the school property, and to replace locks which had to be cut off of lockers during bomb searches; on that point Mr. Romine said that at one time he saw a bushel basket full of cut locks, and that it cost the Board $1.25 apiece to replace them. Mr. Romine further testified that the overall maintenance budget for all the schools in the district for the fiscal year ending June 30 of the current year was $123,000, that by January of this year he saw that unless something was done that budget would be overrun by approximately $17,000. In order to stay within the budget it was necessary he said to dismiss the paint crew of five men, thus saving not only their wages but also the cost of the paint they would have used, and to forego some normal maintenance work on the school properties.
Mr. Blossom testified that the funds of the Little Rock School District are not unlimited, that in fact the district is underfinanced, and the annual expenditure *25 per child is approximately $100 below the national average. He further pointed out that whenever district funds have to be diverted to meet unusual problems as they were during the past year, the district suffers harm, and that such diversions may mean that less teachers can be employed, and less instructional equipment purchased.
Looking toward the approaching school term it was the consensus of opinion on the part of the Board's witnesses, and we find, that there has been no softening of the public attitude in Little Rock toward integration, and we further find, as heretofore stated, that unless some relief is granted the Board the conditions that will prevail in Central High School during the 1958-59 school year will be as bad as they were during 1957-58, and will probably deteriorate still further. One reason for this conclusion is that, according to the evidence, Central High School operated last year largely on a momentum that had been built up during past years, and that momentum is running down. Any efficient organization, manned by skilled personnel, as was Central High School in September, 1957, can operate for a time on its momentum even in the face of severe pressure; but with such pressure a time comes when that momentum is lost, and when that happens then, unless the pressure is removed the organization breaks down. We are convinced that such point is being approached at Central. Mr. Blossom stated in that connection that the strain of the past year had already taken its toll, and would be felt still further when school opens this fall, and that starting into another year would be entirely different from the commencing of school last September. In this he was corroborated by Mrs. Huckaby.
We further find that if the attendance of Negro students at Central High School is to be maintained during the next school year, the Board will have to have military assistance or its equivalent, and it is financially unable to bear the expense of hiring a sufficient number of guards to control the situation. It cannot be expected that the Little Rock Police Department will be in a position to detail enough men to afford the necessary protection.
As to the need for troops when school re-convenes, Superintendent Blossom stated that he saw nothing to indicate that conditions at the school would be different in September than they were throughout the past year, and that as a school administrator he saw no lessening of responsibility for the safety of everyone concerned; he said, "We have that responsibility just as greatly today as we did yesterday, and we will have it tomorrow." And when asked whether or not it would be necessary to have the same guards and civilian security employees in the school in September, he replied: "As I said before, I have no reason to anticipate anything different from what we had. If we take what history teaches us, I think that will be a natural conclusion."
Now, while troops can disperse crowds, and can keep the Negro students physically within the school, and while it is possible that if troops were deployed in sufficient numbers all over the school vandalism could be checked, the presence of troops cannot reduce or eliminate racial tensions, or create a climate that is conducive to education; on the contrary, the presence of armed soldiers in a school is, as has been shown here, disrupting to the educational process. As to the importance of a proper educational climate, Mr. Blossom said: "* * * any educational program needs to have certain things present in the atmosphere, such as a climate where children can be taught and teachers can teach. We have contended that that condition has not existed at Central High School, that it is not likely to exist next year. Now, in putting on any educational program, the proper conditions are about as necessary as the proper tools and the proper teachers." Furthermore, when Mrs. Huckaby was asked on cross-examination if she did not think that the Board, the school administration, the city authorities, and the military could carefully plan the running *26 of the high school, she replied that she did not relish the idea of having those particular groups always involved in her educational system, because as an educator such was foreign to her experience.
As has been said, there can be no question that the Board made a prompt and reasonable start toward compliance with the principles laid down in the Brown cases; thereafter, it put its plan into operation and has adhered to it in good faith in the face of great difficulties. Now, it has come here seeking relief only after it has been confronted with what is, from an educational standpoint, an intolerable situation, and it does not ask for an abandonment of its plan nor does it attempt to obtain an indefinite postponement. It is simply requesting a tactical delay. We are convinced that in seeking this delay the Board is still acting in good faith, and, upon the showing that has been made, we are satisfied that the Board needs more time to carry out its plan in an "effective manner," and that to grant the instant petition is in the public interest, and is consistent with good faith compliance, at the earliest practicable date, with the principles above mentioned. In reaching this conclusion we are not unmindful of the admonition of the Supreme Court that the vitality of those principles "cannot be allowed to yield simply because of disagreement with them;" here, however, as pointed out by the Board in its final brief, the opposition to integration in Little Rock is more than a mere mental attitude; it has manifested itself in overt acts which have actually damaged educational standards and which will continue to do so if relief is not granted.
We have seen that the Supreme Court said in the second Brown decision that the transition of a formerly segregated school to a school free from compulsory segregation should be carried out in an "effective manner," and that such a transition is in the public interest. In our estimation a transition which impairs or disrupts educational programs and standards, and which will continue to do so, is not in the public interest, but, on the other hand, inflicts irreparable harm upon all of the students concerned, regardless of race. Where, as here, such a transition is being undertaken under the compulsive effects of a federal court order, a refusal to modify such order so as to ameliorate the situation would in our opinion under the circumstances here present be inequitable, if not arbitrary as well.
That the Supreme Court recognized the necessity of maintaining educational standards is evidenced by the following language in the first Brown decision:
"Today, education is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship. Today it is a principal instrument in awakening the child to cultural values, in preparing him for later professional training, and in helping him to adjust normally to his environment. In these days, it is doubtful that any child may reasonably be expected to succeed in life if he is denied the opportunity of an education. * * *" Brown v. Board of Education, supra, 347 U.S. at page 493, 74 S.Ct. at page 691.
And Judge Miller, in his original opinion in this case, pointed out that the Board was undertaking not only to work out a program of integration, but also to preserve and improve educational standards; and he took occasion to say: "(The Board) must consider the personal rights of all qualified persons to be admitted to the free public schools as soon as practicable on a nondiscriminatory basis. The public interest must be considered along with all the facts and conditions prevalent in the school district. Educational standards should not be *27 lowered. * * *" (Aaron v. Cooper, supra, 143 F.Supp at pages 864-865.) Furthermore, the Court of Appeals in its affirming opinion said: "* * * The schools of Little Rock have been on a completely segregated basis since their creation in 1870. That fact, plus local problems as to facilities, teacher personnel, the creation of teachable groups, the establishment of the proper curriculum in desegregated schools and at the same time the maintenance of standards of quality in an educational program may make the situation at Little Rock, Arkansas, a problem that is entirely different from that in many other places." Aaron v. Cooper, supra, 243 F.2d at page 364.
The importance of maintaining educational standards today is certainly no less than it has been in prior years; in fact it is more urgent. And while the Negro students at Little Rock have a personal interest in being admitted to the public schools on a nondiscriminatory basis as soon as practicable, that interest is only one factor of the equation, and must be balanced against the public interest, including the interest of all students and potential students in the district, in having a smoothly functioning educational system capable of furnishing the type of education that is necessary not only for successful living but also for the very survival of our nation and its institutions. There is also another public interest involved, namely, that of eliminating, or at least ameliorating, the unfortunate racial strife and tension which existed in Little Rock during the past year and still exists there.
When the interests involved here are balanced, it is our opinion, in view of the situation that has prevailed and will in the foreseeable future continue to prevail at Central High School under existing conditions, the personal and immediate interests of the Negro students affected, must yield temporarily to the larger interests of both races.
While we do not seek at this time to authoritatively define the term "all deliberate speed" employed by the Supreme Court in the Brown case, it does seem to us that the term is a relative one, dependent upon varying facts and circumstances in different localities, and that what might be "deliberate speed" under one set of circumstances could constitute headlong haste under another. And it further appears to us that said term involves the idea of a progress toward the elimination of compulsory segregation that is consistent with the maintenance of sound educational standards and a salutary educational atmosphere, neither of which can be maintained at Central High School if the Board is compelled to keep its plan in operation at this time. After all, the function of any public school system, whether integrated or not, is to educate people.
It is important to realize that to grant the stay requested by the Board will not deprive any Negro student of a good high school education. In 1957 the completely new and up-to-date Horace Mann High School for Negroes was put into operation, and in that school, apart from any question of integration, the Negro students can receive an education equal to that provided in Central High School. As to the Horace Mann School, Mr. Blossom testified that, relatively speaking, the quality of education in that school, measured by any desired indicia, whether facilities, teacher preparation, teaching aids, or instructional supplies, is "on a par with any other school." He further stated with reference to the past session: "The truth of the business is it was better than most high schools in this State, white or colored." He also testified that he felt that the Negro students could in 1958 "be better educated in another manner without them being hurt."
The granting of the Board's petition does not, in our estimation, constitute a yielding to unlawful force or violence, but is simply an exercise of our equitable discretion and good judgment so as to allow a breathing spell in Little Rock, *28 while at the same time preserving educational standards at Central High School.
At one point in his testimony Mr. Blossom stated, and we agree with him, that a tactical delay is not the same as a surrender; and the delay here sought is not a vain thing or a mere frustration of the plaintiffs' rights. In the first place, the delay, in and of itself, may well be of material value to the Board in carrying out its announced purposes. In the two and one-half year period involved tempers will have a chance to cool down, emotions may subside to some extent, and there may also be changes in some of the personalities involved in the dispute. Of more significance, however, is the fact that the delay will afford time for the completion of the pending litigation in the state courts and for an appraisal of the results of that litigation. Obviously, should the state legislation challenged in that litigation be upheld as valid, such a result might well have a profound effect on the situation at Little Rock. On the other hand, should that legislation be held unconstitutional, and particularly if such a result should be reached by the state courts, the people of Little Rock might be much more willing to acquiesce in integration as contemplated by the plan.
What has just been said likewise indicates that the length of the proposed stay is reasonable, and we so find. On this point we agree with the opinion expressed by Mr. Upton, who is an experienced lawyer, that it will take at least two years for the litigation above referred to to be finally terminated. In addition to that, considering the nature of the problem, two and one-half years is not a very long period of time; and a very short delay would serve no useful purpose. Added to those considerations is the fact that the Board and the Superintendent, who are familiar with the problem and whose responsibility it was in the first instance to decide how long a stay was desired, after considering the various factors involved determined on a two and one-half year period, and deemed it desirable to resume the plan at midterm of the 1960-61 school year. And we do not believe that under the circumstances the Court should disturb their judgment, even if it were inclined to do so.
In their brief in support of their motion to dismiss the original petition the plaintiffs cited a number of cases[3] standing for the proposition that an injunction may not be dissolved or modified in the absence of a showing of unforeseeable changes in conditions which have created an exceptional situation. While none of those cases involved any problem of race relations or school integration, we do not quarrel with the general rule laid down therein and the Board in its brief in opposition to the motion concedes "that the situation must be `extraordinary' and that the circumstances must be `exceptional.'"
Here, however, there has been a very radical change of situation since the former orders of this Court were entered, the occurrence and extent of which were not, to our mind, foreseeable at that time. And the situation with which the Board is now confronted is certainly exceptional and extraordinary if not, indeed, unique, that situation being complicated *29 by the vast amount of publicity that has been given to it.
It must be remembered that when Judge Miller handed down his decision in 1956, the people of Arkansas and the legislature had not adopted the measures that we have mentioned; on the contrary, the 1955 legislature had refused to enact certain similar legislation. And when Judge Davies on September 3, 1957 ordered the Board to put its plan into effect forthwith, and when he denied the Board's application for a stay on September 7, and when he entered his order of September 20 enjoining the Governor from further interfering with the operation of the plan, the Negro students had not begun attending classes at the school, federal soldiers had not appeared upon the scene, repeated racial incidents had not occurred, the teachers had not been frightened and demoralized, and educational standards had not been impaired. All of this has taken place since the final order entered by Judge Davies, and we do not believe that he foresaw the result that has come about. On the contrary, in his findings of fact and conclusions of law in connection with the injunction against the Governor he took occasion to refer to the history of peaceful race relations in Little Rock, and to state that prior to the calling out of the Guard the "faculty and the white student body at Central High School were prepared to accept the 9 colored children as fellow students." Aaron v. Cooper, D.C. Ark., 156 F.Supp. at page 224.
As we have said, the fundamental position of the plaintiffs in opposing the petition appears to be that popular opposition to the plan, resulting in obstructions to its orderly operation, does not form any legal basis for affording the Board any relief in this case. In support of that argument counsel for the plaintiffs have cited the following cases: Allen v. County School Board of Prince Edward County, Va., 4 Cir., 249 F.2d 462, certiorari denied 355 U.S. 953, 78 S. Ct. 539, 2 L. Ed. 2d 530; Orleans Parish School Board v. Bush, 5 Cir., 242 F.2d 156, certiorari denied 354 U.S. 921, 77 S. Ct. 1380, 1 L. Ed. 2d 1436; Jackson v. Rawdon, 5 Cir., 235 F.2d 93, certiorari denied 352 U.S. 925, 77 S. Ct. 221, 1 L. Ed. 2d 160; Mitchell v. Pollock, D.C.Ky., 1 Race Rel.L.Rep. 1038; School Board of City of Charlottesville, Va. v. Allen, 4 Cir., 240 F.2d 59, certiorari denied 353 U.S. 910, 77 S. Ct. 667, 1 L. Ed. 2d 664; and School Board of City of Newport News, Va. v. Atkins, 4 Cir., 246 F.2d 325, certiorari denied 355 U.S. 855, 78 S. Ct. 83, 2 L. Ed. 2d 63.
Those cases unquestionably hold that a school board is not justified in failing to make a prompt and reasonable start toward the elimination of compulsory segregation merely because of popular opposition to such a step. But none of them has involved a situation like the instant one where a board has made a prompt and reasonable start, and has actually put its plan into operation, only to find it break down in practice with a consequent impairment of educational standards and demoralization of the faculty and student body.
It is one thing to say that a school board must make a start in the direction of integration without regard to public feelings on the subject, as Judge Hutcheson said in Jackson v. Rawdon, supra; but it is quite another thing to say that when a school board has had the experiences with its plan which the Little Rock Board has had, and when, after observing the results of that plan in operation, it comes into federal court seeking not to abandon the plan or to lay it aside indefinitely, but merely a moratorium, the court must close its eyes and ears to the practical problem with which such board is confronted. Such a judicial attitude would be most unrealistic.
If popular feelings and attitudes are utterly and at all times irrelevant to the question under consideration, the Court of Appeals in affirming Judge Miller in this case would hardly have stopped to point out that the Little Rock schools had been segregated for over 80 years; nor would there have been any occasion for the Court of Appeals to say in the New Orleans case that once a school board *30 has accepted the principle laid down in the Brown decisions, it may well be entitled to "time for such reasonable steps in the process of desegregation as appears to be helpful in avoiding unseemly confusion and turmoil." Orleans Parish School Board v. Bush, supra., 5 Cir., 242 F.2d at page 166.
Plaintiffs have also cited Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 72 S. Ct. 863, 96 L. Ed. 1153; Ex parte Endo, 323 U.S. 283, 65 S. Ct. 208, 89 L. Ed. 243; Morgan v. Com. of Virginia, 328 U.S. 373, 66 S. Ct. 1050, 90 L. Ed. 1317; and City of Birmingham v. Monk, 5 Cir., 185 F.2d 859, certiorari denied 341 U.S. 940, 71 S. Ct. 1001, 95 L. Ed. 1367. Those cases hold that ordinarily enforcement of individual constitutional rights will not be delayed because of the public interests opposed to them, and that the State cannot deprive one of a constitutional right through the exercise of the police power. None of those cases, however, was a school integration case, and, as has been pointed out, the second Brown decision itself recognizes the propriety of delay in school integration under proper circumstances.
In the instant case it is not denied that under the Brown decisions the Negro students in the Little Rock District have a constitutional right not to be excluded from any of the public schools on account of race; but the Board has convincingly shown that the time for the enjoyment of that right has not yet come. That showing applies to the Negro students who were in the school last year as well as to others. While the plaintiffs contend that the rights of the students last mentioned have become vested, no authority in support of that proposition has been cited to us, and we know of no such authority, and we do not believe that such contention can be sustained.
In support of their argument that if the Board had used sufficiently firm disciplinary measures it could have controlled the situation within the school, and that by such measures it can reestablish control this coming year, the plaintiffs called to the stand the two New York educators heretofore mentioned, and their opinion evidence was in line with the plaintiffs' contentions. On the other hand, the testimony of Mr. Blossom and of Mr. Upton, was to the effect that the Board had diligently sought to preserve discipline, that it had expelled a few students and had suspended others for various periods of time, that it had undertaken to consider each case on its own merits and the effect of the action to be taken not only upon the individual child concerned but also upon the other students in the school. It was the opinion of those witnesses that in view of the unusual situation with which they were confronted and of the source and nature of the opposition with which they were faced conditions would have been made worse rather than better by the employment of harsh disciplinary measures such as mass expulsions, and that the course that had been in fact pursued was the best possible one under the existing circumstances.
While Dr. Rogers and Dr. Salten are doubtless well qualified to express opinions as to how school matters should be handled in areas of the country with which they are familiar and in which they have had experience, neither of those gentlemen has had any public school administrative experience in the South, or any personal familiarity with the Little Rock situation; nor has either of them ever had any experience with the problems involved in the transition from segregation to integration in a state where the former has been the accepted and traditional mode of life of the people and where its existence in the public schools has had the sanction of law for so long as those schools have existed. As regards Dr. Rogers in particular, his qualifications to speak on this subject were seriously impaired, in our eyes, by his suggestion that members of the student body at Central High School might have been used, in effect, as spies upon other students there. In view of these *31 limitations upon the qualifications of the plaintiffs' witnesses, we cannot accept their opinions in preference to that of Mr. Blossom, who is also an expert, and who formed his opinion on the ground and has based it upon his own intimate experience with the problem.
It is true that the views of Vice-principal Powell coincide with the opinions of the plaintiffs' experts, as far as the situation inside the school is concerned; but is must be remembered that Mr. Powell had no ultimate disciplinary authority and no responsibility for any matters of overall policy; he was a subordinate employee, and it was not shown what qualifications, if any, he possesses as an expert in public school administration. He testified that he graduated from Central High School in 1940, that he was employed at the school in an undisclosed capacity in 1952, and that he has been vice-principal for boys for the past three years. His training and experience between 1940 and 1952 were not brought out in the evidence. It is also interesting to note in this connection that Mr. Powell's counterpart, Mrs. Huckaby, did not feel that the employment of stern disciplinary measures was the key to the problem. Actually, it occurs to us that Mr. Powell may well have been so close to the situation in all of its personally unpleasant aspects, that he has to some degree lost his sense of perspective in the matter.
In addition to all of the foregoing, it is well to keep in mind that the duty of maintaining discipline in the schools and of deciding what disciplinary steps should be taken is primarily the function of the school administration, and not that of the Court; and we would certainly be unwilling to substitute our judgment as to what should have been done for that of the Board in the absence of a showing that the Board had erred to such an extent as to indicate an absence of good faith on its part. There has been no such showing here.
Relative to interference from outside the school, the plaintiffs urge that the Board should have either instituted criminal prosecutions against the persons responsible, or that it should have applied for injunctive relief, as was done in the Hoxie, Arkansas, and Clinton, Tennessee, cases. See Hoxie School District No. 46 of Lawrence County, Ark. v. Brewer, D.C.Ark., 137 F. Supp. 364, affirmed 8 Cir., 238 F.2d 91; and Kasper v. Brittain, 6 Cir., 245 F.2d 92, certiorari denied 355 U.S. 834, 78 S. Ct. 54, 2 L. Ed. 2d 46. In answer to that argument Mr. Blossom testified, and he was corroborated by Mr. Upton, that the Board had determined as a matter of judgment not to resort to criminal prosecutions or to seek injunctive relief; that it was not the function of the Board to prosecute people or to seek injunctions but to run a school system, and that it had already had all of the litigation that it wanted and was not anxious for any more.
We think that the Board acted within its competency in coming to that conclusion, and we do not think that its failure to commence criminal actions or to seek injunctive relief should militate against its present petition. In the first place, the Board is not charged with the duty of commencing criminal prosecutions or of enforcing the criminal laws of the State. Secondly, by reason of the nature, source and extent of the opposition to integration in Little Rock, actions by the Board looking toward criminal prosecutions or injunctions might have aggravated rather than eased the situation. Moreover, the Board might have had a good deal of difficulty in identifying the persons causing the trouble or in establishing that their conduct constituted crimes or was of such quality as would justify the granting of injunctive relief.
As far as the Hoxie and Clinton cases are concerned, Mr. Blossom testified, and we agree, that the situation at neither of those places was comparable to the situation that has existed and now exists in Little Rock. Both Hoxie and Clinton are much smaller places than Little Rock; hence the procedures followed in the former *32 places might not be effective in the latter.
As an illustration of the differences in situation just mentioned, attention is called to the fact that Judge Reeves' opinion in the Hoxie case discloses that the total integrated student body at Hoxie was 1025, of which only 25 students were Negroes, whereas Judge Miller's opinion in this case shows that the percentage of Negroes to whites in the high school grades at Little Rock, as of May, 1956, was .229, such percentage in the junior high grades was .246, and in the elementary grades .262, the overall percentage being .252. Moreover, Judge Reeves' opinion also makes clear that the educational facilities for Negroes at Hoxie were by no means comparable to those available to the white students, which is not the case at Little Rock.
As to the Clinton, Tennessee, case we take judicial notice of the fact that Clinton is a small town located in the mountainous country of eastern Tennessee where there are very few Negroes. In addition, the trouble there was readily traceable to one individual from outside the State, as is shown by the evidence in this case and by the opinion of the Court of Appeals in Kasper v. Brittain, supra.
It being in the public interest, including the interest of both white and Negro students at Little Rock, that we have a peaceful interlude for the period mentioned, an order is being entered permitting the Board to suspend the operation of its said plan until midsemester of the 1960-61 school year, without the Board, or the individual members thereof, or the Superintendent of Schools being considered in contempt of this Court; and the Court retains jurisdiction of this cause for such other and further proceedings as may hereafter become necessary or appropriate.
On Plaintiffs' Motion for Supersedeas
The motion of the plaintiffs to stay the enforcement of the judgment in this action rendered by us on June 20, 1958, pending appeal therefrom, having been given due consideration by the Court, is hereby denied.
As we understand the law, we have a discretion in this matter; and we feel that that discretion should be exercised in denying the motion, primarily for the reason that from a practical standpoint to grant this motion and stay the enforcement of our judgment would to a large extent nullify our order in the cause since it will in all probability take months to carry the case through the Court of Appeals and the United States Supreme Court; and in the meantime the situation at Central High School which we have found to be intolerable from an educational standpoint would continue from the beginning of the approaching session to the final ruling of the Supreme Court on the merits of the case; and for the reasons stated in our opinion in said cause we do not think that such is in the public interest, including the interest of both the white and Negro students in the Little Rock District.
The Honorable Archibald K. Gardner, Chief Judge of this Circuit, in assigning us to handle the School Board's plea, gave us up to and including September 1, 1958, within which to try and decide the case. In order that any aggrieved party might apply for appellate relief before the beginning of the next school session, our preliminary proceeding, the trial and the preparation and filing of our opinion and order were speeded up as fast as we felt such could be done and at the same time give proper consideration to the cause.
We do not feel that the plaintiffs are deprived of the opportunity of securing an appellate ruling on their motion for supersedeas by reason of the action we are now taking, since it will be more than two months before Central High School convenes this Fall, and in the meantime the plaintiffs can apply at least to the Court of Appeals of this Circuit for a stay of the enforcement of our judgment in this action.
NOTES
[1] The plan is set out verbatim and thoroughly discussed in the district court's opinion in Aaron v. Cooper, supra.
[2] In the very recent case of Thomason v. Cooper, 8 Cir., 254 F.2d 808, a phase of this litigation, as will hereinafter appear, the Court of Appeals in construing Judge Miller's decree, said that in effect it ordered the Board to put the plan into operation at the beginning of the 1957-58 school year.
[3] Klapprott v. United States, 335 U.S. 601, 69 S. Ct. 384, 93 L. Ed. 266; Ackermann v. United States, 340 U.S. 193, 71 S. Ct. 209, 95 L. Ed. 207; United States v. Swift & Co., supra, 286 U.S. 106, 52 S. Ct. 460, 76 L. Ed. 999; Walling v. Harnischfeger Corporation, D.C.Wis., 142 F. Supp. 202, affirmed 7 Cir., 242 F.2d 712; John E. Smith's Sons Co. v. Lattimer Foundry & Machine Co., 3 Cir., 239 F.2d 815; Federal Deposit Ins. Corp. v. Alker, 3 Cir., 234 F.2d 113; Smith v. Kincade, 5 Cir., 232 F.2d 306; Morse-Starrett Products Co. v. Steccone, 9 Cir., 205 F.2d 244; Elgin National Watch Co. v. Barrett, 5 Cir., 213 F.2d 776; Bigelow v. Twentieth Century-Fox Film Corp., 7 Cir., 183 F.2d 60; Coca Cola Co. v. Standard Bottling Co., 10 Cir., 138 F.2d 788; United States v. Besser Manufacturing Co., D.C.Mich., 125 F. Supp. 710; Sunbeam Corporation v. Charles Appliances, D.C.N.Y., 119 F. Supp. 492. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3510632/ | 1 Reported in 208 N.W. 1000; 209 N.W. 939.
Appeal from an order of the district court of Hennepin county denying defendant's motion for a new trial. The cause involves a state of facts which are, in principle, so nearly identical with those in case No. 25,275, infra, page 253, as to fall within and be governed by the same laws. All that is said in that opinion applies to the situation here. The cause was submitted to the trial court on stipulation of fact.
Katharina Erhardt owned a certain tract of land within the city of Minneapolis. In August, 1907, she conveyed a part of such tract to the city and the Board of Park Commissioners thereof for park purposes. The deed contained a provision for exemption from special assessments for benefits which might thereafter be levied, under chapters 30 and 103 of the Special Laws of Minnesota for 1889, until the amount thereof equal $500 to the unconveyed part of said tract which was specifically referred to in the deed.2 Thereafter the park board constructed a boulevard around Lake Calhoun and paved the same. The project was commonly known as "Calhoun Boulevard." Assessments were thereupon levied upon abutting property by commissioners appointed under the statute, which were included in the tax statements for the years 1922 and 1923. Plaintiff was then the owner of said tract and did not appear in the condemnation proceedings, not having any notice thereof. So far as the procedure under the condemnation statute is concerned, no question is made as to its regularity save alone the notice mentioned. The trial court allowed the exemption and directed that the county auditor forthwith change the tax rolls and records pertaining to the special assessments referred to by allowing plaintiff credit of $244.29 *Page 253
upon such special assessments, and certify such change to the county treasurer. We think the trial court properly disposed of the matter.
Affirmed.
2 Sp. L. 1889, p. 563, § 2. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3510638/ | 1 Reported in 206 N.W. 434.
This is a boundary line case wherein, after findings of fact and an order for judgment for defendants, plaintiffs appeal from the judgment.
The decision was put exclusively upon the proof for defendants of adverse possession by themselves and their predecessors in interest up to the line established. It is an east and west line, plaintiffs owning and occupying the land to the north and defendants that to the south. The tract in dispute abuts on the shore of Fish Trap lake and is now used and valuable for summer residence purposes.
The proof which won the case for defendants consisted of the testimony of several witnesses to the effect that some 30 years ago a fence was placed on the line in question by one Hash, then owner of the land to the south, and that the fence ran from a railroad right-of-way to the west over the entire route in controversy and *Page 294
terminated at the shore or in the waters of the lake. The proof is such as to sustain the findings of adverse possession. The principal controversy concerns the east or lake end of the line. To put the case as strongly as possible for plaintiffs, but briefly, there is some evidence both ways on that precise issue. That for defendants is sufficient to sustain the finding in their favor and so we must decline to interfere with the result. Our examination of the evidence concerning the original erection of the fence, its subsequent use and maintenance, its replacement by defendant Mayer and the use made of it all of these years, leaves no other course open to us.
Some point is attempted to be made of an obvious error of description in the findings which does not appear in the judgment. Nothing more need be said concerning it except that the needed correction should be by motion in the trial court. We have examined the affidavits in support of the motion for a new trial and find nothing to change the result or to require much comment here. They show much new and important evidence, sought and found apparently by counsel who has represented plaintiffs on this appeal, but who did not try the case for them. There is no showing that due diligence of preparation would not have made all of the new proof available for plaintiffs at the trial.
Judgment affirmed. *Page 295 | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3303791/ | The petitioner, against whom has been found and presented an indictment purporting to charge him with the crime of extortion, seeks his discharge on habeas corpus from the custody of the sheriff of the city and county of San Francisco upon two grounds, viz.: 1. That one of the grand jurors who participated in the finding of the indictment was incompetent to act as a grand juror, by reason of the fact that he had served and been discharged as a juror by a court of record of this state, within a year of the time that he was examined and impaneled to act as such grand juror; and 2. That the indictment does not charge a public offense.
Upon the hearing it was made to appear to this court, in fact expressly admitted by the petitioner, that being at large upon bail, he had procured himself, immediately before the application for a writ of habeas corpus, to be surrendered to the custody of the sheriff, solely for the purpose of presenting these questions for determination by this court, and that immediately upon the issuance of the writ he gave bail, in the same amount as had been previously required upon the indictment — in other words, that the alleged custody from which he seeks to be discharged was self-invoked and voluntary, submitted to only for the purpose of making a case on habeas corpus.
We are unable to see why these circumstances do not bring this case fully within the rule laid down in the case of In re Gow,139 Cal. 242, [73 P. 145]. It there appeared that the surrender to the officer was merely for the purpose of suing out the writ, and lasted no longer than was necessary to file the petition and procure the order. It was there declared to be an abuse of the remedy by habeas corpus to apply it in cases where there is no actual imprisonment and no restraint, except that which is invited and voluntarily submitted to in order that a merely nominal prisoner may resort to the courts for the determination of the validity of an ordinance, or some question of that sort. It was said: "Our conclusion is, that such a practice ought not to be countenanced, and *Page 665
hereafter the court will make strict inquiry in this class of cases whether the alleged imprisonment is actual and involuntary, and if it is found to be, as in this case, a merely nominal restraint, voluntarily submitted to for the purpose of making out a case, the proceeding will be dismissed." We deem the rule here declared a most salutary one, entirely in accord with the objects and purposes of the remedy by habeas corpus, and adhere thereto. (See, also, In re Dykes, 13 Okla. 339, [74 P. 506]; In re Dill,
(Kan.) 11 P. 672; Commonwealth v. Green, 185 Pa. St. 641, [40 A. 96]; 21 Cyc. 290.)
The writ is discharged and the proceeding is dismissed. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1906488/ | 188 F.Supp. 292 (1960)
Vincent DI SOMMA, Plaintiff,
v.
N.V. KONINKLYKE NEDERLANDSCHE STOOMBOOT, Defendant.
United States District Court S. D. New York.
October 19, 1960.
*293 DiCostanzo & Klonsky, Brooklyn, N. Y., for plaintiff. Philip F. DiCostanzo, Brooklyn, N. Y., of counsel.
George J. Conway, New York City, for defendant. Conrad P. Sheehan, New York City, of counsel.
FREDERICK van PELT BRYAN, District Judge.
Plaintiff, a longshoreman, sues to recover for personal injuries alleged to have been sustained aboard defendant's vessel while he was loading cargo in the employ of stevedores. He claims negligence of defendant and unseaworthiness of the vessel. Defendant has answered denying liability and alleging in bar the assignment of plaintiff's claim by operation of law under the Longshoremen's & Harbor Workers' Compensation Act (33 U.S.C.A. § 933(b)), and the pendency of another action on the same claim brought by his employer's insurer as assignee.
Defendant now moves, pursuant to Rule 12(c), F.R.Civ.P., 28 U.S.C.A., for judgment on the pleadings on the ground that the pendency of the insurer's suit bars this action and that in any event the plaintiff is barred from prosecuting this action because his claim was assigned by operation of law. Since various facts have been supplied by affidavit the motion "shall be treated as one for summary judgment and disposed of as provided in Rule 56". Rule 12(c). The facts are not in dispute.
On May 4, 1957 plaintiff, employed as a longshoreman by Maude James, Inc., stevedores, was loading cargo aboard the M/S Hera owned by defendant. He was injured during the course of his employment when cargo is alleged to have toppled over and fallen on him. He filed a claim for compensation benefits for his injury under the Longshoremen's and Harbor Workers' *294 Compensation Act, 33 U.S.C.A. § 901 et seq., and was granted and accepted an award. The sum of $3,175.20 in benefits was duly paid to him by Michigan Mutual Liability Co., the compensation insurer of Maude James, plaintiff's employer.
Under 33 U.S.C.A. § 933(b) the acceptance of such compensation by Di Somma operated as an assignment to his employer, Maude James, of his rights to recover damages against a third person. Under 33 U.S.C.A. § 933(i) Michigan Mutual, the insurance carrier was subrogated to the rights of Maude James.
On April 2, 1959 Michigan Mutual, suing on its own behalf and on behalf of and as assignee of Di Somma and another seaman to whom it had paid compensation, brought an action in this court against Royal Netherlands Steamship Company, the general agent of the defendant in the present action. It alleged that Royal Netherlands was the owner of and controlled and operated the vessel on which plaintiff was injured and sought to recover $35,000 on Di Somma's claim for the personal injuries on which it had paid compensation and medical expenses which it had paid for him of $471. It alleged that the accident was caused by the negligence of Royal Netherlands, the alleged shipowner, and the unseaworthiness of the vessel. That action will be referred to as Action No. 1.
About a month later, on May 12, 1959, plaintiff brought this action for $75,000 on the same personal injury claim against the defendant here as the owner of the vessel on which he was injured, making the same allegations as to fault. This will be referred to as Action No. 2.
Under the Longshoremen's and Harbor Workers' Act, if a person entitled to compensation determines that someone other than his employer is liable in damages, he may, by giving appropriate notice, elect either to receive such compensation or to recover damages against the third person. 33 U.S.C.A. § 933(a). Acceptance of compensation under an award operates as an assignment to the employer of "all right of the person entitled to compensation to recover damages against such third person". 33 U.S.C.A. § 933(b). The employer may then institute proceedings on the claim or compromise it. § 933(d). Any recovery is apportioned between the employer assignee and the employee whose right of action it originally was. The employer receives an amount equal to the expenses incurred in enforcing the right, expenses for medical care and any amounts paid and payable as compensation. The employee is entitled to any balance remaining. 33 U.S.C.A. § 933 (e). Where the employer is insured his insurance carrier is subrogated to all of the employer's rights. 33 U.S.C.A. § 933(i).
If the language of the statute is taken literally it would provide an absolute defense to a third party in a damage suit brought directly by an injured longshoreman who has accepted compensation and has not obtained a reassignment of his cause of action. However, the act is not to be interpreted literally, and in certain circumstances the injured longshoreman may bring an action against a third party in his own name despite his acceptance of compensation.
In Czaplicki v. The Hoegh Silver-cloud, 351 U.S. 525, 76 S.Ct. 946, 100 L.Ed. 1387, Czaplicki, a longshoreman, had accepted a compensation award paid by his employer's insurance carrier for injuries which he had sustained when steps on the vessel on which he was working collapsed. The steps had been erected by an independent contractor who was insured by the very insurance carrier which had insured Czaplicki's employer. The insurance carrier, the statutory assignee of Czaplicki's claim, had failed to bring suit on his behalf.
It was held that under these circumstances the statute should be construed so as to allow Czaplicki to enforce in his own name the rights of action which were his originally and that he was not barred from so doing by the acceptance of compensation. Mr. Justice Harlan said, (351 U.S. at page 531, 76 S.Ct. at page 950):
*295 "In giving the assignee exclusive control over the right of action, however, we think that the statute presupposes that the assignee's interests will not be in conflict with those of the employee and that through action of the assignee the employee will obtain his share of the proceeds of the right of action, if there is a recovery. Here, where there is such a conflict of interests, the inaction of the assignee operates to defeat the employee's interest in any possible recovery. Since an action by Travelers [the insurer] would, in effect, be an action against itself, Czaplicki is the only person with sufficient adverse interest to bring suit. In this circumstance, we think the statute should be construed to allow Czaplicki to enforce, in his own name the rights of action that were his originally."
Only six months before the Czaplicki case was decided the Supreme Court had held in Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133, that, despite the absence of an express indemnity agreement, a shipowner sued by a longshoreman injured aboard his vessel had an action over against the stevedore who had employed the longshoreman if the injury sued upon resulted from fault of the stevedore.
Mr. Justice Black dissented on the ground that the effect of the holding was to render ineffective the provisions of the Longshoremen's & Harbor Workers' Compensation Act concerning the statutory assignment of claims of employees who accepted compensation, and to emasculate rights granted by the Act to the employer. Concerning the effect of the majority holding on suits brought by an employer assignee under the Act against a third party, he said (350 U.S. 145, 76 S.Ct. 243):
"The actual effect of the Court's holding is this: The employer as an assignee of an employee's claim will know that if he wins a law suit he loses a law suit. This knowledge will not give him a yearning anxiety to file suit. Even though he yields to the call of duty and files the law suit, he might not be exceedingly anxious to write a good complaint. His other pleadings might not be all that a zealous lawyer would desire. Although the employer must pay the judgment, his will be the opening argument to the jury. And when the last word is said in the closing argument, it will be made by counsel who knows that if he persuades the jury to give his client a verdict his client will have to pay it. Counsel will also know that if he happens to lose the case his cleint will be the winner."
It was concern about the adverse effect of such a conflict on the interests of the injured employee "in his right of action even after it has been assigned" which led the court in the Czaplicki case to uphold the employee's right to sue on his own behalf.
Johnson v. Sword Line, Inc., 3 Cir., 257 F.2d 541; 240 F.2d 954, considered another aspect of the Czaplicki problem. There a longshoreman injured aboard a vessel directly sued the shipowner after accepting compensation from his stevedore employer pursuant to an award made under the Act. The employer's insurance carrier had failed to bring suit against the shipowner on the employee's assigned claim for five years. Depositions which had been taken did not show any satisfactory reason for the carrier's inaction or for its refusal to reassign the claim to the injured longshoreman.
The district court had granted defendant summary judgment on the ground that the statutory assignment of plaintiff's claim was a bar to the maintenance of an action on his own behalf against the shipowner. The Court of Appeals reversed. Reasoning from the Czaplicki case and from the dissent of Mr. Justice Black in the Ryan case, it held that upon the record before the court below, a conflict of interest would have to be presumed and that therefore *296 it had not been shown that the statutory assignment was a bar. However, it did not preclude further inquiry as to the reasons for the carrier's failure to bring suit on plaintiff's behalf at the trial where the question of bar could be finally determined.
In D'Amante v. Isthmian Lines, Inc., D.C.E.D.N.Y., 159 F.Supp. 468, plaintiff, a longshoreman employed by International Terminal Operating Co. was injured aboard an Isthmian ship in the course of his employment. He accepted a compensation award and then sued Isthmian. Liberty Mutual, the compensation carrier for the employer, International, was also its public liability carrier under a policy which also protected Isthmian from personal injury suits brought by International's employees. Thus Liberty Mutual was in effect Isthmian's insurer as well as International's.
Liberty brought suit against Isthmian as statutory assignee of D'Amante's claim shortly after D'Amante had brought his suit. It retained independent counsel to prosecute the action on D'Amante's behalf who had no connection with counsel it retained to represent Isthmian. The independent counsel was given authority to act as he saw fit in D'Amante's best interests. Isthmian moved to dismiss D'Amante's suit against it on the ground that the cause of action had been assigned and that the suit by Liberty Mutual was pending. The court denied the motion holding that the mere fact that the insurer had instituted action did not bar plaintiff from suing on his own behalf where the insurer's interests were in conflict with those of the employee assignee and it was in effect suing itself. The arrangements for separate counsel for D'Amante were held not to remove the prejudice to D'Amante's rights which arose from the conflict of interests.
The case at bar is not on all fours with any of the cases to which I have referred. Here, unlike the Czaplicki and Johnson cases, the employer's insurer has actually brought suit on the employer's behalf. Unlike the Czaplicki and D'Amante cases, the insurer-assignee is not also the insurer of parties who might be directly liable to the employee.
Michigan Mutual, suing as Di Somma's assignee, is not the insurer of the shipowner who is alleged to be liable to Di Somma. On the record now before me it is, however, the insurer of Di Somma's employer who, upon appropriate facts, would be liable over to the shipowner as indemnitor under Ryan Stevedoring Co. v. Pan-Atlantic Steamship Corp., supra, Weyerhaeuser Steamship Co. v. Nacirema Operating Co., 355 U.S. 563, 78 S.Ct. 438, 2 L.Ed.2d 491, and Crumady v. The Joachim Hendrik Fisser, 358 U.S. 423, 79 S.Ct. 445, 3 L.Ed.2d 413. The moving affidavits affirmatively state that "in the event that the defendant prevails in a third party action the party ultimately liable to pay the judgment" will be Michigan Mutual, as the insurer of Di Somma's stevedore employer, suing as Di Somma's assignee in Action No. 1.
All that now appears in the limited record before me concerning the cause of Di Somma's injuries is that he was injured when cargo fell over on top of him when he was working in one of the holds of the vessel. These facts certainly do not exclude a claim over by the shipowner against the stevedore if the shipowner is held liable to Di Somma. In such event Michigan Mutual, at least on the record to date, would be called upon to pay any judgment over recovered by the shipowner against the stevedore employer.
Thus on the record as it now stands there is a conflict of interest between Di Somma and Michigan Mutual, his assignee. The potential loss to the assignee from a maximum recovery on behalf of the employee might far outweigh any financial benefits which it would derive from the recovery of the sums paid out by way of compensation. This conflict may well prevent the prosecution of the assignee's action with the vigor and zeal which would result in the maximum recovery for the employee. These are the very dangers envisaged in the *297 Czaplicki case and by Mr. Justice Black in the Ryan case.
It is suggested that, even though such a conflict exists, this case is not within the orbit of the Czaplicki case because the insurer assignee has already instituted an action on Di Somma's behalf and thus has acted diligently to protect his interests. I do not read the Czaplicki case as holding that commencement of an action by the assignee would operate to defeat the employee's right to maintain an action on his own behalf where there is conflict of interests. It is true that in the Czaplicki case "the inaction of the assignee operates[ed] to defeat the employee's interest in any possible recovery." 351 U.S. 525, 76 S.Ct. 946, 950, 100 L.Ed. 1387. But the court went on to say "Since the action by Travelers [the insurer] would, in effect, be an action against itself, Czaplicki is the only person with sufficient adverse interest to bring suit". It thus clearly indicated that, given a conflict, the employee could maintain his own action despite the commencement of suit by the assignee. The same dangers arise from a conflict of interest whether the assignee has failed to act or whether he has actually brought suit.
Thus the defendant is not entitled to summary judgment on the ground that the statutory assignment of Di Somma's claim and the commencement of action by the assignee bars the maintenance of this action by Di Somma.
Plaintiff suggests that Di Somma's action on his own behalf (Action No. 2) and the action by the assignee on Di Somma's behalf (Action No. 1) should be consolidated. There is considerable merit to this suggestion.
The court pointed out in the Czaplicki case, 351 U.S. at page 532, 76 S.Ct. at page 950, that the insurer assignee, Travelers, would be a proper party to the employee's suit and should be made a party on the employee's motion. Here, since the insurer assignee has already commenced an action, the same result would be reached by a consolidation which would protect the interests of both the employee and his assignee in any recovery and would avoid duplication of judicial time and effort.
However, the plaintiff has not moved to consolidate and the insurer assignee in Action No. 1 has had no opportunity to be heard on the question. A motion by the plaintiff employee to consolidate the two actions is in order and the question as to whether a consolidation should take place can then be determined after hearing all parties in interest.
One further word. The question of whether the employee's action is barred by the statutory assignment of his claim may have to be finally determined at a later stage of the litigation where the facts bearing on whether or not a conflict of interests actually exists can be fully explored. Such a determination may be facilitated if a consolidation of the two actions takes place.
The defendant's motion for summary judgment is in all respects denied.
It is so ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1977643/ | 99 F.Supp. 862 (1951)
MARYLAND CAS. CO.
v.
INDEPENDENT METAL PRODUCTS CO. et al.
Civ. A. No. 43-50.
United States District Court D. Nebraska, Omaha Division.
September 8, 1951.
*863 Edson Smith, of the firm of Swarr, May, Royce, Smith & Story, Omaha, Neb., for plaintiff.
Louis E. Lipp, of White & Lipp, Omaha, Neb., for defendants.
*864 DONOHOE, Chief Judge.
This action is for recovery of disbursements made by plaintiff, Maryland Casualty Company, a Maryland corportion, to satisfy the liability of its insured, Fruehauf Trailer Company, arising out of the latter's breach of an implied warranty of fitness of a petroleum transportation trailer sold to Gilmore, Gardner and Kirk Oil Company, a part of which trailer had been fabricated by the defendant, Independent Metal Products Company, now a Nebraska corporation, and formerly a partnership, all the members of which were, and are now, citizens of the state of Nebraska. This Court has jurisdiction since the matter in controversy exceeds $3,000, exclusive of interest and costs, and is between citizens of different states. 28 U.S.C.A. § 1332. The trial was had to the Court without the aid of a jury, and after careful consideration of all the material evidence adduced at the proceedings, the Court makes the following special
Findings of Fact.
The Fruehauf Trailer Company is the world's largest manufacturer and distributor of truck trailers and special bodies and maintains numerous plants throughout the country for the manufacture, assembly and distribution of such vehicles. Among the types of bodies manufactured and assembled by Fruehauf are trailers bearing tanks or vessels to be used in the transportation of fluids, gaseous and powdered commodities.
In addition to the manufacture of such tank trailers in its own plants and factories, the Fruehauf Company has contracted a portion of such work to the defendant partnership, and its successor corporation, Independent Metal Products Company. Fruehauf maintains and operates a tank trailer assembly plant in the city of Omaha, Nebraska; and contiguous to, joining with, and opening into this Fruehauf plant is the plant of the defendant wherein the defendant fabricates and attaches vessels and tanks for Fruehauf.
A course of dealing has been established between Fruehauf and defendant whereby Fruehauf manufactures and assembles the undercarriage or chassis of the trailer, including wheels, tires and other equipment. This undercarriage is then moved to the defendant's plant for the purpose of mounting thereon a tank or vessel fabricated by the defendant.
These tanks are designed by the Fruehauf Company and constructed by the defendant pursuant to written orders from Fruehauf, setting forth the specifications for each tank. The defendant has no discretion in regard to the design of the tank, its size, material, accessories or methods of manufacture, but is required to follow instructions from Fruehauf's engineers who submit to the defendant complete work data sheets, instructions, drawings and specifications. The defendant, in constructing the tank, uses substantially the same methods of procedure used by Fruehauf in its own plants, where Fruehauf manufactures not only the undercarriage, but also the tank which is mounted thereon.
The tanks are constructed in the following manner. Sheets of nickel alloy steel are shaped into the periphery of the tank, which is substantially an ellipsoidal solid, closed at both ends, with a cut out portion toward the front where the tank trailer is attached to the tractor. The metal sheets are welded together, interior vertical braces are inserted to support and strengthen the vessel and oftentimes baffle plates are spaced throughout the tank to eliminate the surging of a contained liquid when the vessel is in motion. All the welding in connection with this construction is done with the tank in an upside down position. When the work is complete the tank is turned right side up and a hole approximately twelve by sixteen inches is cut in the top of the tank. Workmen, of necessity small in stature, go through this hole for the purpose of cleaning the inside of the tank. This cleaning includes using a chip drill on the seams of the tank, sweeping the tank out with brooms and vacuum cleaners and finally painting the seams.
In spite of the interior cleaning by the tank cleaners, frequently pieces of welding rod, metal or other foreign material lodge in the seams and when jarred loose will work their way into the bottom of the tank *865 and ultimately into the dispensing valves thereby scoring or preventing proper operation of these valves. The presence of foreign material in the tank, after cleaning, is sufficiently frequent to be considered a recognized hazard in the tank manufacturing industry. Mr. Owens, an officer and employee of the Fruehauf Company, who had considerable experience in the tank trailer manufacturing industry, testified that he knew of no technique which would insure that the work of the inside cleaners would remove all foreign material from the tank.
This foreign material could be kept from entering and possibly damaging the valve by the use of a device known as a line strainer, which is nothing more than a mesh or screen placed in the pipes just ahead of the valve. The Fruehauf Company was well aware of this device and frequently specified its installation on tanks constructed by the defendant; but the defendant did not have discretion to add this device without a written request from Fruehauf.
Fruehauf employed one Phelps for the purpose of inspecting work done by the defendant. Phelps checked through the assembly line every day and had knowledge of the condition of the tanks from the time their assembly commenced until they were finally accepted. The completed tanks were not accepted for Fruehauf by Phelps until he had made a reasonably extensive inspection, which lasted approximately forty minutes and included an examination of the interior of the tank. In the course of this inspection Phelps would open the fill caps, eight or ten inch openings in the top of the tank, and, using either sunlight or a battery flash light for illumination, he would examine the interior to determine whether or not any foreign material had been left in the bottom of the tank. He would also see that "the plugs heads were built in", that "the baffle plates were in place" and that all the necessary valves, manifolds and so forth that "the order called for were attached to the vessel". If Phelps found foreign material in the tank he could and would refuse to accept the tank for Fruehauf. The inspection which Phelps actually made might not ordinarily disclose all the foreign material that could possibly be lodged behind the baffle plates or in other obscure places. However, the Fruehauf Company determined the nature and extent of its own inspection without any limitation by defendant, and with full opportunity to make as thorough an inspection as Fruehauf desired.
In addition to Phelps, Owens and Thomas, also employees of Fruehauf, went through the defendant's plant on many occasions throughout the period in question; and if they were not satisfied with the methods used in assembling the tanks, or if a particular tank was in some way unfit, they would see that the appropriate changes were made.
The entire output of the defendant, approximately eight tanks a week, was purchased by Fruehauf, subject of course, to the inspection and acceptance already mentioned.
On April 21, 1951, Fruehauf ordered from the defendant sixty, 4000 gallon, Hi-Tensile, three compartment tanks, to be made according to specifications set forth on a data sheet furnished by Fruehauf. These tanks were to be stock items, i.e. tanks made up by the defendant for Fruehauf, though not yet ordered from Fruehauf by a third party. The original order, calling for two-inch piping on all sixty of the tanks, was modified by a letter from Fruehauf, dated April 22, 1942, which specified that twenty of the units, serial numbers T.D. 1404 through T.D. 1424, were "to be built up with 3" piping". On October 6, 1942, one of these twenty tanks, serial number T.D. 1417, was delivered to Fruehauf by the defendant, and accepted, after inspection, by Mr. Phelps on behalf of Fruehauf. This tank was furnished by the defendant to Fruehauf pursuant to a sales contract containing the following express warranty or guarantee: "Guarantee. The seller guarantees all products of its manufacture to be free from defects of workmanship and material for a period of one year from the date of delivery. The obligation of the seller under this guarantee shall be limited, however, to the repair or replacement at our plant in Omaha, Nebraska, *866 of any goods so proving defective, and shall not render the seller liable for any other or consequential damages to the buyer or to any other person."
This tank remained in Fruehauf's possession until October 22, 1942. It was then returned to the defendant for the purpose of adding an eleven-inch tire carrier under the tank and a three-inch manifold on the discharge valves. Mr. Owens testified that it was very improbable that the work done in connection with these changes would introduce any foreign material, such as a piece of welding rod, into the tank or pipes. On October 29, 1942, the tank trailer, with tire carrier and manifold added, was returned to Fruehauf. It was sold by Fruehauf to a partnership known as the Gilmore, Gardner and Kirk Oil Company and delivered to the partnership in Omaha, Nebraska, November 11, 1942.
On December 10, 1942, the Oil Company made a delivery of gasoline from the tank trailer to the Oklahoma Transportation Company in Oklahoma City, Oklahoma. An excessive delivery was made, and the gasoline overflowed onto the floor of the garage. This gasoline ignited and the resulting fire caused serious injuries to one James E. Walker and substantial property damage. A contributing cause of the fire and the resulting damage was the presence of a small piece of welding rod approximately two inches in length and one-eighth of an inch in diameter in the gate valve through which the front compartment of the tank trailer discharged into the manifold, which prevented the complete closing of the valve, and resulted in the excessive delivery. It is undisputed that the piece of welding rod was in the tank on November 11, 1942.
Walker sued Gilmore, Gardner and Kirk Oil Company and his case was settled by the entry of a judgment in his favor in the amount of $3,000, and the payment of the same by the Central Surety and Insurance Corporation with whom the Oil Company carried their insurance. The property damage cases were contested and resulted in verdicts for the Oil Company, but since the suits were for amounts totaling more than the Oil Company's liability insurance policy limits, that company employed its own attorney and paid him $1,500 for his services.
The Oil Company and the Central Surety and Insurance Company brought suit against Fruehauf in the United States District Court in Oklahoma City to recover the amounts paid in settlement of the Walker judgment and for the attorney's fees mentioned. Fruehauf at all stages of the litigation notified the defendant, Independent Metal Products Company, of the filing of the suit and demanded that the defendant hold it harmless from any loss arising out of said action and tendered the defense of the action to Independent Metal Products Company, advising the latter concern that if it did not assume the defense, Fruehauf would do so, and would hold Independent liable for any judgment, attorneys' fees and expenses incurred in connection with the matter, but the defendants refused to undertake the defense.
A trial was had which resulted in a judgment in favor of the Oil Company and the Central Surety and Insurance Company against Fruehauf. This judgment was affirmed on appeal by the United States Court of Appeals, Fruehauf Trailer Co. v. Gilmore, Gardner & Kirk, 10 Cir., 1948, 167 F.2d 324, on the ground that there was an implied warranty on the part of Fruehauf that the tank trailer was reasonably fit for the purpose of transporting and delivering gasoline, and that the failure to remove the welding rod from the front compartment of the tank was a breach of that implied warranty for which the Insurance Company and the Oil Company were entitled to recover.
During all times material to this action, there was in full force and effect a policy of insurance whereby the plaintiff in this case, Maryland Casualty Company, insured the Fruehauf Trailer Company and was obligated to defend Fruehauf against such suits as the one heretofore mentioned and to pay any judgment obtained against Fruehauf in such action. The policy also provided that "in the event of any payment under this policy, the company shall be subrogated to all the insured's rights of recovery therefor." The plaintiff's total *867 disbursements to defend the suit and satisfy the judgment against Fruehauf amounted to $7,048.81. As subrogee of the Fruehauf Trailer Company the plaintiff now seeks to recover this amount from the defendant, Independent Metal Products Company.
Discussion
Counsel for plaintiff has proceeded in the trial of this case on the theory that defendant is liable (1) in tort for negligence, or (2) in contract for breach of an implied warranty of fitness.[1] The evidence fails to convince the Court that the defendant is culpable on either ground.
The defendant was both the manufacturer and vendor of the tank portion of the tank trailer from which the excessive delivery of gasoline was made, thereby causing injuries. This excessive flow of gasoline resulted from the presence of a small piece of welding rod in one of the discharge valves of the tank which prevented the valve from completely closing. The fact is clear that the piece of welding rod was in the tank on November 11, 1942, when the tank was delivered by Fruehauf to Gilmore, Gardner and Kirk Oil Company. However, the Court is not persuaded that the piece of welding rod was introduced into the tank by the defendant, or, that it was even present in the tank when the defendant delivered the tank to Fruehauf. The presence of the welding rod in the tank on November 11, 1942, does not create a presumption that it was there at an earlier date, but is merely evidential of this fact. Liverpool & London & Globe Insurance Co. v. Nebraska Storage Warehouses, 8 Cir., 1928, 96 F.2d 30, 36. Since there is no direct evidence on the issues of how or when the piece of welding rod was introduced into the tank, plaintiff must rely on circumstantial evidence to establish these facts. The conclusion that defendant introduced the piece of welding rod into the tank, or that it was present in the tank when the tank was delivered by defendant to Fruehauf is not, under the view taken by some authorities, supported by circumstantial evidence, unless the facts relied upon are of such a nature and so related to each other that no other conclusion can reasonably be drawn from them. Bixby v. Ayers, 139 Neb. 652, 662, 298 N.W. 533; Mescall v. W. T. Grant Co., 7 Cir., 1943, 133 F.2d 209. And even under the more liberal view, the conclusion, to be supported by circumstantial evidence, must be the more probable hypothesis to be drawn from the proven circumstances. 32 C.J.S., Evidence, § 1039, p. 1103, n. 28. Defendant finished all welding operations in connection with the interior of the tank on October 6, 1942, and delivered the tank to Fruehauf on this date. The tank trailer was returned to defendant October 27, 1942, and kept by it through October 30, 1942, for the purpose of adding a manifold and tire carrier; but in view of the testimony of plaintiff's witness, Mr. Owens, to the effect that it is highly improbable that the piece of welding rod could have been deposited in the tank or valves in the process of making these changes, the Court is inclined to the view that the piece of welding rod was not injected in the tank during this period. With the exception of this four-day period, the tank was in the possession of Fruehauf for more than thirty days prior to the date that the piece of welding rod was admittedly present in the tank. Neither plaintiff, the subrogee of Fruehauf, nor defendant, has introduced evidence which sufficiently shows where the tank trailer was kept during that period and what if anything was done to it. Under these circumstances, the Court cannot conclude, without engaging in speculation, that the piece of welding rod admittedly present in the tank on November 11, 1942, was present in the tank on or before October 6, 1942, or that it was introduced into the tank by defendant, Independent Metal Products Company; such conclusions are not necessarily the more probable to be *868 drawn from the proven circumstances and are certainly not the only conclusions that can fairly and reasonably be drawn from such circumstances.
For purposes of discussion only, and so that all the issues presented at the trial may be completely disposed of, the Court will assume to be the fact that which in the foregoing paragraph, has expressly been declared not to be the fact, i. e. that the piece of welding rod was present in the tank prior to October 6, 1942.
1. Negligence.
It may be stated as a general rule that a manufacturer is required to exercise reasonable care in manufacturing an article which, if carelessly manufactured, is likely to cause more than trivial harm to those who use it in the manner for which it is manufactured. Restatement, Torts (1934 Ed.) Section 395. However, the defendant is only required to exercise reasonable care and the burden is on plaintiff to show that the defendant has failed to exercise such care in one or more of the particulars in which reasonable care is required for the protection of those whose safety depends upon the character of the chattel. The Court is not convinced that the defendant failed to exercise the care required.
"The particulars in which reasonable care is usually necessary for protection of those whose safety depends upon the character of the chattels are, (1) the adoption of a formula or plan which, if properly followed, will produce an article safe for the use for which it is sold, (2) the selection of material and parts to be incorporated in the finished article, (3) the fabrication of the article by every member of the operative staff no matter how high or low his position therein, (4) making such inspections and tests during the course of manufacture and after the article is completed as the manufacturer should recognize as reasonably necessary to secure the production of a safe article, and (5) the packing of the article so as to be safe for those who must be expected to unpack it." Restatement of Torts, Section 395, Comment C.
The defendant cannot be said to have failed to exercise care in the first particular mentioned above because, in general, Fruehauf, and not defendant, determined the design and specifications of the chattel and also the methods and modes of manufacture. In regard to particular number 2, there is neither allegation nor evidence that the defendant failed to use care in selecting the materials to be incorporated in the tank trailer. The difficult question arises in connection with particular number 3. Every member of the defendant's operative staff was required to use reasonable care in the fabrication of the tank trailer. Does the fact, which has been assumed for the purposes of discussion, that a piece of welding rod approximately two inches in length and one-eighth of an inch in diameter was present somewhere in the tank when it was delivered by defendant to Fruehauf show that some member of the defendant's operative staff failed to use reasonable care in his work on the tank? The Court is of the opinion that this fact, in and of itself, does not convincingly establish that defendant's employees failed to use due care. To hold otherwise, the Court would have to assume that if all the defendant's employees exercised reasonable care in manufacturing the tank trailer according to the specifications and in the manner suggested by Fruehauf that the piece of welding rod would not have been overlooked. This assumption does not seem to be in harmony with the testimony of the plaintiff's own witness, Mr. Owens. He stated that in spite of all the cleaning of the interior of the tank by the defendant's clean up boys, frequently pieces of metal and foreign material lodged in the braces or baffle plates and that presence of foreign material in the tank was frequent enough to be a recognized hazard in the industry and that he knew of no procedure which would insure that the sweeping and cleaning would remove all foreign material from the tank. As to the fourth particular, which requires making such inspections and tests during the course of manufacture and after the article is completed as the manufacturer should recognize as reasonably necessary for the production *869 of a safe article, the Court is unable to find that the defendant was negligent in this respect. Particular number 5, which has reference to the packing of the article so as to be safe for those who must be expected to unpack it, is not material to the present case.
Not only is the Court not convinced of the defendant's failure to use due care, but even if the Court were convinced, it would still be dubious of the plaintiff's right to restitution. The applicable rule is this: "Where a person has supplied to another a chattel which because of the supplier's negligence or other fault is dangerously defective for the use for which it is supplied and both have become liable in tort to a third person injured by such use, the supplier is under a duty to indemnify the other for expenditures properly made in the discharge of the claim of the third person, if the other disposed of the chattel in reliance upon the seller's care and if such reliance was justifiable." Restatement, Restitution (1937 Ed.) Section 93 (1). The plaintiff, a subrogee of Fruehauf, must stand in the shoes of Fruehauf. Fruehauf suggested methods of manufacture and the defendant complied with these suggestions. Fruehauf's agents were continually in defendant's plant observing the processes of manufacture and knew the condition of each tank from beginning to end. Upon completion of each tank Fruehauf made a thorough inspection of it before accepting the tank from the defendant. Under these circumstances, the Court is unable to find that Fruehauf justifiably relied upon the defendant's care.
In concluding the discussion of negligence, the Court feels obliged to mention one last fact. Fruehauf was well aware of the possibility that foreign material could have lodged in the tank. Fruehauf could have discovered the presence of this matter by a more detailed inspection or could have prevented the consequences resulting from its presence by authorizing the installation of a line strainer which would have kept this harmful substance from reaching the valves.
2. Implied Warranty
The plaintiff strenuously contends that the defendant's delivery of the tank, with the piece of welding rod therein, to Fruehauf, constituted the breach of an implied warranty of fitness.[2] The Court, however, is unable to find any such implied warranty. Under the Uniform Sales Act as adopted in Nebraska, the general rule is that there is no implied warranty or condition as to the quality or fitness for any particular purpose of goods supplied under a contract to sell or a sale. Section 69-415, R.R.S.Neb., 1943. There are, of course, several exceptions to this general rule, but the case under consideration does not come within the purview of any of these exceptions.
The broadest of such exceptions may be stated as follows: "Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller's skill or judgment (whether he be the grower or manufacturer or not), there is an implied warranty that the goods shall be reasonably fit for such purpose." Section 69-415 (1), R.R.S.Neb.1943. In this case there is no implied warranty of fitness under the quoted section of the statute for the following reasons. The fitness of an article for the performance of a particular function depends generally upon three basic factors: (1) design (including specification of material), (2) materials, and (3) workmanship. In other words, the article must be designed to perform the desired function; it must be made out of specified materials which are not defective and these materials must be assembled according to the plan or design in a careful and workmanlike manner. In the case under consideration, Fruehauf, the buyer, designed the tank trailer and specified the materials to be used in its construction. *870 For this reason, there could be no implied warranty that the tank trailer was designed to perform a particular function because Fruehauf, the buyer, did not rely upon the skill or judgment of the defendant, the seller, in this matter.[3] Nor can the Court imply that the defendant warranted the fitness of the tank with respect to materials and workmanship. It is well settled that where express warranties in a contract are in their nature inconsistent with warranties which would have been implied, it would indeed be violating the intention of the parties to imply warranties. I Williston on Sales (1948 Ed.) Sec. 293 a, p. 625, n. 18; Annotation 164 A.L.R. 1337; cf. Section 69-415 (6), R.R.S.Neb.1943. The sales contract in this case guaranteed that the tank would be free from defects of workmanship and material for a period of one year from the date of delivery. The guarantee, however, limited the obligation of the seller thereunder to the repair or replacement of any goods so proving defective and explicitly provided that "this guarantee shall not render the seller liable for any other or consequential damages to the buyer or any other person." This express warranty specifically covering the matters of materials and workmanship, and limiting the defendant's liability with respect thereto, is inconsistent with and precludes an implied warranty touching the same matters.
The second exception to the general rule that no warranty of quality should be implied relates to the implied warranty of merchantable quality, Sec. 69-415 (2), R.R.S.Neb.1943, and is not material to the disposition of the present case. The last exception which need be mentioned is that an implied warranty as to quality or fitness for a particular purpose may be annexed by usage of trade. Sec. 69-415 (5), Neb. R.R.S.1943. However, the plaintiff does not contend, nor is there any evidence to substantiate a finding, that an implied warranty of fitness was, in this case, annexed by usage of trade.
To conclude the discussion of warranties, the Court calls attention to the proposition that if the buyer has examined the goods, there is no implied warranty as regards defects which such examination ought to have revealed. Sec. 69-415 (3), Neb.R.R.S.1943. However, the Court does not want to indulge in a discussion as to whether or not Mr. Phelps' inspection ought to have revealed the presence of the piece of welding rod upon the assumption that the welding rod was somewhere in the tank when Phelps made his inspection, since such a discussion would lead us too far from the realities of the situation. Suffice it to say, that the evidence does not establish that the piece of welding rod was even in the tank when Mr. Phelps made his inspection and accepted delivery of the tank on behalf of Fruehauf.
For the reasons stated in the foregoing memorandum, plaintiff's cause of action should be dismissed. Counsel for defendant shall prepare and submit for approval the appropriate judgment to be entered in accordance with this memorandum.
NOTES
[1] Under the modern view a warranty is regarded as a term of the contract of sale, express or implied, for which the remedy is a contract action. However, the court recognizes that in its beginning the liability was based on tort and the action was on the case. 1 Williston on Sales (2d Ed.) Sec. 197; Ames, History of Assumpsit, 2 Har.L.R. 1, 8.
[2] Here again the court is assuming for the purposes of discussion, that which the evidence does not establish to be the fact, i. e. the presence of the welding rod in the tank on or before October 6, 1942.
[3] Under the Sales Act the buyer's justifiable reliance on the seller's skill and judgment is alone important. 1 Williston on Sales (1948 Ed.) Sec. 235, pp. 609, 610, note 14. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1977754/ | 705 F.Supp. 1065 (1988)
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
v.
BARRETT, HAENTJENS & CO.
Civ. No. 87-1532.
United States District Court, M.D. Pennsylvania.
February 19, 1988.
On Motion for Summary Judgment July 22, 1988.
On Motion for Reconsideration September 7, 1988.
*1066 Barbara Kosik, Asst. U.S. Atty., Scranton, Pa., Christopher Bullard, Spencer H. Lewis, Jr., Lanier E. Williams, E.E.O.C., Philadelphia, Pa. (Charles A. Shanor, Philip B. Sklover, E.E.O.C., Washington, D.C., of counsel), for plaintiff.
Dona S. Kahn, Harris & Kahn, Philadelphia, Pa., for defendant.
MEMORANDUM AND ORDER
NEALON, Chief Judge.
Currently before the court is defendant's motion for summary judgment based on the running of the applicable statute of limitations. For the reasons that follow, the court will permit the parties to present additional information prior to ruling on the motion.
Background
Plaintiff, the Equal Employment Opportunity Commission (EEOC), filed this action on November 2, 1987 pursuant to the Age Discrimination in Employment Act (ADEA), 29 U.S.C. sections 621-634, "to correct unlawful employment practices on basis of age and to make whole Thomas Casagrande, Charles Woodring, Norbert Wersinger and Oliver Eisenhower." See document 1 of record, at p. 1. The four named employees were discharged on February 2, 1984 and were allegedly replaced by younger employees. See document 4 of record, Exhibits A, B, C, and F. Plaintiff alleges that the employees were discharged from their jobs because of their ages. See document 1 of record, at p. 1.
Defendant filed a motion for summary judgment on December 4, 1987. See document 3 of record. Defendant contends that "plaintiff did not file the complaint within the statute of limitations as required for a violation of the ADEA, and the tolling for conciliation does not make the complaint timely." See id. at p. 3. Plaintiff filed a brief in opposition to defendant's motion on December 21, 1987, and defendant filed a reply brief on January 8, 1988. See documents 4 and 5 of record, respectively. This matter is now ripe for disposition.
Discussion
When examining a motion for summary judgment, the court must view all facts in the light most favorable to the party opposing the motion. Betz Laboratories, Inc. v. Hines, 647 F.2d 402, 404 (3d Cir.1981). If there exists a genuine issue as to any material fact, summary judgment must be denied. Fed.R.Civ.P. 56(c). A fact is material *1067 if it might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). "Factual disputes that are irrelevant or unnecessary will not be counted." Id. (citing 10A C. Wright, A. Miller & M. Kane, Federal Practice & Procedure section 2725, at pp. 93-95 (1983). In addition, summary judgment will not lie if the dispute about a material fact is "genuine," that is, "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. In opposing a motion for summary judgment, a party may not rest on the allegations in his complaint. Instead, the party must present evidentiary affidavits or risk having the undisputed statements contained in the movant's affidavits taken as true. See Fed.R.Civ.P. 56(c); see also Sierra v. Lehigh County Pennsylvania, 617 F.Supp. 427, 429 (E.D.Pa.1985).
The ADEA incorporates the statute of limitations contained in the Portal-to-Portal Act. See 29 U.S.C. section 626(e)(1). Section 6 of the Portal-to-Portal Act provides as follows:
Any action ... to enforce any cause of action ... may be commenced within two years after the cause of action accrued, and every such action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued.
29 U.S.C. section 255(a). The ADEA further provides that the statute of limitations will be tolled "[f]or the period during which the [EEOC] is attempting to effect voluntary compliance with requirements of this chapter through informal methods of conciliation, conference, and persuasion ..., but in no event for a period in excess of one year." 29 U.S.C. section 626(e)(2).
In its brief in opposition to defendant's summary judgment motion, plaintiff makes three main arguments. First, plaintiff argues that Congress did not intend that the one year period of conciliation could be ended prematurely by an employer's intransigence, but instead intended that the tolling period remain in effect for one full year after conciliation is invoked. Second, plaintiff alleges that the actual period of conciliation in this case was sufficient to make this action timely. Last, plaintiff contends that the complaint is timely under a continuing violation theory. These arguments will be addressed in seriatim.
Plaintiff first argues that Congress intended that the tolling period remain in effect for one full year after conciliation is invoked. Both the statute and the case law that interprets it belie this argument. Section 7(e)(2) provides as follows:
For the period during which the Equal Employment Opportunity Commission is attempting to effect voluntary compliance with requirements of this chapter through informal methods of conciliation, conference, and persuasion pursuant to subsection (b) of this section, the statute of limitations as provided in section 255 of this title shall be tolled, but in no event for a period in excess of one year.
29 U.S.C. section 626(e)(2). The courts that have interpreted this section have rejected the contention "that the tolling period ends only when the EEOC sends a letter to a potential defendant stating that conciliation has failed and otherwise runs for an automatic one year after conciliation begins." Equal Employment Opportunity Comm. v. Colgate-Palmolive Co., 586 F.Supp. 1341, 1345 (S.D.N.Y.1984); see also Vuksta v. Bethlehem Steel Corp., 540 F.Supp. 1276, 1280 n. 13 (E.D.Pa.1982), aff'd, 707 F.2d 1405 (3d Cir.1983), cert. denied, 464 U.S. 835, 104 S.Ct. 121, 78 L.Ed.2d 119 (1983); Pfister v. Allied Corp., 539 F.Supp. 224, 227 (S.D.N.Y.1982); EEOC v. State of Kansas, 28 Fair Empl. Prac. Cas. (BNA) 1036, 1038 (D.Kan.1982).
Plaintiff cites no case authority in support of its position. Instead, it relies exclusively on the legislative history of the Act. As stated by plaintiff,
There is not one word in the legislative history of the Amendments to the ADEA that manifests the intention, either expressly or impliedly, that it would be left *1068 to the employer, to determine when conciliation had ended. Were such the intention of Congress, there would have been no reason to establish a time limit for the settlement process because the employer could be counted upon to end conciliation before the enforcement bureau had obtained "unfounded concessions" from it.
See document 4 of record, at p. 10.
While the court finds the legislative history surrounding the amendments to the Act to be inconclusive, the following passage is informative:
Various courts have held that the failure to comply with the conciliation requirement in section 7(b) requires dismissal of the lawsuit. Some courts have gone so far as to say that conciliation is a "jurisdictional prerequisite" to bringing a lawsuit under the Act....
It is the committee's intent that the conciliation requirement in section 7(b) should not be so rigidly applied ... The claim of discrimination ought to be decided on the merits through litigation in the event conciliation process fails.
In order to assure that such resolution on the merits will occur, the legislation provides that the statute of limitations will be tolled during conciliation carried out pursuant to section 7(b).
It is the intent of this amendment to prevent those who have violated the Act from delaying and postponing conciliation and thereby possibly avoiding liability.
Senate Comm. on Human Resources, Age Discrimination in Employment Act Amendments of 1978, S.Rep. No. 95-493, 95th Congr., 2nd Sess. 1, reprinted in 1978 U.S. Code Cong. & Admin.News 504, 516; see also 123 Cong.Rec. 34,317 (1977) ("My amendment would give the parties up to 2 additional years[1] to resolve their differences in informal negotiations. That is probably more time than will be needed in most instances") (emphasis added). These statements, while not resolving the issue, support the conclusion that the statute of limitations is not automatically tolled for the entire one year period.
Plaintiff next argues that, even if plaintiff is not entitled to a tolling of the statute of limitations for one year in all circumstances, the conciliation that did take place sufficiently tolled the statute to make the present suit timely. Given the present state of the record, the court is unable to decide this issue. The court will therefore permit the parties to file supplemental affidavits.
The parties do not contest the fact that the cause of action accrued on February 2, 1984.[2]See document 3 of record, at p. 3; document 4 of record, at p. 2. Defendant assumes arguendo "that plaintiff will be able to sustain its burden of proof as to its allegation of a willful violation," see document 3 of record, at p. 3, thus making applicable the three year statute of limitations. See 29 U.S.C. sections 255(a), 626(e)(1). The suit was filed on November 2, 1987. See document 1 of record. Thus, in order for this suit to be timely, the period of conciliation must have been at least 273 days in length.[3]
The conciliation process begins upon the issuance of a letter of violation by plaintiff. See document 4 of record, Exhibit G (letter *1069 of violation); see also H.Conf.Rep. No. 95-950, 95th Cong., 2nd Sess. 13, reprinted in 1978 U.S.Code Cong. & Admin.News 504, 528 ("The conferees agree that it is appropriate for the tolling of the statute of limitations to begin when the Department of Labor states, in a letter to the prospective defendant(s), that it is prepared to commence conciliation pursuant to section 7(b) of the act"); Equal Employment Opportunity Comm. v. Colgate-Palmolive Co., 586 F.Supp. at 1343-1345. Here, a letter of violation was issued on July 8, 1986. Thus, for the suit to have been timely filed, conciliation must have continued through April 7, 1987.
Exhibit 2 to defendant's motion for summary judgment, see document 3 of record, is a letter from defendant's counsel to Rae T. Balaban, an investigator for the EEOC, dated February 3, 1987. The letter reads, in pertinent part, as follows:
During our phone conversation in which I informed you of the Gabrielle settlement, you informed me that the EEOC was now interested in discussing settlement in connection with other persons, unnamed, (I assume you mean Woodring, Wersinger, and Casagrande), notwithstanding the fact that the only people who filed charges were Ancharski and Gabrielle.
You have never raised the possibility of settlement of "claims" of these other people to me before this week. I indicated to you that I could not immediately respond to your question of settlement since I have no knowledge of the parameters of EEOC's demands or their alleged demands and I had never discussed the issue with my client.
I have spoken to the President of the company today and we are unwilling to pay any moneys to these persons who have not filed their own charges. I am really surprised that you are pursuing this matter....
In any event, we do not intend to make any offer for the other persons, so you can advise your superiors that we are not interested in commencing any conciliation discussions on this matter.
Exhibit 3 to the same document is an affidavit from defendant's counsel. She states the following: "After I sent the February 3, 1987, letter to the EEOC, I had no further substantive discussions about conciliating the claims of Messrs. Casagrande, Woodring, Wersinger, or Eisenhower with any member of the EEOC staff." See document 3 of record, Exhibit 3, at p. 2, para. 3.
Plaintiff, in turn, attached an affidavit from Balaban. She states the following:
2. Some time in the middle of February, 1987, Dona Kahn called me to ask the status of the Gabrielle case as it related to the class members. At this time I discussed possible settlement for the class with her. She wanted to know how much back pay would be involved. I told her I would find out where the file was and call her back. I called Christopher Bullard, an attorney assigned to this case, who informed me that the file had already been sent to Washington, D.C. for review.
3. Within the next few days I called Dona Kahn back to inform her that the case had been sent to Washington with a recommendation for litigation for the class.
4. I talked to her about conciliation for the class again and said I couldn't compute the back pay because the file was in Washington, D.C. but if she was interested in settling for the class, I would call Washington and have them return the file to me. She told me not to do this yet because she would have to speak to Mr. Haentjens first about settlement.
5. Within a week or so, I heard from her that he wasn't interested in settling the class.
See document 4 of record, Exhibit I, at pp. 1-2, paras. 2-5. Reading this in the light most favorable to plaintiff, the non-moving party, the conciliation process terminated near the end of February 1987. As stated previously, conciliation would have had to have continued through April 7, 1987. Since conciliation seemingly ended approximately five weeks too early, the present *1070 suit was filed approximately five weeks too late.
In its opposing brief, however, plaintiff makes certain allegations that are not contained in the accompanying affidavits. For example, plaintiff's brief contains the statement that Balaban believed conciliation remained open because of the Ancharski and Gabrielle settlements and because she and defense counsel had a conversation about settlement after the February 3, 1987 letter, near the end of February. See document 4 of record, at pp. 14-15. In addition, the brief states that Balaban told Kahn that she would remain available to conciliate the case at the time of their last conversation near the end of February of 1987. See id. at p. 15. If Balaban actually made such a statement, plaintiff's counsel should know that it belongs in the affidavit, under penalty of perjury, and not obscured by way of argument in a brief.
Given that these statements are not contained in an affidavit, it would be within the province of this court to simply ignore them. See Helmich v. Kennedy, 796 F.2d 1441, 1443 (11th Cir.1986); Moorhead v. Millin, 542 F.Supp. 614, 617 (D.V.I.1982); Sims v. Mack Truck Corp. 488 F.Supp. 592, 597 (E.D.Pa.1980) (citing Tunnell v. Wiley, 514 F.2d 971 (3d Cir.1975)) ("Self-serving statements of fact in a party's brief, not in proper affidavit form, may not be considered in determing if a genuine issue of material fact exists"). The court, on the other hand, may require the parties to file supplemental affidavits. See, e.g., Gordon v. Watson, 622 F.2d 120, 123 (5th Cir.1980); Season-All Industries, Inc. v. Turkiye Sise ve Cam Fabrikalari, 425 F.2d 34 (3d Cir.1970). Here, the latter alternative will be employed.
Within fifteen (15) days from the date of this Order, plaintiff may, if it desires, file a supplemental affidavit from Rae Balaban or some other interested party that specifically addresses the factual allegations made in plaintiff's brief. The affidavit must be made under oath or in accordance with 28 U.S.C. section 1746. It should also address what, if any, steps were taken regarding conciliation, assuming Balaban made the statement to Kahn near the end of February of 1987 that she would remain available to conciliate the case. Defendant will be given ten (10) days following plaintiff's submission to file a responsive supplemental affidavit, if it so desires.
Plaintiff's final argument is that this suit is timely under the theory of a continuing violation. See document 4 of record, at pp. 16-17. Relying on Equal Employment Opportunity Comm. v. Westinghouse Electric Corp., 725 F.2d 211 (3d Cir.1983), cert. denied, 469 U.S. 820, 105 S.Ct. 92, 83 L.Ed.2d 38 (1984), plaintiff argues that defendant "had set forth on an illegal policy of eliminating the positions of older employees," which policy did not end until April 2, 1984, when Neil Gabrielle was discharged. See id. at p. 16. According to plaintiff, "[i]f the statute of limitations in this case did not begin to run until April 2, 1984 and conciliation was terminated by Kahn's letter of February 3, 1987, then the complaint is timely." Id. Again, the court must reject plaintiff's argument.
According to the Supreme Court in Delaware State College v. Ricks, 449 U.S. 250, 257, 101 S.Ct. 498, 504, 66 L.Ed.2d 431 (1980), to determine the timeliness of an EEOC complaint, a court must "identify precisely the `unlawful employment practice' of which [plaintiff] complains." Here, plaintiff clearly identifies the employment practice of which it complains in its complaint, which reads as follows:
STATEMENT OF CLAIMS
7. Since at least February 1, 1984 the Defendant Employer has engaged in unlawful employment practices at its Hazleton, Pennsylvania facility in violation of Section 4(a) of the ADEA, 29 U.S.C. Section 623(a) by discharging Thomas Casgrande [sic], Charles Woodring, Norbert Wersinger and Oliver Eisenhower from their jobs because of their age.
8. The effect of the policies and practices complained of above has been to deprive Thomas Casagrande, Charles Woodring, Norbert Wersinger and Oliver Eisenhower of equal employment opportunities *1071 and otherwise adversely affect their status as employees because of age.
9. The unlawful practices complained of above were and are willful within the meaning of the ADEA.
See document 1 of record, at p. 3, paras. 7-9; see also id. at p. 1. No mention is made of the subsequent discharge of Neil Gabrielle, nor is the action brought on behalf of the four named employees and all employees similarly situated. Cf. Westinghouse Electric Corp., 725 F.2d at 220 (suit filed on behalf of "Paul Meola, Jane Doe, Richard Roe, and other similarly situated employees"). Thus, plaintiff's argument "cannot be squared with the allegations of the complaint." Delaware State College v. Ricks, 449 U.S. at 257, 101 S.Ct. at 504, 66 L.Ed.2d 431.
Westinghouse Electric Corp., the only case that plaintiff cites in support of its continuing violation theory, is distinguishable from the present case. There, the court stated as follows:
A denial of Layoff Income and Benefits (LIB) could not occur until an employee was eligible to apply for LIB and until the claim was denied due to eligibility for early retirement. An employee did not have an enforceable demand until the claim was denied.... As stated earlier, to be eligible for LIB, an employee had to have been laid off as a result of plant closing. Thus, this case is in a different factual setting than Ricks. Although the alleged unlawful practice was the adoption and implementation of the policy, a cause of action could not accrue until the discrimination manifested itself by virtue of the policy actually being applied to individual employees at the time of the plant closing through individual LIB claim rejections.... In this case, the plant closed on April 1, 1977. Thus, at the earliest, the statute begins to run as of that date. An April 1, 1977 starting date makes this action timely if a three-year statute applies.
Westinghouse Electric Corp., 725 F.2d at 219 (citations omitted); cf. Laffey v. Northwest Airlines, Inc., 567 F.2d 429, 473 (D.C. Cir.1976), cert. denied, 434 U.S. 1086, 98 S.Ct. 1281, 55 L.Ed.2d 792 (1978) ("A severing of the employment relationship ordinarily terminates a discrimination against the severed employee, and activates the time period for filing charges with the Commission concerning any violation which occurred at separation or which may have been continuing up to the date thereof. To hold otherwise would effectively read the timely-filing requirement out of the statute"). In the present case, a cause of action for Casagrande, Woodring, Wersinger, and Eisenhower clearly accrued on February 2, 1984, the date their services were terminated. Assuming that conciliation ended on February 3, 1987, a February 2 starting date makes this action untimely.
Finally, the court concludes that defendant's actions cannot be deemed "continuing." "To be considered continuing in nature, ... the discrimination may not be limited to isolated incidents but [must] pervade[] a series or pattern of events which must continue within the filing period." Milton v. Weinberger, 645 F.2d 1070, 1076 (D.C.Cir.1981) (quoting Laffey v. Northwest Airlines, Inc., 567 F.2d at 473). Here, Neil Gabrielle filed a charge of discrimination with plaintiff on December 29, 1984. See document 4 of record, Exhibit C. None of the four employees named in plaintiff's complaint filed a similar charge. The maximum time period for filing a charge with the EEOC is 300 days. See 29 U.S.C. section 626(d)(2). In the 300 days preceding Gabrielle's filing, the only allegedly discriminatory act revealed by the record is the discharge of Gabrielle himself. If the four individuals named in the present complaint are considered, there are only two discrete acts of alleged discrimination, the terminations on February 2, 1984 of Casagrande, Wersinger, Woodring, Eisenhower, and Ancharski,[4] and the termination of Gabrielle on April 2, 1984. This hardly *1072 constitutes a pervasive series or pattern of events within the filing period. See Milton v. Weinberger, supra; Laffey v. Northwest Airlines, Inc., supra.
It is important to note that the four named individuals in the present complaint are not attempting to join a suit filed by Ancharski or Gabrielle, the only employees to have filed charges with the EEOC. Cf. Anderson v. Montgomery Ward & Co., 631 F.Supp. 1546 (N.D.Ill.1986) ("individuals who fail to file timely EEOC charges may join an ADEA action brought by similarly situated plaintiffs if at least one plaintiff's timely EEOC charge is sufficient to notify the employer and the EEOC of the circumstances surrounding the additional claims, and if those seeking to join could have filed their own timely EEOC charges at the time the plaintiff's charge was filed"); Fressell v. AT & T Technologies, Inc., 35 Fair Empl.Prac.Cas. (BNA) 658 (N.D.Ga.1984) [1984 WL 1002] (employees whose ADEA charges were not filed within 100 days after employer promoted younger employees may not rely on timely charges filed by two other employees). Both Ancharski and Gabrielle previously filed suit in this court, and both cases were settled prior to trial. See Gabrielle v. Barrett, Haentjens & Co., No. 86-0475 (M.D.Pa. closed Jan. 27, 1987) (Nealon, C.J.); Ancharski v. Barrett, Haentjens & Co., No. 84-1731 (M.D.Pa. closed July 31, 1985) (Caldwell, J.). Here, the named employees are attempting to save their action by arguing a continuing violation and by latching on to Gabrielle's timely EEOC filing. Under the facts of this particular case, the court will not permit them to do so.
An appropriate Order will enter.
ORDER
Now, this 19th day of February, 1988, in accordance with the reasoning set forth in the accompanying Memorandum, IT IS HEREBY ORDERED THAT:
(1) Within fifteen (15) days from the date of this Order, plaintiff may file a supplemental affidavit from Rae Balaban or some other interested party that specifically addresses the factual allegations contained in plaintiff's brief as well as what steps were taken regarding conciliation following Balaban's alleged statement to Kahn near the end of February 1987 that she would remain available to conciliate the case.
(2) Defendant may, within ten (10) days following plaintiff's submission, file a responsive supplemental affidavit.
ON MOTION FOR SUMMARY JUDGMENT
Currently before the court is defendant's motion for summary judgment based on the running of the applicable statute of limitations. For the reasons that follow, the court will deny the motion.
BACKGROUND
The complete factual and procedural history of this case is contained in this court's Memorandum and Order of February 19, 1988. See document 7 of record. In that Memorandum, the court discussed plaintiff's three arguments in opposition to defendant's motion for summary judgment based on the running of the statute of limitations. While the court rejected two of those arguments, it was unable to decide plaintiff's contention that the conciliation that took place between the parties sufficiently tolled the statute of limitations to make the present suit timely. See id. at pp. 7-12. While the court found that plaintiff's affidavits were insufficient to create a genuine issue of material fact as to the timeliness of the suit, it believed that certain statements found in plaintiff's brief in opposition to the summary judgment motion and attributed to an EEOC investigator, Rae T. Balaban, if actually made by her, could create such an issue. Rather than ignore those statements, the court granted plaintiff fifteen (15) days to file a supplemental affidavit. Id. at pp. 9-12.
Plaintiff filed a supplemental brief on March 11, 1988. See document 8 of record. That brief contains a supplemental affidavit from Balaban that reads, in pertinent part, as follows:
*1073 (1) At the time that I had my last conversation with Dona Kahn, Esq. in February of 1987, I told Ms. Kahn that the Commission was always open to settling cases.
(2) At the time of my last conversation with Dona Kahn, Esq. in February, 1987, I was aware that under Section 260.4 of the EEOC Compliance Manual I was obligated to remain available to conciliate this case until the lawsuit was actually filed.
(3) During my last conversation with Dona Kahn, Esq., in February 1987, after she told me that Respondent did not wish to settle, I said to her words to the effect that, "If she changed her mind about settlement we would be open for conciliation up until the time the Commission filed its' lawsuit." At no time did I tell her that conciliation efforts had failed or terminated.
(4) Because I did not have the case file at my desk when I spoke to Dona Kahn, Esq. in February of 1987 I was not able to make notes in the case log about these conversations. I have, thus, relied on my memory of these conversations.
(5) In my experience as an investigator, other representatives for respondents have absolutely refused to settle cases and yet have agreed to settlements immediately before the lawsuit was filed.
See document 8 of record, Exhibit 1. Plaintiff also brought to the court's attention a recent decision from the United States District Court for the District of New Jersey, Equal Employment Opportunity Comm. v. Rhone-Poulenc, Inc., 677 F.Supp. 264 (D.N.J.1988), which this court will discuss infra. Defendant filed a reply brief on March 25, 1988, arguing that Balaban's supplemental affidavit was insufficient to create a genuine issue of material fact. See document 10 of record.
Subsequently, on April 7, 1988, President Reagan signed into law the Age Discrimination Claims Assistance Act of 1988. See document 13 of record, Exhibit A. The purpose of that Act was to "extend the statute of limitations applicable to certain claims under the Age Discrimination in Employment Act of 1967 that were filed with the Equal Employment Opportunity Commission before the date of enactment of this Act." Id. at p. 1. The parties were then required to file briefs on the applicability of the Act to the present controversy. See document 11 of record. Plaintiff filed its brief on April 29, 1988, arguing that the Act was applicable and that it makes the complaint timely. See document 13 of record. Defendant took the opposite position in its brief, submitted on May 19, 1988. See document 14 of record. Both parties then filed reply briefs, plaintiff on June 2, 1988 and defendant on June 10, 1988. See documents 15 and 16 of record, respectively. This matter is now ripe for disposition.
DISCUSSION
In Equal Employment Opportunity Comm. v. Rhone-Poulenc, Inc., supra, the court was faced with a similar issue and factual setting. In denying the defendant's motion for summary judgment based on the running of the statute of limitations, the court stated as follows:
The EEOC is entitled to a tolling of the two or three year statute of limitations for the period during which it is attempting conciliation. 29 U.S.C. § 626(e)(2). Defendant argues that the tolling can only occur for that period during which the EEOC is actively attempting conciliation. The defendant maintains that in this action the EEOC is only entitled to a tolling period from the date of the Letter of Violation, September 8, 1986, until the December 8, 1986 letter indicating that the matter was being referred to the Legal Department....
Plaintiff contends that conciliation did not terminate on December 8, 1986. Plaintiff points out that the letter of December 8, 1986 indicates that the charge was referred to the Legal Department "for further consideration as part of our conciliation process." (Plaintiff's Exhibit 8) (emphasis added). The letter goes on to say "[t]o date we have *1074 been unable to effectuate an agreement for this charge but we are still interested in receiving a suitable proposal." (Emphasis added). These statements do not indicate a termination of conciliation, rather they indicate that the EEOC continues to be open to any voluntary settlement suggestions by the defendant.... In the case now before the court the December 8, 1986 letter does not contain any statement that conciliation attempts are being terminated nor has the EEOC stated that as of the date of the letter it considered attempts to conciliate over. The court finds that it does not at this time have sufficient evidence before it to determine that as of December 8, 1986 the EEOC had terminated its conciliation process and that the tolling period had ended. The fact that defendant did not respond to the December 8, 1986 letter with a new proposal for a settlement with the EEOC, does not necessarily mean the conciliation period was brought to a close.
Id. at 266-267.
In the instant case, reading the record in the light most favorable to plaintiff, the non-moving party, after defendant stated that it was not interested in settling the class, Balaban informed defendant that the EEOC was always open to settling cases and that she would remain open for conciliation up until the time the Commission filed its lawsuit in case defendant changed its position regarding settlement. See document 8 of record, Exhibit 1. At no time did Balaban state to defendant that conciliation efforts had failed or terminated. Id. Balaban also stated that, in her experiences as an investigator, other representatives for companies have absolutely refused to settle cases and yet have agreed to settlements immediately prior to the filing of a lawsuit. Id. As in Rhone-Poulenc, this court is unable to conclude that plaintiff had terminated its conciliation process in February of 1987.
Defendant argues that Rhone-Poulenc is distinguishable because the employer in that case did not tell the EEOC that it did not wish to conciliate. The court must disagree. While this court in its previous Memorandum rejected the notion "that the tolling period ends only when the EEOC sends a letter to a potential defendant stating that conciliation has failed and otherwise runs for an automatic one year after conciliation begins," see document 7 of record, at pp. 4-5, it has never endorsed the conclusion that conciliation automatically ends when an employer states that it is not interested in settling a case. The court will therefore deny defendant's motion for summary judgment on the ground that this action is barred by the statute of limitations.[1]
An appropriate Order will enter.
ON MOTION FOR RECONSIDERATION
Currently before the court is defendant's motion for reconsideration of this court's Order of July 22, 1988. Defendant's motion was filed on August 11, 1988. See document 19 of record. M.D. Local Rule 412 provides that "[a]ny motion for reconsideration or reargument shall be filed within ten (10) days after the entry of the judgment, order or decree." (Emphasis added.) Defendant's motion is untimely and will be denied on that basis.
The motion would fare no better were the court to consider it on its merits. Defendant's motion is based on a perceived conflict between this court's Memoranda and Orders of February 19, 1988 and July 22, 1988. See documents 7 and 17 of record. As stated by defendant,
The Court appears to have taken the position that only EEOC can terminate the conciliation process. This conflicts with the Court's statement in the First Memorandum rejecting the contention that tolling ends only when the EEOC *1075 sends a letter to the employer stating that conciliation has failed.
What is important to note is that even though Ms. Balaban stated that she would remain open to conciliate, she made no further conciliation efforts. It is undisputed that no further conversation or communications were held. What the Court has done is to allow an automatic tolling, even though there were no efforts whatsoever to conciliate subsequent to Ms. Balaban's statement. The fact that no efforts to conciliate were made supports the conclusion that the conciliation process ended in February of 1987, and, therefore, the filing of the suit was untimely.
See document 19 of record, at p. 3.
The court sees no conflict. In its first memorandum, the court rejected the conclusion that the tolling period ends only when the EEOC sends a letter to a potential defendant stating that conciliation has failed and otherwise runs for an automatic one year after conciliation begins. See document 7 of record, at pp. 4-5. In its second opinion, the court rejected the opposite extreme, namely, "that conciliation automatically ends when an employer states that it is not interested in settling a case." See document 17 of record, at pp. 6-7. Again, the court sees no conflict.
The court must also reject defendant's conclusion that the court has created a de facto automatic tolling period. Defendant's view of the conciliation process is too mechanical and focuses solely upon the period from February 7, 1987, when the EEOC's investigator last spoke to counsel for defendant about settling the case, until November 2, 1987, when this action was filed. A process is a systematic series of actions directed to some end. For present purposes, conciliation is the end. Just as the court does not believe that the time between settlement discussions should be excluded from the tolling period,[1] tolling should not be deemed ended on the date of the last conversation, especially when one party states that it will remain open for further settlement negotiations.
The facts of this case supports such a conclusion. As stated in the first memorandum, for this suit to have been timely filed, conciliation must have continued through April 7, 1987. See document 7 of record, at p. 8. After several weeks of negotiations regarding settlement of this dispute, the parties last spoke at the end of February, 1987. At the end of this conversation, the EEOC's investigator stated that she would remain open for conciliation up until the time the commission filed its lawsuit in case defendant changed its position regarding settlement. See document 8 of record, Exhibit 1. The court believes that the "remaining open" for conciliation should last for a reasonable amount of time and that the short period involved here of approximately five weeks (i.e., late February to April 7, 1987) constitutes a reasonable time. Thus, this court cannot conclude as a matter of law that the present action is untimely.
The court must return to its original conclusion, that is, that summary judgment on the issue of the running of the statute of limitations is not appropriate in this case. While the court can easily imagine extreme circumstances where, based on the totality of the circumstances, including the passage of an unreasonable period of time, an employer is so intransigent or the EEOC takes such a disinterest in conciliation that a conclusion that the tolling period for conciliation should be ended would be justified, no such circumstances are here present. Defendant's motion for reconsideration of this court's Memorandum and Order of February 19, 1988 will therefore be denied.
NOW, this 7th day of September, 1988, IT IS HEREBY ORDERED THAT defendant's motion for reconsideration is denied.
NOTES
[1] During the Senate debate over H.R. 5383, the predecessor of P.L. 95-256, Senator Domenici proposed a two-year limitation on the period during which the statute of limitations would be tolled pending conciliation. See 123 Cong.Rec. 34,316-34,317 (1977). While this amendment was agreed to by the Senate, see id. at 34,317, the time period was reduced to one year by the Committee of Conference. See 124 Cong.Rec. 6844, 7882-7883, 8217 (1978).
[2] The complaint alleges that the unlawful practices occurred "[s]ince at least February 1, 1984...." See document 1 of record, at p. 3. "Defendant does not dispute this date since the parties were all notified the first week of February, 1984." See document 3 of record, at p. 3 n. 1. Since the discharge notices themselves are dated February 2, 1984, see document 4 of record, Exhibits A and B, the court will use that date.
[3] If the cause of action accrued on February 2, 1984, plaintiff's three years were up on February 2, 1987, since February 1, 1987 fell on a Sunday. See F.R.C.P. 6(a). From February 2, 1987 to November 2, 1987 is a period of 273 days, excluding February 2, 1987 but including November 2, 1987. See id.
[4] Ancharski was discharged at the time that Casagrande, Wersinger, Woodring, and Eisonhower were discharged. He filed a separate charge of discrimination with the EEOC, although the record does not reveal when that charge was filed. See document 4 of record, at p. 4 n. 1.
[1] One of the conditions of the Age Discrimination Claims Assistance Act of 1988 is that "a civil action on such claim was not brought by the Commission or [an aggrieved] person before the running of the statute of limitations." See document 13 of record, Exhibit A, at p. 3. As the court has concluded that the present action was timely filed for purposes of the summary judgment motion, the court need not consider at this time the applicability of the Act.
[1] For example, if the parties spoke on February 10, 1988, and again on February 20, 1088, it would be absurd to argue that the intervening days should not be included for purposes of the one year tolling period. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1977789/ | 705 F.Supp. 779 (1989)
ESTATE OF Kenneth JACKSON, Delijah Jackson, and Isabelle Jackson, individually and in their capacities as personal representative of the Estate of Kenneth Jackson, Plaintiffs,
v.
CITY OF ROCHESTER, ex-City Manager Peter Korn, Police Chief Delmar E. Leach and Ptl. Ceferino Gonzalez, and Police Officers "John Roe", "John Coe" and "John Loe", individually and in their official capacities Mayor Thomas I. Ryan and Police Chief Gordon Urlacher in their official capacities, Defendants.
No. Civ. 86-0615L.
United States District Court, W.D. New York.
January 31, 1989.
*780 Aaron Frishberg, Stevens, Hinds & White, New York City, for plaintiffs.
Patrick Naylon, Rochester, N.Y., for defendants.
DECISION AND ORDER
LARIMER, District Judge.
This action arises from the death of Kenneth Jackson, who was shot and killed by Rochester police officer Ceferino Gonzalez in November 1984. The complaint alleges causes of action under 42 U.S.C. §§ 1983 and 2000a, and under state law.
The decedent's parents, Delijah and Isabelle Jackson, suing on behalf of Kenneth Jackson's estate and on their own behalf, commenced this lawsuit against Officer Gonzalez, the City of Rochester (City), ex-City Manager Peter Korn, Police Chief Delmar E. Leach, and unidentified officers of the Rochester Police Department, individually and in their official capacities (collectively, municipal defendants), and against Mayor Thomas Ryan and Police Chief Gordon Urlacher in their official capacities.
All defendants have moved for judgment on the pleadings or alternatively for summary judgment. For the reasons discussed below, defendants' motions are granted.[1]
FACTS
The principal witnesses to the shooting were officer Gonzalez and the decedent's cousin Fred Barfield.[2] Although there are some differences, Barfield's version of the confrontation comports to a great extent with Gonzalez' version. Therefore, many of the facts are undisputed.
On November 16, 1984, at approximately 3:20 p.m., Officer Gonzalez began a routine foot patrol of the area known as "Downtown 239". One of the areas of the foot patrol to be given particular attention was Don's Arcade (Arcade). After walking through the Arcade, Gonzalez spoke to Manager Clementine McManus who expressed "concern" about an individual, later identified as the decedent Kenneth Jackson, who was hanging around the Arcade, but not playing any games. After observing Jackson for a few minutes, Gonzalez left the Arcade and continued his patrol in the Main Street area.
Approximately twenty-five minutes later, Gonzalez returned to the Arcade. As he *781 walked through the premises, he observed Jackson "passing some sort of aluminum material" to another man who was later identified as Jackson's cousin, Fred Barfield. While Jackson and Barfield stood talking, Jackson had reached in his pocket and had pulled out an eighteen inch tape that was lime green on one side and silver on the other. As Jackson and Barfield were examining the tape, Gonzalez came up behind them. Gonzalez asked the two what they were doing. Barfield responded that they were not doing anything; however, Jackson did not respond to Gonzalez' question. Rather, as Gonzalez reached for the tape, Jackson turned away from the officer, started to walk around a pinball machine and toward the front exit of the Arcade. As Jackson walked toward the front exit, Gonzalez walked up the aisle parallel to Jackson, so that he could speak to him before he left the premises. Barfield followed Jackson in an attempt to stop him from leaving the Arcade before he had responded to Gonzalez' questions.
Gonzalez caught up with Barfield and Jackson and stood in front of them. Barfield states that Gonzalez asked: "What do you have there? Let me see it." He then reached out and took the tape from Jackson's hand, and called for a backup on his portable radio. Jackson continued to take steps in his attempt to exit the building. Gonzalez pulled out his PR-24, a device comparable to a nightstick, and swung it in front of him. There is no dispute that the officer neither struck nor attempted to strike anyone. Gonzalez then put the nightstick under his arm.
Barfield began walking to the front door of the Arcade, leaving Gonzalez and Jackson standing face to face. Jackson placed his hand inside his clothing in the area of his chest. Gonzalez directed Jackson to remove his hand from inside his clothing at least two times. There is no dispute that when Jackson removed his hand from his clothing, he pulled out a large butcher knife.[3]
Gonzalez states that Jackson began to move from side to side in an "elliptical yet unpredictable manner," and rotated the knife while moving it from hand to hand as he advanced toward him. Gonzalez further states that it is at this point that he drew his service revolver with his right hand and ordered Jackson to stop. Jackson ignored Gonzalez' warnings and commands to stop. Gonzalez alleges that Jackson then moved the knife to an "overarm position" and began to "lunge" at him with the blade pointed toward him. He fired his service revolver three times in order to ward off Jackson's attack. Jackson fell to the floor mortally wounded. Gonzalez holstered his service revolver, and placed his foot on the knife to prevent Jackson from reaching it because even as he lay wounded on the floor, Jackson moved his hand toward the knife.
Barfield essentially confirms Gonzalez' version. He claims that when Jackson put his hand in his clothing, Gonzalez put away his nightstick and put his hand on his revolver. When Jackson did not respond to the officer's command that he remove his hand from his clothing, Barfield states that Gonzalez pulled out his revolver and pointed it to the ceiling. At this point, Barfield went out of the front door of the Arcade and observed Gonzalez and Jackson through the front window. Barfield saw Jackson pull the knife from his clothing. He then went back to the front door and stood in the open door way. He heard Gonzalez direct Jackson to put the knife down at least two times. Barfield himself asked Jackson several times to put the knife down. He alleges that Jackson held the knife about "shoulder high" with the blade pointing toward the ceiling. Gonzalez pointed his gun toward Jackson and again asked him to put the knife down. Barfield stated that Jackson made a "motion" towards Gonzalez with the knife blade still pointing upward. Barfield heard two shots and saw Jackson fall to the floor.
*782 Based on these facts, plaintiffs assert causes of action for violations of their decedent's, and their own, civil rights under the Thirteenth and Fourteenth Amendments, and 42 U.S.C. §§ 1983, 1985, 2000a et seq., as amended. They allege that:
1. Officer Gonzalez used excessive and deadly force without justification, and thereby intentionally, wantonly, maliciously, recklessly, and negligently caused Jackson's death.
2. The City and other defendants conspired with each other to deprive black residents of Rochester of their civil rights and of the equal protection of the laws by "tacitly and explicitly agreeing not to discipline, investigate or curb police officers who used deadly force or excessive force on Black residents or [sic] Rochester, New York and failed to correct such abuses by training, screening, or supervising the officers of the Rochester Police Department to avoid recurrence of use of excessive and deadly force on Black residents of Rochester."
3. Officer Gonzalez' conduct deprived plaintiff's decedent of access to a public accommodation because of his race.
4. The defendants' actions have caused plaintiffs to fear for their lives and liberty, and thus, have deprived them of the equal protection of the laws.
Plaintiffs also assert causes of action under state law for assault, loss of consortium and wrongful death.
DISCUSSION
Defendants have moved for summary judgment dismissing the action against Officer Gonzalez on the ground that he is entitled to qualified immunity. They have also moved to dismiss the action against all other defendants or alternatively for summary judgment on the grounds that Officer Gonzalez' actions were justified under the circumstances and that the City had no policy upon which liability may be predicated.
A. Summary Judgment Standard
The purpose of a summary judgment motion "is to isolate and dispose of factually unsupported claims...." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). Under Rule 56 of the Federal Rules of Civil Procedure, the moving party has the initial burden of informing the court of the basis for the motion for summary judgment and of identifying the portions of relevant documents which demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In clarifying the standards governing summary judgment, the Supreme Court has stated that the moving party discharges its burden by "pointing out to the District Court ... that there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. at 2554.
Once the moving party has met this burden, Rule 56(e) requires that the nonmoving party go beyond the pleadings and designate "specific facts showing that there is a genuine issue for trial." An argument that there are material factual issues which preclude a grant of summary judgment must be supported by concrete particulars. Dressler v. MV Sandpiper, 331 F.2d 130, 133 (2d Cir.1964). Mere denials or general allegations without evidentiary support will not defeat a summary judgment motion. Engl v. Aetna Life Ins. Co., 139 F.2d 469, 473 (2d Cir.1943). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510.
Applying these principles in the instant case, I conclude that plaintiffs have failed to discharge their burden of showing that there are disputes of material facts which under the governing law would preclude summary judgment, and that the undisputed facts mandate the entry of summary judgment for defendants on plaintiffs' federal claims.
B. Liability under Section 1983
1. Officer Gonzalez Qualified Immunity
In Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982), *783 the Supreme Court enunciated an objective standard for determining whether government officials may enjoy qualified immunity. Such officials "performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow, 457 U.S. at 818, 102 S.Ct. at 2738. This test of the objective legal reasonableness of an official's acts as measured by reference to clearly established law "permit[s] the resolution of many insubstantial claims on summary judgment." Id.
The qualified immunity defense is available to state law enforcement officers who are sued for constitutional violations under section 1983. Harlow, 457 U.S. at 818, n. 30, 102 S.Ct. at 2738, n. 30; Robison v. Via, 821 F.2d 913, 920 (2d Cir.1987). One of the several ways in which an official may establish a defense of qualified immunity is if he shows that "it was objectively reasonable for him to believe that his acts did not violate [clearly established] rights." Robison, 821 F.2d at 921. A grant of summary judgment is appropriate if the defendant official "`adduce[s] sufficient facts [such] that no reasonable jury, looking at the evidence in the light most favorable to, and drawing all inferences most favorable to, the plaintiffs, could conclude that it was objectively unreasonable for the defendant[]' to believe that he was acting in a fashion that did not clearly violate an established federally protected right." Robison, 821 F.2d at 921. In the context of an unconstitutional arrest without probable cause it is well established that the officer "is entitled to qualified immunity as a matter of law if the undisputed facts and all permissible inferences favorable to the plaintiff show either (a) that it was objectively reasonable for the officer to believe that probable cause existed, or (b) that officers of reasonable competence could disagree on whether the probable cause test was met." Id.
The undisputed facts in the present case establish that Officer Gonzalez is entitled to qualified immunity under the standards enunciated in Robison. On these facts, it was objectively reasonable for Gonzalez to use deadly force in defense of Jackson's life-threatening actions. Or, at the very least, it is clear that "officers of reasonable competence," Robison, 821 F.2d at 921, could disagree on whether such use of force was necessary under the circumstances.
At the time of this unfortunate incident, it was clear that New York law provided justification for the use of deadly force when a police officer has reasonable cause to believe that a suspect poses a threat of serious physical harm to himself or others. New York Penal Law § 35.15 provides that a police officer may use deadly force upon another person if he "reasonably believes that such other person is using or about to use deadly physical force." N.Y.Penal Law § 35.15(2)(a)(ii) (Consol.1984). Similarly, Penal Law § 35.30 provides that in the course of effecting or attempting to effect an arrest, a police officer may use deadly force if he "reasonably believes" that "the use of deadly physical force is necessary to defend the police officer ... or another person from what the officer reasonably believes to be the use or imminent use of deadly physical force." N.Y.Penal Law § 35.30(1)(c) (Consol.1984).
Plaintiffs have not cited, nor has the court found, any decision holding that these Penal Law provisions were unconstitutional either on their face or in their application in circumstances similar to those involved in the instant case. Indeed, recognizing the well established common law which is embodied in Penal Law §§ 35.15 and 35.30 and similar statutes, the Supreme Court in Tennessee v. Garner, 471 U.S. 1, 11-12, 105 S.Ct. 1694, 1701-02, 85 L.Ed.2d 1 (1985), reiterated that if a suspect threatens an officer with a weapon, he may use deadly force.
Moreover, Rochester Police Department (RPD) policy set forth in General Order (G.O.) 77-7, which was in effect at the time of the shooting, authorizes the use of deadly force in self-defense or in defense of others. General Order 77-7 which governs the use of firearms by police personnel essentially embodies the New York Penal *784 Law provisions concerning use of deadly physical force. It provides that it is the policy of the RPD that an officer is justified in using deadly physical force upon another person to defend himself or a third person when he reasonably believes such other person is using or about to use deadly physical force. G.O. 77-7, § V(A)(1).
Both Officer Gonzalez' and Barfield's version supports the use of deadly force. When Jackson was confronted by Gonzalez, he placed his hand inside his jacket where he could reach a weapon. Gonzalez asked Jackson to put his hand down "at least twice." When Jackson did not respond to that request, Gonzalez removed his revolver and pointed it at the ceiling. Jackson then pulled out a knife from his jacket at which point Gonzalez asked Jackson to put the knife down "at least twice." Gonzalez fired his revolver only after Jackson suddenly "made a motion toward" him with the upraised knife.
Officer Gonzalez acted in accordance with RPD policy in displaying and using his service revolver. Gonzalez was authorized to draw and point his firearm to emphasize and implement his command that Jackson move his hand from his chest area, or if he reasonably perceived a danger that he may have to defend himself, or others, because Jackson concealed a weapon which he may have used against him. He was authorized under state law and RPD policy to fire his revolver if he reasonably believed that Jackson was about to use deadly force against him.
Plaintiffs have failed to submit any evidence that Jackson acted contrary to New York law or RPD rules. Plaintiffs have also failed to demonstrate that Jackson violated accepted norms of police conduct in such a circumstance. There is no expert evidence before the court that Gonzalez' actions were unreasonable, arbitrary or contrary to accepted police practice.
Under the circumstances, I conclude that it was objectively reasonable for Gonzalez to believe that Jackson posed a real and imminent threat of death or serious bodily harm, or at least officers of reasonable competence could have disagreed as to whether such force was necessary. Thus, Gonzalez' use of deadly force in self-defense did not violate any clearly established right of another person.
Because of the tragic conclusion to this brief encounter between citizen and police officer, there may be a tendency to suggest, after the fact, other steps the officer could have taken to disarm Jackson. Had Gonzalez attempted other extraordinary means to subdue Jackson and succeeded, he certainly would have been viewed as a hero. On the other hand, such actions certainly could have failed, resulting in almost certain serious injury or death to Gonzalez. I do not believe that society should expect or demand that a police officer always take extraordinary, life-threatening means to defend himself or face civil liability for failure to do so. The super-cop of television and movies who disarms felons in hand-to-hand combat or with a well-placed shot to the hand should not be the standard by which we determine whether there has been a violation of a citizen's constitutional rights.
Plaintiffs have not cited any constitutional requirement that police officers faced with the imminent use of deadly force against them or others should not respond in kind. See O'Neal v. DeKalb County, GA., 667 F.Supp. 853, 858 (N.D.Ga.1987), aff'd, 850 F.2d 653 (11th Cir.1988) ("[T]he Constitution does not require police officers to use a minimum of violence when attempting to stop a suspect from using deadly force against police officers or others."). Such a requirement would expose police officers to unnecessary risks. The Supreme Court has stated:
[I]t would be unreasonable to require that police officers take unnecessary risks in the performance of their duties.... every year in this country many law enforcement officers are killed in the line of duty, and thousands more are wounded. Virtually all of these deaths and a substantial portion of the injuries are inflicted with guns and knives.... In view of these facts, we cannot blind ourselves to the need for *785 law enforcement officers to protect themselves....
Terry v. Ohio, 392 U.S. 1, 23-24, 88 S.Ct. 1868, 1881, 20 L.Ed.2d 889 (1968) (footnote omitted).
Given the undisputed evidence of record and drawing all permissible inferences from it in favor of plaintiffs, no reasonable jury could conclude that it was objectively unreasonable for Officer Gonzalez to believe that his use of deadly force did not violate plaintiffs' decedent's rights. Further, officers of reasonable competence could disagree on whether some less drastic measure than the use of a gun would have been appropriate under the circumstances. Accordingly, Officer Gonzalez is entitled to qualified immunity as a matter of law.
2. Claims Against the City and other Personnel
The municipal defendants contend that they are not liable to plaintiffs because Officer Gonzalez' use of deadly force in self-defense did not violate plaintiffs' decedent's constitutional rights and, even if there was a constitutional violation, the City has no policy or custom that was the moving force for such violation. I agree with both contentions.
a. Constitutional Violation
Civil rights actions under § 1983 alleging excessive use of force during encounters between law enforcement officers and citizens may be based on the alternative constitutional theories that such use of force violated the individual's substantive due process rights under the Fourteenth Amendment and/or his rights under the Fourth Amendment. In the instant case, plaintiffs claim that Officer Gonzalez' conduct deprived their son of his life in violation of the Fourteenth Amendment. The amended complaint does not cite a violation of the Fourth Amendment. However, the parties' arguments on this motion are framed in terms of the analysis under the Fourth Amendment's test of the objective reasonableness of Officer Gonzalez' conduct.
Based on the undisputed facts, the encounter between Gonzalez and Jackson did not give rise to a Fourth Amendment violation. The only time that a seizure implicating the Fourth Amendment occurred was when Gonzalez finally stopped Jackson from leaving the Arcade by waiving his nightstick.[4] There was no arrest or attempted arrest, however, "[w]henever an officer restrains the freedom of a person to walk away, he has seized that person." Tennessee v. Garner, 471 U.S. 1, 7, 105 S.Ct. 1694, 1699, 85 L.Ed.2d 1 (1985). A seizure occurs when an officer, "by means of physical force or show of authority, has in some way restrained the liberty of a citizen." United States v. Mendenhall, 446 U.S. 544, 552, 100 S.Ct. 1870, 1876, 64 L.Ed.2d 497 (1980). Gonzalez' brandishing of the nightstick could reasonably be construed as a show of authority from which a "reasonable person would have believed that he was not free to leave," Mendenhall, 446 U.S. at 554, 100 S.Ct. at 1877. Indeed, Barfield stated that he perceived the Officer's actions to mean that "if we did make a move, he would strike us." Sworn Statement of Fred Barfield at 3.
Determining whether a seizure was constitutional requires a balancing of "the nature and quality of the intrusion on the individual's Fourth Amendment interests against the importance of the governmental interests alleged to justify the intrusion." Garner, 471 U.S. at 8, 105 S.Ct. at 1699, quoting United States v. Place, 462 U.S. 696, 703, 103 S.Ct. 2637, 2642, 77 L.Ed. 2d 110 (1983). In order to effectuate the important governmental interest in effective law enforcement, in appropriate circumstances and in an appropriate manner, a police officer may approach an individual for the purpose of investigating criminal activity, without probable cause to make an *786 arrest. Terry, 392 U.S. at 22, 88 S.Ct. at 1880. "The legality of an investigatory stop depends on (1) the nature and extent of the government's need for the stop, which must be judged according to the importance of its law enforcement interests under the circumstances, and (2) the reasonableness of the stop, which depends mainly on the degree of police intrusion on the [individual's] freedom of movement." United States v. Pelusio, 725 F.2d 161, 165 (2d Cir.1983). In order to justify the intrusion the police officer must be aware of "specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant that intrusion." Terry, 392 U.S. at 21. 88 S.Ct. at 1879. Pelusio, 725 F.2d at 165.
In this case, Officer Gonzalez had articulable facts creating a ground for reasonable suspicion of unlawful activity. Therefore, his investigatory stop did not violate the Fourth Amendment. In approaching Jackson and Barfield, Officer Gonzalez was undertaking a legitimate investigation of possible criminal activity. Plaintiffs have not disputed that the Arcade was one of the areas that was designated as requiring special attention or that the Arcade's manager expressed concern to Officer Gonzalez that Jackson was loitering at the premises. Gonzalez observed Jackson and Barfield handling, in what appeared to be a furtive manner, an aluminum object which in the officer's experience may have indicated that an illicit drug transaction was imminent or already occurring. Further, plaintiffs have not disputed that Gonzalez was unaware of Jackson's history of mental illness at the time of their encounter. Clearly, Jackson's walking away from the police officer without any response to his inquiry and before he could examine the aluminum object is unusual behavior. Considering all this information that was known to Gonzalez at the time, it was not unreasonable to believe that Jackson's behavior was suspicious and may have been connected with criminal activity. Therefore, Gonzalez' investigatory stop to question Jackson and Barfield was a justifiable and reasonable intrusion under the Fourth Amendment.
The crux of this case, however, is not the investigatory stop, but Jackson's slaying, which did not implicate the Fourth Amendment. Gonzalez did not shoot Jackson for the purpose of seizing him. The stop for purposes of investigating Jackson's behavior had been successfully completed in a reasonable manner. The shooting was unrelated to the stop. Gonzalez did not draw his revolver and fire it to apprehend Jackson; rather, he fired his revolver in self-defense because Jackson suddenly moved toward him with a raised knife. Therefore, Gonzalez' shooting of Jackson in self-defense was not a seizure within the purview of the Fourth Amendment. See Dodd v. City of Norwich, 827 F.2d 1, 7 (2d Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 701, 98 L.Ed.2d 653 (1988).[5]
Thus, the only constitutional basis for plaintiffs' claims under § 1983 is a deprivation of their rights to substantive due process. Broadly defined, substantive due process is violated by police conduct that "shocks the conscience" or that constitutes force that is so "brutal" as to "offend even hardened sensibilities." Rochin v. California, 342 U.S. 165, 172-173, 72 S.Ct. 205, 209-210, 96 L.Ed. 183 (1952). In the seminal case of Johnson v. Glick, 481 F.2d 1028 (2d Cir.), cert. denied, 414 U.S. 1033, 94 S.Ct. 462, 38 L.Ed.2d 324 (1973), the Second Circuit enunciated a more precise guiding standard for analyzing substantive due process *787 violations. Johnson teaches that not every injury that may be actionable under state tort law gives rise to a federal constitutional violation. The Johnson court held that:
In determining whether the constitutional line has been crossed, a court must look to such factors as the need for the application of force, the relationship between the need and the amount of force that was used, the extent of injury inflicted, and whether force was applied in a good faith effort to maintain or restore discipline or maliciously and sadistically for the very purpose of causing harm.
481 F.2d at 1033. Applying the Johnson factors to the instant case, I find that the undisputed facts establish that Officer Gonzalez' conduct did not transgress the bounds of substantive due process. As to the first and third factors, it is clear that Officer Gonzalez shot Jackson three times as he suddenly moved toward him with a raised knife, and that as a result of the shooting Jackson died. The remaining factors must be analyzed to determine whether, as a matter of law, Gonzalez' conduct was reasonable and motivated by a genuine fear for his own safety or whether it was unjustified. As to the second factor, it is unquestionable that there was a need for the use of force. Further, the amount of force Gonzalez used was proportionate to the need to use force to defend himself against Jackson's attack with the knife. As discussed, supra, Officer Gonzalez did not display his weapon until Jackson refused to obey his command to remove his hand from the chest area of his jacket. Under the circumstances, this cautionary measure by Gonzalez was justified. It was reasonable to interpret Jackson's behavior as threatening. Common experience teaches that, all too often in encounters such as this, when a suspect reaches for an article in his clothing, this is not an innocent gesture, but one that signals a threat to the officer. In fact, Gonzalez' apprehension that Jackson concealed a weapon was realized when Jackson produced a knife. Gonzalez did not fire his revolver until Jackson, who had not heeded the officer's commands, and later warnings, to desist in his menacing and threatening behavior, lunged at him with a raised knife. He fired the first shot as Jackson charged toward him with the butcher knife, and immediately fired two additional shots because Jackson continued to move toward him.
Plaintiffs claim that summary judgment is inappropriate because there is a question of fact concerning whether Officer Gonzalez initiated the use of force. They contend that when Gonzalez seized the metallic strip from Jackson's hand, he set the "confrontational tone" which ultimately escalated to the use of deadly force. This contention is meritless. Viewing the facts in the light most favorable to plaintiff, it is clear that the escalation to the use of deadly force can hardly be blamed on Gonzalez. Barfield stated that Gonzalez "removed" the tape from Jackson's hand. Barfield's account does not indicate that this was done in a violent or even offensive manner. While it is true that Gonzalez waved his nightstick in front of him, there is no dispute that he neither struck nor attempted to strike Jackson or Barfield. As stated earlier, it was reasonable for Gonzalez to make an investigatory stop, and his conduct in effectuating the stop was reasonable in light of Jackson's repeated attempts to leave the Arcade before Gonzalez could question him.
Even assuming, arguendo, that Gonzalez' initial conduct in taking the tape and waving his nightstick was unwarranted, those actions alone could not justify Jackson's contemplation of the use of deadly force. Such a relatively minor intrusion could not give Jackson a license to escalate the confrontation by reaching for the weapon he concealed in his jacket.
Plaintiffs have not produced a scintilla of evidence which suggests that under the circumstances another police officer in Gonzalez' place would not have believed that Jackson posed an imminent threat of serious bodily harm or death or that some lesser amount of force would have been sufficient to counter the real threat of serious *788 harm that Jackson posed.[6] After months of discovery, they have not presented any testimonial, documentary or physical evidence that even suggests that Gonzalez' actions were unreasonable, and from which a jury might return a verdict in their favor.
As to the fourth factor, plaintiffs have not proffered any direct evidence that Gonzalez acted maliciously. Gonzalez stated that he fired three times because Jackson continued to come at him after the first shot. He also stated that in his nine years with the RPD this incident was the "one and only time" he had shot his service revolver at an individual. Plaintiffs have offered no evidence to contradict these assertions, or to even create an inference that Gonzalez' actions were motivated by malice.
The shooting of Jackson is a tragedy which we all hope there will be no need to repeat. However, under the circumstances it was not a brutal act which shocks the conscience, nor under the Johnson test was it egregious and unreasonable conduct. Based on the undisputed facts, a rational factfinder could not find that Gonzalez applied excessive force. Accordingly, I find that, as a matter of law, Gonzalez' use of deadly force in self-defense was reasonable under the circumstances, and therefore, did not violate the Fourteenth Amendment.[7]
Having exonerated Gonzalez from any claim of a constitutional violation, there is no basis for asserting liability against the municipal defendants. If Gonzalez did not inflict a constitutional injury, the City and its employees in the RPD cannot be held liable under § 1983. Whether the City had a policy or custom which might have authorized or supported the use of constitutionally excessive force is "beside the point" if a person has suffered no constitutional injury at the hands of the individual police officer. City of Los Angeles v. Heller, 475 U.S. 796, 799, 106 S.Ct. 1571, 1573, 89 L.Ed.2d 806 (1986); Dodd v. City of Norwich, 827 F.2d 1, 8 (2d Cir.1987).
b. Unconstitutional Policy or Custom
Even assuming, arguendo, that Officer Gonzalez' conduct was constitutionally impermissible, the record establishes no possible basis for holding the municipal defendants liable. A local government cannot be held liable under § 1983 on a theory of respondeat superior. Pembaur v. Cincinnati, 475 U.S. 469, 478, 106 S.Ct. 1292, 1297, 89 L.Ed.2d 452 (1986).[8] A municipality is subject to § 1983 liability "when execution of a government's policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy, inflicts [an] injury...." Monell v. Dept. of Social Services of City of New York, 436 U.S. 658, 694, 98 S.Ct. 2018, 2037, 56 L.Ed.2d 611 (1978). Further, the policy or custom must be the "moving force of the constitutional violation." Id. at 694, 98 S.Ct. at 2037; City of Oklahoma City v. Tuttle, 471 U.S. 808, 820, 105 S.Ct. 2427, 2434, 85 L.Ed.2d 791 (1985) (plurality).
Plaintiffs have failed to proffer evidence of a policy or custom of the City on which an unconstitutional loss of Jackson's life could be premised. The amended complaint bases the City's liability on several theories: that the municipal defendants promulgated policies which "permitted Officer Gonzalez to act with impunity (these policies are not specifically identified)," that they failed to properly screen, train and supervise officers, that they ratified Officer Gonzalez' wrongful conduct and similar wrongful conduct, and that they failed to take precautions to put officers on notice of the existence of persons with psychiatric disabilities. However, plaintiff's opposition papers address only the theory *789 of the municipal defendants' "ratification" of Gonzalez' conduct.[9] They do not provide any evidentiary support for this theory. Rather than providing concrete particulars which point to the existence of an unconstitutional policy or custom, plaintiffs merely make the conclusory argument that the City's failure to reprimand or discipline Officer Gonzalez in connection with the shooting of Jackson constitutes such a policy.
Generally, a single incident of illegal police conduct is insufficient to meet a plaintiff's burden of establishing that a policy or custom of the municipality is the moving force behind the deprivation of his constitutional rights. Tuttle, 471 U.S. at 820, 105 S.Ct. at 2434. In addressing the nature and quantum of proof that is required to meet this burden, the Supreme Court has reiterated that:
Proof of a single incident of unconstitutional activity is not sufficient to impose liability under Monell, unless proof of the incident includes proof that it was caused by an existing, unconstitutional municipal policy, which policy can be attributed to a municipal policymaker. Otherwise the existence of the unconstitutional policy, and its origin, must be separately proved. But where the policy relied upon is not itself unconstitutional, considerably more proof that the single incident will be necessary in every case to establish both the requisite fault on the part of the municipality, and the causal connection between the "policy" and the constitutional deprivation.
Tuttle, 471 U.S. at 823-24, 105 S.Ct. at 2436-37 (footnotes omitted).
Plaintiffs have not identified an express municipal policy that is unconstitutional on its face and thus susceptible of easy proof. Rather, as in Tuttle, the policy on which plaintiffs' rely is "nebulous" at best. Thus, they must adduce "considerably" more proof than a single incident. A policy of condoning police abuse cannot be inferred from the Jackson shooting alone. Although the amended complaint alleges that the City has ratified not only the alleged wrongful conduct involved in the present action, but also "similar wrongful conduct," plaintiffs have not offered any evidence of such wrongful conduct. They failed to produce any evidence which might establish that persons in positions of responsibility in the local government were so deliberately indifferent to prior incidents of police misconduct as to tacitly encourage, condone or acquiesce in such behavior. See Turpin v. Mailet, 619 F.2d 196 (2d Cir.), cert. denied, 449 U.S. 1016, 101 S.Ct. 577, 66 L.Ed.2d 475 (1980). Accordingly, there is no basis for imposing liability on the municipal defendants, and the federal claims against these defendants must be dismissed.
C. Pendent State Claims
Plaintiffs also seek relief on state law claims of assault (fourth cause of action), loss of consortium (fifth cause of action), and wrongful death (sixth cause of action). Having determined that plaintiffs federal claims must be dismissed, and there being no diversity of citizenship between the parties, the court declines to take jurisdiction of the state law claims. This decision is in keeping with the principle that "[n]eedless decisions of state law should be avoided both as a matter of comity and to promote justice between the parties, by procuring for them a surer-footed reading of applicable law." Robison, 821 F.2d at 925. Accordingly, *790 the plaintiffs state law claims are dismissed.
CONCLUSION
For the reasons stated above, defendants' motions for summary judgment dismissing plaintiffs' federal claims and to dismiss plaintiffs' pendent state claims are granted. Plaintiffs action against all defendants is dismissed in its entirety.
IT IS SO ORDERED.
NOTES
[1] The court has previously granted a portion of defendants' motions, dismissing the action against defendants Thomas Ryan and Gordon Urlacher; dismissing the action against all defendants in their official capacities; dismissing the third cause of action alleging denial of access to a public accommodation; and dismissing the claim for injunctive relief.
[2] In support of their motion, defendants submitted the Affidavit of Officer Gonzalez, sworn to May 11, 1988, which relates his version of events. In opposition to defendant's motion, plaintiffs submitted the sworn statement of Fred Barfield, made on the day of the incident, relating what he observed during the encounter. Plaintiffs' Memorandum of Law in opposition to summary judgment, Exhibit 1.
[3] Barfield described the knife that Jackson held as a kitchen knife that was six to eight inches long with a light brown wood handle. Plaintiffs do not dispute that the knife Jackson held was a weapon capable of inflicting serious injury.
[4] Officer Gonzalez's initial approach of Jackson and Barfield and his questioning concerning their activity did not constitute a seizure. Jackson did not answer Gonzalez's question. Rather he walked away and attempted to exit the building with the Officer following until Barfield intervened and requested that Jackson speak to the Officer. Thus, this initial encounter did not implicate the Fourth Amendment.
[5] Even if the Fourth Amendment were found to be applicable in this case, the undisputed facts establish that the shooting of Jackson did not violate that constitutional provision. In balancing the competing interests involved here, it is axiomatic that Jackson had a fundamental interest in his own life and his seizure by use of deadly force is the most intrusive imaginable. However, against that fundamental interest are a variety of governmental interests in effective law enforcement, including not only investigating possible criminal activity but also the physical safety of law enforcement officers. When a police officer has reasonable cause to believe that a suspect poses a threat of serious physical harm to himself or others, as the facts of this case bear out, he does not violate the Fourth Amendment by using deadly force to protect himself. Garner, 471 U.S. at 11-12, 105 S.Ct. at 1701-02.
[6] In opposition to this motion, plaintiffs submitted only a 10-page memorandum of law which included one exhibit: Barfield's sworn statement.
[7] In light of my conclusion that Officer Gonzalez did not use excessive force against Jackson, I find that plaintiffs' claims of a conspiracy in violation of 42 U.S.C. § 1985 and of a denial of equal protection are groundless and do not merit discussion.
[8] There is, of course, no evidence that defendants Korn, Leach and the unidentified RPD officers were personally involved in the shooting of Jackson.
[9] In support of their motion, the municipal defendants submitted the affidavits of Gordon Urlacher, Chief of Police of the RPD, Joseph Davis, captain in charge of the RPD's Professional Development Section, Thomas Conroy, an RPD captain who is commander of the Professional Standards Section, and Scott Hill, an RPD Lieutenant who is director of the Research and Evaluation Section. These affidavits set forth at length the RPD's pre-employment screening procedures, its extensive training program which includes instructions on dealing with persons who appear to be psychiatrically impaired, its supervision and periodic evaluation procedures, and statistics for the period 1982 through 1986 concerning RPD police officers' use of their firearms. Plaintiffs have not proffered any evidence to dispute or in any way impugn defendants' substantial evidence that the RPD's police officers are properly screened, trained and supervised. Nor have they specifically identified or offered proof of a custom or policy which authorizes RPD police officers to use excessive force in confrontations with citizens, particularly blacks. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2385060/ | 353 F.Supp.2d 623 (2005)
UNITED STATES of America,
v.
Oscar Antonio GRANDE, also known as "Pantera," Defendant.
No. CRIM.A. 04-283.
United States District Court, E.D. Virginia. Alexandria Division.
January 11, 2005.
*624 *625 *626 Ronald L. Walutes, Jr., Esquire, Assistant United States Attorney, United States Attorney's Office, Patricia Giles, Esquire, Assistant United States Attorney, United States Attorney's Office, Alexandria, VA, for Plaintiff.
David Preston Baugh, Esquire, Richmond, Luis Felipe Restrepo, Esquire, Krasner & Restepo, Philadelphia, PA., for Defense Attorneys.
MEMORANDUM OPINION
LEE, District Judge.
THIS MATTER is before the Court on Defendant Oscar Antonio Grande's Motion to Strike Non-Statutory Aggravating Factors from the Government's Notice of Intent to seek the Death Penalty. Defendant Oscar Antonio Grande and three others are charged with (1) Conspiracy to Tamper with a Witness or an Informant, 18 U.S.C. § 1512(k), (2) Conspiracy to Retaliate Against a Witness or an Informant, 18 U.S.C. § 1513(e), (3) Killing a Person Aiding a Federal Investigation, 18 U.S.C. §§ 2 & 1121(a)(2), (4) Tampering with a Witness or an Informant, 18 *627 U.S.C. §§ 2 & 1512(a)(1), and (5) Retaliating Against a Witness or an Informant, 18 U.S.C. §§ 2 & 1513(a)(1). The government filed a Notice of Intent to Seek a Sentence of Death against all four defendants on October 1, 2004. Defendant Oscar Antonio Grande moves the Court to strike various non-statutory aggravating factors asserted by the government pursuant to 18 U.S.C. § 3593(a)(2) and one statutory aggravating factor cited by the government pursuant to 18 U.S.C. § 3592(c). The issues before the Court are whether to strike (1) a statutory aggravating factor stating that a murder was committed in "an especially heinous, cruel, and depraved manner in that it involved torture and serious physical abuse" to the victim, because it is impermissibly vague, (2) various non-statutory aggravating factors because they are unconstitutionally irrelevant, vague, overbroad or double-counted, and (3) information in support of these statutory aggravating factors for irrelevance, impermissible prejudicial effect, or unreliability.
For the reasons stated below, the Court grants Defendant Oscar Antonio Grande's Motion to Strike as to non-statutory aggravating factors (1), (2) and (4), and as to supporting information (1)(a), (3)(c), (3)(d), (5)(c), (5)(d), and (5)(b) except for assaults and threats on correctional officers and fellow inmates not covered in any other aggravating factors. The Court denies Defendant Oscar Antonio Grande's Motion to Strike as to (1)(b), (3)(a), (3)(b), (3)(e), (3)(f), and (5)(a), (8) and (9).
I. BACKGROUND
Statutory Aggravating Factor No. 1
Defendant Oscar Antonio Grande ("Defendant," "Mr. Grande") is charged with five counts relating to the murder of Ms. Brenda Paz (also known as "Smiley," "Ms. Paz"). In its Notice of Intent to Seek a Sentence of Death ("Notice") filed on October 1, 2004, the government expressed its intention to seek the death penalty for Mr. Grande, should he be convicted of any of the five counts alleged in the indictment. Apart from seeking to prove the necessary threshold findings as a basis for the imposition of the death penalty in relation to the various counts of the indictment as required by 18 U.S.C. § 3591(a)(2)(A) (D), the government indicated it will seek to prove two statutory aggravating factors enumerated under 18 U.S.C. § 3592(c). Mr. Grande challenges the first of these two statutory aggravating factors: "1. Defendant OSCAR ANTONIO GRANDE, also known as `Pantera,' committed the offense in an especially heinous, cruel, and depraved manner in that it involved torture and serious physical abuse to Brenda Paz, also known as `Smiley.' 18 U.S.C. § 3592(c)(6)."
In support of his position, Mr. Grande asserts that since the drafting of the Federal Death Penalty Act, statutory aggravating factors are treated as elements of the offense, rather than mere sentencing findings. In other words, Mr. Grande argues that the defendant "must be given notice of the conduct it is alleged he engaged [in] to permit him the opportunity to explain or deny the allegation of engaging in such conduct." Mem. Law & Auth. Supp. Oscar Antonio Grande's Mot. Strike Non-Stat. Agg. Factors at 14 (hereinafter "Def.'s Mot. Strike"). According to Mr. Grande, because the aggravating factor solely tracks the statutory language, rather than delineating the specific method of torture or serious physical abuse, the Notice is legally insufficient and this statutory aggravating factor should be dismissed as vague and struck from the Notice. Id. at 15.
Non-Statutory Aggravating Factors
In its Notice, the government states that it will seek to prove ten additional non-statutory *628 aggravating factors pursuant to 18 U.S.C. §§ 3593(a) and (c). Under the factors concerning Mr. Grande's alleged pattern of juvenile criminal activity, pattern of adult criminal activity, and continuing threat to society, the government lists various facts to be proven. Notice at 3-6. Mr. Grande challenges the following non-statutory aggravating factors on the grounds of constitutional irrelevance, vagueness, overbreadth and for double-counting, and the information supporting them as irrelevant, more prejudicial than probative or unreliable:
1. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," engaged in a pattern of juvenile criminal activity as demonstrated by, but not limited to, the following:
(a) On or about April 14, 1999, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," assaulted a student at Fairfax High School.
(b) On or about April 17, 1999, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," solicited co-defendant Ismael Juarez Cisneros to stab a fifteen-year-old victim at the Fairfax Towne Center shopping center in retaliation for the victim preventing defendant GRANDE from further assaulting a fellow student at school. Defendant GRANDE was also armed with a knife during the attack on this student at the Fairfax Towne Center.
2. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," while a student in the Fairfax County school system, repeatedly engaged in misconduct that resulted in multiple suspensions, and his expulsion.
3. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," has engaged in a pattern of criminal activity as an adult as demonstrated by, but not limited to, the following:
(a) On or about April 25, 2002, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," pled guilty to Assault and Battery.
(b) On or about June 18, 2003, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," along with other members of the Mara Salvatrucha, also known as "MS-13," knocked an individual to the ground, struck him in the head with a large rock, and then kicked and stomped him. On or about May 19, 2004, defendant GRANDE pled guilty to Malicious Wounding and Street Gang Participation in Arlington, Virginia.
(c) On or about December 19, 2003, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," pled guilty to obstructing justice.
(d) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly carried a concealed weapon, namely a knife.
(e) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly hit Brenda Paz, also known as "Smiley," and threatened to kill her.
(f) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly abused females with whom he associated, including hitting, kicking, and threatening them with knives.
* * * * * *
4. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," was a member of a criminal street gang as defined by 18 U.S.C. § 521(a), namely Mara Salvatrucha, also known as MS-13." As a member of MS-13, defendant GRANDE agreed to engage in acts of violence, including murder and aggravating assaults. Defendant GRANDE was a senior member of Centrales Locos Salvatrucha *629 or "CLS," clique of MS-13, and as such was an enforcer of the rules of MS-13.
5. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," poses a future danger based upon the probability that he would commit criminal acts of violence that would constitute a continuing threat to society as demonstrated by, but not limited to, the following:
(a) While detained at the Arlington County Detention Facility and facing pending charges, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," threatened to kill an individual whom he believed had cooperated with law enforcement.
(b) While detained at the Arlington County Detention Facility, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," has shown poor institutional adjustment in that he has committed numerous disciplinary violations.
(c) While detained at the Arlington County Detention Facility, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," continued to conduct and influence MS-13 gang business occurring inside and outside of the correction institution.
(d) While detained at the Loudoun County Detention Center, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," along with other members of MS-13, caused a disturbance in the facility.
* * * * * *
8. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," committed Counts One, Two, Three, Four and Five of the Indictment to prevent Brenda Paz, also known as "Smiley," from and to retaliate against her for assisting in the investigation and prosecution of co-defendant Denis Rivera for the murder of Joaquin Diaz, and in the investigation of other MS-13 members for their criminal activity.
9. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," attempted to obstruct justice after murdering Brenda Paz, also known as "Smiley," by threatening to kill anyone who revealed to law enforcement details of his and co-defendants Ismael Juarez Cisneros and Oscar Alexander Garcia-Orellana's departure from the Holiday Inn Fair Oaks with Brenda Paz, also known as "Smiley."
* * * * * *
II. DISCUSSION
A. Legal Framework
Basic Sentencing Process and General Principles
In Lewis v. Jeffers, 497 U.S. 764, 110 S.Ct. 3092, 111 L.Ed.2d 606 (1990), the Supreme Court affirmed that "`[t]he Eighth and Fourteenth Amendments cannot tolerate the infliction of a sentence of death under legal systems that permit this unique penalty to be ... wantonly and ... freakishly imposed.'" Id. at 774, 110 S.Ct. 3092 (citing Gregg v. Georgia, 428 U.S. 153, 188, 96 S.Ct. 2909, 49 L.Ed.2d 859 (1976) (joint opinion of Stewart, Powell, and Stevens, JJ.)) (quoting Furman v. Georgia, 408 U.S. 238, 310, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972) (Stewart, J., concurring)). Consequently, it is essential that a capital sentencing body's discretion "be suitably directed and limited so as to minimize the risk of wholly arbitrary and capricious action." Id. (quoting Gregg, 428 U.S. at 189, 96 S.Ct. 2909). Capital sentencing schemes must "`channel the sentencer's discretion' by `clear and objective standards' that provide `specific and detailed guidance,' and that `make rationally reviewable the process for imposing a sentence of death.'" Id. (quoting Godfrey *630 v. Georgia, 446 U.S. 420, 428, 100 S.Ct. 1759, 64 L.Ed.2d 398 (1980)).
Sentencing in a federal capital case is composed of two discrete phases. See 18 U.S.C. § 3591 et seq. The first phase, "eligibility," requires the factfinder to determine whether the defendant qualifies for the death penalty, while the second phase, "selection," necessitates a decision as to whether a particular defendant "should in fact receive that sentence." Tuilaepa v. California, 512 U.S. 967, 972, 114 S.Ct. 2630, 129 L.Ed.2d 750 (1994). In both the eligibility and selection inquiries, the process must be "neutral and principled so as to guard against bias or caprice in the sentencing decision." Id. at 973, 114 S.Ct. 2630 (citing Gregg, 428 U.S. at 189, 96 S.Ct. 2909) (joint opinion of Stewart, Powell, and Stevens, JJ.).
To be eligible for the death penalty in a homicide case, the factfinder must convict the defendant of capital murder, finding the requisite "intent" as delineated in 18 U.S.C. § 3591(a)(2). Next, it must find beyond a reasonable doubt the existence of at least one statutory aggravating factor for which the defendant received notice. See 18 U.S.C. §§ 3592(c)(1) (16) & 3593(c) & (e); see also Tuilaepa, 512 U.S. at 971-72, 114 S.Ct. 2630; U.S. v. Johnson, 136 F.Supp.2d 553, 557-58 (W.D.Va.2001).
If the defendant is eligible for the death penalty, the factfinder proceeds to the selection phase. The jury must weigh aggravating factors proven by a reasonable doubt to the satisfaction of a unanimous jury against mitigating factors proven by a preponderance of the evidence found by at least one juror to make "an individualized determination on the basis of the character of the individual and the circumstances of the crime" of whether this defendant should receive a death sentence. Zant v. Stephens, 462 U.S. 862, 879, 103 S.Ct. 2733, 77 L.Ed.2d 235 (1983) (citations omitted); see also 18 U.S.C. §§ 3593(d)-(e) (requiring the factfinder to weigh mitigating and aggravating factors to determine whether a sentence of death is justified and discussing burdens of proof during sentencing). The aggravating factors may include non-statutory aggravating factors put forth by the government. 18 U.S.C. § 3593(a) (stating that aggravating factors may include "any other relevant information" provided that the government provides notice to the defendant).
Non-Statutory Aggravating Factors
The Court plays an important role in ensuring that sentencing is carried out in a manner consistent with the requirements of the Constitution. In other words, the Court's screening of aggravating factors is essential in channeling, directing and limiting the sentencer's discretion to prevent arbitrary and capricious imposition of the death penalty. See Arave v. Creech, 507 U.S. 463, 470-71, 113 S.Ct. 1534, 123 L.Ed.2d 188 (1993) (discussing the requirements of sentencing schemes). "[A]ggravating circumstances must be construed to permit the sentencer to make a principled distinction between those who deserve the death penalty and those who do not." Jeffers, 497 U.S. at 776, 110 S.Ct. 3092 (citation omitted). To come before the sentencer, an aggravating factor cannot be unconstitutionally vague, overbroad, duplicative or irrelevant. See Tuilaepa, 512 U.S. at 973, 114 S.Ct. 2630 (vagueness); Arave, 507 U.S. at 474, 113 S.Ct. 1534 (overbreadth); United States v. Tipton, 90 F.3d 861, 899 (4th Cir.1996) (referencing the reasoning in United States v. McCullah, 76 F.3d 1087 (10th Cir.1996) with respect to double-counting); Gregg, 428 U.S. at 192, 96 S.Ct. 2909 (relevance); United States v. Lentz, 225 F.Supp.2d 666 (E.D.Va.2002) (discussing vagueness, overbreadth, double-counting, and relevance); United States v. McVeigh, 944 F.Supp. 1478, 1486 (D.Co.1996) ("[t]he *631 guiding principles for judicial determination of the validity of particular non-statutory aggravators is the death penalty jurisprudence developed by the Supreme Court").
Vague and overbroad aggravating circumstances are impermissible. An aggravator is vague if it lacks "some `commonsense core of meaning ... that criminal juries should be capable of understanding.'" Tuilaepa, 512 U.S. at 973, 114 S.Ct. 2630 (citing Jurek v. Texas, 428 U.S. 262, 279, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976) (White, J., concurring in judgment)). Vagueness review is "quite deferential" since it "is not susceptible of mathematical precision." Id. (citing Walton v. Arizona, 497 U.S. 639, 655, 110 S.Ct. 3047, 111 L.Ed.2d 511 (1990)). A factor is overbroad if "the sentencer fairly could conclude that an aggravating circumstance applies to every defendant eligible for the death penalty." Arave, 507 U.S. at 474, 113 S.Ct. 1534. In other words, if an aggravating factor applies to all defendants convicted of murder, it is unconstitutionally overbroad. See Tuilaepa, 512 U.S. at 972, 114 S.Ct. 2630 (stating the factor "may not apply to every defendant convicted of a murder; it must apply only to a subclass of defendants convicted of murder").
Unconstitutionally irrelevant or duplicative aggravating factors may not come before the jury either. A relevant factor is one that assists the sentencer "in distinguishing `those who deserve capital punishment from those who do not...'" McVeigh, 944 F.Supp. at 1488 (quoting Arave, 507 U.S. at 474, 113 S.Ct. 1534). The aggravating factor must be "sufficiently relevant to the inquiry of who should live and who should die" to be considered by the sentencer. Johnson, 136 F.Supp.2d at 558 (quoting United States v. Davis, 912 F.Supp. 938, 943 (E.D.La.1996)). If the aggravator has only a tangential relationship to a determination of who is more worthy of receiving a sentence of death, it should be excluded from the sentencer's review. Furthermore, the Federal Death Penalty Act and federal criminal jurisprudence have emphasized that relevant information is "particularized to the individual defendant." United States v. Chong, 98 F.Supp.2d 1110, 1116 (D.Hawai'i 1999) (citing United States v. Frank, 8 F.Supp.2d 253 (S.D.N.Y.1998)).
In addition, duplicative aggravating factors may pose constitutional problems. The Fourth Circuit has reasoned that aggravating factors that duplicate each other are prohibited; "a submission [of multiple overlapping aggravating circumstances] ... that permits and results in cumulative findings of more than one of the ... circumstances as an aggravating factor is constitutional error." Tipton, 90 F.3d at 899 (adopting the Tenth Circuit's reasoning in McCullah, 76 F.3d at 1111). The concern is that aggravating factors "that duplicate each other may impermissibly skew a jury in favor of imposing the death penalty." United States v. Regan, 228 F.Supp.2d 742, 751 (E.D.Va.2002) (quoting United States v. Allen, 247 F.3d 741, 789-90 (8th Cir.2001)). Although the sentencer may review information that duplicates elements of the underlying offense as an aggravating factor, it is constitutional error for the same aggravating factor to be considered by the sentencer more than once, even if dressed in new clothing. Id. (citations omitted).
Admissibility of Information in Support of Aggravating Factors
In deciding whether to admit information regarding aggravating factors at sentencing, the Court must ensure that it is relevant, reliable and less prejudicial than probative. See 18 U.S.C. § 3593(c) *632 (relevance, probative versus prejudicial value); Lockett v. Ohio, 438 U.S. 586, 604, 98 S.Ct. 2954, 57 L.Ed.2d 973 (1978) (heightened reliability requirements in death penalty cases). At the same time, it should lean in favor of admitting as much information as possible to allow the jury to make an individualized determination of whether the defendant merits the death penalty. Davis, 912 F.Supp. at 941. The FDPA provides the following guidance:
The government may present any information relevant to an aggravating factor for which notice has been provided under subsection (a). Information [during the penalty phase] is admissible regardless of its admissibility under the rules governing admission of evidence at criminal trials except that information may be excluded if its probative value is outweighed by the danger of creating unfair prejudice, confusing the issues, or misleading the jury.
18 U.S.C. § 3593(c). In sum, information submitted in the penalty phase must be relevant to the aggravating factors, and its probative value may not be outweighed by the danger of creating unfair prejudice. Id. In addition, the information must satisfy the "heightened reliability" requirements of capital sentencing, in light of the finality of the penalty. See, e.g., Lockett, 438 U.S. at 604, 98 S.Ct. 2954 ("We are satisfied that this qualitative difference between death and other penalties calls for a greater degree of reliability when the death sentence is imposed"). At the same time, it is "`desirable' for the jury to have `as much information before it as possible' when deciding the penalty." Davis, 912 F.Supp. at 941 (quoting Gregg, 428 U.S. at 204, 96 S.Ct. 2909). Consequently, the Court must struggle with an often cited inherent tension in capital cases between reliability and providing the jury with as much information as possible to make an individualized determination of whether the defendant merits the death penalty. See id. at 941-943 (describing this tension through Supreme Court capital jurisprudence) (citing, inter alia, Furman, 408 U.S. 238, 92 S.Ct. 2726, Woodson v. North Carolina, 428 U.S. 280, 96 S.Ct. 2978, 49 L.Ed.2d 944 (1976), Gardner v. Florida, 430 U.S. 349, 97 S.Ct. 1197, 51 L.Ed.2d 393 (1977)).
B. Statutory Factor No. 1:
1. Defendant OSCAR ANTONIO GRANDE, also known as `Pantera,' committed the offense in an especially heinous, cruel, and depraved manner in that it involved torture and serious physical abuse to Brenda Paz, also known as `Smiley.' 18 U.S.C. § 3592(c)(6).
The Court denies Defendant's motion to strike the first statutory aggravating factor in the Death Notice for vagueness because almost identical language has been previously upheld as proper so long as a limiting instruction is provided, and such an instruction is incorporated into this aggravating factor. In Frank, the Southern District of New York held that a statutory aggravating factor stating that "the defendant committed the offense in an especially heinous, cruel and depraved manner in that it involved torture or serious physical abuse to the victim" was proper when given with a limiting instruction. Frank, 8 F.Supp.2d at 277-78. The Frank court notes that the Supreme Court held that such a statutory factor by itself, "does not provide a jury with constitutionally sufficient guidance in distinguishing among murderers" in Walton. 8 F.Supp.2d at 277-78 (citing 497 U.S. at 653-54, 110 S.Ct. 3047). However, the court proceeds to explain, the Supreme Court in Maynard v. Cartwright, 486 U.S. 356, 108 S.Ct. 1853, 100 L.Ed.2d 372 (1988), held that this phrase could pass constitutional muster when given with "a limiting instruction stating that the murder involved `some kind of torture or serious physical abuse.'" *633 Id. at 365, 108 S.Ct. 1853; accord United States v. Minerd, 176 F.Supp.2d 424, 438 (2001). As the Frank court points out, the necessary limiting language has been inserted into the statute itself, remedying the constitutional error raised in Maynard. Frank, 8 F.Supp.2d at 278. 18 U.S.C. § 3592(c) permits the sentencer to consider whether "[t]he defendant committed the offense in an especially heinous, cruel, or depraved manner in that it involved torture or serious physical abuse to the victim." 18 U.S.C § 3592(c)(6).[1] As to Mr. Grande's argument that the Court should strike this factor for not providing proper notice since it only tracks the language of the statute and does not describe the conduct at issue, the Court rejects this argument since "[t]he FDPA and the Constitution require that the defendant receive adequate notice of the aggravating factor ... not notice of the specific evidence that will be used to support it." United States v. Higgs, 353 F.3d 281, 325 (4th Cir.2003) (citations omitted).
C. Non-Statutory Factors
1. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," engaged in a pattern of juvenile criminal activity as demonstrated by, but not limited to, the following:
(a) On or about April 14, 1999, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," assaulted a student at Fairfax High School.
(b) On or about April 17, 1999, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," solicited co-defendant Ismael Juarez Cisneros to stab a fifteen-year-old victim at the Fairfax Towne Center shopping center in retaliation for the victim preventing defendant GRANDE from further assaulting a fellow student at school. Defendant GRANDE was also armed with a knife during the attack on this student at the Fairfax Towne Center.
The Court strikes the first non-statutory aggravating factor because the Court finds that the government has failed to make out a "pattern" of juvenile criminal behavior. Alternatively stated, the Court finds that the information listed below non-statutory aggravating factor (1), in subheadings (a) and (b), is irrelevant to the assertion of the existence of a "pattern." Like the federal district court in Chong, this Court reasons that "information, to be relevant, must provide some evidence in support of a statutory or non-statutory aggravating factor alleged by the Government." 98 F.Supp.2d at 1117. Here, the information purportedly in support of the first non-statutory aggravating factor is irrelevant because it does not establish a pattern.
The relevant definition of the word "pattern" is "a combination of qualities, acts, tendencies, etc., forming a consistent or characteristic arrangement: the behavior patterns of teenagers..." RANDOM HOUSE WEBSTER'S COLLEGE DICTIONARY 971 (2001). The government's Notice and its supplemental submission to the Court make clear that (a) and (b) are factually intertwined. Not only are the two events only three days apart, but also, the police reports and interviews of witnesses submitted clarify that they involve the same victim. Through their investigation of the stabbing, *634 the police learned from the stabbing victim that Mr. Grande had been involved in a fight at school with him three days before the stabbing. According to the victim, Mr. Grande witnessed a fight in a school hallway and jumped in. The victim grabbed Mr. Grande in an effort to keep him away from the fight. Then Mr. Grande jumped on a locker and kicked him. Three days later, Mr. Grande and another co-defendant in this case, Mr. Ismael Cisneros, approached the victim with knives drawn at Fairfax Towne Center, and Mr. Cisneros stabbed him four times in the back and once in the left wrist. The government's Notice includes only (a) and (b), and no other supporting facts under non-statutory aggravating factor (1) to establish a pattern of juvenile criminal conduct.
The Court finds that these two events do not evince a "combination of ... acts ... forming a consistent or characteristic arrangement" because they are only three days apart and involve the same two parties that were in the school fight, with the addition of Mr. Cisneros. Id. Since the government has listed only these two facts in support of its statement that the defendant was involved in a "pattern" of juvenile criminal activity, and the Court finds these insufficient to establish a "pattern," the Court strikes (1).
After striking non-statutory aggravating factor (1), the Court considers (a) and (b) individually, as independent non-statutory aggravating factors, to determine whether they may be brought before the jury. The Court strikes (a) because a high school fight is unconstitutionally irrelevant to the determination of "who should live and who should die." See Johnson, 136 F.Supp.2d at 558 (quoting Davis, 912 F.Supp. at 943). Furthermore, the Court notes that this is an unadjudicated high school fight. While unadjudicated conduct may be admissible, it must be carefully monitored to avoid constitutional deficiencies. See id. at 562 (citing Milton v. Procunier, 744 F.2d 1091, 1097 (5th Cir.1984)). In addition, this case is distinguishable from Higgs, where the Fourth Circuit found unadjudicated criminal conduct admissible as a non-statutory aggravating factor, when that conduct consisted of impeding investigation of the murders the defendant was being tried for. 353 F.3d at 323. Here, the unadjudicated conduct is a high school fight that took place five years ago and is wholly unrelated to the murder that Mr. Grande is currently charged with.
The Court declines Defendant's invitation to strike (1)(b) because of the government's representation at oral argument that it is adjudicated conduct and because it is not vague, overbroad, irrelevant or duplicative of any other non-statutory aggravating factor presented. Furthermore, the Court notes that even though it appears that Mr. Grande did not himself stab the victim, he was present and apparently approached the victim brandishing a knife. Violent adjudicated conduct is information that should come before the jury during sentencing. See Zant, 462 U.S. at 888, 103 S.Ct. 2733 ("Nothing in the United States Constitution prohibits a trial judge from instructing a jury that it would be appropriate to take account of a defendant's prior criminal record in making its sentencing determination ... even though the defendant's prior history of noncapital convictions could not by itself provide sufficient justification for imposing the death sentence"); see also Williams v. New York, 337 U.S. 961, 69 S.Ct. 1529, 93 L.Ed. 1760 (1949) (allowing trial court judges to consider a wide range of factors in sentencing, including past criminal conduct). Consequently, the Court will allow this non-statutory aggravating *635 factor to come before the jury as a free-standing non-statutory aggravating factor.
2. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," while a student in the Fairfax County school system, repeatedly engaged in misconduct that resulted in multiple suspensions, and his expulsion.
The Court strikes this factor because it is unconstitutionally irrelevant and vague. As a matter of law, whether Mr. Grande's high school career was marred by suspensions, or even an expulsion, is irrelevant to the jury's determination of whether Mr. Grande should live or die. See Jeffers, 497 U.S. at 776, 110 S.Ct. 3092 (stating that information before the sentencer must go to whether the defendant merits the penalty of death). Furthermore, as written, this proposed non-statutory aggravating factor is vague in this context because it lacks "some `common-sense core of meaning ... that criminal juries should be capable of understanding.'" Tuilaepa, 512 U.S. at 973, 114 S.Ct. 2630 (citing Jurek v. Texas, 428 U.S. 262, 279, 96 S.Ct. 2950, 49 L.Ed.2d 929 (1976) (White, J., concurring in judgment)). "Misconduct" in the school system can range from failing to turn in homework to cutting class to assaulting a teacher. It is difficult to argue a correlation exists between a student's decision to cut class and subsequent suspension and the student's future dangerousness to society. The government's language simply does not sufficiently channel the jury's discretion in evaluating this non-statutory aggravating factor. The Court strikes this non-statutory aggravating factor because it is vague and immaterial to the jury's inquiry of whether Mr. Grande should receive the death penalty.
3. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," has engaged in a pattern of criminal activity as an adult as demonstrated by, but not limited to, the following:
(a) On or about April 25, 2002, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," pled guilty to Assault and Battery.
(b) On or about June 18, 2003, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," along with other members of the Mara Salvatrucha, also known as "MS-13," knocked an individual to the ground, struck him in the head with a large rock, and then kicked and stomped him. On or about May 19, 2004, defendant GRANDE pled guilty to Malicious Wounding and Street Gang Participation in Arlington, Virginia.
(c) On or about December 19, 2003, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," pled guilty to obstructing justice.
(d) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly carried a concealed weapon, namely a knife.
(e) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly hit Brenda Paz, also known as "Smiley," and threatened to kill her.
(f) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly abused females with whom he associated, including hitting, kicking, and threatening them with knives.
Non-Statutory Aggravating Factor (3)
The Court rejects Defendant's argument that the "as demonstrated by, but not limited to" language renders the factor unconstitutionally vague because the Court finds that the full text of factor (3) properly limits the scope of the factor, and it provides the defendant with adequate notice as required by the death penalty *636 statute. The government is not required to spell out the evidence it intends to use during sentencing. See Higgs, 353 F.3d at 325 ("The FDPA and the Constitution require that the defendant receive adequate notice of the aggravating factor ... not notice of the specific evidence that will be used to support it"); 18 U.S.C. § 3593(a) (requiring notice of non-statutory aggravating factors, not evidence supporting those factors). Because the words "criminal activity as an adult" have a common sense core of meaning as required by the Constitution criminal activity over the age of eighteen the Court holds that this non-statutory aggravating factor is not vague despite its use of the words "including, but not limited to." See United States v. O'Driscoll, 203 F.Supp.2d 334, 339 (M.D.Pa.2002) (permitting this language in a non-statutory aggravating factor regarding victim impact). In other words, the Court will allow the government to introduce Mr. Grande's criminal activity as an adult so long as it is relevant to the determination of a pattern of criminal activity as an adult justifying the death penalty and its probative value outweighs the danger of creating unfair prejudice, confusing the issues or misleading the jury. See 18 U.S.C. § 3593(c); see also Zant, 462 U.S. at 888, 103 S.Ct. 2733.
Supporting Information (a) and (b)
(a) On or about April 25, 2002, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," pled guilty to Assault and Battery.
(b) On or about June 18, 2003, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," along with other members of the Mara Salvatrucha, also known as "MS-13," knocked an individual to the ground, struck him in the head with a large rock, and then kicked and stomped him. On or about May 19, 2004, defendant GRANDE pled guilty to Malicious Wounding and Street Gang Participation in Arlington, Virginia.
The Court will not strike supporting information (a) and (b) concerning the rock attack on an unarmed victim because (a) and (b) are relevant to whether the defendant exhibits a pattern of violent adult criminal activity and they are not more prejudicial than probative. These subheadings refer to a brutal assault and adjudicated criminal conduct. Thus, (a) and (b) constitute relevant information that should come before the jury at sentencing.
Supporting Information (c) and (d)
(c) On or about December 19, 2003, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," pled guilty to obstructing justice.
(d) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly carried a concealed weapon, namely a knife.
The Court excludes (c) and (d), information relating to a conviction for obstruction of justice and allegations that the defendant repeatedly carried a knife, because they are more prejudicial than probative to the finding that Mr. Grande exhibits a pattern of adult criminal activity justifying the death penalty. 18 U.S.C. § 3593(c) specifies that during the sentencing phase of a capital trial, "[i]nformation is admissible regardless of its admissibility under the rules governing admission of evidence at criminal trials except that information may be excluded if its probative value is outweighed by the danger of creating unfair prejudice, confusing the issues, or misleading the jury." Id. In the government's supplemental submission, the Court learned that Mr. Grande was fined $177 and given a suspended sentence of thirty days in jail as a result of his obstruction of justice plea.[2] The government *637 has provided no information describing the underlying conduct supporting the conviction. Nevertheless, because of the relatively low penalty, the Court cannot assume the underlying conduct was highly egregious.
For non-statutory aggravating factor (3) to be constitutionally relevant, a finding of a pattern of adult criminal activity must be significant in the determination of whether Mr. Grande should live or die. See Jeffers, 497 U.S. at 776, 110 S.Ct. 3092 (asserting that non-statutory aggravating factors must address whether a defendant merits the death penalty). Because the jury might give this relatively minor obstruction of justice conviction undue weight and make a finding of adult criminal activity justifying the death penalty, at least in part, because of the obstruction of justice guilty plea, the Court believes allowing its admission may mislead or confuse the jury. Cf. Higgs, 353 F.3d at 323 (admitting at sentencing a non-statutory aggravating factor of obstruction of justice and corresponding evidence when the defendant hid the murder weapon, destroyed physical evidence, lied to the police and told others to lie); see also 18 U.S.C. §§ 3592(c)(2) (4) (listing as statutory aggravating factors "previous conviction of violent felony involving firearm," "previous conviction of offense for which a sentence of death or life imprisonment was authorized," and "previous conviction of other serious offenses ... punishable by a term of imprisonment of more than 1 year ... involving the infliction of, or attempted infliction of serious bodily injury or death upon another person"). The same reasoning applies to subheading (d). Although carrying a concealed knife may be criminal conduct under Virginia law, a bare allegation, unspecified in time or event without some indication the weapon was carried to threaten or assault is not relevant to a finding of a pattern of adult criminal activity sufficient to justify the death penalty. The Court strikes these two subheadings from the Notice because evidence regarding the carrying of a knife or a guilty plea to a relatively minor obstruction of justice charge is more prejudicial than probative as to whether Mr. Grande exhibits a pattern of criminal activity as an adult justifying the death penalty.[3]
Supporting Information (e) and (f)
(e) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly hit Brenda Paz, also known as "Smiley," and threatened to kill her.
(f) Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," repeatedly abused females with whom he associated, including hitting, kicking, and threatening them with knives.
The Court denies Defendant's motion to strike non-statutory supporting information in subheadings (e) and (f), concerning threats and assaults on Ms. Paz, the alleged murder victim, and threats and assaults on other women, because these allegations are relevant to determining whether Mr. Grande exhibits a pattern of violent criminal behavior as an adult. If *638 Mr. Grande repeatedly hit and threatened Ms. Paz, this is violent criminal conduct that is relevant to a finding of a pattern of adult criminal activity. The same applies to allegations of Mr. Grande's repeated threats and physical abuse of other women. Furthermore, the Court holds that the word "abuse" is not unconstitutionally vague since it has a "common-sense core of meaning" that criminal juries are capable of understanding. Tuilaepa, 512 U.S. at 973, 114 S.Ct. 2630 (citing Jurek, 428 U.S. at 279, 96 S.Ct. 2950 (White, J., concurring in judgment)). Also, as this Court ruled in Lentz, threats or acts of domestic violence are relevant information for sentencing and, if necessary, the Court will "limit introduction of evidence pertaining to such domestic abuse offenses or threats that withstand the evidentiary standard of 18 U.S.C. § 3593(c)." 225 F.Supp.2d at 671.
4. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," was a member of a criminal street gang as defined by 18 U.S.C. § 521(a), namely Mara Salvatrucha, also known as MS-13." As a member of MS-13, defendant GRANDE agreed to engage in acts of violence, including murder and aggravating assaults. Defendant GRANDE was a senior member of Centrales Locos Salvatrucha or "CLS," clique of MS-13, and as such was an enforcer of the rules of MS-13.
The Court strikes this non-statutory aggravating factor from the Notice because it does not assist the jury in making an individualized determination of whether Mr. Grande should receive the death penalty. "What is important at the selection stage is an individualized determination on the basis of the character of the individual and the circumstances of the crime." Zant, 462 U.S. at 879, 103 S.Ct. 2733 (emphasis in original). Mr. Grande's membership in a gang will be more than obvious to the jury; he and his three co-defendants are all admittedly members of MS-13 and Mr. Grande has "MS" or "MS-13" tattooed in places which will be visible to the jury. Furthermore, all four defendants are being tried jointly for the murder of a government informant. The purpose of the selection phase of sentencing is to focus on this individual's characteristics, not on the possible guilt of those with whom he associated. The non-statutory aggravating factor conflates the two: "As a member of MS-13, defendant GRANDE agreed to engage in acts of violence, including murder and aggravated assaults." Notice at 5. Furthermore, the Court is concerned about reliability with respect to this proposed non-statutory aggravating factor. It makes generalized statements about MS-13 as a group, including allegations of MS-13 engaging in uncharged murders and assaults, that are difficult, if not impossible, to cross-examine and which do not refer to Mr. Grande's individual acts or intentions in joining the gang. There has been a great deal of negative publicity in the news media associating MS-13 with violent acts including maiming victims with machetes, gang beatings, and assaults against female victims. The jury in this case is charged with rendering a verdict as to the conduct of Oscar Antonio Grande on a particular date, not the conduct of all members of MS-13 for an unlimited period of time. Consequently, the Court grants the defendant's motion to strike non-statutory aggravating factor number (4).
5. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," poses a future danger based upon the probability that he would commit criminal acts of violence that would constitute a continuing threat to society as demonstrated by, but not limited to, the following:
(a) While detained at the Arlington County Detention Facility and facing pending charges, defendant OSCAR ANTONIO *639 GRANDE, also known as "Pantera," threatened to kill an individual whom he believed had cooperated with law enforcement.
(b) While detained at the Arlington County Detention Facility, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," has shown poor institutional adjustment in that he has committed numerous disciplinary violations.
(c) While detained at the Arlington County Detention Facility, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," continued to conduct and influence MS-13 gang business occurring inside and outside of the correction institution.
(d) While detained at the Loudoun County Detention Center, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," along with other members of MS-13, caused a disturbance in the facility.
Non-Statutory Aggravating Factor (5)
The Court denies Defendant's motion to strike the "as demonstrated by, but not limited to" language. Again, as previously stated, the government is not required to spell out exactly what evidence it will present in the penalty phase, only to give notice of the non-statutory aggravating factor. Furthermore, as required by 18 U.S.C. § 3593(c), the Court will ensure that evidence submitted to support this factor is relevant, sufficiently reliable, and not more prejudicial than probative.
Supporting Information (a)
(a) While detained at the Arlington County Detention Facility and facing pending charges, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," threatened to kill an individual whom he believed had cooperated with law enforcement.
The Court denies Defendant's motion to strike supporting information (a), referring to Mr. Grande's alleged threats to an individual who may have cooperated with law enforcement, because it is relevant to whether Mr. Grande poses a future danger to society. In addition, the Court finds this information to be in compliance with 18 U.S.C. § 3593(c), because it is sufficiently reliable and not more prejudicial than probative. Finally, if true, it is violent criminal conduct that should come before the jury at sentencing.
Supporting Information (b) and (d)
(b) While detained at the Arlington County Detention Facility, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," has shown poor institutional adjustment in that he has committed numerous disciplinary violations.
(d) While detained at the Loudoun County Detention Center, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," along with other members of MS-13, caused a disturbance in the facility.
The Court grants Defendant's motion to strike the information in subheading (d), referring to Mr. Grande's participation in a "disturbance" at Loudoun County Detention Center, entirely, and subheading (b), referring to Mr. Grande's alleged "poor institutional adjustment" to the Arlington County Detention Center, to the extent that it is irrelevant to the non-statutory aggravating factor of Mr. Grande posing a future danger of committing criminal acts of violence. The government's supplemental submission to the Court discusses only two incidents of disciplinary violations. One involves throwing a dinner tray out of a slot at a correctional officer. The correctional officer was not injured; in his words, "[a]fter opening Inmate Grande's ... foodslot he threw his dinner tray out of the slot striking me [in] the right knee, leaving food particles on my right pant leg. No medical attention was *640 required." The second involves a disturbance in Block No. 3 of the Loudoun Adult Detention Center. In that incident, spanning several hours, inmates housed in Block No. 3 put graffiti on the walls of their cells, refused to clean them, yelled and banged on bunks and bars. The inmates were ultimately sprayed with Oleoresin Capsicum spray. The correctional officer's report in no way singles out Mr. Grande's behavior. The report's only reference to Mr. Grande is in a list of all the inmates housed in Block No. 3 of the jail.
The Court finds that the first incident, of Mr. Grande pushing his food tray though a foodslot at a correctional officer, is irrelevant to the determination of whether Mr. Grande poses a future danger to society to justify the death penalty, although the Court appreciates that his conduct was wrongful. As to the second incident, of the group jail disturbance, the Court finds that it lacks the requisite indicia of reliability for an individualized determination of whether Mr. Grande deserves the death penalty since the report does not refer to Mr. Grande's behavior, but instead the behavior of all inmates in Block No. 3. Also, putting graffiti on walls or banging on bars does not speak to Mr. Grande's tendency to "commit criminal acts of violence," as stated in the aggravating factor. The Court will, however, admit any information that is relevant to this determination, including serious assaults on or threats to fellow inmates or correctional staff.
Supporting Information (c)
(c) While detained at the Arlington County Detention Facility, defendant OSCAR ANTONIO GRANDE, also known as "Pantera," continued to conduct and influence MS-13 gang business occurring inside and outside of the correction institution.
The Court grants Defendant's motion to strike supporting information (c) of non-statutory aggravating factor Number Five because the phrase "continued to conduct and influence MS-13 gang business" is vague and undefined, and thus, is more prejudicial than probative to whether Mr. Grande poses a future danger to society, and it will be confusing and misleading to the jury if permitted. The government has not defined what "gang business" is or what it means to "conduct and influence" gang business. Although the government is not required to present all the evidence it will use in support of an aggravating factor, the evidence in support of an aggravating factor must be reliable, must not mislead the jury or confuse the issues, and it must be more probative than prejudicial. 18 U.S.C. § 3593(c). Here, the vagueness of the words "gang business" confuses the issues and may be misleading to the jury. "Gang business" is not, of necessity, criminal. Having a conversation with a fellow gang member does not necessarily constitute a crime. Similarly, the meaning of "conduct and influence" is also unclear. Finally, as previously stated, the purpose of the sentencing phase is to determine whether this defendant is eligible for and deserving of the death penalty, not to try Mr. Grande's gang membership in and of itself or the gang he was a member of. Consequently, the Court grants Defendant's motion to strike supporting information (c) from the Notice.
8. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," committed Counts One, Two, Three, Four and Five of the Indictment to prevent Brenda Paz, also known as "Smiley," from and to retaliate against her for assisting in the investigation and prosecution of co-defendant Denis Rivera for the murder of Joaquin Diaz, and in the investigation of other MS-13 members for their criminal activity.
The Court denies Defendant's motion to strike this factor for impermissible *641 double counting because the Fourth Circuit and the Supreme Court have rejected the argument that aggravating factors may not duplicate elements of the offense. See Higgs, 353 F.3d at 315 ("... the Eighth Amendment does not prohibit the use of an aggravating factor during the sentencing phases that duplicates one or more elements of the offense of the crime found at the guilt phase") (citing Lowenfield v. Phelps, 484 U.S. 231, 246, 108 S.Ct. 546, 98 L.Ed.2d 568 (1988)).
9. Defendant OSCAR ANTONIO GRANDE, also known as "Pantera," attempted to obstruct justice after murdering Brenda Paz, also known as "Smiley," by threatening to kill anyone who revealed to law enforcement details of his and co-defendants Ismael Juarez Cisneros and Oscar Alexander Garcia-Orellana's departure from the Holiday Inn Fair Oaks with Brenda Paz, also known as "Smiley."
The Court denies Defendant's motion to strike this aggravating factor as unconstitutionally vague and far removed from the purpose of non-statutory aggravating factors because the language has a common sense core of meaning and because obstruction of justice with respect to the underlying offense has frequently been deemed a proper non-statutory aggravating factor. Def.'s Mot. Strike at 35. Although the defendant summarily states that the aggravating factor is unconstitutionally vague, he does not point to any language in the factor that is vague, nor can the Court discern any "vague" language within the meaning of the applicable caselaw. See, e.g., Tuilaepa, 512 U.S. 967, 114 S.Ct. 2630. Furthermore, the Court holds that the factor is not unconstitutionally overbroad, duplicative or irrelevant. As the defendant's brief points out, obstruction of justice aggravating factors are common aggravating factors "where the defendant killed the victim in order to obstruct the investigation or prosecution of another offense." Def.'s Mot. Strike at 24 (citations omitted). The Court holds that threatening to kill potential witnesses is conduct intimately tied to the underlying offense and is almost, if not equally, as serious.
III. CONCLUSION
The Court denies Defendant's motion to strike the first statutory aggravating factor because the Supreme Court upheld such language when provided with a limiting instruction in Maynard v. Cartwright, 486 U.S. 356, 108 S.Ct. 1853, 100 L.Ed.2d 372 (1988). Id. at 365, 108 S.Ct. 1853. The Court strikes non-statutory aggravating factor (1) because the two alleged facts listed in support of it do not establish a "pattern" of juvenile activity since they are factually intertwined because they are only three days apart and involve the same victim. Although it will allow evidence as to (1)(b), adjudicated juvenile criminal conduct, the Court will not allow evidence of the unadjudicated high school fight that preceded it because it is unconstitutionally irrelevant to the determination of who should live and who should die. The Court strikes non-statutory aggravating factor (2) because Defendant Oscar Antonio Grande's suspension or even expulsion from school is unconstitutionally irrelevant, and the use of the word "misconduct" in this context is unconstitutionally vague.
As to non-statutory aggravating factor (3), the Court rejects Defendant's argument that the "as demonstrated by, but not limited to" language renders the factor unconstitutionally vague because it finds that the full text of the factor sufficiently limits its scope, and it provides the defendant with adequate notice as required by the death penalty statute. The Court will not strike (a) and (b) because they are relevant to whether the defendant exhibits a pattern of adult criminal *642 activity and they are not more prejudicial than probative. The Court excludes (c) and (d) because they are more prejudicial than probative to the finding that Mr. Grande exhibits a pattern of adult criminal activity justifying the death penalty. The Court allows (e) and (f) because they are relevant to determining whether Mr. Grande exhibits a pattern of criminal activity as an adult.
The Court strikes non-statutory aggravating factor (4), regarding Defendant Oscar Antonio Grande's membership in a gang from the Notice because it does not assist the jury in making the requisite individualized determination of whether Mr. Grande should receive the death penalty.
The Court denies Defendant's motion to strike non-statutory aggravating factor (5) because of its "as demonstrated by, but not limited to" language because although the government is required to give notice of its non-statutory aggravating factors, it is not required to detail in advance the evidence it will use in support of these factors. The Court denies Defendant's motion to strike (a) because threatening to kill a person who cooperated with law enforcement is relevant to whether Defendant poses a future danger and continuing threat to society, and it is not more prejudicial than probative. Also, evidence of the defendant's past violent criminal conduct is highly probative and should come before the jury at sentencing. The Court strikes (b) because an inmate throwing a food tray through a slot does not speak to whether Mr. Grande exhibits a danger of committing criminal acts of violence constituting a continuing threat to society. The Court strikes (d) because the evidence of a group disturbance in the jail facility provided to the Court does not contain the requisite indicia of reliability since it does not refer specifically to Mr. Grande's behavior, but rather the conduct of all inmates in Block No. 3 at the Loudoun Adult Detention Center. Also, the Court strikes (c) because its language is so vague that it is more prejudicial than probative to whether Mr. Grande constitutes a future danger to society.
The Court denies Defendant's motion to strike non-statutory aggravating factor (8) because the Fourth Circuit and the Supreme Court have rejected the argument that aggravating factors may not duplicate elements of the offense. Finally, the Court denies Defendant's motion to strike non-statutory aggravating factor (9) as unconstitutionally vague and far removed from the purpose of non-statutory aggravating factors because the language has a common sense core of meaning and because obstruction of justice with respect to the underlying offense, by assaulting a witness, has frequently been deemed a proper non-statutory aggravating factor.
For the foregoing reasons, it is hereby
ORDERED that the Defendant's Motion to Strike Non-Statutory Aggravating Factors is GRANTED IN PART and DENIED IN PART.
The government is directed to strike the following from the Notice of Intent to Seek the Death Penalty:
(1), (1)(a), (2), (3)(c), (3)(d), (4), (5)(d), (5)(c), and (5)(b), except for assaults and threats on correctional officers and fellow inmates not covered in any other aggravating factors or supporting information.
The Clerk is directed to forward a copy of this Order to counsel of record.
NOTES
[1] The Court notes that the government's proposed aggravating factor here states, in part, that the offense committed was "especially heinous, cruel, and depraved" rather than "especially heinous, cruel, or depraved," as the statutory language details. Compare Notice at 3 with 18 U.S.C. § 3592(c)(6). Nevertheless, the limiting language required by the Supreme Court is present; the aggravating factor states that the offense "involved torture and serious physical abuse." Notice at 3.
[2] "Obstruction of justice" under Virginia law encompasses a wide range of conduct, from talking back to a police officer to attempting to prevent a witness from appearing in court. See VA. CODE ANN. § 18.2-460 (Michie 2004).
[3] The Court imagines a situation where an identical non-statutory aggravating factor is put forth on a government notice of intention to seek the death penalty, but the supporting subheadings state that the defendant had ten speeding tickets over the course of five years. Although violating the law in this way is, by definition, criminal, a finding of adult criminal activity sufficient to justify the death penalty would not be warranted. The non-statutory aggravating factor itself becomes unconstitutionally irrelevant to the determination of who should live and who should die, even though it may be true that the defendant committed the traffic violations and his behavior exhibits a pattern of flaunting traffic laws. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2708643/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 12-3330
BONNIE FISH, et al.,
Plaintiffs-Appellants,
v.
GREATBANC TRUST COMPANY, et al.,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 09 C 1668 — Milton I. Shadur, Judge.
ARGUED MAY 30, 2013 — DECIDED MAY 14, 2014
Before SYKES and HAMILTON, Circuit Judges, and
STADTMUELLER, District Judge.*
HAMILTON, Circuit Judge. The central issue in this appeal is
the application of the statute of limitations for claims for
breach of fiduciary duty under the Employee Retirement
*
The Honorable J.P. Stadtmueller, United States District Court for the
Eastern District of Wisconsin, sitting by designation.
2 No. 12-3330
Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq.1
The presumptive limitation period for violations is six years
from the date of the last action constituting part of the breach
or violation, but the statute provides a limited exception. The
time is shortened to just three years from the time the plaintiff
gained “actual knowledge of the breach or violation.”
29 U.S.C. § 1113. (The six-year limit can also be extended in
cases of fraud or concealment, but neither is at issue here.)
The plaintiffs in this case were employees of The Antioch
Company who participated in an employee stock ownership
plan or ESOP. Their claims arise from a buy-out transaction at
the end of 2003 in which Antioch borrowed money to buy all
stock except the stock owned by the employee stock ownership
plan. The buy-out ended badly, leaving Antioch bankrupt and
the employee stock ownership plan worthless. The plaintiffs
have sued under ERISA for breach of fiduciary duties in the
buy-out. The district court granted summary judgment for the
defendants under the three-year limit of § 1113(2), finding that
proxy documents given to plaintiffs at the time of the buy-out
transaction and their knowledge of Antioch’s financial affairs
after the transaction gave them actual knowledge of the alleged
ERISA violations more than three years before suit was filed.
Fish v. GreatBanc Trust Co., 890 F. Supp. 2d 1060 (N.D. Ill. 2012).
We reverse. The plaintiffs’ claims for breach of fiduciary
duty do not depend solely on the disclosed substantive terms
of the 2003 buy-out transaction. Their claims also depend on
1
Citations to ERISA in this opinion are to the sections as codified in Title 29
of the United States Code rather than to the sections in the ERISA legislation
as enacted.
No. 12-3330 3
the processes that defendant GreatBanc Trust used to evaluate,
to negotiate, and ultimately to approve the ill-fated transaction.
The plaintiffs’ knowledge of the substantive terms of the buy-
out transaction itself therefore did not give them “actual
knowledge of the breach or violation” alleged in this case. See
Maher v. Strachan Shipping Co., 68 F.3d 951, 956 (5th Cir. 1995).
Summary judgment on the statute of limitations defense must
therefore be reversed.
I. Undisputed Facts for Summary Judgment
In this appeal from a grant of summary judgment, we
consider the factual record in the light most favorable to the
plaintiffs and give them the benefit of all conflicts in the
evidence and reasonable inferences that may be drawn from
the evidence. See Lesch v. Crown Cork & Seal Co., 282 F.3d 467,
471 (7th Cir. 2002). We do not necessarily vouch for the
objective accuracy of all factual statements here, but defen-
dants moved for summary judgment, which requires that we
view the evidence in this harsh light.
A. The Parties and the Buy-Out
Plaintiffs Bonnie Fish, Christopher Mino, Monica Lee
Woosley, and Lynda Hardman were employees of Antioch,
which made and sold scrapbooks and related accessories. They
were also participants in Antioch’s Employee Stock Ownership
Plan (“the Plan”). Before the buy-out transaction closed on
December 16, 2003, the Plan owned 43 percent of Antioch’s
common stock. The remainder was held primarily by members
of the extended Morgan family, which had founded and still
controlled Antioch. The Morgan family decided to pursue a
major transaction that would accomplish several goals:
4 No. 12-3330
(a) allow the Morgan family and other shareholders to cash out
their Antioch stock holdings at a favorable price; (b) leave the
Morgan family in control of the company as fiduciaries of the
Plan; and (c) gain tax advantages by converting Antioch to a
subchapter S corporation with just one shareholder (the Plan).
We simplify the details of the transaction, but it was
structured so that Antioch would make a tender offer of $850
per share for all shares of its stock. The expectation was that
the Morgan family and all other shareholders would sell all
their stock, but an express condition of the transaction was that
the Plan was required to decline the tender offer so that it
would be left as the sole shareholder. To pay the Morgan
family and the other shareholders the $850 per share, the
relatively small employee-owned company would have to pay
more than $150 million in cash, much of it newly borrowed.
The Antioch Plan was governed by ERISA. The buy-out
transaction was what ERISA treats as a prohibited transaction
between an employee benefit plan and parties in interest. The
economic substance of the transaction was that the Plan would
buy Antioch stock (indirectly) from the Morgan family and
other shareholders. The individual defendants—Lee Morgan,
Asha Morgan Moran, and Chandra Attiken—were Plan
fiduciaries under ERISA, which prohibits transactions between
plans and persons in interest (including fiduciaries) unless,
among other exceptions, the purchase was for fair market
value determined in good faith by the fiduciary. See 29 U.S.C.
§§ 1106(a), 1108(e). Antioch and the individual defendants
agreed with the other defendant, GreatBanc Trust, to have it
become the Plan trustee on a temporary basis for purposes of
evaluating the proposed tender offer and making an independ-
No. 12-3330 5
ent decision about whether to agree to it (by agreeing not to
tender the Plan’s shares). GreatBanc Trust became the Plan
trustee on August 21, 2003, and remained the trustee until after
the buy-out transaction closed.
B. The Process Leading to the Buy-Out
Plaintiffs contend the defendants breached their fiduciary
duties to use a sound process to evaluate the fairness of the
proposed buy-out. GreatBanc Trust’s role was to serve tempo-
rarily as a trustee independent of Antioch and the Morgan
family to evaluate the fairness of the transaction for the Plan
participants. GreatBanc Trust was to negotiate with defendants
on behalf of Plan participants and to keep them informed, and
ultimately to approve or reject the buy-out transaction. The
plan was for the individual defendants to retain control of
Antioch by returning to their fiduciary positions with the Plan
after the buy-out.
For help in evaluating the transaction, GreatBanc Trust
hired Duff & Phelps, a financial advice firm. In early October
2003, Duff & Phelps described the proposed transaction as “the
most aggressive deal structure in the history of ESOPs.” (That
comment led the Morgans and other Antioch management to
contemplate firing GreatBanc Trust and Duff & Phelps.)
GreatBanc Trust began negotiating amendments to the
proposed transaction.
In late October, Antioch agreed to GreatBanc Trust’s
request for a so-called Put Protection Price (sometimes called
a PPP) for employees who “cashed out” in the three years
following the transaction. In an ESOP where the stock is not
publicly traded, the plan must provide a “put option” that
6 No. 12-3330
obliges the company to buy back an employee-participant’s
stock when the employee retires, leaves employment, or
otherwise cashes out. See 26 U.S.C. § 409(h). A PPP is a
mechanism to protect ESOP participants against a short-term
drop in stock value, such as in the wake of a highly-leveraged
transaction. The PPP in this deal imposed a floor price for 2004
cash-outs and set a fixed amount to add to the appraised fair
market value of Antioch stock for cash-outs in 2005 and 2006.
The PPP created significant additional liability and risk for
Antioch and the Plan since the company was contractually
obliged to pay the agreed-upon price premium. The PPP was
binding no matter how many employees decided to cash out
and no matter what the appraised fair market value of the
stock might be at the time.
In November 2003, Antioch also adopted a new Plan
distribution policy that further increased the incentive for Plan
participants to “cash out” with the benefit of the PPP after the
buy-out. A Plan participant who retired early under the old
distribution policy had to wait five years for payments to
begin. (That’s the maximum time allowed by federal tax law.
See 26 U.S.C. § 409(o).) Under the new distribution policy,
payment would begin immediately and the full value would
be paid within five years. This change further increased
Antioch’s potential repurchase liability after the transaction.
As they had begun their work on the Antioch transaction,
GreatBanc Trust and Duff & Phelps had asked Antioch to
provide repurchase liability projections for twenty-five years
after the proposed transaction. The projections compared
Antioch’s then-current repurchase obligations to the obliga-
tions expected after the buy-out. To fulfill this request, Antioch
No. 12-3330 7
provided GreatBanc Trust with one page from the report that
Antioch’s chief financial officer had prepared to assess its
liability before and after the proposed transaction. The record
does not indicate that GreatBanc Trust or Duff & Phelps ever
reviewed or even requested the full report. Without the full
report, GreatBanc Trust and Duff & Phelps were unable to
verify the key assumptions. They simply took Antioch at its
word, according to plaintiffs. These key assumptions, which
included the projected retirement age of Plan participants,
were made back in July 2003, before the addition of the PPP
and the new distribution policy. In other words, according to
plaintiffs, GreatBanc Trust’s final approval of the buy-out was
based on obsolete and incomplete information.
Prior to the final version of the PPP agreement and new
distribution policy, Duff & Phelps had provided GreatBanc
Trust with a 22-page report summarizing the proposed
transaction and a 79-page preliminary report reviewing its
impact. These were supplemented in December 2003 by a four-
page update to the original review and a final five-page
fairness letter. These documents give no indication that
GreatBanc Trust or Duff & Phelps considered the potential
negative impact of the PPP or the new distribution policy in
their fairness analysis. This omission lies at the core of plain-
tiffs’ claims. It implicates both GreatBanc Trust’s willingness to
negotiate with Antioch and the defendants, at least as to the
critical price term, and GreatBanc Trust’s consideration of the
long-term interests of the Plan. None of the documents
prepared by Duff & Phelps were provided to plaintiffs at the
time of the transaction.
8 No. 12-3330
C. The Information Available to Plan Participants
Because the three-year limitations period under 29 U.S.C.
§ 1113(2) runs from the time the plaintiffs had “actual knowl-
edge of the breach or violation,” this appeal depends in large
part on the information they had about the transaction more
than three years before they filed suit. Antioch sent a proxy
statement regarding the tender offer to all Plan participants
and shareholders in November 2003, a month before the
transaction closed. The proxy statement described the transac-
tion and provided a fairness analysis for non-Plan participants,
who had to act independently to tender their shares. The cover
letter told Plan participants that GreatBanc Trust had been
hired for the sole purpose of ensuring that the transaction was
fair, prudent, and in the best interest of the Plan and its
participants. Defendants’ motion for summary judgment relied
primarily on the disclosures in the proxy materials to show
plaintiffs’ early “actual knowledge” of the alleged breaches.
The cover letter for the proxy materials said that GreatBanc
Trust had determined that “it is prudent and in the best
interests of the ESOP participants and beneficiaries not to sell
the ESOP’s shares of Antioch’s common stock in the Tender
Offer.” When discussing the purchase price of the shares, the
proxy materials said: “A condition to the Closing is [GreatBanc
Trust’s] receipt of an opinion from Duff & Phelps that the
Transaction, as a whole, is fair to the ESOP from a financial
point of view.” The proxy letter further noted that GreatBanc
Trust “has received a preliminary opinion from Duff & Phelps
to that effect.” These bare-bones references to Duff & Phelps’s
preliminary report were all the information the Plan partici-
No. 12-3330 9
pants received about the fairness analysis conducted on their
behalf.
The proxy materials also included a one-page section titled
“Risks Related to the Transaction,” which acknowledged some
potential dangers of the highly-leveraged transaction. The
materials addressed in bland terms the risks if the tax benefits
were overestimated or the purchased shares were overvalued.
They also noted that ESOP repurchase obligations could be
higher than expected if the fair market value of stock “in-
creases substantially.” The proxy materials provided reassur-
ance, however: “The Company has projected the potential
repurchase liability through the year 2013 under a set of
assumptions that the Company believes to be reasonable.” The
section concluded, though, that repurchase obligations could
be unexpectedly higher and could leave the company “insol-
vent.”
No part of the proxy materials provided to the Plan
participants disclosed the processes that GreatBanc Trust and
Duff & Phelps used to exercise due diligence and to conduct
the fairness analysis. Duff & Phelps ultimately provided the
required fairness opinion. GreatBanc Trust approved the
transaction, which closed on December 16, 2003, making the
Plan the sole shareholder of Antioch.
D. Antioch’s Collapse
After the closing, things were calm for a few months, but
Plan participants began cashing out in the summer of 2004. In
2004, seventy employees under the age of fifty resigned and
cashed out, taking advantage of the high stock value and the
new distribution policy. According to plaintiffs, the many
10 No. 12-3330
resignations in 2004 depleted Antioch’s remaining cash
reserves, and tax savings could not fully offset declining sales.
According to plaintiffs, these events set off a downward cycle
as liabilities increased and revenues decreased, forcing Antioch
into bankruptcy by 2008. Antioch shares and the Plan were
worthless, representing a total loss of roughly $60 million to
the named plaintiffs and several hundred of their co-workers.
See Fish v. GreatBanc Trust Co., 830 F. Supp. 2d at 429.2
According to plaintiffs, Antioch collapsed because the buy-
out transaction was far too generous to the Morgan family and
other shareholders, and because the transaction included ill-
advised promises to Plan participants about their ability to
receive comparable stock prices in cash if they retired or left
the company within a few years. Saddled with excessive debt
incurred to pay the Morgan family in the 2003 buy-out,
Antioch was vulnerable to such a “stampede” to cash out.
2
Antioch’s collapse highlights a risk of employee stock ownership plans,
especially when an ESOP is a major shareholder of a corporation whose
stock is not publicly traded, such as Antioch. Without an efficient market
for the stock, the proper valuation of stock for purposes of paying
employees who retire or leave the company becomes critical for the
company’s financial viability. “If the price is set too low, employees who
leave will feel shortchanged. If it is set too high it may precipitate so many
departures that it endangers the firm’s solvency.” Armstrong v. LaSalle Bank,
N.A., 446 F.3d 728, 730 (7th Cir. 2006). The latter prospect can produce an
accelerating stampede—initially to take advantage of the high price, but
eventually to leave before the company folds under the growing demand
for cash payments.
No. 12-3330 11
II. Analysis
Defendants GreatBanc Trust Co., Lee Morgan, Asha
Morgan Moran, and Chandra Attiken all owed fiduciary duties
to the Plan and its participants. Plaintiffs allege that GreatBanc
Trust violated its fiduciary duties under ERISA by failing to
take reasonable steps to evaluate the fairness of the Morgan
family’s proposed buy-out before agreeing to the transaction.
Plaintiffs contend that the other defendants failed to monitor
GreatBanc Trust sufficiently, failed to disclose material
information to GreatBanc Trust, and acted under a conflict of
interest where they would benefit from the transaction
regardless of its effect on the employees in the Plan. (We have
simplified the theories considerably; plaintiffs have identified
a number of more specific procedural failings in GreatBanc
Trust’s evaluation of the proposed transaction.)
The plaintiffs’ claims focus on the fairness analysis per-
formed by GreatBanc Trust and the individual defendants’
actions prior to the 2003 transaction. Plaintiffs contend that all
defendants breached the fiduciary duty of prudence, see
29 U.S.C. § 1104(a)(1)(B), and engaged in a prohibited transac-
tion without adequate consideration, see §§ 1106(a) and
1108(e). The defendants argued, and the district court agreed,
that plaintiffs’ claims are time-barred because they had actual
knowledge of the alleged breaches of fiduciary duty more than
three years before filing suit. We begin by analyzing the
“actual knowledge” standard under § 1113(2) and then turn to
the plaintiffs’ claims and the relevant evidence.
12 No. 12-3330
A. “Actual Knowledge” Under § 1113(2)
ERISA provides its own statute of limitations. The generally
applicable rule bars an action brought more than six years after
the end of the fiduciary breach, violation, or omission.
29 U.S.C. § 1113(1). The statute also bars an action if it is
commenced more than “three years after the earliest date on
which the plaintiff had actual knowledge of the breach or
violation.” § 1113(2). The application of the three-year excep-
tion to the six-year default rule turns on the meaning of “actual
knowledge,” which must be distinguished from “constructive”
knowledge or inquiry notice. Martin v. Consultants & Adminis-
trators, Inc., 966 F.2d 1078, 1086 (7th Cir. 1992).
The different circuit courts of appeals currently apply
different tests for actual knowledge. See generally Wright v.
Heyne, 349 F.3d 321, 327–29 (6th Cir. 2003). The strictest test
applies the three-year bar only when the plaintiff knows not
only the facts underlying the alleged violation but also that
those facts constitute a violation under ERISA. See International
Union v. Murata Erie N. Amer., 980 F.2d 889, 900 (3d Cir. 1992).
A strong textual argument supports this position because the
text phrases the three-year limit in the unusual terms of “actual
knowledge of the breach or violation” rather than merely
knowledge of facts or knowledge of injury. See 29 U.S.C.
§ 1113(2) (emphasis added).3
3
Most statutes of limitations run from the time a claim accrues, and the
reference to actual knowledge of a violation in § 1113(2) is exceptional. Cf.
Cada v. Baxter Healthcare Corp., 920 F.2d 446, 450 (7th Cir. 1990) (explaining
that limitations period for age discrimination claim starts when claim
(continued...)
No. 12-3330 13
Other circuits do not require knowledge that the law was
violated but still demand “actual knowledge of all material
facts necessary to understand that some claim exists, which
facts could include necessary opinions of experts, knowledge
of a transaction’s harmful consequences, or even actual harm.”
Maher v. Strachan Shipping Co., 68 F.3d 951, 954 (5th Cir. 1995)
(also quoting but not adopting the Third Circuit’s decision in
International Union, 980 F.2d at 900, which requires knowledge
of the law) (quotations omitted); see also Caputo v. Pfizer, Inc.,
267 F.3d 181, 193 (2d Cir. 2001).
We have observed that “it is difficult to say in the abstract
precisely what constitutes ‘actual knowledge.’” Consultants &
Administrators, 966 F.2d at 1086. Our most concise definition is
“knowledge of ‘the essential facts of the transaction or conduct
constituting the violation,’” with the caveat that “it is ‘not
necessary for a potential plaintiff to have knowledge of every
last detail of a transaction, or knowledge of its illegality.’” Rush
v. Martin Petersen Co., 83 F.3d 894, 896 (7th Cir. 1996), quoting
Consultants & Administrators, 966 F.2d at 1086. This court’s
precedent seems consistent with the Fifth Circuit’s approach in
Maher, which requires knowledge of “all material facts” but not
knowledge of every detail or knowledge of illegality. 68 F.3d
3
(...continued)
accrues, meaning when plaintiff discovers he has been injured); 15 U.S.C.
§ 15b (Sherman Act claims barred “unless commenced within four years
after the cause of action accrued”); 15 U.S.C. § 77m (various limitation
periods under Securities Act of 1933 based on time “after the discovery of
the untrue statement or the omission, or after such discovery should have
been made by the exercise of reasonable diligence,” or “after the violation
upon which it is based”).
14 No. 12-3330
at 954. And a court applying § 1113(2) must take care to resist
the temptation to slide toward reliance upon constructive
knowledge or imputed knowledge, neither of which is actual
knowledge.
B. Plaintiffs’ Claims for Breach of Fiduciary Duties
ERISA imposes general standards of loyalty and prudence
that require fiduciaries to act solely in the interest of plan
participants and to exercise their duties with the “care, skill,
prudence, and diligence” of an objectively prudent person.
29 U.S.C. § 1104(a)(1); Eyler v. Comm’r of Internal Revenue,
88 F.3d 445, 454 (7th Cir. 1996). In addition, § 1106 supplements
the general fiduciary duty provisions by prohibiting ERISA
fiduciaries from causing a plan to enter into a variety of
transactions with a “party in interest.” See Keach v. U.S. Trust
Co., 419 F.3d 626, 635 (7th Cir. 2005). As a general rule, a
fiduciary may not engage in a direct or indirect transaction
constituting a “sale or exchange, or leasing, of any property
between the plan and a party in interest.” 29 U.S.C.
§ 1106(a)(1)(A). A plan fiduciary is a party in interest, as are
officers, directors, and major shareholders of a plan sponsor
like Antioch. 29 U.S.C. § 1002(14)(A) & (H). Section 1106
begins, though, by saying “Except as provided in section 1108,”
which provides numerous exceptions to the prohibited
transaction rule. The most relevant exception for this case is for
plan purchases of employer securities. Section 1106(a) does not
apply to such purchases if, among other conditions, the
transaction “is for adequate consideration.” § 1108(e). ERISA
defines adequate consideration as “the fair market value of the
asset as determined in good faith by the trustee … .”
§ 1002(18)(B).
No. 12-3330 15
Plaintiffs contend that by carrying out the Antioch buy-out
transaction in 2003, all the defendants violated the general duty
of prudence under § 1104 and engaged in a transaction
prohibited by § 1106(a). We have before us not the merits of
those claims but only the statute of limitations defense. To
decide when the plaintiffs gained actual knowledge of the
alleged breaches of fiduciary duty, we must examine the
nature of the alleged breaches. See, e.g., Maher, 68 F.3d at 956.
1. Substantive and Procedural Elements of Plaintiffs’ Claims
Whether an ERISA fiduciary has acted prudently requires
consideration of both the substantive reasonableness of the
fiduciary’s actions and the procedures by which the fiduciary
made its decision: “In reviewing the acts of ESOP fiduciaries
under the objective prudent person standard, courts examine
both the process used by the fiduciaries to reach their decision
as well as an evaluation of the merits.” Eyler v. Comm’r, 88 F.3d
at 455. This is true when determining whether an act was
prudent under the general standard of § 1104 and whether an
otherwise prohibited transaction under § 1106 is saved by
“adequate consideration” under § 1108(e). Keach, 419 F.3d at
636.
In Keach we explained that this combination of substantive
and procedural aspects of the fiduciary’s duties was consistent
with a proposed Department of Labor regulation. Id. at 636 &
n.5. The Department of Labor has identified two requirements
for a transaction to be considered supported by adequate
consideration: a substantive requirement that the value
assigned reflect the fair market value of the asset, and a
procedural requirement that the fiduciary actually determine
16 No. 12-3330
the value assigned in good faith. See Prop. DOL Reg. § 2510.3-
18(b); 53 Fed. Reg. 17,632–33 (May 17, 1988); see also Chao v.
Hall Holding Co., 285 F.3d 415, 437 (6th Cir. 2002) (endorsing
test); Donovan v. Cunningham, 716 F.2d 1455, 1467–68 (5th Cir.
1983) (describing standard before proposed regulation).
In this case, Duff & Phelps provided GreatBanc Trust with
financial advice about the proposed buy-out. That advice is
highly relevant, of course, but we agree with our colleagues in
the Fifth Circuit: “An independent appraisal is not a magic
wand that fiduciaries may simply wave over a transaction to
ensure that their responsibilities are fulfilled.” Donovan v.
Cunningham, 716 F.2d at 1474. We said in Keach that “an
independent assessment from a financial advisor … is not a
complete defense against a charge of imprudence.” 419 F.3d at
636–37 (internal quotation omitted). Whether the transaction is
exempted under § 1108 by adequate consideration depends in
part on whether GreatBanc Trust performed sufficient due
diligence, including reasonable investigation into Duff &
Phelps’s process and independent scrutiny of materials from
Antioch. When determining whether a fiduciary’s process is
sufficient, “‘the degree to which a fiduciary makes an
independent inquiry is critical.’” Keach, 419 F.3d at 636, quoting
Eyler, 88 F.3d at 456. A fiduciary’s reliance on a financial
advisor is evidence of prudence, but some inquiry into the
advisor’s qualifications and methods is still required. Id. at 637.
Whether GreatBanc Trust properly approved the buy-out
transaction despite the prohibition in § 1106 depends on
whether its process was sufficient to fulfill the procedural
requirement of adequate consideration. GreatBanc Trust
received Duff & Phelps’s evaluation of the fairness of the
No. 12-3330 17
transaction. While GreatBanc Trust could rely on the fairness
analysis of an expert, it must still demonstrate that its reliance
on the advice from Duff & Phelps for this particular transaction
was justifiable. That means a plaintiff asserting a process-based
claim under § 1104, § 1106(a), or both does not have actual
knowledge of the procedural breach of fiduciary duties unless
and until she has actual knowledge of the procedures used or
not used by the fiduciary.
The Fifth Circuit has held that to trigger the “actual
knowledge” statute of limitations clock under § 1113(2) for a
process-based claim, the plaintiffs “must have been aware of
the process utilized by [the fiduciary] in order to have had
actual knowledge of the resulting breach of fiduciary duty.”
Maher, 68 F.3d at 956 (reversing summary judgment for
fiduciaries on process-based claim that had been based on
three-year limit). We could not affirm here without creating a
circuit split with Maher, as defendants acknowledged in oral
argument, and we see no good reason to do so. The reasoning
of Maher is sound.
The Ninth Circuit has made the same point for process-
based claims: the three-year limit cannot be triggered merely
through disclosure of the terms of an imprudent investment
when a claim “hinge[s] on the infirmities in the selection
process.” Tibble v. Edison Int’l, 729 F.3d 1110, 1121 (9th Cir.
2013) (affirming judgment for beneficiaries and rejecting
statute of limitations defense). Thus, for process-based claims
18 No. 12-3330
under §§ 1104 and 1106(a), the three-year limit is not triggered
by knowledge of the transaction terms alone.4
Our disagreement with the district court centers on this
procedural aspect of plaintiffs’ claims. The district court
rejected plaintiffs’ arguments targeting the process GreatBanc
Trust used to evaluate the transaction: “Their true complaint
is about the substance of the decision, not about the process
undertaken in reaching the decision, for no matter how much
process GreatBanc undertook, plaintiffs would still be
complaining that the ultimate decision that set the redemption
price too high was imprudent.” Fish, 890 F. Supp. 2d at 1067
(emphasis in original). There is no doubt that the harm alleged
by plaintiff was based on the substantive terms of the buy-out,
but knowledge of an unwise decision does not amount to
“actual knowledge” of an imprudent process, which is an
independent breach of fiduciary duty. The district court’s
conclusion overlooked the procedural dimension of a
fiduciary’s duties under ERISA and the ability of a plaintiff to
show she was harmed by a fiduciary’s substantive decision
precisely because the fiduciary violated ERISA by failing to
comply with its procedural obligations.
4
Even for a substance-based claim, the terms of a transaction alone would
only rarely provide actual knowledge under § 1113(2) since either an expert
opinion or actual harm would likely be necessary before an ESOP partici-
pant could know of the flaws in the substance of a fiduciary’s decision
when only the bare terms were disclosed. See Gluck v. Unisys Corp., 960 F.2d
1168, 1177 (3d Cir. 1992); see also Brown v. Owens Corning Inv. Review
Comm., 622 F.3d 564, 573 (6th Cir. 2010) (charging plaintiffs with actual
knowledge once allegedly imprudent investment “had lost almost all
value”).
No. 12-3330 19
2. Evidence of Plaintiffs’ Knowledge
In support of their motion for summary judgment, the
defendants showed that they provided information to the
plaintiffs in November 2003 about the terms of the proposed
buy-out, and they point to the “stampede” of cash-outs that
began Antioch’s slide toward bankruptcy began in 2004, more
than three years before plaintiffs filed suit. This evidence does
not show, however, that the plaintiffs gained knowledge of the
inadequate processes used by GreatBanc Trust to approve the
Antioch buy-out more than three years before they filed this
suit. Without undisputed proof of such knowledge of
inadequate processes, we must reverse summary judgment for
the defendants.
a. The Proxy Materials
The evidence here could support a finding that Duff &
Phelps failed to perform an independent assessment because
it simply accepted Antioch’s July 2003 assumptions regarding
the company’s projected repurchase liability. Furthermore,
Duff & Phelps’s work, largely concluded by October, was
performed before the PPP agreement and the new distribution
policy became key elements of the transaction. Plaintiffs have
offered evidence that GreatBanc Trust then committed its own
procedural error by relying unreasonably and uncritically on
Duff & Phelps’s analysis to justify approval of the transaction.
(Recall that we are reviewing a grant of summary judgment
based on the statute of limitations, so we assume for now that
plaintiffs will be able to prove these allegations on the merits.)
Plaintiffs did not have actual knowledge of the violations
they allege because the evidence does not show they had any
20 No. 12-3330
indication that any of these procedural failures had occurred.
GreatBanc Trust received four reports prepared by Duff &
Phelps, including more than 100 pages of analysis prior to the
mailing of the proxy materials, yet none of these were
provided to the plaintiffs. Instead, the proxy materials said
blandly that some analysis occurred resulting in Duff &
Phelps’s determination the transaction was “fair.” The message
to the plaintiffs, at least implicitly, was that the Plan trustee
had used proper procedures and that the transaction was
therefore not a prohibited transaction under § 1106.
GreatBanc Trust also provided no explanation of its
decision to rely on the financial advisor’s opinion. Without
considerable insight into both Duff & Phelps’s analysis and
GreatBanc Trust’s reasons for relying upon it, plaintiffs could
not determine whether the buy-out transaction was supported
by adequate consideration as required by §§ 1106(a) and
1108(e) or whether GreatBanc Trust acted prudently under
§ 1104. Plaintiffs knew almost no relevant facts, let alone the
essential facts constituting the violations, see Consultants &
Administrators, 966 F.2d at 1086, and thus could not have had
actual knowledge of these alleged procedure-based breaches.
Defendants point out that the proxy materials provided
some information about risk, including the risks that ultimately
doomed Antioch. Instead of highlighting the specific
circumstances of the Antioch buy-out, however, the proxy
materials simply provided a short list of the risks inherent in
any highly-leveraged ESOP transaction. And while the
materials explained that Antioch might struggle in the face of
high repurchase obligations, they also did not disclose a major
substantive risk: that an inflated stock valuation might increase
No. 12-3330 21
ESOP redemptions beyond the debt-burdened company’s
ability to pay. See Armstrong v. LaSalle Bank, N.A., 446 F.3d 728,
731–32 (7th Cir. 2006) (explaining a trustee’s duty to avoid a
“run” of ESOP redemptions when a company faces a liquidity
shortage).
Yet even if the proxy materials had disclosed these
substantive risks more fully, they would not have provided
actual knowledge of the violations alleged in this case.
Plaintiffs challenge not only the substantive prudence of the
buy-out transaction but also the procedures used by GreatBanc
Trust to assess the transaction. Moreover, the proxy materials
did not even mention the PPP and new distribution plan in the
risk disclosure, let alone that they increased the danger that a
“stampede” of cash-outs would occur. Nor did they indicate
whether and how GreatBanc Trust considered the possible
impact on the Plan’s and employees’ long-term interests when
negotiating these amendments. Because the proxy materials
did not describe GreatBanc Trust’s methods, they could not
have given plaintiffs actual knowledge of their claims based on
its alleged failure to use sound processes in deciding whether
to approve the buy-out transaction.
b. The Stampede Begins
Defendants also argue that Antioch’s noticeable decline
began during 2004, the first year after the transaction, shown
primarily by the large number of employees who resigned or
retired to cash out, including seventy ESOP participants under
the age of fifty. According to defendants, this unexpectedly
high number of cash-outs provided actual knowledge of
GreatBanc Trust’s alleged imprudence. After all, say
22 No. 12-3330
defendants, those employees perceived the extent of Antioch’s
troubles.
We reject this argument as a basis for summary judgment.
First, different employees were always likely to weigh
differently the risks and benefits of the choice between quitting
to benefit from the high stock price or staying with the
company. More fundamental, the increase in cash-outs might
have suggested to plaintiffs that “something was awry,” but
again, neither inquiry notice nor constructive knowledge
triggers the three-year limit of § 1113(2). E.g., Consultants &
Administrators, 966 F.2d at 1086.
Additional evidence indicates that Antioch’s overall
performance in 2004 appeared to be strong based on the
company’s annual report. Defendant Lee Morgan’s
“Chairperson’s Letter” reported that 2004 had been a good
year for the employee-owners, and he noted that the stock
price had increased even after the unexpectedly high number
of ESOP redemptions. Hindsight reveals that the increased rate
of ESOP redemptions in 2004 was the first symptom of
Antioch’s downward spiral after the transaction. But the
limited evidence of the company’s decline then available to
plaintiffs fell far short of providing actual knowledge that
GreatBanc Trust had failed to use prudent processes to weigh
the risks and benefits of the transaction.
As plaintiff Hardman testified, she was aware of the
increase in redemptions in 2004, but based on the information
she had received, she thought there was “no reason to get
concerned. It was so soon after the transaction that, you know,
I felt that GreatBanc Trust had done their homework and this
No. 12-3330 23
was all taken into consideration.” Her reasoning is consistent
with the District of Columbia Circuit’s reasoning in Fink v.
National Savings and Trust Co., 772 F.2d 951, 957 (D.C. Cir. 1985)
(reversing summary judgment based on three-year statute of
limitations for process-based claims: “beneficiaries are entitled
to assume that in performing these [fiduciary] acts, the
fiduciaries thought about them. If this were not so, the lengthy
list of fiduciary duties under ERISA would mean nothing more
than caveat emptor. A fiduciary’s independent investigation of
the merits of a particular investment is at the heart of the
prudent person standard.”). We cannot fault Ms. Hardman or
any other plaintiff for having faith in the independent trustee
supposedly protecting the Plan participants’ interests.
3. Defendants’ Additional Arguments
Defendants offer two additional arguments in support of
summary judgment. First, they contend that plaintiffs received
sufficient information but were “willfully blind” to it. Second,
they contend that because the fiduciary defendants bear the
burden of proving that they acted prudently and used sound
processes to evaluate the transaction, information about the
defendants’ processes was not an element of plaintiffs’ causes
of action, so that their lack of knowledge did not prevent them
from having “actual knowledge” of the alleged breaches. We
reject these arguments.
a. Willful Blindness
The district court determined that defendants provided
plaintiffs with sufficient information of the alleged breaches
and that plaintiffs were “willfully blind” to that information
such that they should be charged with actual knowledge. See
24 No. 12-3330
Fish, 890 F. Supp. 2d at 1065. Defendants urge that “willful
blindness” is a basis for affirmance because it is equivalent to
actual knowledge. As explained, plaintiffs did not have access
to materials sufficient to provide actual knowledge of the
alleged process-based ERISA violations. Yet there is a more
fundamental problem with reliance upon willful blindness to
support summary judgment in a civil case.
As the district court explained, willful blindness is a
concept taken from criminal law and the often-given “ostrich”
instruction. See, e.g., United States v. Garcia, 580 F.3d 528,
536–38 (7th Cir. 2009); United States v. Ramsey, 785 F.2d 184,
190–91 (7th Cir. 1986). Willful blindness is distinct from
constructive knowledge (what a party “should have known”),
negligence, or even reckless disregard for the facts. It implies
a deliberate and conscious decision not to pursue the facts.
The district court distinguished willful blindness from
carelessness, but the Supreme Court has made clear in a civil
case that the doctrine of willful blindness is considerably
narrower. See Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct.
2060 (2011). The Supreme Court took pains to distinguish
willful blindness from negligence or even reckless or deliberate
indifference toward the facts:
While the Courts of Appeals articulate the
doctrine of willful blindness in slightly different
ways, all appear to agree on two basic
requirements: (1) the defendant must
subjectively believe that there is a high
probability that a fact exists and (2) the
defendant must take deliberate actions to avoid
No. 12-3330 25
learning of that fact. We think these requirements
give willful blindness an appropriately limited scope
that surpasses recklessness and negligence. Under
this formulation, a willfully blind defendant is
one who takes deliberate actions to avoid
confirming a high probability of wrongdoing
and who can almost be said to have actually
known the critical facts. See G. Williams,
Criminal Law § 57, p. 159 (2d ed. 1961) (“A court
can properly find wilful blindness only where it
can almost be said that the defendant actually
knew”). By contrast, a reckless defendant is one
who merely knows of a substantial and
unjustified risk of such wrongdoing, see ALI,
Model Penal Code § 2.02(2)(c) (1985), and a
negligent defendant is one who should have
known of a similar risk but, in fact, did not, see
§ 2.02(2)(d).
131 S. Ct. at 2070–71 (emphasis added; footnote omitted)
(affirming jury finding that defendant was willfully blind to
plaintiff’s patent before beginning infringing conduct).
If willful blindness has a place in the analysis of the “actual
knowledge” three-year statute of limitations under § 1113(2)—
a question we do not decide here—it would almost certainly
present a genuine issue of material fact to be resolved by the
finder of fact at trial. In criminal cases, the ostrich instruction
on willful blindness describes an inference that a jury may
make, not a rule of law that must be applied even where the
party denies actual knowledge. See, e.g., United States v.
Carrillo, 435 F.3d 767, 780–81 (7th Cir. 2006) (describing issue in
26 No. 12-3330
terms of what a jury may infer); Seventh Circuit Pattern
Criminal Jury Instruction No. 4.10 (2012).5 Consistent with
these observations, we have said that “finding the line between
‘willful blindness’ and ‘reason to know’ may be like finding the
horizon over Lake Michigan in a snowstorm.” Hard Rock Café
Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143, 1151
n.5 (7th Cir. 1992); see also Consultants & Administrators, 966
F.2d at 1086 (“in cases near the border the distinction may well
be nearly semantic”). In other words, only rarely could that
line be drawn as a matter of law.6
Accordingly, even if we assume willful blindness is
relevant under the actual knowledge standard of § 1113(2), and
even if defendants had made the relevant information
available to the plaintiffs, the willful blindness theory would
not be a sufficient basis for summary judgment here.
5
We do not address issues here about how Global-Tech Appliances may
apply to the exact wording of criminal jury instructions about knowledge,
as discussed in the committee comments to Pattern Instruction No. 4.10.
6
Global-Tech Appliances illustrates the point. The plaintiff showed that the
defendant had deliberately copied a foreign model of its product that did
not bear notice of U.S. patents, and then obtained an opinion of non-
infringement from a U.S. lawyer whom it did not tell it had copied
plaintiff’s product. 131 S. Ct. at 2064. The Court found this evidence
sufficient to support a jury finding of willful blindness and thus actual
knowledge, but did not say such a finding was required as a matter of law.
Id. at 2071–72.
No. 12-3330 27
b. The Burden of Proof for Prohibited Transactions
Defendants also argue that the burden of proof regarding
whether a fiduciary used appropriate processes and exchanged
property for adequate consideration means that plaintiffs’
claims are time-barred. Under ERISA, the burden of proof is on
a defendant to show that a transaction that is otherwise
prohibited under § 1106 qualifies for an exemption under
§ 1108. See, e.g., Keach, 419 F.3d at 636; accord, e.g., Harris v.
Amgen, Inc., 738 F.3d 1026, 1045 (9th Cir. 2013), petition for cert.
filed on other grounds, (Jan. 10, 2014). We have applied the
same burden of proof to the adequacy of a fiduciary’s
investigation and processes under the more general fiduciary
duty in § 1104. Eyler v. Comm’r, 88 F.3d 445, 455 (7th Cir. 1996),
citing Donovan v. Cunningham, 716 F.2d 1455, 1467–68 (5th Cir.
1983). ERISA plans engage in transactions nominally
prohibited by § 1106 all the time, while also taking steps to
comply with ERISA by relying on one or more of the many
exceptions under § 1108. The burden of proof makes good
sense as a policy matter because the fiduciary will ordinarily
have the information needed to know whether an exception
applies under § 1108.
Defendants reason that because they have the burden of
proving that they used appropriate processes to determine
fairness and fair market value in the Antioch buy-out, their use
of appropriate processes is an affirmative defense rather than
an element of the plaintiffs’ case. Plaintiffs therefore did not
need knowledge of inadequate processes, defendants argue, to
have “actual knowledge” of the alleged breaches.
28 No. 12-3330
Defendants’ argument is clever, but it’s not supported by
case authority. It’s also not realistic. First, defendants’ theory
runs directly contrary to the Fifth Circuit’s decision in another
case of process-based fiduciary duty claims, Maher v. Strachan
Shipping Co., 68 F.3d at 956, which they urge us to reject. In
Maher, the defendants had used retirement plan assets to buy
a single premium annuity contract to pay for benefits. The
transaction allowed the defendants to return millions in cash
from the retirement plan to the company, but the company that
sold the annuity later went into conservatorship and
retirement payments were cut substantially. Like the
defendants in this case, the defendants in Maher asserted that
the plaintiffs had actual knowledge of the alleged breach of
fiduciary duty when they learned of the transaction—in Maher
the purchase of the annuity from a shaky seller, and here the
highly leveraged buy-out—and in both cases the district courts
granted summary judgment to the defendants.
The Fifth Circuit reversed in Maher. The plaintiffs’
knowledge that the seller of the annuity seemed financially
shaky indicated that something might be awry, but that did not
amount to actual knowledge of the breach. Rather, the
plaintiffs were challenging the selection of the seller, and “they
must have been aware of the process utilized by [the employer]
in order to have had actual knowledge of the resulting breach
of fiduciary duty.” 68 F.3d at 956, citing Donovan v.
Cunningham, 716 F.2d at 1467. We agree with that conclusion,
which is also consistent with Waller v. Blue Cross of California,
32 F.3d 1337, 1341 (9th Cir. 1994) (holding that three-year clock
did not begin to run on process-based claims under §§ 1104
and 1106 at time plaintiffs learned of purchase of annuities
No. 12-3330 29
from shaky seller). Whether the transaction here was
prohibited depends on the extent of the fiduciaries’ processes
used to evaluate it. Plaintiffs did not know about the alleged
inadequacy of those processes more than three years before
they filed suit.
Both sides cite the Eighth Circuit’s decision in Brown v.
American Life Holdings, Inc., 190 F.3d 856 (8th Cir. 1999), on this
issue. The plaintiff in Brown alleged that fiduciaries breached
their duties by investing plan assets too conservatively. The
key passage in the opinion said:
Therefore, when a fiduciary’s investment
decision is challenged as a breach of an ERISA
duty, the nature of the alleged breach is critical
to the actual knowledge issue. For example, if
the fiduciary made an illegal investment—in
ERISA terminology, engaged in a prohibited
transaction—knowledge of the transaction
would be actual knowledge of the breach. But if
the fiduciary made an imprudent investment,
actual knowledge of the breach would usually
require some knowledge of how the fiduciary
selected the investment. See Maher v. Strachan
Shipping Co., 68 F.3d 951, 955–56 (5th Cir. 1995),
and cases cited.
190 F.3d at 859 (emphasis in original). The Eighth Circuit
ultimately affirmed summary judgment for the defendants,
concluding that the plaintiff knew of the alleged failure to
diversify investments at the time the transactions were
disclosed to him, and finding that the plaintiff had failed to
30 No. 12-3330
articulate clearly a process-based claim. Id. at 860. We agree
with the broad language in Brown, but it does not answer the
questions before us, which depend on whether the Antioch
buy-out was in fact a prohibited transaction or an imprudent
transaction, both of which depend in turn on the processes
used by the defendants to approve the buy-out.
We agree with Maher and Waller because their analysis fits
most comfortably within the overall statutory framework of
ERISA as well as the text of § 1113. Under defendants’
unrealistic theory, plaintiffs could have and even should have
filed suit immediately after the 2003 buy-out took place,
without undertaking any investigation of the affirmative
defense that the defendants themselves were invoking at the
time. We doubt it would have been prudent or even
responsible for plaintiffs to have filed suit at the time, knowing
only (a) that the transaction was prohibited under § 1106
unless § 1108 applied, and(b) that defendants claimed it did
apply.
Consider the situation the plaintiffs faced back in 2003 and
2004. The defendants disclosed to plaintiffs their intention to
go forward with a transaction nominally prohibited under
§ 1106. The disclosures also assured the plaintiffs that the
defendants were taking steps to make sure the transaction was
for adequate consideration and would be approved only after
appropriate procedures had been used to evaluate the fairness
of the transaction and the adequacy of the consideration. In
other words, defendants were telling the plaintiffs that the
transaction was protected under § 1108. That is not providing
actual knowledge of a violation or breach of fiduciary duty.
No. 12-3330 31
In rejecting defendants’ argument, we are well aware of the
distinction in civil procedure between the elements of a
plaintiff’s claims and an affirmative defense. That distinction
does not extend to the “actual knowledge” standard under
§ 1113 when a defendant invokes an exception under § 1108. In
deciding whether sanctions should be imposed on plaintiffs
who filed unfounded cases, we have said that plaintiffs and
their attorneys “may have a responsibility to examine whether
any obvious affirmative defenses bar the case.” Matter of Excello
Press, Inc., 967 F.2d 1109, 1113 (7th Cir. 1992) (finding that
Federal Rule of Bankruptcy Procedure 9011 (parallel to Federal
Rule of Civil Procedure 11) could impose a duty to investigate
an obvious “ordinary course of business” defense, but
reversing sanctions) (emphasis in original; quotation omitted);
see also Bethesda Lutheran Homes and Services, Inc. v. Born,
238 F.3d 853, 858 (7th Cir. 2001) (reversing denial of sanctions
as abuse of discretion where claim was barred by affirmative
defense of claim preclusion); White v. General Motors Corp.,
908 F.2d 675, 682 (10th Cir. 1990) (affirming sanctions based on
obvious affirmative defense of release); McLaughlin v. Bradlee,
803 F.2d 1197, 1205 (D.C. Cir. 1986) (affirming sanctions where
plaintiff failed to anticipate affirmative defense of issue
preclusion).
In the case of an ERISA plan that invokes a § 1108 exception
to a § 1106 prohibition, the plaintiff does not have actual
knowledge of an alleged violation until she knows that the
exception does not apply. These plaintiffs did not have actual
knowledge of the violations based on the information
defendants provided. That information claimed that
defendants had been prudent, had used appropriate
32 No. 12-3330
procedures to evaluate the Antioch buy-out transaction, and
had concluded that the consideration would be adequate. To
the extent defendants argue that this approach extends the
limitations period too long, the response is that the six-year
limit in § 1113(1) remains applicable to protect defendants from
stale claims.7
C. Remaining Issues on Appeal
Defendants are not entitled to summary judgment based on
§ 1113(2). Because we are reinstating all claims, we address the
remaining issues only briefly. Plaintiffs challenge the dismissal
of later-added plaintiff Evolve Bank, which on January 16, 2008
became the final trustee of the Plan. Using as a launching pad
a footnote by the district judge calling Evolve Bank’s addition
a “manipulative tactic,”see Fish v. GreatBanc Trust Co., 830 F.
Supp. 2d 426, 430 n.7 (N.D. Ill. 2010), the parties have debated
whether plaintiffs’ knowledge should be imputed to Evolve
Bank. The district court stated that “manipulation could be
effected by replacement of knowing fiduciaries with new
fiduciaries without actual knowledge,” id., but it was
defendants’ choice to make Evolve Bank a new fiduciary in this
case. We agree with the Ninth Circuit’s reasoning in
Landwehr v. DuPree, 72 F.3d 726, 732 (9th Cir. 1995), that
knowledge should not be imputed from one party to another
for purposes of the “actual knowledge” standard under
§ 1113(2). Defendants complain that allowing a new fiduciary
to avoid the three-year statute of limitations would undermine
7
We leave for another day questions that might be raised concerning the
scope of a plaintiff’s duty to investigate under Federal Rule of Civil
Procedure 11 when contemplating a suit based on 29 U.S.C. § 1106.
No. 12-3330 33
the statute, but again, defendants would still be protected by
the six-year limit of § 1113(1).
Plaintiffs also appeal the district court’s dismissal of their
alternative claim for defendants’ failure to sue themselves for
their own breaches of fiduciary duty. We recognized such a
theory could be viable in Consultants & Administrators, 966 F.2d
at 1089–90. The theory seems in this case to be only a backstop
theory if plaintiffs were to lose under § 1113(2) based on their
own knowledge and the dismissal of Evolve Bank. We are
reversing summary judgment on both of those grounds. The
district court did not explain its reasons for dismissing this
alternative failure-to-sue theory. We vacate that dismissal as
well, and leave it to plaintiffs to decide whether they wish to
continue to pursue the alternative theory on remand. If they do
so, we leave it to the district court to evaluate the theory.
Plaintiffs also raise a number of objections to the district
court’s unusual procedure in granting the defendants’ second
motion for summary judgment. The district court limited
briefing to just a couple of issues and then proceeded to grant
the motion without further briefing, concluding that plaintiffs
had been given ample opportunities to present all of their
evidence and legal arguments. Because we are reversing on all
claims, we need not address these issues. Plaintiffs will have a
chance to litigate all issues anew upon remand.
We add that under the circumstances here, plaintiffs should
be permitted to amend their complaint based on the four
intervening years of litigation and the discovery they
undertook after first amending their complaint, see Foman v.
Davis, 371 U.S. 178, 182 (1962) (emphasizing that Rule 15(a)’s
34 No. 12-3330
command that leave to amend “shall be freely given” should
be followed unless apparent interest weighs against
amendment, such as undue delay, bad faith, or futility); Barry
Aviation, Inc. v. Land O’Lakes Municipal Airport, 377 F.3d 682,
689–90 (7th Cir. 2004) (reversing denial of leave to amend), and
discovery should no longer be restricted to statute of
limitations issues.
Finally, we deny plaintiffs’ separate motion for
reassignment pursuant to Seventh Circuit Rule 36. We are
confident that upon remand the issues will be considered
fairly.
Because the plaintiffs did not have actual knowledge of the
alleged ERISA violations, defendants’ motion for summary
judgment should have been denied. We REVERSE the
judgment of the district court and REMAND the case for
further proceedings consistent with this opinion. | 01-03-2023 | 08-05-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1951567/ | 316 F. Supp. 1081 (1970)
Michael B. ANDERSON, Cadet, U.S.A., et al., Plaintiffs,
v.
Melvin R. LAIRD et al., Defendants.
Civ. A. No. 169-70.
United States District Court, District of Columbia.
July 31, 1970.
*1082 *1083 Warren K. Kaplan, Washington, D. C., for plaintiffs; Lawrence Speiser, American Civil Liberties Union, Washington, D. C., and Melvin Wulf, American Civil Liberties Union, New York City, of counsel.
Thomas A. Flannery, U. S. Atty. for District of Columbia, and Joseph M. Hannon, Asst. U. S. Atty. for District of Columbia, for Government; John A. McIntire, Washington, D. C., for Department of Defense and Department of the Navy, Robert K. Weaver, Colonel, United States Army, Office of Judge Advocate General, and C. Claude Teagarden, Major, United States Air Force, Office of Judge Advocate General, of counsel.
OPINION AND ORDER
CORCORAN, District Judge.
I.
GENERAL STATEMENT
Plaintiffs, two cadets of the United States Military Academy and nine midshipmen[1] of the United States Naval Academy, brought this suit as a class action on behalf of all cadets and midshipmen[2] at the United States Military Academy at West Point, New York, the United States Naval Academy at Annapolis, Maryland, and the United States Air Force Academy at Colorado Springs, Colorado.[3] The defendants are the Secretary of Defense and the Secretaries of the Army, Air Force, and Navy.
Plaintiffs claim that the regulations of the Academies compelling Sunday attendance at Catholic, Protestant, or Jewish chapel service violate the Establishment/Free Exercise Clauses of the First Amendment and constitute a "religious test" in violation of Article VI of the Constitution. They urge that such compulsory attendance is contrary to the Supreme Court's declarations limiting governmental actions involving religion because compulsory attendance constitutes religious proselytizing and governmental support of religion. They also urge that mandatory attendance constitutes an establishment of religion and an interference with plaintiffs' free exercise of religion. Plaintiffs seek (1) a declaratory judgment that compulsory church or chapel attendance violates the above noted provisions of the Constitution, and (2) a permanent injunction forbidding the Academies from enforcing the regulations and from disciplining those cadets involved in this court action.
The applications for preliminary and permanent injunction were heard on a consolidated basis. The Court first took testimony and heard argument on whether the plaintiffs had exhausted their administrative remedies within the Academies before filing suit. The Court ruled that adequate and effective administrative remedies were not available and hence that the exhaustion doctrine was not available as a defense. Thereafter the Court completed testimony on the merits and took the case under advisement.
For the reasons appearing below the Court holds that the regulations requiring mandatory church or chapel attendance on Sunday violate neither the First *1084 Amendment to nor Article VI of the Constitution of the United States.
II.
THE CHAPEL REQUIREMENTS
There is no question that Sunday church or chapel attendance is required by all cadets attending the three service Academies.[4]
The West Point regulation provides:
"Attendance at Chapel is part of a cadet's training; no cadet is exempt. Each cadet must attend either the Cadet Chapel, Catholic Chapel or Jewish Chapel service on each Sunday, according to announced schedules." Regulations for the United States Cadet Corps of the United States Military Academy, Chapter 8, Section IV, paragraph 819.
Air Force Regulation No. 265-1 provides:
"Attendance at an established church service is mandatory for those Second, Third and Fourth Classmen present for duty in the Cadet area."
Part II, Chapter 15, of the United States Naval Academy Regulations states:
"1. The basic requirements concerning religious matters at the Naval Academy are:
(a) All Midshipmen will attend church or chapel services on Sunday mornings but are required to attend at no other times."
Violations of these regulations are punished in the same manner as violations of other regulations, i. e., by reprimands, demerits, punishment marching tours, confinement to quarters, and for repeated violations, expulsion.
There are slight variations in the respective Academy Regulations concerning alternative worship services available. At West Point, all cadets are required to attend one of the three services on the Academy premises, as there is no town nearby to provide other alternatives. At the Naval Academy, midshipmen are permitted to attend a denominational service in Annapolis in lieu of the Academy church or chapel service. At the Air Force Academy, a cadet may attend church in Colorado Springs which has been approved by the Senior Chaplain.
Cadets may change their regular attendance from one church or chapel service to another only after first securing the approval of the respective chaplains involved, and, if they are under twenty-one, the approval of their parents. The cadet must demonstrate a sincere desire to affiliate with the new church. Approval of requests to change chapel squads is not granted on a mere personal whim any more than requests to change muster, classes or meals.
However, a cadet who has sincerely held convictions against church or chapel attendance itself may be excused from such attendance. It was so declared by the Superintendents of the Academies in April 1969 in a policy statement which said:
"It is understood that intelligent provisions must be made for bona fide cases where attendance would be in conflict with sincerely held convictions of individual cadets or midshipmen."[5]
Thus when the effect on the individual cadet is opposite to that intended, i. e., when he becomes incapable of observing, assimilating or becoming involved with an understanding of the religious beliefs *1085 of men and finds himself turning away from an understanding of what their religious belief and value systems are, then he is relieved from the attendance requirement.
The requirement of attendance at Sunday services at the service Academies reaches for its origins far back into the nineteenth century. West Point established its requirement as early as 1821; the Annapolis regulation dates back to 1853; and the Air Force Academy, following tradition, adopted a similar requirement when it was organized in 1955.
III.
THE FIRST AMENDMENT
The First Amendment to the Constitution provides in part that "Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof."
It is urged by the plaintiffs that the compulsory chapel requirements quoted above have a purpose which advances religion and have a primary effect which in some ways advances and in other ways inhibits religion in violation of the First Amendment.
The defendants on the other hand urge that the requirement to attend is not a requirement to worship; that the purpose of attendance is purely secular and an integral part of the military training accorded to the various groups of cadets, and that its primary effect is to instill in the cadets an understanding of the religious values which can at times motivate the men who will ultimately come under their command.
The conduct of the service Academies is a military activity (perhaps in the long run the most important military activity) of the United States. It is administered by the respective military services and Secretaries and under the overall responsibility of the Secretary of Defense.
Accordingly to put the issues in proper perspective it would seem appropriate, at the very outset, to note the limitations which have traditionally guided the courts in dealing with matters military.
The Courts have always been reluctant to interfere in the management of the military services. Orloff v. Willoughby, 345 U.S. 83, 73 S. Ct. 534, 97 L. Ed. 842 (1953); Nixon v. Secretary of Navy, 422 F.2d 934 (2nd Cir. 1970); Raderman v. Kaine, 411 F.2d 1102 (2nd Cir. 1969); Byrne v. Resor, 412 F.2d 774 (3rd Cir. 1969); Smith v. Resor, 406 F.2d 141 (2nd Cir. 1969); United States ex rel. Schonbrun v. Commanding Officer, 403 F.2d 371 (2nd Cir. 1968), cert. denied 394 U.S. 929, 89 S. Ct. 1195, 22 L. Ed. 2d 460 (1969); Fox v. Brown, 402 F.2d 837 (2nd Cir. 1968); Wasson v. Trowbridge, 382 F.2d 807, 812 (2nd Cir. 1967); Noyd v. McNamara, 378 F.2d 538 (10th Cir.), cert. denied 389 U.S. 1022, 88 S. Ct. 593, 19 L. Ed. 2d 667 (1967); Luftig v. McNamara, 373 F.2d 664 (D.C.Cir. 1967); Feliciano v. Laird, 311 F. Supp. 791 (E.D.N.Y.1970); Dash v. Commanding General, 307 F. Supp. 849 (D.S.C.1969); Arnheiter v. Ignatius, 292 F. Supp. 911 (N.D.Calif.1968); Rank v. Gleszer, 288 F. Supp. 174 (D.Colo.1968).
The problem here facing the Court is but one facet of the age-old problem of how to balance the requirements of the military and its needs for discipline and training with the Constitutionally protected rights and privileges of the civilian society.
Mr. Justice Harlan succinctly noted in Noyd v. Bond, 395 U.S. 683, 694, 89 S. Ct. 1876, 1883, 23 L. Ed. 2d 631 (1969) that
"In reviewing military decisions, we must accommodate the demands of individual rights and the social order in a context which is far removed from those which we encounter in the ordinary run of civilian litigation, whether state or federal."
As a guiding principle it can be said that the amount of judicial interference with the military should be limited; the amount of deference given the military in matters of discipline and training *1086 should be wide. As Mr. Justice Jackson commented:
"[J]udges are not given the task of running the Army. * * * The military constitutes a specialized community governed by a separate discipline from that of the civilian." Orloff v. Willoughby, 345 U.S. 93-94, 73 S. Ct. 540 (1953).[6]
The reason for this special treatment is the unique role which the military performs. Mr. Justice Black pointed out in Toth v. Quarles, 350 U.S. 11, 17, 76 S. Ct. 1, 5, 100 L. Ed. 8 (1955), and it was re-emphasized by Mr. Justice Douglas in O'Callahan v. Parker, 395 U.S. 258, 262, 89 S. Ct. 1683, 1685, 23 L. Ed. 2d 291 (1969) that
"Unlike courts, it is the primary business of armies and navies to fight or be ready to fight wars should the occasion arise."
Judge Latimer of the United States Court of Military Appeals in a similar vein has written "that military units have one major purpose justifying their existence: to prepare themselves for war and to wage it successfully. That purpose must never be overlooked in weighing the conflicting rights of the serviceman * * * and the right of the Government to prepare for and pursue a war to a successful conclusion." U. S. v. Voorhees, 4 U.S.C.M.A. 509, 531, 16 C.M.R. 83 (1954). And in the same opinion, Chief Judge Quinn, while speaking strongly to the constitutional rights of men in uniform, pointed out that "there are differences between the civilian and military communities." Id. at 531.
A most forceful statement of the limitation on the judiciary when dealing with matters military comes from former Chief Justice Warren.
"So far as the relationship of the military to its own personnel is concerned, the basic attitude of the Court has been that the latter's jurisdiction is most limited.
* * * * * *
"* * * [I]t is indisputable that the tradition of our country * * * has supported the military establishment's broad power to deal with its own personnel. The most obvious reason is that courts are ill-equipped to determine the impact upon discipline that any particular intrusion upon military authority might have. Many of the problems of the military society are, in a sense, alien to the problems with which the judiciary is trained to deal." [Emphasis supplied] Warren, The Bill of Rights and the Military, 37 N.Y.U.L.Rev. 181, 186-187 (1962).
The Second Circuit, speaking to issues which parallel this case, has echoed the ideas of Chief Justice Warren.
"Few decisions properly rest so exclusively within the discretion of the appropriate government officials than the selection, training, discipline and dismissal of the future officers of the military * * *. Instilling and maintaining discipline and morale in these young men who will be required to bear weighty responsibility in the face of adversityat times extreme is a matter of substantial national importance scarcely within the competence of the judiciary." (Emphasis supplied.) Wasson v. Trowbridge, 382 F.2d 807, 812 (2nd Cir. 1967).
Of course it is uncontested that a member of the armed services retains certain fundamental rights notwithstanding his membership in the military. The Supreme Court has left no doubt as to the applicability of the Constitution to the Military establishment. Burns v. Wilson, 346 U.S. 137, 73 S. Ct. 1045, 97 L. Ed. 1508 (1953). And, as the Court of Military Appeals has said, "[T]he protections in the Bill of Rights, except those which are expressly or by necessary implication inapplicable, are available to members of *1087 our armed forces." U. S. v. Jacoby, 11 U.S.C.M.A. 428, 431-432, 29 C.M.R. 244, 246-247 (1960). However, it is equally clear that being a member of the armed services does curtail the assertion of certain constitutional rights.[7] As Chief Judge Quinn of the United States Court of Military Appeals wrote:
"Service in the armed forces, in both war and peace, entails substantial restriction on fundamental rights." Quinn, The U. S. Court of Military Appeals and Individual Rights in the Military Service, 35 Notre Dame Law, 491 493 (1960).
The Second Circuit has said, as to the rights of a member of the armed services:
"Of necessity, he is forced to surrender many important rights. He arises unwillingly at an unreasonable hour at the sound of a bugle unreasonably loud. From that moment on, his freedom of choice and will ceases to exist. He acts at the command of some person not a representative of his own choice who gives commands to him which he does not like to obey. He is assigned to a squad and forced to associate with companions not of his selection and frequently the chores which he may be ordered to perform are of a most menial nature. Yet the armed services, their officers and their manner of discipline do serve an essential function in safeguarding the country. The need for discipline, with the attendant impairment of certain rights, is an important factor in fully discharging that duty." Raderman v. Kaine, 411 F.2d 1102, 1104 (2nd Cir. 1969).
There is nothing revolutionary in concluding that one logically distinguishable group in society enjoys more limited rights than ordinary individuals. Pickering v. Board of Education, 391 U.S. 563, 568, 88 S. Ct. 1731, 20 L. Ed. 2d 811 (1968); Meehan v. Macy, 425 F.2d 469, 470 (D.C.Cir.1968); Ginsberg v. N. Y., 390 U.S. 629, 88 S. Ct. 1274, 20 L. Ed. 2d 195 (1968).
Nor is it revolutionary to say that First Amendment rights are not absolute. Callison v. United States, 413 F.2d 133, 136 (9th Cir. 1969). And although the Religion Clauses are couched in absolute terms, it is not realistically possible to have absolute or perfect separation and non-involvement. Zorach v. Clauson, 343 U.S. 306, 312, 72 S. Ct. 679, 96 L. Ed. 954 (1952). The very existence of the clauses denotes an involvement of sorts. As the Chief Justice has said, "* * * [T]here is room for play in the joints productive of a benevolent neutrality * * *." Walz v. Tax Commission, 397 U.S. 664, 669, 90 S. Ct. 1409, 1412, 25 L. Ed. 2d 697 (1970). The Religion Clauses are in effect boundaries laid out to avoid excessive entanglement.
Traditionand the continuous public acceptance of a practicecarries weight and demands recognition. The practice of compulsory chapel at the military academies did not arise only yesterday. There is an unbroken pattern of 150 years of mandatory chapel under the eyes of the President and the Congress,[8]*1088 the military authorities, and the public in general. Such tradition cannot be lightly discarded; and the longer its existence the greater its influence on the constitutional interpretation of the regulations involved.
As Judge (later Mr. Justice) Cardozo observed "Not lightly vacated is the verdict of quiescent years." Coler v. Corn Exchange Bank, 250 N.Y. 136, 164 N.E. 882, 884 (1928). In the same vein is Mr. Justice Holmes' comment that "a page of history is worth a volume of logic." New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S. Ct. 506, 507, 65 L. Ed. 963 (1921). In a later case, Jackman v. Rosenbaum, 260 U.S. 22, 31, 43 S. Ct. 9, 10, 67 L. Ed. 107 (1922) Mr. Justice Holmes further reiterated the force of tradition in these words:
"[I]f a thing has been practised for two hundred years by common consent, it will need a strong case for the Fourteenth Amendment to affect it."
The Court recognizes of course that long continued use cannot turn a constitutional violation into a right. However, the purpose of a statute or regulation can change over the years from "the impermissible purpose of supporting religion" to the "permissible purpose of furthering overwhelmingly secular ends." School District of Abington Township, Pa., v. Schempp, 374 U.S. 203, 264, 83 S. Ct. 1560, 1593-1594, 10 L. Ed. 2d 844 (1963) (Brennan, J., concurring); Walz v. Tax Commission, supra, 397 U.S. at 687, fn. 8, 90 S. Ct. 1409 (Brennan, J., concurring).
The Court turns now to a closer examination of the chapel attendance regulations in relation to the Freedom of Religion Clauses of the Constitution.
In School District of Abington Township, Pa. v. Schempp, supra, 374 U.S. at 222, 83 S. Ct. at 1571, Mr. Justice Clark set down the test to be followed in determining whether the Freedom of Religion Clauses of the First Amendment have been violated. "* * * [T]o withstand the strictures of the Establishment Clause there must be a secular legislative purpose and a primary effect that neither advances nor inhibits religion."
The Chief Justice re-framed the issue in these words:
"Each value judgment under the Religion Clauses must therefore turn on whether particular acts in question are intended to establish or interfere with religious beliefs and practices or have the effect of doing so." [Emphasis supplied] Walz v. Tax Commission, supra, 397 U.S. at 669, 90 S. Ct. at 1412.
The most cogent testimony as to "purpose" and "effect" of mandatory chapel attendance, as might be expected, was given by those people directly charged with the training of the cadets.
Among others, the defendants called upon Rear Admiral James Calvert, the Superintendent of the Naval Academy, Admiral Thomas Moorer, the then Chief of Naval Operations and now Chairman of the Joint Chiefs of Staff, and Mr. Roger Kelley, the Assistant Secretary of Defense for Manpower and Reserve Affairs. They testified substantially as noted below.
The cadets are required only to attend church or chapel services and to remain attentive in keeping with the avowed purpose of the activity; they are not required to participate in the service or to worship. The choice is left to each individual.[9] There is no punishment for non-participation. The activities involved are not aimed at the cultivation of religious faith or motivation,[10] but are *1089 aimed rather at the complete training of future officers who in combat will shoulder awesome responsibilities. For this reason the young men who volunteer to become cadets submit themselves to a training program the rigors of which far exceed those of other institutions of higher learning. The Academies are called upon to educate and train as effective combat leaders these young men who represent the country's key reservoir of officer talent and who are expected to set and maintain the standards for performance and conduct of all commissioned officers. Particular emphasis is placed necessarily on inculcating a sense of duty, integrity, and moral responsibility. Experience has shown that these qualities and a sensitivity to the spiritual needs of men in times of combat crisis are essential in leading men in the face of danger. Why some men resort to religion or spiritual values as support and strength in times of extreme danger and trial must be understood by a commanding officer.
Within the overall training program of the academies the most effective method of inculcating this sensitivity is attendance at chapel or church services which provide the only opportunity to observe the impact that spiritual values have on the lives of men. It would be as inconsistent with the responsibility the Academies have to train complete combat officers to ignore this necessity as it would be to ignore the more obvious physical and tactical education.
"One of the most challenging aspects of officership is the ability to draw out the best in the people who are subordinate to that officer's command, and the ability to draw out the best in those people requires, beyond any question, an understanding of the spiritual value system that those people use as a basis for conducting their lives and this spiritual value system is put to the most rigorous test in military life, particularly in conditions of combat and crisis."[11]
Highly trained military leaders are essential to national security, and the understanding gleaned from chapel attendance is necessary to mold the well-trained officer. Without it a vital component of officer development would be missing causing a weakness in the fiber of the officer corps which in the long run would have a harmful effect on national security. Lectures or courses in moral guidance, comparative religion, or ethics would not achieve the same effect as attendance since the crucial element of observation would have been removed. Secretary Kelley testified:
"The opportunity to observe others at worship is clear manifestation of the manner and the extent to which they draw upon God or a supernatural being in the conduct of their lives."[12]
Specifically as to the "purpose" of mandatory attendance Secretary Kelley further testified:
"Very simply the reason for the requirement is to help the midshipmen and the cadets understand the basis of religious belief and practice on the part of other midshipmen and cadets and thus equip him for positions of leadership responsibility in later service life."
And Admiral Moorer said:
"The purpose, of course, is to enhance his leadership and command ability by putting him in a position where he can get a feel, an understanding of the impact of religion on the various types of individuals and so he can see this in operation; and, consequently, as he acts as a leader in later years, he will appreciate this impact that religion will have on so many people.
* * * * * *
"[T]hat is the sole purpose. We are in the process of developing leaders and this is a vital part of the overall leadership package; and that is the sole purpose."
*1090 Looking to the primary effect (as contrasted with purpose) the Chief Justice has pointed out that the end resultthe effectmust not be "excessive government entanglement with religion. The test is inescapably one of degree." (Emphasis supplied) Walz v. Tax Commission, supra, 397 U.S. at 674, 90 S. Ct. at 1414.[13]
As Secretary Kelley testified:
"The institutional judgment of the Department of Defense as to the primary effect of required chapel attendance is to develop in those required to attend chapel an understanding of the religious beliefs and the spiritual value systems of other midshipmen and cadets. * * *
"I meant primary effect of requiring attendance at chapel is to instill in a midshipman the understanding of the religious beliefs of others."
And Admiral Moorer added:
"The primary effect is to generate in the individual a better understanding of the impact, related on the lives of men, and certainly permitting them in the future to be better leaders.
* * * * * *
"When we experience a crisis situation, different men react in different ways, and it is very important that the commander, or the senior man on the scene of the conflict or difficulty, understands why the various men in his command will react in a different way, and why some of them find a need to resort to religion to support them in this time of extreme danger and extreme trial. And unless he understands that many people have this feeling and have this need to resort to their religious beliefs to provide strength to them in this period of crisis, he cannot properly, in my view, handle this crisis situation."
As indicated earlier the Court is prepared to and does accord great weight to the opinions and the judgment of those military experts who have the responsibility of training and developing the country's future military leaders. In the absence of any compelling testimony to the contrary, it agrees with their evaluation that the purpose of required attendance at church or chapel service is wholly secular; that it is a vital part of the overall training program designed to create effective officers and leaders by preparing them to meet all the exigencies of command. The Court also agrees that the primary effect of required attendance is secular in that it enables those who will one day hold command positions to gain an awareness and respect for the force religion has on the lives of men so as to react for the benefit of all in combat crises including the giving of spiritual counseling and guidance to those who turn to religion in such situations.
In according deference to the opinions and judgments of the military, the Court is not downgrading the testimony proffered by the plaintiffs. The plaintiffs introduced forceful testimony as to the negative effects of compulsory attendance at worship services upon mankind in general. And it is undeniable that the plaintiffs adduced testimony that the mandatory attendance will have some religious effect on some of the cadets. The plaintiffs failed, however, to demonstrate that the effect is anything but slight, insubstantial, and non-extensive.[14] It is significant, too, that the testimony adduced by the plaintiffs was presented by persons who are not now and never have been directly concerned with the training of our military leaders. As moralists the Court must accord them due deference, but in matters military the Court feels constrained to look to the military experts.
*1091 With the foregoing testimony in mind, the Court concludes that the Religion Clauses of the First Amendment have not been breached by the chapel attendance requirement.
The Court first makes the necessary distinction between "attendance" and "worship" and holds that attendance under the circumstances in question does not constitute worship. While this distinction might be said to be slight, it is in this case crucial. As Chief Justice Burger has said, "[I]t is an essential part of adjudication to draw distinctions, including fine ones, in the process of interpreting the Constitution." Walz v. Tax Commission, supra, 397 U.S. at 679, 90 S. Ct. at 1416.
The Court next finds that the purpose and primary effect of compulsory attendance cannot be said to either substantially "advance" or "inhibit" religion. The thrust is toward the complete training of a military leader. The effect of attendance is no different than the effect of other regulations which all blend together to mold the future officer. "The educational system at the service Academies is a total educational and training concept having to do with developing the whole man, the whole officer. * * * There is an integration between the elements of the total system and each makes its own significant contribution to developing the whole man-officer which equips him as a leader of men."[15]
Any advancement or inhibition, any sponsorship or hostility (and the Court finds none) would only be incidental. And if only incidental, it would be insufficient to hold it in violation of the Religion Clauses. As Mr. Justice Harlan wrote, concurring in Board of Education of Central School Dist. No. 1 v. Allen, 392 U.S. 236, 249, 88 S. Ct. 1923, 1929, 20 L. Ed. 2d 1060 (1968):
"I would hold that where the contested governmental activity is calculated to achieve non-religious purposes otherwise within the competence of the State, and where the activity does not involve the State `so significantly and directly in the realm of the sectarian as to give rise to * * * divisive influences and inhibitions of freedom,' [School District of Abington Township, Pa. v. Schempp, supra, 374 U.S. at 307] id., at 307, 83 S.Ct. at 1616 (concurring opinion of Goldberg, J.), it is not forbidden by the religious clauses of the First Amendment."
This mandatory attendance requirement also meets the test for the Free Exercise Clause as laid down in School District of Abington, Township, Pa. v. Schempp, supra, 374 U.S. at 223, 83 S. Ct. 1560. To come into conflict with the Clause it must be shown that there is a coercive effect which operates against the individual in the practice of his religion. These regulations in no way operate against a cadet in practicing his own religion or in practicing none. The individual chooses which service to attend and he chooses whether to participate and worship or not. And for sincerely held reasons he can be excused from attendance.
Nor does compulsory chapel attendance violate the standards set down by Mr. Justice Brennan in his concurring opinion in School District of Abington Township, Pa. v. Schempp, supra, 374 U.S. at 203, 83 S. Ct. 1560, and restated in Walz v. Tax Commission, supra, 397 U.S. at 680, 90 S. Ct. at 1417, 25 L. Ed. 2d 697. Mr. Justice Brennan held that "those involvements of religious with secular institutions" are forbidden "which (a) serve the essentially religious activities of religious institutions; (b) employ the organs of government for essentially religious purposes; or (c) use essentially religious means to serve governmental ends, where secular means would suffice."
The attendance requirements do not "serve the essentially religious activities of religious institutions" as their principal effect is to carry out secular purposesthe *1092 training of future military leaders. Nor do they "employ the organs of government for essentially religious purposes." To the extent that the chapel attendance requirements further secular ends, they do not advance "essentially religious purposes." To the extent that purely religious activities are benefited by the requirements, the benefit is passive. Nor do they "use essentially religious means to serve governmental ends, where secular means would suffice." To accomplish the end involvedthe complete training of future military leadersit is the judgment of military experts that secular means would not suffice. With this judgment the Court agrees.
As the Chief Justice has pointed out the Religion Clauses "mark boundaries" so as to "avoid excessive entanglement." Walz v. Tax Commission, supra, 397 U. S. at 670, 90 S. Ct. 1409. The Court concludes that the involvement of these regulations with religion falls outside the boundaries. The Court accordingly affirmatively finds that church or chapel attendance is an integral and necessary part of the military training of the future officer corps, that its purpose is purely secular, and that its primary effect is purely secular.
IV.
ARTICLE VI
It is also claimed by the plaintiffs that mandatory church or chapel attendance imposes a "religious test" for officers in violation of Article VI of the Constitution. Article VI reads in pertinent part:
"No religious test shall ever be required as a qualification to any office or public trust under the United States."
As there is no case law directly in point[16] the Court for guidance looks back to the historical context in which the Article was adopted.
When the Revolutionary War began, England and every American colony with the exception of Rhode Island had an "established church" or "established religion."[17] However, by the time of the Constitutional Convention eleven years later strong support had developed for the proposition that no person should be denied political rights because he did not share the religious beliefs of the majority.[18]
The Founding Fathers were in accord with this view and were determined that the Federal Government should have no grant of delegated power to deal with religion. Lack of delegation it was felt *1093 would remove "the fundamental power of religious establishment: the ability to control the political process through interference in the claims of conscience."[19]
However, when the Convention reached the question of granting Congress the power to establish qualifications for federal office the problem of a religious test oath arose. Such oaths had been prevalent in every colony but Rhode Island; and while there were variations in the groups restricted, most made belief in some Protestant sect a requirement.[20] New Jersey as the first colony to adopt a constitution set the example.
"[A]ll persons professing a belief in the faith of any Protestant sect * * * shall be capable of being elected into any office of profit or trust, or being a member of either branch of the Legislature, and shall fully and freely enjoy every privilege and immunity, enjoyed by others their fellow subjects." F. Thorpe, American Charters, Constitutions and Organic Laws, Vol. V, at 2597 (1909).
The effect of these religious test oaths was to prevent those who did not profess belief in the established church or religion of the state from exercising the basic political and economic rights of voting, holding office, practicing a profession, or becoming an officer in the militia.[21]
It was against this background that the religious test oath was accepted by the Convention. It was based upon the Founding Fathers' fear that the power to determine the qualifications for office might carry with it by derivation or implication the power to use religion as a basis for qualification.[22] And this they wanted to prevent.
It is clear from the history behind the adoption of the clause and from the subsequent debates in the state ratifying conventions that the banning of the religious test oath in the Constitution was to keep the Federal Government from creating an established religion.[23]
Thus, from an historical stand-point there is a close connection between the establishment prohibition and the test oath prohibition. The Court having determined that there is no violation of the Establishment Clause in the mandatory attendance regulations, it necessarily follows that there can be no violation of the test oath prohibition.
Further and as a practical matter if one considers that the Academy graduates constitute less than five percent of the officer corps, it can hardly be said that the Academy regulations interpose a test which prevents others from becoming officers in the armed services of the United States. The Court accordingly finds these regulations not to be a religious test and not a violation of Article VI.
This opinion constitutes the Court's findings of fact and conclusions of law.
V.
ORDER
In the light of the foregoing it is hereby
Ordered:
(1) Plaintiffs' motion for a declaratory judgment that compulsory chapel attendance violates the Constitution is denied.
(2) Plaintiffs' motion for a permanent injunction forbidding the Academies from enforcing the requirement, is denied.
(3) Plaintiffs' motion for a permanent injunction forbidding the Academies from disciplining the cadets and midshipmen for their involvement in this suit, is granted.
NOTES
[1] Most midshipmen were minors and appeared through the Reverend Father Robert F. Drinan as "next friend." The defendants challenged the right of Father Drinan to appear for the minors absent a showing that the parents of the minors had been consulted and consented to such an appearance. Since the Court had ruled that the action was a class action it deemed the challenge immaterial and denied the motion to strike Father Drinan's appearance as next friend.
[2] The term "cadets" is hereinafter used to include not only the cadets at the West Point and the Air Force Academies but the midshipmen at Annapolis as well.
[3] None of the named plaintiffs was a cadet at the Air Force Academy. The similarity of regulations at the three Academies and the similarity of cadet positions at each Academy brings the Air Force Academy within the confines of this suit held to be a class action pursuant to Rule 23 F.R.Civ.P. See Class Actions, Charles Alan Wright, 47 F.R.D. 169, 172, 174, 178 (1969).
[4] Nor is there any question that prospective candidates for the service Academies, volunteers all, are on notice as to the behavior expected of them if accepted as officer candidatesincluding the requirement to attend Sunday services. They are so notified through the catalogs distributed to them when they apply. It might well be argued that the cadets by their own choice have imposed restrictions on their activities at the Academies. See Raderman v. Kaine, 411 F.2d 1102, 1104 (2nd Cir. 1969).
[5] The Eleventh Conference of Superintendents of the Academies of the Armed Forces, Record of Proceedings, April 18, 1969 at 32.
[6] Mr. Justice Harlan in a separate context also has emphasized the unique position of military personnel in American society. Carrington v. Rash, 380 U.S. 89, 100-101, 85 S. Ct. 775, 13 L. Ed. 2d 675 (1965) (dissenting opinion).
[7] Cf. Kester, Soldiers Who Insult The President, An Uneasy Look at Article 88 of The Uniform Code of Military Justice, 81 Harv.L.Rev. 1697, 1743 (1968).
[8] A Board of Visitors is constituted annually to each of the service academies. It is made up of the Chairman of the Committee on Armed Services of the Senate (or his designee); three other members of the Senate (two of whom are members of the Committee on Appropriations); the Chairman of the Committee on Armed Services of the House of Representatives (or his designee); four other members of the House of Representatives (two of whom are members of the Committee on Appropriations); and six persons designated by the President. Among their duties are to inquire into the morale and discipline, the curriculum, instruction, physical equipment, fiscal affairs, academic methods and other matters relating to the Academy. The Board is required to report to the President within sixty days after its annual visit to each academy. Title 10, §§ 4355, 9355, 6968.
[9] When the age, maturity, and voluntary position of the individuals are considered, the problems of peer pressure and youthful minds which loomed large in the school prayer cases (Engel v. Vitale, 370 U.S. 421, 82 S. Ct. 1261, 8 L. Ed. 2d 601 (1962), School District of Abington Township, Pa. v. Schempp, supra, 374 U.S. 203, 83 S. Ct. 1560) present no obstacle.
[10] Cf. Kayser, Church and State: Cooperative Separation, 60 Mich.L.Rev. 1, 31 (1961).
[11] Testimony of Secretary Kelley, Tr. Vol. V at 28.
[12] Tr. Vol. V at 27.
[13] The Court of Appeals had one month earlier reached the same result in Allen v. Hickel, 424 F.2d 944, 949 (D.C. Cir. 1970). "The question is not whether there is any religious effect at all, but rather whether that effect, if present, is substantial."
[14] As has been noted, supra, a cadet or midshipman may be excused from attendance for sincerely held reasons or beliefs.
[15] Testimony of Secretary Kelley, Tr. Vol. V at 37.
[16] The Supreme Court did briefly discuss Article VI and the religious test oath in Torcaso v. Watkins, 367 U.S. 488, 490-491, 81 S. Ct. 1680, 6 L. Ed. 2d 982 (1961) but decided the case on First Amendment grounds since the plaintiff held state rather than federal office.
[17] "There were established churches in at least eight of the thirteen former colonies and established religions in at least four of the other five." Engel v. Vitale, 370 U.S. 428, 82 S. Ct. 1265. See generally S. Cobb, The Rise of Religious Liberty in America (1902) and C. Antieau, A. Downey and E. Roberts, Freedom from Federal Establishment (1964).
By "Establishment" was meant any alliance between church and state which could have one or more of the following characteristics:
"1. A state church officially recognized and protected by the sovereign;
2. A state church whose members alone were eligible to vote, to hold public office, and to practice a profession;
3. A state church which compelled religious orthodoxy under penalty of fine and imprisonment;
4. A state church willing to expel dissenters from the commonwealth;
5. A state church financed by taxes upon all members of the community;
6. A state church which alone could freely hold public worship and evangelize;
7. A state church which alone could perform valid marriages, burials, etc." [Emphasis supplied] C. Antieau, A. Downey, E. Roberts, Freedom from Federal Establishment, supra, at 1.
[18] But in only two of the thirteen states, Rhode Island and Virginia, was full and perfect freedom of religion conceded by law. S. Cobb, The Rise of Religious Liberty in America, supra, at 482-509.
[19] C. Antieau, A. Downey and E. Roberts, Freedom from Federal Establishment, supra, at 110.
[20] Id. at 92-110.
[21] Id. at 10-16.
[22] Id. at 99.
[23] Elliot's Debates, II, 149, 202; Elliot's Debates, III, 204, S. Cobb, The Rise of Religious Liberty in America, supra, at 508. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3856572/ | Argued October 27, 1937.
Plaintiff instituted suit in trespass against the defendant, alleging injuries sustained because of the negligent operation of an automobile by the defendant. The case was tried before ALESSANDRONI, J., and resulted in a verdict of $400 in favor of the plaintiff, for which judgment was entered.
A capias ad satisfaciendum was issued, and the defendant taken into custody.
The defendant filed a petition for discharge from arrest, under the provisions of the Act of June 1, 1915, P.L. 704 (39 PS 9). In the petition the defendant alleged his insolvency, and an inability to pay the judgment. No answer to this petition was filed.
In accordance with the Act, the defendant caused the requisite advertisements to be published, and notices to be sent.
Upon the return day of the rule, the defendant appeared for a hearing thereon before GORDON, P.J., of Court of Common Pleas No. 2 of Philadelphia County. Proofs of publication were offered, and the defendant was then sworn as a witness.
The defendant testified that he was a clothing salesman working on a commission basis; that he had a wife and two children; and that his earnings during the past year averaged $35 per week. He stated that he had no property, and was therefore unable to pay the judgment. He answered all questions put to him by counsel and the court.
Although no evidence to contradict the petitioner was offered, the court stated in its opinion filed that he did *Page 220
not believe the witness, discharged the rule and committed him.
This appeal was then taken to this court and upon a petition being filed, a supersedeas was allowed and an order made that the appeal be prosecuted in forma pauperis.
This case arose out of an ordinary trespass action wherein the plaintiff claimed to have been injured by defendant's negligent operation of an automobile.
The defendant was the only one to testify as to his financial condition. It disclosed no property and showed a very limited earning capacity with a responsibility of a wife and two children. There was no evidence of the concealment of any assets. There was no contradiction of any matter to which defendant testified.
The relevant section of the Act of June 1, 1915, P.L. 704, under which the proceedings for discharge were instituted, reads as follows: "Upon the hearing of the rule the petitioner shall be required to answer all questions put to him, and shall produce all books and papers required of him; and if it shall appear to the court that the petitioner is without means or property with which to pay the judgment, and that he has not secreted or assigned any of his property so as to avoid the payment of the judgment, the court may discharge him from arrest and in said proceedings; but such discharge shall not in any way affect the judgment entered against him. Any person arrested or held in custody on or by virtue of, any process issued on a judgment obtained in any civil action in this Commonwealth, shall be discharged at the expiration of sixty days from the date of the commitment, if compliance is had with all the requirements of this act and all other acts of assembly relating to insolvency."
In the recent case of Kubit v. Witt, 127 Pa. Super. 434,193 A. 81, decided July 15, 1937, the *Page 221
court reaffirmed the principles enunciated in the leading case on the subject, Miller's Petition, 119 Pa. Super. 283,180 A. 904. In that case, the lower court was reversed for refusing to discharge a defendant from arrest on a capias ad satisfaciendum. There the defendant had an income from a spendthrift trust, and had said he would rather sit in jail than pay the judgment. Nevertheless this court interpreting the law in accordance with legislative intent, discharged the defendant, because there was no evidence that he had concealed or transferred his property. In that case after reviewing the cases on the subject, Judge PARKER said on p. 289: "Is the petitioner entitled to a discharge? In the cases in which we have heretofore considered the Act of 1915, the 16th section of Article I, part of the Declaration of Rights of the Constitution of this Commonwealth, was apparently not taken into account. It is there provided: `The person of a debtor, where there is not strong presumption of fraud, shall not be continued in prison after delivering up his estate for the benefit of his creditors in such manner as shall be prescribed by law.' In passing the Act of 1901 the legislature had in mind this constitutional provision, for it made the granting of a discharge mandatory, even before sixty days had expired, where there was a compliance with the provisions of that insolvent law. The Acts of 1901 and 1915, insofar as they relate to petitions for discharge, are intended to accomplish the same purpose. The one act is available where the debtor has property and the other act provides for discharge of debtors who have neither means nor property to pay the judgment, and it would be a vain thing to make an assignment. It would seem to follow, if effect is to be given to the spirit of the constitutional provision, that a debtor who otherwise brings himself within the provisions of the Act of 1915, the insolvent law involved, is entitled to the same consideration as one *Page 222
who, although he may have only a negligible amount of property, has assets to assign. In either case, if the applicant complies with the particular statute he is complying with the insolvent laws of the state and delivering up such estate as he has. Inother words, if a debtor is without means or property with whichto pay the judgment, has not secreted or assigned any of hisproperty, follows the procedure prescribed by the first threesections of that act, and there is not a strong presumption offraud growing out of either the transaction which formed thebasis of the judgment or the proceedings for discharge, he isentitled under the constitution of this Commonwealth to adischarge without waiting sixty days.
"Viewing the controversy from another angle, we arrive at the same conclusion. While in Matz v. Haug, supra, and other cases construing this act we have said that before the expiration of sixty days, the right of one imprisoned for a civil debt to a discharge is a matter of grace, this means that it is a matter ofjudicial discretion under the law and the facts. We have not found a better description of judicial discretion than that given by Chief Justice MARSHALL in the case of Osborn v. Bank of U.S.,22 U.S. 738, 866: `Judicial power, as contra-distinguished from the power of the laws, has no existence. Courts are the mere instruments of the law, and can will nothing. When they are said to exercise a discretion, it is a mere legal discretion, a discretion to be exercised in discerning the course prescribed by law; and, when that is discerned, it is the duty of the court to follow it. Judicial power is never exercised for the purpose of giving effect to the will of the judge; always for the purpose of giving effect to the will of the legislature; or, in other words, to the will of the law.'" Also, see Augustine v. Wolf, 29 Pa. Super. 336.
"Legislation in this Commonwealth has shown a *Page 223
decided trend away from affording to a creditor the remedy of imprisonment as a means of enforcing collection of judgments in civil actions." (Italics supplied). Further, on p. 291: "We deem the reasons assigned by the court below for its action insufficient. Even under the Act of 1836 this petitioner would have been entitled to a discharge without undergoing confinement for a minimum term, for the tort which formed the basis of the action in which the judgment was recovered was not founded upon actual force: Doescher's Petition, supra. If the reasons here assigned were sufficient to support the order of the court, it would be in rare instances that a defendant in any action in tort for negligence might not, at the will of court, be compelled to serve a minimum term of sixty days. To so hold would reverse the whole policy of the law. To refuse the petition is an exercise of the will of the judge rather than the settled policy of the Commonwealth as expressed in its constitution and by the legislature."
The foregoing principles were reiterated by our Supreme Court in the late case of Young's Petition, 327 Pa. 267, 192 A. 911, where in affirming the lower court, which discharged a defendant, it was said, at p. 270: "We are compelled to reach the same conclusion as the court below, that the evidence fails to disclose facts which would indicate that defendant has secreted or assigned any of his assets to avoid paying the judgment of the plaintiffs. He has answered all questions concerning his property and finances. While the testimony manifests his indifference to the obligation owing by him to the plaintiffs, it does not establish that there is any property or income, other than mentioned, available for the satisfaction of the judgment. Imprisonment for civil debt is abhorrent to the law of this Commonwealth. This policy has been established not only in the organic law of the Commonwealth, but *Page 224
as well by legislative enactment, and the decisions of the courts."
The lower court evidently relied upon the fact that at the time of the recovery of the verdict, defendant had offered to pay $150 in full settlement. This was no evidence of what his ability to pay was at the time of the hearing for the discharge. The court in its opinion referred to a portion of the opinion of Mr. Justice BARNES in Young's Petition, supra: "The question whether the defendant has been guilty of fraud, or has secreted or assigned his property, is a matter of judicial discretion dependent upon the facts in each case." The same opinion concludes as follows: "However, once it is apparent that the defendant is without means to satisfy the judgment, and has not secreted or assigned his property, it is the duty of the court to grant the discharge of the defendant, otherwise the whim of the court is substituted for fundamental rights guaranteed by the Constitution and promulgated by acts of Assembly."
After careful consideration, we are of the opinion that the lower court erred, and that following the policy of the Commonwealth as expressed in our Constitution and by legislative enactment, the defendant should have been discharged.
Assignment of error sustained, order reversed and defendant discharged. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1977993/ | 705 F. Supp. 152 (1989)
SANITOY, INC. and Pilgrim Infants Products, Inc., Plaintiffs,
v.
Richard SHAPIRO, Defendant.
No. 85 Civ. 6473 (MGC).
United States District Court, S.D. New York.
January 30, 1989.
Jacobs Persinger & Parker by William Lasher, New York City, for plaintiffs.
Hofheimer Gartlir & Gross by Sylvia D. Garland, New York City, for defendant.
OPINION AND ORDER
CEDARBAUM, District Judge.
Plaintiffs, Sanitoy, Inc. and Pilgrim Infants Products, Inc., have brought this action seeking damages against defendant Richard Shapiro for his allegedly fraudulent and negligent misrepresentations concerning the quality and manufacture of certain infant plush toys, and for his alleged *153 violation of Consumer Product and Safety Commission ("CPSC") standards regulating those toys. Defendant has moved for summary judgment. After reviewing the undisputed facts and other facts offered by plaintiffs, and drawing all inferences in plaintiffs' favor, the motion for summary judgment is granted in part and denied in part.
THE UNDISPUTED FACTS
Sanitoy, Inc. and its wholly-owned subsidiary Pilgrim Infants Products, Inc. are Delaware corporations with principal places of business in Fitchburg, Massachusetts. Plaintiffs manufacture, import, and distribute infant products, including toys. Richard Shapiro, who resides in New York, is a salesman of toy products and the managing director of Richard Toy Company Ltd., a Hong Kong corporation. Shapiro and his wife are the sole shareholders of Richard Toy Company.
In late 1982, Shapiro contacted Sanitoy concerning the sale of infant plush toys, which Sanitoy would then resell to retailers. Shapiro had never before had business dealings with Sanitoy or Pilgrim or with any of their officers or employees. For their part, Sanitoy and Pilgrim had had only limited experience with plush toys prior to meeting Shapiro.
Shapiro subsequently attended three meetings at Sanitoy's offices with several of Sanitoy's officers and employees, including Arthur Zadek, Sanitoy's president, and J. Daniel Simon, Sanitoy's executive vice-president. Shapiro brought to these meetings samples of the toys, which he said were manufactured in Korea, and left them with Sanitoy for its inspection. For purposes of this motion, Shapiro concedes that he made the following representations at these meetings:
(1) that he would direct and supervise production of high quality infant plush products in the Far East;
(2) that such products would be in full conformity with applicable trade standards and CPSC rules and regulations for resale in the United States; and
(3) that Sanitoy and Pilgrim could rely on his personal expertise and abilities for the delivery of high-quality infant plush products.
In December of 1982, Sanitoy and Pilgrim placed three purchase orders with Shapiro. The purchase orders and corresponding letters of credit were made out to Richard Toy Company, Ltd., which plaintiffs understood to be Shapiro's company. Richard Toy Company in turn contracted with the Song Won Trading Company in Korea to manufacture the toys. The merchandise, shipped F.O.B. Korea, arrived in the United States in May of 1983. Plaintiffs do not claim that they have incurred any damages in connection with the first three purchase orders.
On April 7, 1983, Sanitoy placed its fourth purchase order, P.O. # 77287, for 6,000 dozen style 101-A plush, two-headed, toy dumbells. Sanitoy intended to resell this merchandise to K-Mart, one of its major customers. Like the first three orders, the fourth purchase order did not specify the CPSC standards that the toys would have to meet to be acceptable for introduction into interstate commerce in the United States. However, all of the purchase order forms contained pre-printed "terms and conditions" which included language to the effect that the seller would guarantee compliance with all relevant laws and regulations. In May of 1983, Zadek visited the factories in Korea where the dumbells were being manufactured, but did not undertake a thorough inspection of the facilities or of the merchandise in its various stages of production. The first shipment of merchandise ordered under P.O. # 77287 arrived at Sanitoy's warehouse at the end of June, 1983.
When Sanitoy conducted tests on the dumbells to check for compliance with CPSC standards, it discovered that the eyes on most of the dumbells were not sufficiently securely attached to comply. On July 1, 1983, Sanitoy contacted Shapiro with this information. The parties subsequently decided to return the merchandise to Korea for repair. Richard Toy Company assumed the costs of repair, although Sanitoy *154 paid some of the shipping and surveyor charges. The repaired merchandise arrived at Sanitoy's warehouse in the spring of 1984.
After Sanitoy had placed the fourth purchase order, plaintiffs placed fifteen additional orders with Richard Toy Company. Nine of the fifteen were placed after Sanitoy had received the defective shipment.
Several of the fifteen orders included style 101-A dumbells. The only shipment that plaintiffs refused to accept in its entirety was the shipment of style 101-A dumbells received under the fourth purchase order. However, plaintiffs claim that two of the later orders, P.O. # 77289 and P.O. # 1589, dated April 26, 1984, also contained many defective toys that plaintiffs were unable to sell to retailers.
Plaintiffs filed the complaint in August of 1985. Count One of the complaint alleges common law fraud based on plaintiffs' reliance on Shapiro's representations in deciding to purchase the plush toys. Count Two asserts that Shapiro should be held liable for negligent misrepresentation because of his claimed expertise in plush toys and plaintiffs' relative inexperience. Plaintiffs allege in Count Three that Shapiro is liable to them for violation of CPSC regulations. The original complaint also contained two counts alleging injury to Sanitoy's relationship with K-Mart, but these counts have been withdrawn. After the completion of discovery, Shapiro moved for summary judgment on the three remaining counts. All parties agree that New York law is the substantive law governing the common law claims, Counts One and Two of the complaint.[1]
SUMMARY JUDGMENT
A court will grant summary judgment if it determines "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Knight v. United States Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S. Ct. 1570, 94 L. Ed. 2d 762 (1987). The test for granting a summary judgment motion is similar to that for directing a verdict, in that if the trier of fact could return a verdict for the nonmoving party, the motion should not be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). On the other hand, a court is not precluded from granting the motion simply because the nonmoving party has established that there is an issue of material fact. The nonmoving party must show that the issue of fact is "genuine," involving more than mere "metaphysical doubt." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986); Murray v. Xerox Corp., 811 F.2d 118, 121 (2d Cir.1987).
In determining whether a case should proceed to trial, a court must review the record in the light most favorable to the nonmoving party, resolving ambiguities and drawing reasonable inferences in that party's favor. Patrick v. LeFevre, 745 F.2d 153, 158 (2d Cir.1984). But if, after adequate time for discovery has passed, the nonmoving party fails to establish the existence of an essential element of its case, on which it will bear the burden of proof at trial, the court should enter summary judgment against it. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548 at 2552, 91 L. Ed. 2d 265 (1986). In that situation, "there can be no `genuine issue of material fact,' since a complete failure of proof ... necessarily renders all other facts immaterial." Id. at 323, 106 S. Ct. at 2553.
DISCUSSION
Negligent Misrepresentation
New York law generally does not recognize liability for words "negligently spoken" during commercial dealings. The exception is "when the parties' relationship suggests a closer degree of trust and reliance than that of the ordinary buyer and *155 seller." American Protein Corp. v. AB Volvo, 844 F.2d 56, 63 (2d Cir.), cert. denied, ___ U.S. ___, 109 S. Ct. 136, 102 L. Ed. 2d 109 (1988) (quoting Coolite Corp. v. American Cyanamid Co., 52 A.D.2d 486, 384 N.Y.S.2d 808, 811 (1st Dep't 1976)). Defendant argues that plaintiffs cannot establish the "special relationship" necessary for actionable negligent misrepresentation because plaintiffs' relationship with him was never more than that of ordinary buyer and seller. Plaintiffs argue that defendant's expertise and assurances concerning infant plush toys, and their own relative inexperience in this area, created a special relationship.
In support of their claim of negligent misrepresentation, plaintiffs rely primarily on White v. Guarente, 43 N.Y.2d 356, 401 N.Y.S.2d 474, 372 N.E.2d 315 (1977), Coolite Corp. v. American Cyanamid Co., 52 A.D.2d 486, 384 N.Y.S.2d 808 (1st Dep't 1976), and Mathis v. Yondata, 125 Misc. 2d 383, 480 N.Y.S.2d 173 (N.Y.Sup.Ct.1984). In each of these cases, the court found a special relationship which would support a claim of negligent misrepresentation. An analysis of these cases shows that plaintiffs' reliance is misplaced.
The facts of White are not analogous. In White, the New York Court of Appeals found a sufficiently close relationship between the defendant, an accounting firm, and the plaintiff, a limited partner of the partnership which was a client of the accounting firm, to recognize "some relation of duty" beyond the exact terms of the agreement to audit the partnership. Specifically, the accountants knew that the limited partners would receive and rely on the auditor's report. The court did not broadly examine all circumstances "arising out of contract or otherwise," 43 N.Y.2d at 363, 401 N.Y.S.2d at 478, 372 N.E.2d at 320, which might give rise to a duty of care, but instead specifically considered when a third party beneficiary of a service contract may seek damages for fraud.
In Coolite, the court imposed a duty of care on the defendant because the defendant had required the plaintiffs to form a new company with solid capitalization before the parties could enter a distributorship agreement for the sale of "light sticks." The court found that the plaintiffs' investment of $500,000 "attest[ed] the parties' relationship was intrinsically a more intimate relationship association, at least in terms of reliance and trustworthiness, than that of the commonly encountered buyer and seller." 384 N.Y.S.2d at 811 (emphasis added). By contrast, Sanitoy and Pilgrim did not commit themselves to any expenditure which could be considered unusual for a commonly encountered buyer, nor did they commit themselves to the long-term relationship of a distributorship agreement.
Mathis is also distinguishable. In that case, the defendants had contracted to provide the plaintiffs with data processing services. A year later, they attempted to induce the plaintiffs not to cancel the contract by promising to sell them certain computer equipment after developing the software necessary for the plaintiffs' business. Thus, this was not a simple contract for the sale of goods, but an agreement to supply services on an ongoing basis. In denying the defendants' summary judgment motion, the court held that the promises, representations, and warranties made for the purpose of guiding the plaintiffs in their business transactions created a special relationship between the parties.
The relationship between merchants who buy and sell goods, in contrast to a distributorship or service arrangement, is not the special relationship required by New York law as an essential element of a claim of negligent misrepresentation. If, as plaintiffs contend, a salesman's representation that the buyer can rely on his expertise and the buyer's reliance were enough to create the necessary special relationship, the exception would swallow the rule. After all factual inferences are drawn in plaintiffs' favor, plaintiffs' claim of negligent misrepresentation could not withstand a motion for a directed verdict. Therefore, defendant's motion for summary judgment on this claim is granted.
*156 Fraudulent Misrepresentation
Under New York law, in order to succeed on their fraud claim, plaintiffs must prove the following six elements by clear and convincing evidence: (1) that Shapiro made a misrepresentation as to a material fact; (2) that the representation was false and (3) known by Shapiro to be false; (4) that the representation was made for the purpose of inducing the plaintiffs to rely on it; (5) that the plaintiffs, in ignorance of its falsity, rightfully did so rely; and (6) that plaintiffs' reliance on Shapiro's misrepresentations caused them injury. See Murray v. Xerox Corp., 811 F.2d 118, 121 (2d Cir. 1987); Channel Master Corp. v. Aluminum Limited Sales, Inc., 4 N.Y.2d 403, 176 N.Y.S.2d 259, 151 N.E.2d 833 (1958); Brown v. Lockwood, 76 A.D.2d 721, 730, 432 N.Y.S.2d 186 (2d Dep't 1980).
In their 3(g) statement, plaintiffs assert that defendant misrepresented the quality of the toys, including their comparability to another well-known line, misrepresented his ability to supervise the manufacture of the toys, and misrepresented both his knowledge of applicable CPSC regulations and that the toys would conform to those regulations. Plaintiffs also assert that after they discovered the defects in the fourth purchase order, defendant continually reassured them that the defects and the allegedly low quality of those toys and of toys ordered under later purchase orders would be corrected, but that this never happened.
Defendant contends that plaintiffs have waived any cause of action for fraud by their placement of additional orders with Richard Toy Company after having received the defective goods under the fourth purchase order, by returning the defective merchandise for repair, and by selling the repaired toys and the later shipments to retailers. He also argues that the plaintiffs could not justifiably have relied on his representations, that any representations as to quality or conformity with CPSC regulations constituted nonactionable opinion or prediction, and that he did not have the necessary scienter to make any of his statements actionable in fraud.
Many cases have held that if a plaintiff continues to deal with a defendant after discovering the truth of the defendant's misrepresentations, the plaintiff waives any fraud claim for damages arising subsequent to the discovery. See, e.g., Deutsch v. Health Insurance Plan of Greater New York, 573 F. Supp. 1433 (S.D.N.Y.1983); Lumber Industries, Inc. v. Woodlawn Furniture Corp., 26 A.D.2d 924, 274 N.Y. S.2d 813 (1st Dep't 1966); Oleet v. Pennsylvania Exchange Bank, 285 A.D. 411, 137 N.Y.S.2d 779 (1st Dep't 1955). The basis for finding waiver with respect to later business dealings is that a plaintiff's knowledge of the true facts precludes it from being able to satisfy all of the elements of fraud. Specifically, with respect to new transactions after falsity has been revealed, a plaintiff cannot claim justifiable reliance on the earlier misrepresentations. See Deutsch, 573 F.Supp. at 1442; Long Island Lighting Co. v. Imo Delaval, Inc., 668 F. Supp. 237, 240 (S.D.N.Y.1987).
When a plaintiff has incurred damages both before and after learning the truth, a court may grant recovery for damages sustained during the former period and disallow post-discovery damages. For example, in Accusystems. Inc. v. Honeywell Information Systems, 580 F. Supp. 474, 483 (S.D.N.Y.1984), the court concluded that because the defendant had misrepresented the capabilities of its computer operating system, the plaintiffs could recover for fraud. But since the plaintiffs could have discontinued using the system after they realized the truth, the court limited recoverable damages to exclude damages arising after that time. Similarly, in Clearview Concrete Products v. S. Charles Gherardi, Inc., 88 A.D.2d 461, 453 N.Y.S.2d 750 (2d Dep't 1982), the court precluded recovery of sums spent after the plaintiff had accepted the benefits of a contract originally based on the defendants' misrepresentations, although the plaintiff could have recovered "prediscovery expenses" if it had been able to establish any. Id. 453 N.Y. S.2d at 755.
Plaintiffs assert that they have incurred damages both as a direct result of defendant's *157 original misrepresentations and even after they learned the truth, because they have been unable to sell the low quality and defective toys to retailers, and because they incurred charges in returning the fourth purchase order to Korea. While plaintiffs have not completely waived their fraud claim, since some of their damages were incurred before they learned the truth, or are otherwise directly attributable to the consequences of receiving the defective fourth purchase order, they could not justifiably have relied on defendant's original representations when they placed two purchase orders in April of 1984. Thus, they may not use the early representations as a basis for recovery of damages arising from the later orders.
But plaintiffs also base their claim for damages from the later purchase orders on defendant's later assurances that the toys' quality would improve and that the toys ordered later would not be defective. These later representations are insufficient to "revive" the claim for damages that the plaintiffs have waived because plaintiffs had already discovered that they could not believe defendant's representations about the quality of goods. Even if these repeated assurances were actionable misrepresentations and not mere puffery, plaintiffs could not reasonably have relied on them as truthful.
Defendant argues that even if plaintiffs did not waive their fraud claim as to damages incurred before they received the defective toys, his original representations are not actionable in fraud because they involved opinion and prediction, not present fact, and because the plaintiffs could not justifiably have relied on them. However, factual issues preclude summary judgment on the initial alleged misrepresentations.
In general, representations involving opinion, such as the quality of an object or service, are not actionable in fraud because they do not provide a reasonable ground for reliance. See George Backer Management Corp. v. Acme Quilting Corp., 46 N.Y.2d 211, 413 N.Y.S.2d 135, 140, 385 N.E.2d 1062 (1978); Paladino v. Adelphi University, 89 A.D.2d 85, 454 N.Y.S.2d 868, 874 (2d Dep't 1982). But not only did defendant extol the high quality of his products when he first met with plaintiffs, he also represented that they compared favorably to Eden Toy, a specifically identified line of plush toys. Plaintiffs have testified that Eden Toy is one of the industry leaders in infant plush toys and that they relied on defendant's comparison in deciding to place their orders with him. (Zadek Dep. 41, Simon Dep. 46). In Stern v. Satra, 539 F.2d 1305 (2d Cir.1976), the court noted that an opinion may constitute grounds for fraud if it is made in reference "to some commonly accepted measure." 539 F.2d at 1308 (quoting Taylor v. Burr Printing Co., 26 F.2d 331, 334 (2d Cir.) (L. Hand, J.), cert. denied, 278 U.S. 641, 49 S. Ct. 36, 73 L. Ed. 556 (1928)). Eden Toy may provide such a measure here.
In addition, although defendant's representations that he would supervise the toys' manufacture and that they would conform to CPSC regulations were statements of future intent and prediction, they are nevertheless actionable if defendant made them with the present intent to deceive, a question of fact involving state of mind. See Murray v. Xerox Corp., 811 F.2d 118, 122 (2d Cir.1987); Schwartz v. Newsweek, 653 F. Supp. 384, 389 (S.D.N.Y.1986), aff'd, 827 F.2d 879 (2d Cir.1987); Lanzi v. Brooks, 54 A.D.2d 1057, 388 N.Y.S.2d 946, 948 (3d Dep't 1976), aff'd, 43 N.Y.2d 778, 402 N.Y.S.2d 384, 373 N.E.2d 278 (1977).
The Second Circuit has recently observed that "summary judgment is ordinarily inappropriate where an individual's intent and state of mind are implicated." Ramseur v. Chase Manhattan Bank, 865 F.2d 460- (2d Cir.1989) (citations omitted). Here, plaintiffs have offered proof which raises an issue of fact as to defendant's initial intent to deceive.
For example, defendant has conceded that Richard Toy Company did not choose any of the subcontractors who worked for Song Won, and that he did not know all of the subcontractors who worked on the infant plush line. (Shapiro Dep. 15-16). Furthermore, defendant has acknowledged that he did not know all of the applicable *158 CPSC regulations when he met with the plaintiffs, but relied on the plaintiffs to inform him of them. (Shapiro Dep. 84, 97-98).
Finally, whether plaintiffs justifiably relied on defendant's original representations also presents a genuine issue of material fact. Whether a plaintiff may justifiably rely on a representation depends on whether the plaintiff "was placed on guard or practically faced with the facts," Mallis v. Bankers Trust Co., 615 F.2d 68, 81 (2d Cir.1980), cert. denied, 449 U.S. 1123, 101 S. Ct. 938, 67 L. Ed. 2d 109 (1981), or whether the facts were "peculiarly within the defendant's knowledge." See Black v. Chittenden, 69 N.Y.2d 665, 511 N.Y.S.2d 833, 835, 503 N.E.2d 1370, 1372 (1986) (citations omitted).
Plaintiffs contend that they reasonably relied on defendant because they considered him an expert in plush toys while they themselves were inexperienced and had no means of obtaining the knowledge to test his representations. Plaintiffs knew defendant by reputation and considered him "a very fine salesman" representing "a very fine company." (Zadek Dep. 45). They had not distributed many plush toys before meeting defendant, and were reluctant to purchase toys from Korea because they had had an unpleasant experience with a different supplier. (Simon Dep. 26-28). Plaintiffs knew that defendant's company was in Hong Kong, even if he lived in New York, so that it would not have been unthinkable for them to believe that he could supervise the production of Korean-made toys. These circumstances raise an issue of fact as to whether plaintiffs should have been placed on guard and examined defendant's representations more closely.
In sum, defendant is not entitled to summary judgment on plaintiffs' fraud claim in its entirety, but only to the extent that it includes damages relating to the later purchase orders. Summary judgment is denied with respect to the claim arising from the fourth purchase order.
CPSC Violations
In Count Three of the complaint, plaintiffs allege that because the defective merchandise failed to comply with CPSC rules and regulations, plaintiffs suffered economic injury in that the merchandise was either unsaleable or required repair before it became saleable. Plaintiffs base their claim on 15 U.S.C. § 2072, § 23(a) of the Consumer Product Safety Act, which provides that:
Any person who shall sustain injury by reason of any knowing (including willful) violation of a consumer product safety rule, or any other rule or order issued by the Commission may sue any person who knowingly (including willfully) violated any such rule or order in any district court of the United States in the district in which the defendant resides or is found or has an agent....
15 U.S.C. § 2072(a) (1982).
Defendant contends that plaintiffs have no standing to sue under 15 U.S.C. § 2072 for two reasons. First, he argues that the governing regulation, 16 C.F.R. § 1500.18(a)(9), which bans infant toys which present a "choking, aspiration, or ingestion hazard because of small parts ... and which [are] introduced into interstate commerce after January 1, 1980," does not apply to him. Under the regulation, "a toy or children's article manufactured outside the United States is introduced into interstate commerce when it is first brought within a U.S. port of entry." Id. Defendant argues that since the toys were shipped F.O.B. Korea, title had passed to plaintiffs before the toys were introduced into interstate commerce. Second, defendant contends that § 2072 is limited to suits for personal injury and does not authorize a private action for economic harm.
The Consumer Product Safety Act, Pub. L. No. 92-573, 15 U.S.C. § 2051 et seq., was enacted in 1972. Its first stated purpose is to "protect the public against unreasonable risks of injury associated with consumer products." 15 U.S.C. § 2051(b)(1) (1982). Although the words of 15 U.S.C. § 2072, § 23(a) of the Act, do not expressly define the type of injury for which a private *159 right of action is provided, or explicitly identify the "persons" whom Congress intended to include, the legislative history shows that Congress believed that it was creating a private federal remedy for injured consumers.
The language of § 2072, which refers to "any person," is arguably broad enough to include plaintiffs' claim. But the scope of the provision is ambiguous because of the absence of an express definition of "injury." A review of the legislative history is appropriate because "a thing may be within the letter of the statute and yet not within its spirit, nor within the intention of its makers." Church of The Holy Trinity v. United States, 143 U.S. 457, 459, 12 S. Ct. 511, 512, 36 L. Ed. 226 (1892).
The floor debates in the House of Representatives focused on whether the provision would overburden the federal courts by allowing any consumer who had suffered a personal injury to sue in a federal forum. See 118 Cong.Rec. 31,383-87. For example, despite Representative Eckhardt's reassurances that "the burden would be on the plaintiff first to show that the victim died or sustained personal injury ... or became ill," Representative Jonas predicted that "you will have the Federal courts filled up with a multitude of suits involving very small sums of money against retailers all over the United States." Id. at 31,384.
Plaintiffs cite one case in which it was held that an insulation supplier and installer could sue an insulation manufacturer and its distributor for economic injury under § 2072, Griswold Insulation Co. v. Lula Cotton Processing Co., 540 F. Supp. 1334 (M.D.Tenn.1982). In that case the court relied upon 15 U.S.C. § 2082, a provision added to the statute six years after the adoption of § 2072. Section 2082 is directed exclusively to cellulose insulation, and has no apparent connection with the private remedy created by § 2072.
The Griswold case is not persuasive on the critical issue what was Congress' intention in enacting § 2072. The legislative history provides no basis for concluding that Congress intended that § 2072 would provide a federal right of action for wholesale distributors against manufacturers, or for purely economic injury. Compare 15 U.S.C. § 2073 (1982) (allowing "any interested person" to seek injunctive relief to enforce product safety rule). On the contrary, the floor debates show that Congress was aware that § 2072 would burden the federal courts, but nevertheless wished to create a federal remedy only for injured consumers.
Since plaintiffs are not injured consumers, they do not have a right to sue under § 2072. In view of that conclusion, I do not reach defendant's contention about the significance of title to the toys or the question of whether defendant, as distinguished from Richard Toy Company or Song Won, can be said to have "violated" a rule of the CPSC.
Defendant's motion for summary judgment on Count Three of the complaint is granted.
CONCLUSION
For the reasons discussed above, defendant's motion for summary judgment is granted in part and denied in part. Settle order on notice by February 3, 1989.
SO ORDERED.
NOTES
[1] Cf. Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 317 (2d Cir.1983), cert. denied, 466 U.S. 963, 104 S. Ct. 2181, 80 L. Ed. 2d 562 (1984) (in absence of proof to contrary, New York court will assume that another state's common law is the same as its own.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1978249/ | 705 F. Supp. 491 (1988)
BROOKTREE CORPORATION, Plaintiff,
v.
ADVANCED MICRO DEVICES, INC., Defendant.
Civ. No. 88-1750-E (CM).
United States District Court, S.D. California.
December 13, 1988.
*492 John Land, Spensley, Horn, Jubas & Lubitz, San Diego, Cal., Ellsworth Roston, Roston & Schwartz, Los Angeles, Cal., for plaintiff.
William L. Anthony, Jr., Robert C. Colwell, Gary T. Aka, Robert Barr, Townsend & Townsend, Palo Alto, Cal., Joseph A. Sawyer, Jr., Advanced Micro Devices, Inc., Sunnyvale, Cal., Christopher J. Healy, Philip David Kopp, Luce, Forward, Hamilton & Scripps, San Diego, Cal., for defendant.
MEMORANDUM DECISION
ENRIGHT, District Judge.
INTRODUCTION
On November 14, 1988, plaintiff Brooktree Corporation("Brooktree") filed an ex parte application for a temporary restraining order and an order to show cause why an injunction should not issue. The hearing was held at 3:00 p.m. on November 15, *493 1988; counsel for both plaintiff and defendant appeared. This court denied plaintiff's motion and set a hearing date of December 12, 1988 for plaintiff's motion for preliminary injunction.
FACTUAL BACKGROUND
Brooktree is a California corporation in the business of designing, manufacturing, and selling semiconductor chip products used in computer graphic displays.
Defendant Advanced Micro Devices, Inc. ("AMD") is a competitor in the same business. It is one of the five largest manufacturers of chip products in the United States, with sales almost 30 times that of Brooktree.
Brooktree alleges that between 1981 and 1986 it invested approximately $3.8 million in developing integrated circuit chips that convert digital graphics image information to analog information at high frequencies for display on very high resolution computer video screens. It further claims that its chip has captured this niche market previously dominated by AMD.
Brooktree alleges that AMD has introduced pirated chips at lower prices in an attempt to recapture its lost market. These pirated chips are allegedly copies of two of Brooktree's chips.
The two Brooktree chips that are allegedly being copied represent 40% of Brooktree's sales. Brooktree alleges that AMD's unlawful conduct has caused irreparable injury, including damages of over $2,753,000 in the last six months, lost sales, and lost ability to expand or go public due to lost profits. It further alleges that its total $30 million investment since 1981 is in jeopardy as the firm has only recently reached profitability and thus does not have the strength to weather the loss of sales due to AMD's conduct. Finally, Brooktree alleges that AMD's pirating is damaging Brooktree's other products as Brooktree is being forced to cut the cost of all its chips in order to keep its cost structure in line.
STANDARD FOR EQUITABLE RELIEF
As set out by the Ninth Circuit in Los Angeles Memorial Coliseum Commission v. National Football League, 634 F.2d 1197, 1200 (9th Cir.1980), the four traditional criteria for granting equitable relief are:
1. a strong likelihood of success on the merits;
2. the possibility of irreparable injury to the plaintiff if the preliminary relief is not granted;
3. a balance of hardships favoring the plaintiff; and
4. (in certain cases) advancement of the public interest.
These criteria have been fashioned into two alternative tests, so that now a party may meet its burden by demonstrating either:
1. a combination of probable success on the merits and the possibility of irreparable injury; or
2. that serious questions are raised and that the balance of hardships tips sharply in the plaintiff's favor.
Id. at 1201. Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935, 937 (9th Cir. 1987). International Molders' and Allied Workers' Local Union No. 164 v. Nelson, 799 F.2d 547, 550 (9th Cir.1986). In the Ninth Circuit "[t]hese two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Arcamuzi, 819 F.2d at 937, citing Oakland Tribune, Inc. v. Chronicle Publishing Co., 762 F.2d 1374, 1376 (9th Cir.1985). See also San Diego Committee Against Registration and the Draft (CARD) v. Governing Board of Grossmont Union High School District, 790 F.2d 1471, 1473 n. 3 (9th Cir.1986); DeMasters v. State of Montana, 656 F. Supp. 21, 23 (D.Mont.1986).
Finally, the decision whether to grant or deny temporary injunctive relief is committed to the sound discretion of the district court. Oakland Tribune, Inc. v. Chronicle Publishing Co., Inc., 762 F.2d 1374, 1376 (9th Cir.1985); DeMasters, supra.
I.
MASK WORK ACT
This case was brought under the Mask Work Act, 17 U.S.C. §§ 901-914. Because *494 both copyright and patent protection were inadequate, the Mask Work Act was passed in an effort to protect the original layout of a semiconductor chip from piracy. (S.Rep. 98-425, p. 6-7). However, the Mask Work Act is not sui generis legislation; it is based upon concepts derived from copyright laws. (130 Cong. Rec. § 12924). A "mask work" is defined in the Mask Work Act as follows:
(2) a "mask work" is a series of related images, however fixed or encoded
(A) having or representing the predetermined, three-dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of a semiconductor chip product; and (B) in which series the relation of the images to one another is that each image has the pattern of the surface of one form of the semiconductor chip product;
17 U.S.C. § 901(a)(2).
The Mask Work Act protects against the literal copying of a mask work and against the misappropriation of a material portion of a mask work.
Mask works sometimes contain substantial areas of (so-called "cells") whose layouts involve creativity and are commercially valuable. In appropriate fact settings, the misappropriation of such a cell assuming it meets the original standards of this chapter could be the basis for an infringement action under this chapter.
(H.Rep. 98-781, pp. 26-27).
However, the Mask Work Act does not prohibit independent development of a mask work; an identical but original second mask work is not an infringement of the first. 17 U.S.C. § 905(1). Also, the Mask Work Act only protects the "series of related images" encoded in the chip. 17 U.S.C. § 901(a)(2). It does not "extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work." 17 U.S.C. § 902(c).
Finally, the Mask Work Act specifically allows for reverse engineering. Section 906 provides that "it is not an infringement of the exclusive rights of the owner of a mask work for
(1) a person to reproduce the mask work solely for the purpose of teaching, analyzing, or evaluating the concepts or techniques embodied in the mask work or the circuitry, logic flow, or organization of components used in the mask work; or
(2) a person who performs the analysis or evaluation described in paragraph (1) to incorporate the results of such conduct in an original mask work which is made to be distributed.
17 U.S.C. § 906(a).
DISCUSSION
In the instant action, Brooktree alleges that AMD misappropriated two mask works from its Bt451 and Bt458 chips. The mask works are: (1) the location and configuration of the active areas in the Static Ram cells and (2) the location and path of the polysilicon lines in the Static Ram cells. (See Exhibit 5 for an example of the active area of a section of a Static Ram Cell array and Exhibit 7 for an example of the polysilicon lines).
Brooktree alleges that these two masks allow its Bt451 chip to: (1) utilize a low power technology "CMOS" which operates at very high frequencies without the need of a special supply of negative voltage; (2) change the colors in the color palette without disrupting the selection of particular colors from the palette for display on a video screen, and (3) simultaneously read information from, and write information to, the RAM without synchronizing the read and write operations while operating at very high frequencies.
Brooktree's allegations against AMD are twofold. First, Brooktree alleges that the mask works at issue in AMD's chips are substantially identical and/or substantially similar to those in Brooktree's own chips. Second, that this resemblance is not the result of extensive reverse engineering, but rather the result of simple copying.
*495 A. Identical/Similar
The parties agree that if the defendant can produce a paper trail establishing reverse engineering, the appropriate standard is substantially identical rather than substantially similar. The court finds that defendant has produced a sufficient paper trail to require the plaintiff to prove that the alleged pirated chip is substantially identical to the original chip.
AMD argues that while the layout of the mask works at issue may be similar, they are not substantially identical. AMD also argues that this type of layout is the result of functional requirements, or, in other words, that it is essentially the only way of laying out the Static Ram circuit.
In response, Brooktree offers exhibits of two alternative designs developed by two separate individuals with limited knowledge of Brooktree's own layout. (Compare Exhibits 5 and 6 with 67 and 74; Exhibits 7 and 8 with 69 and 75; and Exhibits 13 and 14 with 70 and 76). However, rather than prove that there are a wide variety of potential layouts, these two new layouts, at best, merely confuse the issue, and, at worst, confirm AMD's position that functionally there is little room for diversity.
The two new designs do not utilize the same donut and pyramid shapes that Brooktree refers to in describing its own layout, but they do have the same basic clusters of components as the original designs. Also, the two new layouts were admittedly developed in a matter of hours. It is possible that if these designs had undergone testing to determine whether they would perform in the desired manner, they would have been modified and eventually appear more similar to the original layouts.
William Plants, the designer of AMD's chips, states in his declaration that the shape of the various regions in his layout was dictated by the functions of the regions. He also states that although his layout is similar to Brooktree's, there are substantial differences between specific aspects of the active regions of the two layouts.
Finally, AMD argues that even if the layouts were identical, these two cells do not comprise enough of the chips in question to support an allegation of misappropriation of a mask work. They argue that although the cells are repeated many times in the chip, they compromise only approximately 27-35% of the chip area. Brooktree counters this argument by stating that the cells compromise approximately 80% of the transistors in the chip, and that the transistors are the heart and soul of the chip.
B. Reverse Engineering
AMD argues that Plants discovered his layout through reverse engineering, and that reverse engineering is specifically allowed under the Mask Work Act. AMD has presented evidence of a paper trail showing the various stages of Plants' discovery process. AMD maintains that it has invested an equal or greater amount of funds in developing its chips, and that the Mask Work Act was directed at minimal investment piracy rather than the type of long-term research and reverse engineering it performed.
Brooktree argues that what the paper trail actually establishes is that Plants was incapable of discovering the layout on his own. According to Brooktree, Plants had no experience in designing CMOS chips and spent over one year attempting to design a layout utilizing first six and then eight transistors as compared to Brooktree's layout which utilizes ten transistors. During this one-year period, plants studied Brooktree's Bt451 chip under a microscope and was unable to discover all ten of the transistors.
Brooktree alleges that Plants did not discover the ten transistors on his own but rather was shown a copy of Brooktree's ten transistor static RAM circuit by an employee of another competitor of Brooktree (Integrated Device Technology Corporation) which had supposedly copied Brooktree's Bt451 chip. After Plant was shown the ten transistor design, he allegedly went back to the microscope and studied the Bt451 chip to confirm the number of transistors and to determine their location and function in the design.
*496 Brooktree maintains that the fact that Plant was able to finish his work on the layout in less than three months after being shown the ten transistor design is significant. Accordingly, Brooktree argues that the only paper trail that is relevant is what was created after Plant was shown the ten transistor design. Because the paper trail for the last three months is minimal, Brooktree argues that AMD has failed to offer sufficient facts to establish that AMD discovered the layout of the mask work at issue through reverse engineering.
AMD responds by arguing that the entire paper trail must be reviewed, and that the paper trail shows that Plant gradually discovered the correct layout. Plant states in his declaration that he started with six transistors as that is the minimum number possible, and that designers always begin at the minimum and work up. He states that the amount of time he spent working on six and eight transistor layouts demonstrates that he did not simply copy the Bt451. Plant admits to analyzing the Bt451 chip through a microscope, but maintains that only stripping the chip down chemically layer by layer and photographing each layer is prohibited by the Mask Work Act.
Based upon the above discussion, the court finds that Brooktree has failed to make a showing of a strong likelihood of success on the merits. Therefore, the degree of irreparable harm that Brooktree must establish is high. In the Ninth Circuit, the formulations applied to determine the appropriateness of a preliminary injunction "represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases." Arcamuzi, 819 F.2d at 937, citing Oakland Tribune, Inc. v. Chronicle Publishing Co., 762 F.2d 1374, 1376 (9th Cir.1985).
II.
IRREPARABLE HARM
Brooktree alleges that it has been irreparably harmed through the loss of $2,753,000 over the past six months due to forced price cuts; the loss of customers in a highly concentrated market; and the loss of profits which has prevented Brooktree from expanding and going public.
AMD argues that the damages Brooktree has identified are monetary and can be compensated without equitable relief. AMD points to the fact that Brooktree admits in its moving papers that it has not suffered any serious loss in sales or customers, and that Brooktree also admits that even if the court were to enjoin AMD, Brooktree would be unable to raise the prices for its chips. The grant of an injunction, therefore, would merely have the effect of guaranteeing that Brooktree would not have to compete with AMD for new sales. An injunction would not compensate Brooktree for the "irreparable harm" Brooktree alleges it has already suffered.
Brooktree also argues that, through its size, AMD will be able to weather a price war, and that the result of the current pricing competition will irreparably harm Brooktree. The court, however, finds this argument too tenuous. Brooktree has conceded that it has not yet suffered any serious loss in sales. The denial of an injunction will undoubtedly put an additional strain on Brooktree's profitability. However, the computer industry is a volatile industry with fortunes made and lost depending upon the whim of progress. Brooktree has failed to establish that monetary damages are insufficient in light of the considerable burden it bears in requesting the extraordinary relief of an injunction.
Finally, Brooktree argues that because it has shown that AMD infringed the mask work rights in the Bt451, a presumption of irreparable injury is created. Brooktree advances this proposition by analogy through copyright law in which infringement creates a presumption of irreparable injury. See Apple Computer, Inc. v. Formula Intern., Inc., 725 F.2d 521, 525 (9th Cir.1984). Although Congress modeled the Mask Work Act after copyright law, it is unclear whether Congress intended such a presumption to extend to infringements of mask works. However, this court does not *497 need to reach the issue of whether the presumption exists as it has already found that Brooktree did not establish that its mask work rights were infringed.
III.
BALANCE OF HARDSHIPS
Brooktree also argues that equitable relief should be granted based upon the second formulation of the test for preliminary injunction: "that serious questions are raised and that the balance of hardships tips sharply in the plaintiff's favor." Los Angeles Memorial Coliseum Commission, 634 F.2d at 1201. Brooktree's reasoning is based upon the following factors: (1) sales of the types of chips in question are a much greater percentage of Brooktree's total sales than of AMD's total sales; (2) loss of these sales would have a much greater effect on Brooktree than AMD; (3) Brooktree has spent more time and resources in developing its chips; and (4) Brooktree is only just becoming profitable.
Although serious questions as to the appropriate resolution of the substantive issues in the case have been raised, Brooktree has not shown that the balance of hardships tips sharply in its favor. AMD is a larger company than Brooktree, but that is not a sufficient reason for enjoining it. AMD would not go out of business if it is enjoined, but Brooktree has failed to establish any concrete evidence of the probability that it will go out of business if relief is not granted. Finally, AMD has invested an equivalent amount into developing its chips as has Brooktree, and the fact that Brooktree is only now becoming profitable is nonpersuasive.
IV.
CONCLUSION
Upon due consideration of the parties' memoranda and exhibits, the arguments advanced at hearing, and for the reasons set forth above, the court hereby denies plaintiff's motion for preliminary injunction. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3292768/ | Defendant pleaded guilty to the crime of involuntary manslaughter. Although defendant was granted leave to file an application for probation, the trial court refused to consider it and denied probation to defendant on the sole ground that under the provisions of section 1203 of the Penal Code the trial court had no power or authority to grant probation to "one who in the perpetration of the crime inflicted great bodily injury." The appeal is from the judgment; and the ultimate point raised by appellant is that the alleged error of the trial court in refusing to consider the application of defendant for probation on the ground specified was prejudicial to his substantial rights in the premises. (People v. Jones, 87 Cal.App. 482
[262 P. 361].)
That part of section 1203 of the Penal Code, upon which reliance was placed by the trial court and which is here urged as authority to sustain its refusal to consider the application of defendant for probation, is as follows: "Probation shall not be granted to any defendant who at the time of the perpetration of the crime or at the time of his arrest was armed with a deadly weapon (unless at the time he had a lawful right to carry the same), nor to one who used or attempted to use a deadly weapon in connection with the perpetration of the crime, nor to one who inthe perpetration of the crime inflicted great bodily injury ortorture, . . ." *Page 230
So far as is here concerned, the words of the statute which require construction are "perpetration" and "inflicted." It is apparent that if such words are to be taken in the sense that the first signifies the simple commission of an act which by the statute constitutes a crime, and that the second merely means that by reason of such act "great bodily injury" resulted, no criminal act (either malum in se or malum prohibitum, however insignificant the latter, or however lacking in either actual or presumed criminal intent on the part of the guilty person), which, even as against the express or implied will, or the manifest contrary conduct, of such person at the time of the commission thereof, results in "great bodily injury" to any person whomsoever — may be the subject upon which that portion of the probation law here under consideration, as expressed in section 1203 of the Penal Code, may lawfully operate.
A familiar rule of construction of statutes is that unless it appear that words therein have been used in a particular sense, they should be given an interpretation which will accord with the usual, natural, or ordinary meaning attributed to them. Moreover, section 4 of the Penal Code contains the provision that all the statutory provisions of the Penal Code "are to be construed according to the fair import of their terms, with a view to effect its objects and to promote justice." But aside from what may be the generally accepted significance of the particular words in question, it may be noted that the dictionary definition of the word "perpetrate" includes the thought that it is used "commonly in a bad sense; as to perpetrate a crime" (Webster's New International Dictionary); or, as stated in Funk and Wagnall's New Standard Dictionary, the word is "now used only ina bad sense; to be guilty of; commit as a wicked deed"; from which it would appear that in the "perpetration of the crime," as designated by section 1203 of the Penal Code, the guilty person necessarily must have acted consciously or with a guilty intent to "commit (the act) as a wicked deed," or with gross carelessness or recklessness. Such also is the common or ordinary acceptation of the word "perpetrate." No one would think of using it in connection with the doing of a kindly, a gracious, or a just act. A man may perpetrate a fraud upon another; but it would seem incongruous that in a suit in equity to redress the *Page 231
wrong a judge would "perpetrate" a just judgment. If on a crowded street or sidewalk two boys should be tossing a baseball one to the other, or engaged in what is commonly known as "playing catch," and if while so engaged one of the boys should make a "bad throw" and the other fail to catch the ball, with the result that the ball should come in contact with the head of an infant in the arms of its mother with such force as to kill the child, although by reason of the failure on the part of the boys "to use due care and circumspection" (sec. 192, Pen. Code), they might be charged with the offense of manslaughter — would it be a correct use of English to speak of the incident as the"perpetration" of a crime; or to say that "great bodily injury had been inflicted"? Illustrations might be multiplied by which it might be shown that from pure accident or from a lack of "due care and circumspection" the crime of manslaughter might be "perpetrated," by reason of which "great bodily injury" might be "inflicted"; but in the "perpetration" of which no actual intent would be present to commit either manslaughter or any other crime.
Although possibly by neither the popular nor the dictionary definition of the word "inflicted" does it necessarily follow that the meaning to be conveyed is that an actual intent must be in operation to impose a blow of any sort, or to cause distress or suffering, nevertheless in Webster's New International Dictionary one of the meanings ascribed to the word is "to impose, as a penalty or punishment." On consideration of the history of the probation law in question (sec. 1203, Pen. Code), it will be found that the original probationary benefits ordinarily available to one who committed a crime were denied in cases only of "murder, robbery, burglary, or rape by force and violence"; and that the language by which the denial of the right of probation in such cases was indicated was strikingly similar to that employed in the present statute — the language in the original statute refusing probation being "where, in theperpetration of any such crimes, great bodily injury or torture is inflicted." It is obvious that in committing the crime of murder, as distinguished from other crimes where homicide results, "great bodily injury . . . is inflicted" "with malice
(or intent) aforethought." (Section 187, Pen. Code.) It is common knowledge that in the commission of either robbery, *Page 232
burglary, or rape, for a failure on the part of the victim of such crime to comply instantly with the demands of the perpetrator thereof, "great bodily injury" is likely to be administered as a penalty or punishment; which act manifestly is wilful and intentional on the part of the guilty person and readily suggests the reason for the denial of probation in such a case. The infliction of the "penalty or punishment" upon the victim by the perpetrator of either of such crimes cannot be attributed to chance, accident, or misfortune, but legally must be imputed to deliberate design or intent. So far as relates to the question here under consideration, as between the statute as originally enacted and as it now appears, in substance, literally the only difference is that formerly it applied to certainspecified crimes of violence only, whereas in the present statute its provisions apply to "any" crime; from which fact the inference may be deduced that in the enactment of the new statute the identical considerations were present in the minds of the legislators which were so apparent and outstanding in the original statute there appearing as a basic reason for denial to the violator of the law of even the possible benefits of the statutory provisions relating to probation. The purpose of that portion of the probation law as it now exists and here under consideration is obvious; that is, to preclude or prevent the exercise of probationary discretion in cases involving wilful
and intentional wrong, and to expand the former statute so as to now include therein offenses which, in the wicked "perpetration" thereof "great bodily injury" is intentionally "inflicted." A consultation of the index of felonies appearing in the Penal Code discloses the fact that, in addition to those specified in the statute as originally enacted, to wit, "murder, robbery, burglary, or rape by force and violence," there are at least thirty other crimes in the "perpetration" of which "great bodily injury" is likely to be "inflicted." Moreover, in the "perpetration" of each of such additional crimes, malice or an implied or specific intent to commit it is necessarily present. The mention of some of them will illustrate the point: Abduction; arson; malicious burning of property; assault with a deadly weapon; assault with caustic chemicals; enticing away child; administering stupefying drugs; false imprisonment; extortion; kidnaping; mayhem; administering poison with intent to *Page 233
kill; engaging in or aiding prizefights. On the other hand, in the "perpetration" of crimes amounting to felonies arising from the operation of motor vehicles and in which "great bodily injury" is likely to be "inflicted" the actual resulting injury is, almost, if not quite, universally of an accidental nature, and without any direct intent that it shall happen. Section 141 of the California Vehicle Act (Stats. 1923, p. 517), provides in substance that:
"The driver of any vehicle which strikes any person or collides with another vehicle shall immediately stop and give his name and address and the names and addresses of all passengers not exceeding five in his vehicle, also the registration number of his vehicle, to the person struck or the occupants of the vehicle collided with, and shall also render to such persons all necessary assistance, including the carrying of such persons to a physician or surgeon for medical or surgical treatment, if such treatment is required, or if such carrying is requested by the person struck or any occupant of such vehicle collided with. Any person violating any of the provisions of this section is punishable by imprisonment in the state prison not exceeding five years or in the county jail not exceeding one year, . . ."
It is undeniable that daily within this state dozens of automobile accidents occur in which "great bodily injury" is "inflicted." Can it be true that in the enactment of the statute in question it was the intention of the legislature to include within its purview all misdemeanors or felonies which are thus "perpetrated"? We think not.
In the case of The Queen v. Clarence, 22 Q.B. Div. 23, it was held (by illustration) that if a man by a grasp of the hand should infect another with smallpox it would be "an unnatural use of language to say that a man by such an act `inflicted' smallpox upon the other." It was also held in the same case that knowingly suffering from a venereal disease and yet having connection with and imparting the disease to one of the opposite sex who is ignorant that the embracer is so suffering is not to "inflict grievous bodily harm," as coming within the purview of the statute prohibiting the same. The point in the case, as expressed in one of the opinions therein, is that in the infliction of anything by one person upon another the element of intent must be present. And so in Jefferson Standard L.I. Co. v. Myers
(Tex. 1926), *Page 234
284 S.W. 216, where the authorities are cited, in principle it is ruled that an insane person is incapable of inflicting an injury; that the word involves an exercise of the will;something done voluntarily; and necessarily implies intention.
To the same effect is Accident Ins. Co. v. Crandal,120 U.S. 527 [30 L.Ed. 740, 7 Sup. Ct. Rep. 685, see, also, Rose's U.S. Notes], and Kortendick v. Town of Waterford (1910),142 Wis. 413 [125 N.W. 945], where, among other things, the court said: "The criticism to this language is that the word `infliction' denotes and implies actual wrong."
For the purpose of considering the eligibility of the defendant in the instant case to probation, it will be remembered that he pleaded guilty to the crime of involuntary manslaughter. By section 192 of the Penal Code manslaughter is defined as "the unlawful killing of a human being, without malice, . . . without due caution and circumspection"; and section 188 of the Penal Code declares that "malice may be express or implied. It is express when there is manifested a deliberate intention unlawfully to take away the life of a fellow-creature. It is implied, when no considerable provocation appears, or when the circumstances attending the killing show an abandoned and malignant heart."
In People v. Kelley, 24 Cal.App. 54 [140 P. 302], among other things, it is said: "Involuntary manslaughter, as thephrase necessarily imports and as our code defines that crime, is the taking of life in certain unlawful ways without any intention of doing so." And the same ruling is inferable from each of the following cases: People v. Sidwell, 29 Cal.App. 12, 18, 19 [154 P. 290]; People v. Searle, 33 Cal.App. 228, 231 [164 P. 819]; People v. Pearne, 118 Cal. 154, 157 [50 P. 376]. [1] It may, therefore, be considered as established by judicial decision, as well as by statute, that in cases of involuntary manslaughter (especially where, as here, the crime was committed "without due care and circumspection") no intention to commit the act may be even imputed to the guilty person — from which, in the instant matter as presented to the trial court, it is manifest that the fact that in the commission (or "perpetration") by defendant of the crime of involuntary manslaughter, "great bodily injury" was suffered by the victim does not in and of itself warrant or admit of a legal or other presumption *Page 235
or conclusion that the killing was intentional or wilful. [2]
It follows that within the meaning of the statute in question one who in the perpetration of a crime inflicts great bodily injury must do so wilfully and intentionally (expressly or impliedly) before the substantial rights relating to probation, to which, under the terms of the statute, he is entitled, will be denied him.
The judgment is reversed, with directions to the trial court to re-arraign defendant for judgment, and thereupon and in accordance with law to hear and determine on its merits the application of defendant for probation, and thereafter to proceed in the premises as it may be advised.
Conrey, P.J., and York, J., concurred.
A petition for a rehearing of this cause was denied by the District Court of Appeal on March 11, 1929, and a petition by respondent to have the cause heard in the Supreme Court, after judgment in the District Court of Appeal, was denied by the Supreme Court on March 28, 1929.
All the Justices present concurred. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1977911/ | 705 F.Supp. 952 (1989)
Armando BUITRAGO, Petitioner,
v.
Charles J. SCULLY, Warden, Greenhaven Correctional Facility, and Robert Abrams, Attorney General of the State of New York, Respondents.
No. 88 Civ. 0144(MEL).
United States District Court, S.D. New York.
January 31, 1989.
*953 Armando Buitrago, Stormville, N.Y., pro se.
Paul T. Gentile, Dist. Atty., Bronx County, Bronx, N.Y., for respondents; Peter D. Coddington, Lynn M. Talutis, Asst. Dist. Attys., of counsel.
LASKER, District Judge.
Armando Buitrago petitions this court for a writ of habeas corpus pursuant to 28 U.S.C. § 2254 and moves for appointment of counsel. Buitrago was convicted of two counts of first degree robbery after a jury trial in the Supreme Court of New York, Bronx County. He was sentenced as a second violent felony offender to two concurrent 10-20 year terms of imprisonment. The Appellate Division affirmed the conviction without opinion. People v. Buitrago, 131 A.D.2d 981, 515 N.Y.S.2d 941 (1987). The New York State Court of Appeals denied Buitrago's application for leave to appeal. People v. Buitrago, 70 N.Y.2d 710, 519 N.Y.S.2d 1044, 513 N.E.2d 1312 (1987). Counsel was appointed both at the trial and appellate levels.
Buitrago argues that his constitutional rights were violated because 1) he did not receive effective assistance of trial counsel, 2) he did not receive effective assistance of appellate counsel, 3) the prosecution failed to correct the knowing use of false evidence, and 4) the prosecution improperly bolstered identification testimony of the police officers.[1]
*954 I. PETITIONER'S TRIAL COUNSEL WAS EFFECTIVE
To prevail on a claim of ineffective assistance of counsel, Buitrago must satisfy the test set out in Strickland v. Washington, 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed. 2d 674 (1984). He must show first, that his lawyer's performance was deficient, id. at 687, 104 S.Ct. at 2064, that is, that it "fell below an objective standard of reasonableness[,]" id. at 688, 104 S.Ct. at 2064; and second, that his lawyer's deficient performance prejudiced the action's outcome, id. at 687, 104 S.Ct. at 2064, that is, "that there is a reasonable possibility that, but for the counsel's unprofessional errors, the result of the proceeding would have been different[,]" id. at 694, 104 S.Ct. at 2068.
Buitrago claims that his trial counsel was ineffective because: 1) he failed to move to dismiss the indictment on speedy trial grounds, 2) he failed to request an alibi charge, 3) he failed to call certain witnesses for the defense, 4) he failed to request a missing witness charge, 5) he failed to take exception to the court's failure to give the jury missing witness and alibi charges, and 6) he failed to object to the introduction into evidence of a gold chain. These arguments are addressed in turn.
First, Buitrago asserts that his counsel should have moved to dismiss the indictment on speedy trial grounds. Buitrago was arrested in August, 1984[2] and brought to trial on November 19, 1985, almost fifteen months after his arrest. Under New York law, a motion to dismiss must be granted if the State is not ready for trial within "six months of the commencement of a criminal action wherein a defendant is accused of one or more offenses, at least one of which is a felony." N.Y.Crim.Proc. § 30.30(1)(a) (McKinney 1981). A criminal action is commenced as soon as an "accusatory instrument" is filed in a criminal court, N.Y.Crim.Proc. § 1.20(17) (McKinney 1981), which includes the filing of a felony complaint or indictment. Id. at § 1.20(1).
In this case the filing of the indictment commenced the criminal action, and at that point, the State was obligated to be ready for trial within six months. The State must declare its readiness for trial on the record within the time allowed; prejudice to the defendant is irrelevant as is the defendant's readiness to proceed. People v. Hamilton, 46 N.Y.2d 932, 415 N.Y.S.2d 208, 209, 388 N.E.2d 345, 346 (1979). Records before this court[3] indicate that the State declared its readiness for trial on January 18, 1985, well within the six month limit. Accordingly, there was no basis for Buitrago's counsel to move to dismiss the indictment on speedy trial grounds.
Buitrago next alleges that his trial lawyer failed to request an alibi charge. The claim is without merit. The sole defense witness, Richard Rivera, did not testify that he was with or knew where petitioner was on the day of the robbery. Since no alibi was established, there was no legal basis for Buitrago's attorney to request an alibi charge. See United States v. Caputo, 808 F.2d 963, 966-67 (2d Cir. 1987) (trial counsel not ineffective for not making a motion which he had no legal basis to make). Compare with People v. La Chance, 39 N.Y.2d 892, 386 N.Y.S.2d 395, 352 N.E.2d 582 (1976) (court's failure to instruct jury with alibi charge after defendant presented two alibi witnesses is reversible error); People v. Bacon, 84 A.D. 2d 680, 446 N.Y.S.2d 634, 635 (1981) (where defendant presented an alibi defense it was reversible error for the court to refuse to instruct the jury with an alibi charge).
Third, Buitrago claims that his trial attorney failed to request a missing witness charge. Buitrago alleges that the State knew the whereabouts of a thirteen-year old boy who entered the store during the robbery, but whom the State did not call to testify. Be that as it may, the record establishes that Buitrago's counsel did make a request for a missing witness charge, *955 which was denied. (Trial Record ("TR") 362-67). Furthermore, the attorney's objection to the court's ruling is expressly noted in the record. TR 366-67. Petitioner's missing witness claim is therefore without merit.
Buitrago next charges that his trial attorney was ineffective because counsel failed to call Buitrago's mother and father to testify that he was at home with them at the time of the robbery. However, Buitrago has failed to provide any support, either on the record or in his petition, to indicate that his parents would have testified as he claims.
Fifth, Buitrago alleges that his counsel was ineffective because he did not object to the court's failure to instruct the jury with missing witness and alibi charges. As noted above, defense counsel objected to the denial of his request for a missing witness charge. TR 366-67. Because counsel's failure to request an alibi charge was reasonable, his failure to object was similarly reasonable. Therefore, this claim is without merit.
Finally, Buitrago claims that it was a serious error, rising to the level of ineffective assistance of counsel, for his attorney not to object to the introduction into evidence of a gold chain which was recovered from Buitrago at the time of his arrest, TR 211-13, and alleged to have been taken from the robbery victim, TR 247. Buitrago maintains that the chain should not have been introduced into evidence because it, unlike the one taken during the robbery, did not have a clasp. However, the record indicates that trial counsel excepted to admission of the chain into evidence. TR 239-40. Moreover, the prosecution witness testified that the chain that was ripped from his neck, unlike the chain found on the defendant at the time of his arrest, had a clasp, but that the chains were otherwise identical. TR 252-54.
Since each of his six claims of ineffective assistance of trial counsel has failed to show that his counsel's performance was deficient, Buitrago has failed to meet the requirement of the first prong of the Strickland test; therefore his ineffective assistance of trial counsel claim must fail, and there is no need to address the issue of prejudice.
II. PETITIONER'S APPELLATE COUNSEL WAS EFFECTIVE
Buitrago contends that his appellate counsel was ineffective because he failed to raise trial counsel's ineffectiveness on appeal and he did not seek Buitrago's opinion on the issues to be raised on appeal.
The same criteria govern determinations of the effectiveness of appellate counsel as govern the determination of effectiveness of trial counsel. Gulliver v. Dalsheim, 739 F.2d 104, 107 (2d Cir.1984).
First, Buitrago has failed to produce any meritorious claim to establish that his trial counsel was ineffective; therefore, it was reasonable for his appellate counsel not to raise this issue on appeal. Buitrago's citation to Barnes v. Jones, 665 F.2d 427, 433 (2d Cir.1981), for support of the proposition that appointed counsel must raise and advocate all "colorable" issues that his client urges him to, is not meaningful because Buitrago has not established that he had brought any "colorable" issues to his counsel's attention. Moreover, Barnes was reversed by the Supreme Court, which noted that it is counsel's obligation to choose carefully the issues to be argued on appeal and that "by promulgating a per se rule that the client, not the professional advocate, must be allowed to decide what issues are to be pressed, the Court of Appeals seriously undermines the ability of counsel to present the client's case in accord with counsel's professional evaluation." Jones v. Barnes, 463 U.S. 745, 751, 103 S.Ct. 3308, 3313, 77 L.Ed.2d 987 (1983).
Buitrago next claims that he was denied effective assistance of counsel because his appellate lawyer never contacted him for his opinion as to the issues he felt were meritorious. A defense attorney's failure to consult with his client is not a per se violation of a defendant's Sixth Amendment rights. Healey v. People of New *956 York, 453 F.Supp. 14, 16 (S.D.N.Y.1978).[4] Rather, the question is whether defense counsel's performance fell below an objective standard of reasonableness. Strickland, 466 U.S. at 688, 104 S.Ct. at 2064. Buitrago has failed to provide this court with any evidence indicating that his appellate counsel's performance was anything less than reasonable.
Even if Buitrago had established that his counsel's failure to contact him constituted a "deficient performance," he still fails to satisfy the second prong of the Strickland test because he has not established that the alleged errors of his trial counsel, which he would have communicated to his appellate counsel, would have "undermine[d] confidence in the outcome" of the case. Strickland, 466 U.S. at 694, 104 S.Ct. at 2068.
III. PROSECUTOR DID NOT KNOWINGLY USE FALSE EVIDENCE
Buitrago claims that the prosecution failed to correct its knowing use of false evidence. In particular, Buitrago asserts that one of the prosecution witnesses, Detective Lance Edwards, the arresting officer, lied when he testified that he did not interview Jorge, a thirteen year old boy who was in the store at the time of the robbery. Buitrago claims that the prosecutor knew that Detective Edwards was lying yet failed to correct his perjury. Detective Edwards' cross-examination testimony in question is as follows:
Q: Did you ever go to the home or otherwisedid you have occasion to interview a witness named Jorge in this case?
A: No, sir.
TR 228. While Edwards denied interviewing Jorge, the complainant's testimony provided support for a finding to the contrary. On cross-examination, one of the victims, Noel Velazquez, testified as follows:
Q: Do you know whether or not Detective Edwards interviewed Jorge in connection with this robbery?
THE COURT: If you know.
A: Yes, he spoke to him.
Q: Is that because you gave him Jorge's address?
A: No. We seen Jorge one day when Officer Edwards was dropping us off from the store. We called him over. We told him Officer Edwards wanted to speak with him.
Q: And Officer Edwards spoke with him?
A: Yes.
Q: In your presence?
A: No.
Q: But you saw them in conversation?
A: Yes.
TR 272-73. The other victim, Francisco Velazquez, testified on cross-examination as follows:
Q: And when you saw [Jorge] after the incident, did you call the police? Did you try to see whether the police could interview him?
A: I believe they did went over and spoke to him.
Q: What?
A: I believe that they did go over and speak with him.
Q: Go over where?
A: To his home.
TR 152-53.
A state conviction obtained by the knowing use of perjured testimony is unconstitutional. Mooney v. Holohan, 294 U.S. 103, 112, 55 S.Ct. 340, 341-42, 79 L.Ed. 791 (1935). "The same result obtains when the State, although not soliciting false evidence, allows it to go uncorrected when it appears." Napue v. Illinois, 360 U.S. 264, 269-70, 79 S.Ct. 1173, 1177, 3 L.Ed.2d 1217 (1959) (citations omitted). This rule applies even though the false testimony only goes to the credibility of the witness. Id. A conviction must be reversed if "there is any reasonable likelihood that the false testimony could have affected the judgment of the jury." United States v. Agurs, 427 U.S. 97, 103, 96 S.Ct. 2392, 2397, 49 L.Ed.2d 342 (1976) (footnote omitted). Furthermore, a defendant's due process rights can be violated *957 when a prosecutor was not, but should have been, aware that her or his witness was lying. See Giglio v. United States, 405 U.S. 150, 92 S.Ct. 763, 31 L.Ed.2d 104 (1972) (prosecutor responsible to know of promise of immunity given to a witness by another prosecutor in the same office).
While Buitrago correctly cites various holdings relating to a prosecutor's knowing use of false testimony, he incorrectly applies them to the facts of this case. Had Jorge come forward indicating that he was interviewed by Edwards and provided Edwards with information which was exculpatory to the defendant, or had Edwards recanted his trial testimony, then there might be cause to hold an evidentiary hearing to ascertain the truth of the facts asserted. But no evidence has surfaced since the trial to indicate that Edwards was lying. Even assuming that Edwards' testimony was perjured, there is no indication or evidence of record that the prosecutor knew or had reason to know that it was false.
The Court of Appeals of this circuit recently held that, even absent a showing of prosecutorial misconduct, a conviction obtained in part by perjured testimony may violate due process. Sanders v. Sullivan, 863 F.2d 218, 224 (2d Cir.1988) (holding that conviction based on testimony later recanted may be of extraordinary nature to find due process violation and remanding for hearing as to credibility of recantation). Yet Buitrago's claim does not qualify even under the Sanders' rule because he has failed to establish that Detective Edwards' testimony was in fact perjured. While the witnesses' testimony did conflict, as is regularly true in litigated cases, that alone is not a basis to conclude that Edwards' testimony was perjured; a mere conflict in evidence cannot be a basis for habeas relief.
As was true in United States v. Miranne, 688 F.2d 980, 989 (5th Cir.1982), cert. denied, 459 U.S. 1109, 103 S.Ct. 736, 74 L.Ed.2d 959 (1983), there is no hard evidence of perjury.
The only evidence of perjury was in the conflict between the testimony of [two witnesses]. At most, this represented a contradiction in the testimony of two witnesses. Generally, the credibility of witnesses and the weight to be given to their testimony are questions within the province of the jury.
(citations omitted). See also United States v. Hemmer, 729 F.2d 10, 17 (1st Cir.) (existence of inconsistencies between grand jury and trial testimony "does not warrant the inference that the government knowingly introduced perjurious testimony[;]" jury was best suited to address the inconsistencies and sort "falsehoods from facts"), cert. denied, 467 U.S. 1218, 104 S.Ct. 2666, 81 L.Ed.2d 371 (1984); United States v. Holladay, 566 F.2d 1018, 1019 (5th Cir.) ("Presentation of a witness who ... contradicts his prior testimony is not to be confused with eliciting perjury. It was for the jury to decide whether or not to credit the witness"), cert. denied, 439 U.S. 831, 99 S.Ct. 108, 58 L.Ed.2d 125 (1978).
Moreover, the Sanders court held that, absent prosecutorial misconduct, "the perjured testimony which will trigger a due process violation must be of an extraordinary nature. It must leave the court with a firm belief that but for the perjured testimony, the defendant would most likely not have been convicted." Sanders, 863 F.2d at 226 (footnote omitted). Edwards' testimony related only to the events surrounding Buitrago's arrest. It is clear that the State's case was built primarily on the victims' identification of Buitrago, independently, at two separate lineups. Since Edwards' testimony was not "of an extraordinary nature," Buitrago has failed to meet the standard announced in Sanders.
IV. APPOINTMENT OF COUNSEL
In deciding whether to appoint counsel for indigent civil litigants, the district court should first consider the merits of the indigent's claim. Hodge v. Police Officers, 802 F.2d 58, 60 (2d Cir.1986). Even where the claim is not frivolous, counsel need not be appointed when the chances of success are "highly dubious." Miller v. Pleasure, 296 F.2d 283, 285 (2d Cir.1961), cert. denied, 370 U.S. 964, 82 *958 S.Ct. 1592, 8 L.Ed.2d 830 (1962). If an indigent's claim satisfies the threshold requirement, the court should then consider
the indigent's ability to investigate the crucial facts, whether conflicting evidence implicating the need for cross-examination will be the major proof presented to the fact finder, the indigent's ability to present the case, the complexity of the legal issues and any special reason in that case why appointment of counsel would be more likely to lead to a just determination.
Hodge, 802 F.2d at 61-62.
Since Buitrago's petition lacks merit, he has failed to meet the threshold requirement for appointment of counsel. Even if counsel were appointed, Buitrago's chances of success would at best be "highly dubious."
For the reasons stated above, the petition must be denied. A certificate of probable cause is denied.
It is so ordered.
NOTES
[1] Upon a review of the record, this court determined that the fourth claimthat the police officers' testimony was improperly bolstered had not been exhausted. Although the claim had been raised below, Buitrago's argument did not allege or call to mind a violation of his constitutional rights. In letters of June 2, 1988 and July 11, 1988, the court advised Buitrago that, unless he agreed to drop his unexhausted claim, his petition would be dismissed pursuant to Rose v. Lundy, 455 U.S. 509, 102 S.Ct. 1198, 71 L.Ed.2d 379 (1982). In a motion to amend his petition, Buitrago agreed to drop his unexhausted claim and have his remaining claims addressed on their merits; the motion was unopposed and is hereby granted.
[2] There is some dispute whether the date of Buitrago's arrest was August 24, 1984 or August 31, 1984. This difference, however, does not affect the resolution of this claim.
[3] Transcript of minutes for People v. Buitrago, for January 18, 1985, at 2.
[4] Although Healey dealt with the effectiveness of trial counsel, its premise also applies to evaluate effectiveness of appellate counsel. Cf. Gulliver, 739 F.2d at 107. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3856577/ | Argued November 12, 1935.
The question involved in this appeal is whether there is sufficient evidence on the record to sustain a finding of the workmen's compensation board that the husband of the claimant was killed in the course of his employment with the city of Reading. The referee and board found for the claimant and the action of the board was affirmed by common pleas.
Salem J.K. Bock was, for a number of years, employed by the city of Reading as foreman of its garbage disposal plant. On February 9, 1933, between 6:30 and 7:00 P.M., he was found seriously injured in an automobile belonging to the city on a public road between Reading and his home, and he died a few minutes later. The garbage plant was located southwest of Reading and the deceased lived at Kutztown, northeast of Reading and about eighteen miles from the plant. William J. Smith, one of the city councilmen and director of the department in charge of the garbage plant, testified: "When Mr. Bock first came to the city of Reading, back in 1923, if my memory serves me right, he had been an employe of the Kutztown Foundry Company. And it was a joint arrangement between the *Page 470
Kutztown Foundry and the city of Reading whereby we could have his services as a foreman to operate the garbage plant; and at that time he had the use of the Kutztown Foundry Company's Ford car, or at least a small car. And then later, Mr. Bock of course became an out-and-out employe of the city, with no obligation to the Kutztown Foundry. In view of the fact that he lived at Kutztown, and at that time was without a machine, I agreed to let him have the machine and let him go back and forth to his home because of the lack of transportation at the hour at which he came some mornings to work, and that is how the car happened to be assigned to Mr. Bock. It was a matter entirely between myself and Mr. Bock, not by any action of Council." Bock was employed by virtue of a resolution of council as follows: "Resolved, That Salem Bock be and he hereby is appointed foreman at the Garbage Disposal Plant, effective July 2, 1923." No formal action by council was found fixing his compensation, but he was paid by the city for ten years first at the rate of $2,400 and then at $3,000 per annum. He was first furnished with a Ford and then with a Dodge Coupe which the city kept in repair and maintained, including gasoline and oil. From time to time he reported at the city hall and his hours of service were largely determined by himself, except that he was required to report at the plant early in the morning before there was available any public transportation service. He usually left his work about 3:30 P.M., but on occasions was detained until 6:00 P.M. and later.
As a general proposition, the liability of an employer ceases when the employee leaves the premises where he is employed, and the compensation law does not apply to an employee while going to and returning from his place of employment: Haley v. Phila.,107 Pa. Super. 405, 408, 163 A. 917; Cronin v. American Oil Co., 298 Pa. 336, 340, 148 A. 476. There is an exception *Page 471
where some special duty is undertaken for the employer. In Haddock v. Edgewater Steel Co., 263 Pa. 120, 106 A. 196, an employee was directed by his employer to go to a distant city and gather information for his employer. On his return, while going from a railroad station to his home late at night, he was fatally injured and it was held that he was, at the time of the injury, in the course of his employment. In Cymbor v. Binder Coal Co.,285 Pa. 440, 132 A. 363, a workman employed in a mine during the day was also employed to go to the mine during the night to start the mine pumps which required but a moment and for which he received extra pay on a time basis. He was injured while returning home and it was held that he was engaged at the time in furthering his employer's business and his death was compensable. We have also a line of cases dealing more particularly with situations where transportation was furnished the employee by the employer as a part of his agreement of employment. In Logan v. Pot Ridge Coal Co., 79 Pa. Super. 421, the employee was engaged as an engineer in its mine and his regular hours of employment were from 7:00 A.M. to 4:00 P.M., during which time all his actual work was performed. As part of the contract of employment the company furnished a motor truck by which its employees were hauled from Windber to the mine, a trip of several miles. While in the truck on a return trip and at about 4:30 P.M., the employee was fatally injured. The death was held compensable. In Dunn v. Trego, 279 Pa. 518, 124 A. 174, there was a shortage of labor at a town where the employer was engaged in building operations and the claimant was engaged as a lather. The agreement was that he was actually to work ten hours between 7:00 A.M. and 5:30 P.M., but was to be paid for eleven hours. While it was not specifically agreed that transportation would be furnished him, he was told to report at a garage in Philadelphia *Page 472
at 6:00 A.M. for the purpose of riding to his place of employment. After working several days and while returning from his work, the truck struck a rut and the employee was injured. It was held that the injury occurred in the course of his employment.
There is also a line of cases in which it has been held that the furnishing of the transportation must not be for the sole convenience of the employee but by order of the master, express or implied: Haley v. Phila., supra. The case upon which the board and the court relied and one most closely resembling the case we are considering is that of Knorr v. Central R.R. of N.J., 268 Pa. 172,110 A. 797. The employee was there engaged as an extra fireman. The company furnished him a pass over its railroad and a plane train (an independent operation of the company) to ride to and from his work. During the day he was assisting in taking a train from Ashley to Taylor and on returning the same day with a train he arrived at Ashley where he registered and checked out. After attending to some personal business in that town, he proceeded by way of the plane train to his home and while riding on this train was accidentally killed. Mr. Justice KEPHART, in rendering the opinion of the court in that case, said (p. 175): "This service from the place of residence to the place of work, using the facilities furnished by the company, was useful to the company; and the place of residence, while a matter of convenience to him, was nevertheless beneficial to the employer, being within easy reach of his place of work, and appellant [the company] would require it to be so. His transportation may be regarded as a privilege incidental to the contract of service, if it is not a part of his compensation. . . . . . The pass was therefore beneficial to both employer and employee and, when his labors were over, the mere fact that he stopped for a short time to transact business in the town, would not break the continuity *Page 473
of his general employment which arose after his special labor had ceased, when he had registered, checked out, and left the premises to go to a railroad independent, disconnected, and separated from the line upon which he was working." It also appeared that the employee there did not have regular assigned employment but was subject to call at any time as the occasion made demand for his services.
The referee found, and his findings were affirmed by the board, that the city of Reading furnished Bock with an automobile owned by it for a number of years, and the car was kept in repair and furnished with gasoline and oil required for the purpose of going to and from the plant; that `when he sustained his injury he was on his way home from the city of Reading, using the facilities furnished by the city of Reading; that while the transportation furnished him by the city of Reading, if not a part of his compensation, was a privilege incidental to the contract of service, and that the use of the car furnished by the city of Reading was both beneficial to the employer and the employee and that when he sustained his accidental injury he was in the course of his employment with the defendant."
The courts of this state, as well as those of other states, have, since the enactment of this form of legislation, placed a liberal construction on compensation laws (Maguire v. James Lees Sons Co., 273 Pa. 85, 88, 116 A. 679; Dunn v. Trego, supra), and with that attitude in mind we cannot say that the court below erred in holding that Bock was injured in the course of his employment. As the referee and board found, the furnishing of an automobile to the deceased for the purpose of transporting him between his home and his place of employment was just as much a part of the contract of employment as the money compensation which he was to be paid. Councilman Smith testified that he "agreed" to furnish the automobile. The resolution *Page 474
of council authorizing his employment did not fix his salary or prescribe the terms of his employment. It was necessary for him to be at the plant at an early hour in the morning before there were public facilities in operation upon which he might have secured transportation, and it was important that he be there to see that the fires were started and that the plant could be efficiently operated by its other employees. We believe that the fact-finding bodies were fully justified in inferring that it was to the interest of the city that he have the means of getting to the plant at an early hour as well as at other times when his service might be required. While there is not any evidence as to its being necessary for him to be at the plant at other times, there is evidence from which an inference could be drawn that he was employed on account of his special fitness for the task. He was paid greater wages than those of a day laborer and was persuaded to leave the employ of another concern which had formerly furnished his services to the city, and he was given the same facilities of transportation by the city that had been furnished by his former employer when Bock was performing services for the city of Reading. In fact, we do not see how any other conclusion could be drawn than that it was part of the agreement for his employment that he would be furnished transportation. Just as in Dunn v. Trego, supra, transportation was in fact furnished and the director of his department testified that this transportation was furnished to Bock when the city dealt with his former employer and that when he came into the direct employ of the city of Reading they furnished him the same facilities. We believe the evidence justified the conclusion of referee and board that the automobile was not furnished to Bock for his mere convenience. We are also of the opinion that these inferences may be drawn by the court. There is not any dispute here as to the material *Page 475
evidence for it came almost exclusively from the city by its employees and councilman, and the question involved is a mixed question of law and fact: Schott v. P.R.R. Co., 76 Pa. Super. 582,583.
Appellant also suggests that there was evidence showing that Bock left his place of employment before 4:00 P.M. and was not found until at least 6:30 P.M. We do not regard these facts as controlling. There was just such a situation in Dunn v. Trego, supra. When Bock was injured he was on the direct line of travel between the plant and his home, and even though he may have transacted some private business in Reading, such fact would not defeat the claim. We have the further fact to consider that no one testified or gave any evidence from which it could be inferred just how long before Bock was found the accident actually occurred.
It is further urged that no resolution of council has been shown specifically authorizing the councilman to make a contract with Bock for the use of the automobile. Conceding this to be true, it does not follow that the claimant is not entitled to compensation. "It is well settled that contracts which are within the scope of the corporate powers but not authorized by proper action of the municipal corporation, that is, contracts not ultra vires, may be ratified by the proper corporate authorities, but contracts beyond the corporate powers, that is, contracts which the corporation is not permitted legally to enter into are not subject of ratification": 3 McQuillin Municipal Corporations (2d Ed.) § 1358. Also, see Hamilton Ave., 48 Pa. Super. 156. Not only did the council by resolution authorize the employment of Bock as foreman of the garbage disposal plant of the city, but for ten years it paid him his salary, furnished him with a car, and bore the expense of repairs and gasoline and oil. This, to our minds, constituted a clear case of ratification and was sufficient to *Page 476
estop the city from denying the contract. In the situation that we find, the city cannot now avoid responsibility for compensation.
Judgment of the court below is affirmed. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3856582/ | Argued March 12, 1936.
The Owl Protective Company (hereafter referred to as Owl Company), organized under the Business Corporation Law of 1933 (15 PS 2852) complained to the Public Service Commission that the Keystone Telephone Company of Philadelphia (hereafter referred to as Keystone Company) had refused to lease wires to it for use in its burglar alarm system and asked for relief. The commission after hearing dismissed the complaint and the Owl Company has appealed to this court. The Electric Protective Society, Inc. was permitted to intervene in support of the complaint and the City of Philadelphia and the Holmes Electric Protective Company on behalf of the respondent.
The Owl Company was incorporated on June 26, 1935 and is doing business in the City of Philadelphia. Its purpose, as expressed in its charter, is "the installation and maintenance of burglar and fire alarm systems". The plan of operation of the company is to install *Page 385
on the doors, walls and windows of the residences and places of business of its customers a mechanism or device which is connected by wire with a gong, light or other signal device at the central office of the company so that if there is any interference by trespassers such tampering will become known and protection will be afforded. To effect the connection between the premises of each customer and the offices of the company a wire over which a light current of electricity passes is required and these wires necessarily are placed over or under the streets of the city. The Owl Company through the purchase of the business of a company formerly operating in the city had secured two circuits from the Keystone Company and was furnishing burglar alarm service and had made application for further circuits when the Keystone Company was advised that it could not lease its wires to the Owl Company since the latter company had not secured permission from the city to operate over its streets, lanes and alleys. Keystone Company then declined to lease further wires, but continued the arrangement for the use of the two wires pending the outcome of this contest. The Keystone Company is willing to furnish the service if it has a legal right so to do and if it may do so without forfeiting a franchise which it secured by ordinance from the city.
The Keystone Company was incorporated November 26, 1902 under the Act of April 29, 1874 and a supplement of May 1, 1876, P.L. 90 (15 PS 2311) authorizing the formation of corporations of the second class "for the purpose of constructing, maintaining and leasing lines of telegraph for the private use of individuals, firms, corporations, . . . . . . for general business and for police, fire alarm or messenger business, or for the transaction of any business in which electricity over or through wires may be applied to any useful purpose". The purpose expressed in the charter *Page 386
of the Keystone Company is in the same words as those used in the act to which was added the clause, "including the maintenance and operating of a general telephone system and telegraph business".
It was provided by an amendment to the Act of 1876 passed June 25, 1885, P.L. 164 (15 PS 2314): "Before the exercise of any of the powers given under this act, application shall be first made to the municipal authorities of the city, town or borough in which it is proposed to exercise said powers, for permission to erect poles or run wires on the same, or over or under any of the streets, lanes or alleys of said city, town or borough, which permission shall be given by ordinance only, and may impose such conditions and regulations as the municipal authorities may deem necessary." By ordinance of the City of Philadelphia, passed August 5, 1886, it was provided: "Should any company, corporation, firm or individual to which privileges have heretofore been or shall hereafter be granted for the laying of underground wires, electrical conductors, conduits, . . . . . . dispose of any of the franchises granted by the ordinance, or lease to, consolidate, or merge with any other company, corporation, firm or individual, they shall forfeit all rights and privileges granted to them by the City of Philadelphia."
The City of Philadelphia on December 26, 1902 (Ordinances of 1902, p. 323) granted permission to the Keystone Company to "open streets, construct conduits and manholes and erect a terminal pole in each block, and to lay, erect, maintain and operate a conduit system of cables, wires, electric conductors and terminal poles for telephone and telegraph purposes, in, over, across, under . . . . . . the streets of the City of Philadelphia." By this ordinance the Keystone Company was also authorized to "lease any portion or all of its conduits, poles or wires not used by it for the transaction of its business to any other corporation having *Page 387
authority to use the same." The Owl Company has not secured from the city any right to make special use of the streets of the municipality. The intervening appellee, Holmes Electric Protective Company of Philadelphia, has secured such a consent from the city and is paying a considerable return to the city for the use of the streets and the respondent Keystone Company is leasing wires to it. Keystone Company has also leased wires to Philadelphia Local Telegraph Company for use in the operation of a fire alarm system.
The appellees contend that by the terms of the ordinance granting to Keystone Company the right to use the streets of the city, the Keystone Company is not permitted to lease wires to the Owl Company until permission is granted it to so use the streets by the City of Philadelphia and that the service demanded of the Keystone Company by Owl Company is not a public service.
The commission relied on the first contention for support of its order dismissing the complaint. The arguments on that phase of the case all ultimately turn upon the meaning and effect to be given to that clause of the ordinance of 1902 which provides that conduits, poles and wires may be leased to any other corporation"having authority to use the same". We are required to determine the meaning and effect of the last phrase.
We agree with the commission and the appellees that the commission had not only the power but that it was its duty to determine whether the Keystone Company had a right under the ordinance of 1902 to lease wires to the Owl Company in advance of the securing by the Owl Company of permission to use the streets. In Pittsburgh Rys. Co. v. P.S.C., 115 Pa. Super. 58, 62,174 A. 670, we said: "It is well settled that the commission has jurisdiction to determine whether corporations have the right to do or not do the thing for which the commission's approval is sought." In Fogelsville *Page 388 T. Elec. Co. v. Pa. P. L. Co., 271 Pa. 237, 243, 114 A. 822, the Supreme Court said: "For a proper determination of the many matters submitted, the commission has certain inquisitorial powers which may, to a degree, conflict with those generally understood to be within the purview of quo warranto by the attorney general. In passing on applications or complaints, as the case may be, as to duties, liabilities, powers and limitation of powers of a public service company, inquiry must be made as to the rights or powers of the company to do or not to do the thing applied for or complained about."
The precise reason assigned by the Keystone Company for its refusal to supply the wires asked for by Owl Company is that the granting of the request would involve giving to the latter company the use of the streets of Philadelphia for carrying on of an independent business without the consent of the city. It is well settled that no person, corporation or individual, has the right to make a special or exceptional use of a public highway not common to all citizens except by grant from the sovereign power: Phila. Co. v. Freeport Boro., 167 Pa. 279, 31 A. 571. The legislature, exercising its sovereign power, has delegated to the city the regulation and control of its streets. "Subject to the paramount authority of the Commonwealth, the regulation and control of the streets, which are the great highways of the city, belong to the city government": Phila. Elec. Co. v. Phila.,301 Pa. 291, 303, 152 A. 23. Also see The Southwark R.R. Co. v.Phila., 47 Pa. 314; Ellwood Lumber Co. v. Pittsburgh, 269 Pa. 94,112 A. 19. As affecting the right of respondent to make a lease of wires, the legislature, by the Act of June 25, 1885, delegated to the municipality the right to exercise a special control over the use of the streets, lanes and alleys of the municipality by telephone and telegraph companies for it was provided that *Page 389
notwithstanding the charter granted by the commonwealth, such companies should not exercise any of the powers given it to run wires over or under any of the streets, lanes or alleys of the city, town or borough, until granted authority by ordinance which might impose such conditions and regulations as the municipal authorities deemed necessary. It follows that the municipality as the delegated agent of the commonwealth had the right to impose the conditions which it did when it granted the use of the city streets to the Keystone Company, and that if those conditions cover the present situation they are enforceable: Keystone T. T. Co. v. Ridley Park Boro., 28 Pa. Super. 635.
The Owl Company does not seriously question this principle, but says, in effect, that it is a business corporation engaged in a private business not affected with a public interest and that it does not propose to use the streets of the city, but only asks permission to become a patron of the Keystone Company which has permission to use such streets. In short, it asserts that it is in no different position than that of other patrons of telephone companies, for example, a brokerage firm which leases a wire for its exclusive use. On the other hand the appellees, sustained by the commission, contend that the Owl Company is making an independent use of the streets and proposes so to do in the future if granted the use of the wires in question and that it may not so use the streets without first securing the consent of the city.
It therefore becomes necessary to consider the nature of the business that would be done by the respondent and the use which would be made of the wires by the complainant. It is clear that the Owl Company wished exclusive use of a wire that is not employed in the ordinary telephone service rendered by the Keystone Company. Appellees insist that the wires intended to be used are what are known as "dead" wires, that the *Page 390
current to operate the signalling device is to be furnished by the Owl Company and that the Keystone Company will have nothing to do with operations over the line, but will be concerned alone in maintaining the integrity of the line. While appellant asserts in its argument that the current may be supplied by the Keystone Company, we think the record shows that it is proposed to use what is known as a dead line. The complaint was that the respondent had refused to lease wires to complainant which would be "connected direct from the applicant's place of business to the customers of the applicant where the burglar alarms are installed." If it was some other and different service that complainant wished to enjoy it should have so alleged and shown by its proofs. However, as we shall see, the fact as to whether the current might be supplied by one or other of the parties is not essential to a determination of the actual use contemplated.
Considering the nature of the proposed service from the standpoint of both lessor and lessee it seems clear to all of us that if the demand of the appellant is granted and the Owl Company carries out its plan to serve customers in the business district of Philadelphia, such actions would constitute a use of the streets by the Owl Company and a consequent violation of the condition of the ordinance of 1902. The evidence contained in the record with reference to the actual operations by the Keystone Company, and a consideration of the terms of its charter rights and franchise from the city, show that while the primary business of the Keystone Company is what is known as a telephone or telegraph business it is in a position to do and has been transacting a business disconnected therewith. The operation of a telephone system in a large city necessitated the construction of conduits which could not be economically constructed so as to furnish a pre-determined and exact capacity intended only to *Page 391
accommodate the telephone business as it then existed. The ordinance granting a franchise to the telephone company shows that both the company and the city foresaw that when the company constructed its conduits it would have a surplus capacity at least for a time and that there would be other companies or individuals who might need and could make profitable use of idle wires. From the viewpoint of the city it was desirable to consider this matter for it would avoid unnecessary tearing up of the streets if the company was permitted to lease idle wires or wires not required for its ordinary business. It is therefore most apparent that we are here dealing with a situation where the Keystone Company was authorized to act and is acting in two capacities. It is primarily a telephone company in the ordinary acceptation of that term, furnishing a service to the public and it also had space in its conduits and wires which were not required in the transaction of its business and which it was authorized to lease. The city by the ordinance of 1902 recognized these two kinds of business for it granted to Keystone Company the right to install a conduit with wires and other fixtures for use in its own business and in addition authorized it to lease excess space or wires to others and treated the two situations differently. When it furnished service itself as part of its business there were no limitations, with which we are now concerned, but when it leased its excess facilities to others its power to lease was subject to the limitation that the assignee had the right to enjoy the grant.
By the general ordinance of 1886 it had been provided that companies such as the respondent should not be permitted to transfer their franchises but when the franchise was granted to the Keystone Company special provision was made so that it might lease wires to others. This would indicate an intention upon the part of the city to make it impossible for the Keystone *Page 392
Company to transfer rights it obtained from the city to others if such transfer would deprive the city of the control of its streets. A lease of conduit or wires to a corporation which had obtained the right to use the streets would not interfere with the city's control.
Considering the business from the standpoint of the Owl Company, it is an independent business — furnishing protection from burglars — in which it is engaged, employing its own devices, mechanisms and equipment. The wires from office to customer are and would be a substantial part of its physical plant. It is demanding from the Keystone Company not an ordinary telephone or telegraph service, but wires which it would employ in performing a class of service not rendered by this telephone company. The Owl Company would furnish burglar protection and the Keystone Company telephone service.
The Keystone Company accepted the ordinance granting it the right to use the city streets subject to a condition which the city was empowered to impose and consequently it may not do that which is prohibited by the ordinance. Certainly the phrase in the ordinance, "having authority to use the same", means that the assignee must have the right to occupy the streets for that is the very matter with which the provision deals. The Owl Company like all other persons has a right to demand of the Keystone Company the telephone service which Keystone Company as a public service company is furnishing to the public but when it demands the use of idle wires, mere physical property, even though it may be a public service, it is asking the Keystone Company to do something as to which it has only a limited power. If the Keystone Company may lease wires to Owl Company it may lease them to telegraph or other telephone companies or to any other company which makes use of electric currents passing over wires.
The complainant suggests that the service which it *Page 393
demands is not different from that of furnishing private wires to brokerage firms and others. We do not find that the situations are comparable and on the contrary believe that they are not only essentially different, but tend to emphasize the correctness of the conclusion at which we have arrived. The telephone company in furnishing the use of private telephone wires to brokerage firms does not, as we understand it, turn over the wire to its customer, but simply furnishes exclusive use of the wire for telephone service during certain hours. This is only a special phase of ordinary telephone service. Here it is a wire and not service that is being furnished. The situations would be more nearly parallel if the telephone company leased a naked wire to a corporation which with its own devices and instruments then proceeded to make use of such wire. Neither do we think it important that the Keystone Company may furnish the current for the wires. The Owl Company still furnishes all other equipment and devices necessary to constitute a burglar alarm system.
To summarize our conclusions, we are of the opinion that the city had the power to impose the conditions which it did in the ordinance of 1902, that the ordinance dealt with two distinct situations, direct use of the conduits and wires by the Keystone Company in supplying service itself to the public and the leasing of conduits and wires to other corporations for an independent use, and that the use which the Owl Company proposes to make of the wires it wishes to lease, places such use in the latter class. To hold otherwise would render the conditions in the ordinance of 1902 of no effect and permit the Keystone Company to grant the use of the streets to all other corporations, operating by means of electric current over wires, without the consent of the city.
In view of the conclusion at which we have arrived we deem it unnecessary to dispose of the contention of *Page 394
the appellee and the commission in its brief that the complainant failed to show that Keystone Company is, with respect to leasing wires not required in its telephone business, engaged in a public service. We also feel that it would be unfair to the appellants to rule the case on that ground for the reason that the complainant attempted to develop facts which bore directly on the extent and nature of the service rendered with respect to the leasing of the wires and it was not permitted so to do by the commissioner who conducted the hearing. Counsel for complainants was not permitted to interrogate the executive vice president of the respondent as to the nature of the service which was rendered with respect to leasing wires and the persons whom the respondent was serving or offering to serve, but was limited to an inquiry as to the wires leased and the persons with whom contracts were made for burglar alarm purposes only. The actual business conducted and the persons with whom the Keystone Company dealt, with respect to leasing conduits or wires bore directly on the question as to whether the respondent was doing a public or a private business. This was true regardless of whether the wires were leased for a burglar alarm system, or a fire alarm system, or any other business making use of electric currents passing over wires. We therefore rest our decision on the grounds first stated.
The order of the commission is affirmed. | 01-03-2023 | 07-06-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3517156/ | ON THE MERITS.
The question here presented for decision arises under the Mississippi Unemployment Compensation Law, chapter 176, Laws 1936, as amended by chapter 3, Laws of *Page 166
First Extraordinary Session of 1936, chapter 147, Laws 1938, and chapter 295, Laws of 1940. The appeal is from a judgment of the Circuit Court, reversing a decision of the Board of Review created by said statutes, and directing the Board of Review to enter an order allowing weekly compensation at $15 for a period of fourteen weeks in favor of the appellee. Not having registered for work or filed his claim for benefits in the manner, and within the time, required by law, the appellee claims the right to have his application dated back about eighteen months to a time when he presented himself at the local employment office at Meridian to register for work and file a claim, and was erroneously advised by an unidentified employe in the reception room at the office that it would be necessary for him to apply to the Tennessee Unemployment Compensation Commission in order to obtain unemployment compensation.
For several years prior to May 5, 1938, the appellee had been employed by a life insurance company of Memphis, Tennessee, as district manager, with an office at Meridian, Mississippi, with a number of agents and other employes under his supervision. His employment with the company was terminated on May 4, 1938; whereupon he sought information from an attorney as to his right to obtain compensation under the Mississippi Unemployment Compensation Law, chapter 176, Laws 1936, as amended. The attorney advised him, as almost any other attorney not connected with the administration of this law would have done, that he was not familiar with the law, and sent him to the local office of the Unemployment Compensation Commission. The appellee claims that he then went to this office, presented his social security card to one of the ladies in the front office, who read the card and told him that he would have to get his compensation benefits from the state of Tennessee, as his employment was in that state. He told her he thought his company had made contributions to the Unemployment Compensation Fund in Mississippi, where he had *Page 167
been working, but the lady still thought that the information she had given him was correct.
It was not shown that the lady referred to, whoever she may have been, had any authority either to advise claimants in regard to their right to the benefits sought, or to waive any of the conditions prerequisite to an allowance thereof. Moreover, the only reasonable inference to be drawn from the record before us is that the lady was merely a receptionist in the office. The appellee does not claim to have asked for the manager, or anyone else in authority, but left the office after showing his social security card to the lady in the reception room, and reported to his attorney that he had been advised at the office that he would have to take the matter up with the Unemployment Commission of Tennessee. It was then determined that this course would not be taken until after the attorney should conclude a contemplated suit against the employer of the appellee for alleged breach of his contract of employment. That matter was finally terminated during October of that year, but the appellee made no effort during the next several months either to contact anyone in authority at the local office, or at the central office of the Mississippi Unemployment Compensation Commission at Jackson; nor did he ever communicate with the Commission in Tennessee in regard to the matter.
Finally, in October, 1939, he learned through a former fellow employe that he could collect unemployment benefits in Mississippi, whereupon he filed a claim with the local office at Meridian for the fourteen weeks' compensation here involved; but which claim could not be allowed for the reason that it had not been filed within the required time subsequent to the termination of his employment on May 4, 1938. However, the claim was referred by the Claim Examiner to the Referee, who permitted it to be dated back to May 5, 1938, and allowed the same, on the ground that the appellee had presented himself on that date at the local employment office for the purpose *Page 168
of filing his claim for benefits, and was misinformed as to his rights in the premises.
The cause was then appealed by the Claim Examiner to the Board of Review, which, after a full hearing, reversed the decision of the Referee and disallowed the claim. Thereafter a judicial review was obtained in the Circuit Court upon the record made before the Board of Review. That court held that when appellee presented himself to register for work, and to make a claim for benefits at the employment office, his action in that behalf constituted the legal equivalent of a registration for work and filing a claim on the form prescribed for that purpose; and the decision of the Board of Review was therefore reversed and the decision of the Referee reinstated, allowing the claim at $15 a week for a period of fourteen weeks, as if filed on May 5, 1938.
Section 4, chapter 176, Laws 1936, provides that: "An unemployed individual shall be eligible to receive benefits with respect to any week only if it has been found by the commission that: (a) He has made a claim for benefits in accordance with the provisions of section 6(a) of this act. (b) He has registered for work at the employment office designated by the commission within such time limits and with such frequency and in such manner (such as in person or in writing) as the commission may by general rule prescribe, . . ."
Section 6(a) provides, among other things, that "Claims for benefits shall be made in accordance with such rules as the commission may prescribe, at the employment office nearest either to the individual's place of residence or to the place of his most recent employment. . . . An employer shall give to each of his employees at the time such employee becomes totally unemployed, a printed statement of the rules prescribed by the commission relating to the filing of claims for benefits. Such printed statements shall be supplied by the commission to each employer without cost to him."
It was not shown that the employer of the appellee *Page 169
failed to furnish him the printed statement of rules prescribed by the commission relating to the filing of claims for benefits.
It is well settled that the Legislature has the power to delegate to an administrative agency the right to promulgate such reasonable rules and regulations as might be necessary to accomplish the purposes for which the agency is created. Abbott v. State, 106 Miss. 340, 63 So. 667; United States v. Grimaud,220 U.S. 506, 31 S. Ct. 480, 55 L. Ed. 563; Marshall Field Co. v. Clark, 143 U.S. 649, 12 S. Ct. 495, 36 L. Ed. 294.
Among other rules and regulations promulgated by the Mississippi Unemployment Compensation Commission is regulation 103, which provides:
"(a) Any individual claiming benefits or waiting period credits for total unemployment shall report in person at the public employment office most accessible to him, and there shall on form UC 501(1) register for work, and (2) file a claim for benefits. The claim for benefits shall constitute both the individual's registration for work and his claim for benefits.
"(b) In order to establish eligibility for benefits or waiting period credits for weeks of total unemployment during a continuous period of total unemployment, the claimant shall (1) continue to report at intervals of not less than one week, or at intervals of less than one week when directed to do so by the Commission, at the public employment office at which he registered for work and filed his claim for benefits, and (2) file at such office each week a continued claim for benefits on Form UC 507 (Master Index Claim Card) during waiting period and on Form UC 510 (Continued Claim) during compensable weeks. The continued claim for benefits shall constitute both the individual's registration for work and his claim for benefits."
Moreover, it is conceded by the appellee that the commission had the power to promulgate the foregoing regulation, and it is not contended that the same is arbitrary *Page 170
or unreasonable. The appellee's position is that the employment office at Meridian waived compliance with the regulation by failing to furnish him the required form of application when he presented his social security card, and by erroneously advising him that he could not obtain the benefits applied for in Mississippi. A sufficient answer to this contention is that if it should be conceded that someone vested with authority to advise the applicant as to his rights in the premises could waive the requirements, the same could not be waived by a mere receptionist in the waiting-room of the office. The requirement contemplated that an applicant should not only present himself at the office to register for benefits, but that he should also continue to report his availability for work, as well as his desire for benefits provided for while unemployed.
We are of the opinion that the appellee has not brought himself within either the terms of the statute or the rules and regulations prescribed thereunder, so as to be entitled to the compensation allowed.
The judgment of the Circuit Court will therefore be reversed, and that of the Board of Review, disallowing the claim, reinstated.
Reversed and judgment here for appellant. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2993763/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 14-1511
AFRAM BOUTROS,
Plaintiff-Appellant,
v.
AVIS RENT A CAR SYSTEM, LLC,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 10 CV 08196 — John J. Tharp, Jr., Judge.
ARGUED SEPTEMBER 22, 2014 — DECIDED SEPTEMBER 23, 2015
Before WOOD, Chief Judge, and EASTERBROOK and SYKES,
Circuit Judges.
SYKES, Circuit Judge. Afram Boutros worked for Avis Rent
A Car as a courtesy bus driver at the company’s facility at
O’Hare Airport. One night in May 2008, Boutros informed his
supervisor that the fire extinguisher on his bus inexplicably
discharged, spraying fire retardant near the driver’s seat. He
2 No. 14-1511
reported no injury at the time, but the next morning he claimed
that chemicals from the discharge had harmed him. Avis
launched an investigation and eventually fired Boutros for
dishonesty and insubordination in connection with his shifting
accounts of the fire-extinguisher accident.
Boutros sued, claiming that Avis fired him because of his
race and subjected him to a hostile work environment in
violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§§ 2000e et seq., and also retaliated against him for exercising
his rights under the Uniformed Services Employment and
Reemployment Rights Act (“USERRA”), 38 U.S.C. §§ 4301 et
seq. The case was tried to a jury, which found for Avis on all
claims. After a perfunctory and unsuccessful motion for a new
trial, Boutros appealed, raising claims of evidentiary error and
challenging the denial of his posttrial motion.
Avis asks us to dismiss the appeal because Boutros’s
appellate submissions violate several rules of appellate
procedure. That’s true, but we prefer to decide the case on the
merits. The appeal is frivolous, so we affirm the judgment and
issue an order to show cause why sanctions should not be
imposed under Rule 38 of the Federal Rules of Appellate
Procedure.
I. Background
Boutros began working at Avis’s O’Hare Airport facility in
2002. He quit in 2005 to join the Army, but his tenure in the
military was brief. In 2006 he was honorably discharged based
on unsatisfactory performance. Boutros tried to return to Avis,
No. 14-1511 3
but the company was reluctant to rehire him. He filed suit
under USERRA, which guarantees reemployment rights to
persons “whose absence from a position of employment is
necessitated by reason of service in the uniformed services.”
38 U.S.C. § 4312(a)(1). Avis maintained that USERRA did not
apply but eventually settled the suit by agreeing to rehire
Boutros. On May 4, 2007, he returned to Avis as a courtesy bus
driver at O’Hare Airport.
The job of a courtesy bus driver involves driving customers
from the airport to Avis’s rental-car lot and back again, and
also assisting customers with their luggage. On the evening of
May 27, 2008, Boutros was driving Courtesy Bus No. 35 from
the rental-car lot to the airport when the on-board fire extin-
guisher fell off its bracket and sprayed fire-suppressant
powder inside the bus. No passengers were aboard at the time.
Boutros drove the bus back to Avis’s facility and informed
his shift manager, Rolando Trujillo, of the accident. His initial
story was that a customer knocked the extinguisher over and
it sprayed fire suppressant next to the driver’s seat. Trujillo
saw a small amount of powder suppressant near the driver’s
seat and instructed Boutros to take the bus to Avis’s mechanic
shop for cleaning. If no mechanics were available, he told
Boutros to take the bus out of service and use a different one
for the remainder of his shift.
A bit later that same evening, Boutros encountered another
shift manager, Mario Foster, and told him what happened.
Like Trujillo, Foster instructed Boutros to have a mechanic
clean the bus. Boutros said there were no mechanics available
and that he had already cleaned the bus himself. He also told
4 No. 14-1511
Foster that the extinguisher fell on its own (not that a customer
knocked it over) and that it sprayed on his pants and face (not
next to the driver’s seat). Finally, he claimed that the fire-
suppressant powder caused him to cough and made it difficult
to breathe. He also expressed concern about his exposure to
chemicals. But he declined medical assistance.
The next day Boutros changed his mind and requested
medical attention. Avis sent him to a health clinic. Boutros
thereafter went to the emergency room. He later claimed that
the clinic doctors sent him to the hospital because
fire-extinguisher chemicals can cause cancer. Boutros remained
off of work for three days and filed a workers’ compensation
claim regarding the incident.
This was not the first time Boutros had made an unusual
medical claim. A few months before the fire-extinguisher
accident, Boutros had complained about an odd “hugging
incident” involving Trujillo. According to Trujillo’s version of
this event, Boutros was having a hard day, so he gave him a
hug. Boutros, on the other hand, said it wasn’t just a hug—it
was a hug accompanied by a shove. But he also said he wasn’t
hurt. The next day, however, Boutros left work to seek medical
attention, claiming that Trujillo had injured him. The day after
that he complained of serious damage to his kidneys. Trujillo
was disciplined for the incident under the company’s zero-
tolerance policy for unwelcome workplace touching. Boutros’s
claim of injury was unsubstantiated.
Based on Boutros’s conflicting statements about the fire-
extinguisher accident and his peculiar claim of injury from the
“hugging incident,” Avis decided to open an investigation. Bill
No. 14-1511 5
Rogers, Avis’s Chicago-area manager, checked the “Bus
Inspection Form” Boutros had completed to verify the condi-
tion of Bus No. 35 at the beginning of his shift on May 27. The
form listed the fire extinguisher as “OK.” His suspicions
aroused, Rogers told Eva Liss, Avis’s human-resources
manager, that he thought Boutros’s story about the fire-
extinguisher accident was “fraudulent” and asked if Avis could
“get rid” of Boutros “once and for all.”
On June 8 Avis suspended Boutros for dishonesty and
insubordination. He had given Trujillo one account of the fire-
extinguisher accident but a different one to Foster, and the
preliminary investigation didn’t support either version. He
also violated a direct order from his supervisor by cleaning the
bus himself rather than delivering it to maintenance or taking
it out of service and using another bus.
While Boutros was serving his suspension, Rogers and Liss
continued their investigation, taking written statements from
Boutros, his managers, and other potential witnesses, and
interviewing the doctors who treated Boutros. Boutros had
claimed that no mechanics were available on the evening of
May 27, but that wasn’t true; records showed that several
mechanics were on duty and available. Doctors at the clinic
denied ever telling him to go to the emergency room due to
cancer concerns. The bracket holding the extinguisher in place
on Bus No. 35 showed no signs of rust or disrepair.
They also interviewed Dane McCartney, a representative of
Avis’s fire-extinguisher vendor, asking him how the extin-
guisher might have accidentally discharged. McCartney wrote
a short report for Avis comparing the weight of the extin-
6 No. 14-1511
guisher after the incident to the weight listed on its label. He
concluded that it discharged only about 5.5 ounces of powder.
That was inconsistent with Boutros’s claim that the extin-
guisher sprayed “a lot.”
At some point during the investigation, Boutros changed
his story again, claiming that Trujillo had authorized him to
clean the bus himself and that his coworker, Ricky Sappington,
had seen him vomiting in the parking lot on the night of the
incident. Sappington denied this and gave Avis a handwritten
statement to that effect. At the conclusion of the investigation,
Avis fired Boutros for dishonesty and insubordination.
Boutros then filed suit against Avis alleging that he was
fired because of his race in violation of Title VII. He also
alleged that Avis had subjected him to a hostile work environ-
ment in violation of Title VII and retaliated against him for his
earlier USERRA suit. Although the Title VII claims specifically
alleged discrimination on the basis of race, it became clear later
in the litigation that Boutros actually was claiming that Avis
discriminated against him because of his perceived national
origin (or perhaps ethnicity) and religion. Boutros is a native of
Lebanon, a Christian, and an ethnic Assyrian; he claimed that
his supervisors and coworkers perceived him to be Arab and
Muslim.
The case proceeded to jury trial. Avis moved in limine to
exclude certain evidence related to the prior USERRA lawsuit.
The district judge withheld ruling, instead encouraging the
parties to stipulate to the relevant facts about the prior litiga-
tion. They did so and entered the following stipulation, which
was read to the jury during trial:
No. 14-1511 7
[Boutros] worked for Avis from 2002 into 2005[,]
when he left to serve in the United States Army.
In 2006, after [Boutros’s] discharge from the
military, he sought to return to work at Avis. The
parties disputed whether he was entitled to
return to work at Avis. [Boutros] filed a lawsuit
against Avis regarding his reemployment rights
under USERRA. The parties resolved that law-
suit. In May of 2007, [Boutros] returned to work
at Avis.
Boutros moved in limine to exclude Sappington’s out-of-
court statement and also to preclude Avis from using
McCartney as an expert witness. The judge denied the first
motion, reasoning that Sappington’s statement wasn’t hearsay
because Avis was not presenting it for its truth but only for its
effect on Avis’s managers as they considered whether to fire
Boutros. The judge denied the second motion too, after Avis’s
lawyer said she wasn’t planning to call McCartney as an expert
witness.
At trial Rogers testified about the course of the investiga-
tion and Avis’s decision to fire Boutros for dishonesty and
insubordination. Avis introduced Sappington’s and
McCartney’s out-of-court statements through Rogers for the
nonhearsay purpose of showing their effect on Avis’s decision
to fire Boutros. Avis also called Juanita Chaidez, another Avis
manager, who testified about (among other things)
Sappington’s and McCartney’s out-of-court statements.
Boutros objected to the introduction of Sappington’s and
McCartney’s statements on hearsay grounds. The judge
8 No. 14-1511
overruled each objection, allowed the testimony, and at
Boutros’s request gave the jury a limiting instruction explain-
ing that the statements were not offered for the truth of the
facts asserted but rather to prove their effect on Avis. Regard-
ing McCartney’s out-of-court statement, the judge also
instructed the jury that the statement was neither offered nor
admitted as the opinion of an expert witness.
The jury found for Avis on all claims. Boutros thereafter
hired a new lawyer, who filed a boilerplate, multipurpose
posttrial motion requesting the alternative remedies of judg-
ment as a matter of law, see FED. R. CIV. P. 50; a new trial, see id.
Rule 59; or relief from judgment, see id. Rule 60. The motion
contained no meaningful content but merely quoted the rules
and requested an opportunity to file a supplement at an
unspecified later time. The judge denied the motion in its
entirety, saying that it “barely qualifies as a motion” and “was
plainly a placeholder” in a futile quest for an extension of time
to file a proper motion for a new trial. The judge noted that
Rule 59(b) sets a 28-day deadline for motions for a new trial,
and Rule 6(b) prohibits the court from extending that deadline.
Boutros timely appealed.
II. Discussion
Boutros raises three issues on appeal. He challenges the
admission of Sappington’s and McCartney’s out-of-court
statements. He also argues that the judge “erred in limiting
[the] testimony of the previous [USERRA] lawsuit.” Finally, he
challenges the denial of his Rule 59 motion for a new trial.
No. 14-1511 9
Before turning to the merits of these claims (or, as we shall
see, their abject lack of merit), we note some serious procedural
irregularities in Boutros’s appellate submissions. Although
Boutros is represented by counsel, his opening brief violates
several appellate and circuit rules. The statement of facts lacks
any citation to the record, in violation of Rule 28(a)(7) of the
Federal Rules of Appellate Procedure and Circuit Rule 28(c).
The appendix lacks a copy of the judgment, complete tran-
scripts of the evidentiary rulings challenged on appeal, and a
transcript of the posttrial hearing at which his Rule 59 motion
was denied. This violates Rule 10(b)(2) and Rule 30(a) of the
Federal Rules of Appellate Procedure, and also Circuit
Rules 30(a) and (b).
Avis noted these deficiencies in its response brief and
supplied a copy of the judgment and relevant transcripts in its
own appendix. Based on the rules violations, however, Avis
urges us to dismiss the appeal. See Morisch v. United States,
653 F.3d 522, 529 (7th Cir. 2011) (“A violation of Rule 10(b)(2)
is grounds for forfeiture and dismissal.”); Cole v. C.I.R.,
637 F.3d 767, 773 (7th Cir. 2011) (“Complete failure to comply
with Rule 28 will result in dismissal of the appeal.”) (internal
quotation marks omitted). Alternatively, Avis asks that we
decide the appeal based solely on its recitation of the facts and
the transcripts it has submitted. See Albrecthsen v. Bd. of Regents
of Univ. of Wis. Sys., 309 F.3d 433, 436 (7th Cir. 2002) (adopting
this approach for a Rule 28 violation).
In reply Boutros insists that he has complied with “the
essence of the[] rules.” He has not. The rules violations are
multiple and conspicuous, clearly providing grounds for
10 No. 14-1511
dismissal. Still, we prefer to decide the case on the merits. We
will, however, disregard Boutros’s statement of facts and
decide the appeal based solely on Avis’s account and the
relevant transcripts.
Boutros raises two claims of evidentiary error. First, he
argues that admitting Sappington’s and McCartney’s out-of-
court statements for nonhearsay purposes was unduly prejudi-
cial under Rule 403 of the Federal Rules of Evidence. Second,
he claims that the judge improperly limited the evidence of his
prior USERRA suit. We review evidentiary rulings for abuse of
discretion. Jenkins v. Chrysler Motors Corp., 316 F.3d 663, 664
(7th Cir. 2002).
The Rule 403 argument is frivolous. Boutros did not object
to this evidence on Rule 403 grounds, so the claim is
unpreserved. See FED. R. EVID. 103(a); see also Williams v. Dieball,
724 F.3d 957, 961–63 (7th Cir. 2013). Although Rule 103 permits
plain-error review of forfeited claims of evidentiary error, in
civil cases this review is available only in “extraordinary cir-
cumstances.” Williams, 724 F.3d at 963. This requires Boutros to
show that “(1) exceptional circumstances exist; (2) substantial
rights are affected; and (3) a miscarriage of justice will result”
if review is denied. Id. (quoting Estate of Moreland v. Dieter,
395 F.3d 747, 756 (7th Cir. 2005)). Boutros has neither acknowl-
edged nor made any effort to shoulder this burden.
His argument is doomed in any event. Rule 403 permits the
exclusion of evidence if its probative value is substantially
outweighed by the danger of unfair prejudice. FED. R.
EVID. 403; Thompson v. City of Chicago, 722 F.3d 963, 971 (7th
Cir. 2013); Javier v. City of Milwaukee, 670 F.3d 823, 832 n.8 (7th
No. 14-1511 11
Cir. 2012). Sappington’s and McCartney’s out-of-court state-
ments were presented not for their truth but as evidence of
Avis’s reasons for suspending and then firing Boutros after the
fire-extinguisher accident. Boutros sued Avis for firing him
with improper intent, so the evidence was clearly probative on
that issue.
Boutros’s argument for undue prejudice is essentially that
these statements made him look dishonest in front of the jury.
But the key question in the case was not whether Boutros was,
in fact, dishonest; it was whether Avis’s nondiscriminatory
reason for firing him was pretextual—that is, just a cover for
discrimination. See Widmar v. Sun Chem. Corp., 772 F.3d 457, 464
(7th Cir. 2014) (explaining that the “only question” in an
employment-discrimination case “is whether the employer’s
proffered reason was pretextual, meaning that it was a lie”)
(internal quotation marks omitted). McCartney’s statement
about the fire extinguisher was not offered to prove how the
extinguisher did, in fact, fall and discharge.1 Rather, it was one
of many data points on which Avis relied when it decided to
fire Boutros for dishonesty and insubordination.
Sappington’s statement was similar. It contradicted what
Boutros had claimed during the investigation—namely, that
Sappington saw him vomiting in the parking lot on the night
of the incident—but it was not admitted to prove that Boutros
1
Boutros also argues that admitting McCartney’s statement was unduly
prejudicial because the jury might have believed that he was an expert
witness. This is preposterous. McCartney did not testify, and the judge
specifically instructed the jury that his out-of-court statement was not
admitted as the opinion of an expert witness.
12 No. 14-1511
had, in fact, lied, or even that he lacked credibility as a witness
in the case. Rather, it was admitted as evidence that Avis fired
him for nondiscriminatory reasons—specifically, dishonesty
and insubordination. It was the jury’s job to decide whether
Avis’s proffered reasons actually motivated its decision to
terminate Boutros’s employment. Whether those reasons were
“unwise or unfair” is irrelevant. Id.
Finally, any undue prejudice was effectively mitigated by
the judge’s limiting instructions. See United States v. Linwood,
142 F.3d 418, 425 (7th Cir. 1998) (“So long as the judge is
convinced that the potential prejudicial effect of the jury
considering testimony for a hearsay purpose does not substan-
tially outweigh the probativity of the testimony’s intended
non-hearsay use, it is within his broad discretion to admit the
evidence into the record, provided that a limiting instruction
is given upon request.”) (citation omitted). Boutros insists that
the limiting instructions were insufficient to cure the prejudice.
This argument too is a loser. “[T]he law assumes that [juries]
can and do follow the limiting instructions … .” Id. at 426.
Boutros has not explained why the normal presumption
should not apply here.
Boutros next argues that the judge improperly prevented
him from presenting evidence regarding his prior USERRA
lawsuit against Avis. He invokes Rule 106, which codifies the
“rule of completeness”: “If a party introduces all or part of a
writing or recorded statement, an adverse party may require
the introduction … of any other part … that in fairness ought
to be considered at the same time.” FED. R. EVID. 106.
No. 14-1511 13
There are two glaring problems with this argument. First,
the judge didn’t limit this evidence. Boutros stipulated to the
facts of the prior USERRA suit. Second, Rule 106 doesn’t apply.
In response to Avis’s motion in limine, the judge encour-
aged the parties to stipulate to the facts of the earlier lawsuit.
Boutros voluntarily did so, and his stipulation below waives
the issue on appeal. Cent. States, Se. & Sw. Areas Pension Fund
v. Koder, 969 F.2d 451, 455 (7th Cir. 1992); see also Graefenhain v.
Pabst Brewing Co., 870 F.2d 1198, 1206 (7th Cir. 1989) (“Stipula-
tions regarding the nature of trial proceedings are crucial to the
prompt and efficient disposition of litigation. Therefore, once
made, a stipulation is binding unless relief from the stipulation
is necessary to prevent a ‘manifest injustice’ or the stipulation
was entered into through inadvertence or based on an errone-
ous view of the facts or law.”).
Boutros claims that he was acting “with tied hands” after
the judge made “a dispositive ruling on the issue after motions
were filed.” This is flatly incorrect. The judge did not rule on
Avis’s motion in limine but simply invited the parties to try to
reach a stipulation about the relevant facts regarding the prior
suit. This was a reasonable trial-management suggestion, and
Boutros readily agreed and arrived at an acceptable stipulation
with Avis.
In any event, Rule 106 is a defensive evidentiary tool. When
a party introduces part of a writing or recorded statement into
evidence, the opponent may ask the court’s permission to place
before the jury other parts of the writing or statement that “in
fairness ought to be considered at the same time.” As we’ve
explained, “a party against whom a ‘fragmentary statement’ is
14 No. 14-1511
introduced may ask the district court to admit other parts of
the statement necessary to ‘clarify or explain the portion
already received.’” United States v. Price, 516 F.3d 597, 604 (7th
Cir. 2008) (emphasis added) (quoting United States v. Glover,
101 F.3d 1183, 1189 (7th Cir. 1996)). Boutros’s reliance on
Rule 106 is entirely inapt. He hasn’t identified a “fragmentary”
writing or recorded statement that was introduced against him
and needed clarification or explanation. This argument too is
frivolous.
Lastly, Boutros challenges the denial of his Rule 59 motion
for a new trial. It should be obvious why this argument cannot
succeed. As we’ve noted, Boutros’s posttrial motion was
devoid of meaningful content. Indeed, the judge said it “barely
qualifies as a motion” and was nothing more than a “place-
holder” in a brazen effort to obtain an extension of the
Rule 59(b) deadline, which Rule 6(b)(2) says cannot be ex-
tended. Nothing more needs to be said on this issue.
For all the foregoing reasons, this appeal is frivolous.
Accordingly, we invoke Rule 38 and issue an order to show
cause why sanctions should not be imposed for filing a
frivolous appeal. See FED. R. APP. P. 38 (“If a court of appeals
determines that an appeal is frivolous, it may, after … notice
from the court and reasonable opportunity to respond, award
just damages and single or double costs to the appellee.”).
Boutros’s attorneys shall respond within 14 days of the date of
this opinion.
AFFIRMED; ORDER TO SHOW CAUSE ISSUED. | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/8569577/ | *160TEXTO COMPLETO DE LA RESOLUCION
Comparece ante nos el Departamento de la Familia de Puerto Rico y nos solicita la revisión de una resolución emitida por el Tribunal de Primera Instancia, Sala de Ponce (Hon. Teresa M. Pérez Stuart, Juez), el 26 de enero de 2004. Mediante el referido dictamen, el foro de instancia ordenó que una vez se concluyera el proceso de evaluación y el informe de la Dra. Caro, las menores S.T.R. y H.S.R. debían ser trasladadas al estado de Massachusetts y ser entregas al Executive Offices of Health and Human Services Department of Socia Services de Boston. Esto se haría acompañadas por un funcionario del Departamento de la Familia de Puerto Rico, quien llevaría toda la evidencia obtenida de las menores para la acción pertinente en dicho estado. Además, el Tribunal de Primera Instancia dispuso en su resolución que el traslado se haría no más tarde del 30 de enero de 2004.
Luego de estudiados los hechos, así como el derecho aplicable, denegamos la expedición del auto de certiorari y como resolvió el Tribunal de Primera Instancia, las menores S.T.R. y H.S.R. deben ser trasladadas al estado de Massachusetts para ser entregadas al Executive Offices of Health and Human Services Department of Social Services.
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Las menores H.S.R. y S.T.R. debían regresar al estado de Massachusetts para el 26 de septiembre de 2003, fecha en la cual comenzaban las clases de las menores en dicha jurisdicción. El 22 de septiembre de 2003, la abuela materna de las menores, con la cual ellas se encontraban en Puerto Rico, recibió sus pasajes de regreso.
Así las cosas, el 26 de septiembre de 2003, fecha en que las menores debían regresar al estado de Massachusetts, el Departamento' de la Familia de Puerto Rico presentó una petición de custodia de emergencia al amparo del Artículo 35 de la Ley Núm. 342 de 16 de diciembre de 1999, 8 L.P.R.A. see. 443, hoy derogada por la Ley Núm. 177 de 1 de agosto de 2003, mejor conocida como la Ley para el Bienestar y Protección Integral de la Niñez, con el propósito de proteger a las menores A.V.R., S.T.R. y H.S.R., ya que entendía que éstas habían sido víctimas de maltrato, por alegadamente haber sido abusadas sexualmente por su padrastro, el señor Pedro Gómez, y que estaban en riesgo inminente de ser maltratadas nuevamente. (Ap. Certiorari, a las págs. 10-13.)
Ese mismo día, el Tribunal de Primera Instancia celebró una vista a los efectos de atender la solicitud de petición de custodia de emergencia. A la referida vista compareció la señora Brunymar Santos Colón, Trabajadora Social I del Departamento de la Familia de Puerto Rico, María M. Rivera Renta, abuela de las menores y las menores A.V.R., S.T.R. y H.S.R. El Tribunal de Primera Instancia, luego de escuchar los testimonios de la trabajadora social y el de las menores, le concedió la custodia provisional de las mismas al Departamento de la Familia de Puerto Rico. (Ap. Certiorari, a las págs. 14-17.) Además, señaló vista de ratificación de remoción de custodia para el 14 de octubre de 2003, según lo dispone el Artículo 38 de la Ley Núm. 342, 8 L.P.R.A. sec. 443c. (Ap. Certiorari, a las págs. 18-19.)
*161A la vista de ratificación, señalada para el 14 de octubre de 2003, compareció Brunymar Santos Colón, María M. Rivera Renta, la Procuradora Especial de Relaciones de Familia en representación de las menores A. V.R., S.T.R. y H.S.R. y el señor José R. Vargas, padre de la menor A.V.R. En la referida vista, según surge del acta, también compareció Deborah A. Rivera Rentas, parte demandada-recurrida y madre de las menores. Rivera Rentas, parte demandada-recurrida, sin someterse a la jurisdicción y por medio de su representación legal, alegó que nunca fue notificada del procedimiento en su contra, por lo que la remoción no fue conforme a derecho, y además sostuvo que el foro de instancia no tenía jurisdicción sobre dos (2) de sus tres (3) hijas menores, específicamente sobre S.T.R. y H.S.R., ya que las menores residen y estudian en el estado de Massachusetts el cual ya había asumido jurisdicción sobre las menores y no habían residido en Puerto Rico por lo menos seis (6) meses antes a la fecha en que el Departamento de la Familia de Puerto Rico presentara la petición de emergencia. Ante las alegaciones de la parte demandada-peticionaria, Deborah A. Rivera Rentas, sobre si tenía o no jurisdicción el tribunal, el foro de instancia señaló una vista para el 16 de octubre de 2003 para discutir el asunto jurisdiccional. (Ap. Certiorari, a las págs. 21-22.) Respecto a la menor A.V.R., la parte aquí demandada-peticionaria se sometió a la jurisdicción del tribunal, pues de la prueba presentada en evidencia surgía que dicha menor llevaba más de seis (6) meses residiendo en Puerto Rico, por lo que el foro de instancia señaló vista de ratificación.de custodia de dicha menor para el 9 de diciembre de 2003.
El 16 de octubre de 2003, se celebró una vista en auxilio de jurisdicción. En la referida vista, el Departamento de la Familia de Puerto Rico solicitó mantener la custodia de emergencia para comenzar a hacer gestiones con el estado de Massachusetts para verificar si se iba a seguir con la investigación sobre maltrato de las menores en ese Estado, o si por el contrario renuncia a su jurisdicción y cedía la misma para que en Puerto Rico se continuara con los procedimientos. Luego de reunirse las representaciones legales de las partes, la Leda. Sheila M. Torres Matías, abogada del Departamento de la Familia de Puerto Rico, le informó al Tribunal que las partes han acordado que la demandada-peticionaria, Rivera Rentas, se someta a la jurisdicción del tribunal en cuanto a la menor A.V.R., la cual lleva más de seis (6) meses en Puerto Rico y se señaló vista de ratificación de custodia para el 9 de diciembre de 2003. Además, expresó que en cuanto a las menores H.S.R. y S.T.R., la parte demandada-peticionaria acepta que el Departamento de Familia de Puerto Rico retenga la custodia provisional de emergencia al amparo P.K.P.A., sin someterse a la jurisdicción en cuanto a ellas. (Ap. Certiorari, a las págs. 23-26.)
El 6 de noviembre de 2003, el Tribunal de Primera Instancia emitió una resolución otorgando la custodia provisional de las menores H.S.R. y S.T.R. al Departamento de la Familia de Puerto Rico al amparo del P.K.P. A. (Ap. Certiorari, a las págs. 27-29.)
El 10 y 12 de diciembre de 2003, en el foro de instancia se celebró la vista de ratificación de privación de custodia. A la misma comparecieron como testigos el señor Noel Serrano Ostolaza, padre biológico de la menor H.S.R., la Dra. Iris Vélez, ginecóloga, y la Dra. Caro, psicóloga de la Universidad Carlos Albizu. Luego de que el foro de instancia evaluara toda la prueba presentada, encontró que existía prueba suficiente sobre los alegados maltratos y abuso sexual y se reafirmó en su orden del 6 de noviembre de 2003, manteniendo la jurisdicción de emergencia sobre las dos menores H.S.R. y S.T.R. al amparo del P.K.P.A. Además, el Tribunal de Primera Instancia, al ser la situación de autos una de alto interés público y en protección de las menores H.S.R. y S.T.R., ordenó que se mantuviera la evaluación de las mismas con la Dra. Caro. Por último, ordenó el foro de instancia que una vez concluidas las evaluaciones y que el informe esté rendido, las menores sean trasladadas por un funcionario del Departamento de la Familia de Puerto Rico y la evidencia obtenida a no más tardar del 30 de enero de 2004. (Ap. Certiorari, a las págs. 47-57.)
Finalmente, el 26 de enero de 2004, el Tribunal de Primera Instancia dictó sentencia parcial recogiendo lo anteriormente dispuesto. Específicamente, dispuso que luego de ponderar la prueba presentada tanto escrita como oral, determina que es el estado de Massachusetts el que tiene jurisdicción sobre las menores H.S.R. y S. T.R. Además, dispuso que al entender que hay prueba suficiente sobre maltrato, ordenó que se terminara el *162proceso de evaluación de las menores en la Universidad Carlos Albizu reteniendo la custodia de las menores hasta una vez se concluya ello. Por último, dispuso que una vez terminado el proceso de evaluación y con el informe de la Dra. Caro, las menores H.S.R. y S.T.R. deberán ser trasladadas a Massachusetts, no más tarde del 30 de enero de 2004, y ser entregadas al Departamento de Servicios Sociales en Boston, acompañadas por un funcionario del Departamento de Familia de Puerto Rico quien llevará toda la evidencia obtenida para la acción pertinente en el estado de Massachusetts. (Ap. Certiorari, a las págs. 2-8.)
El 29 de enero de 2004, la parte aquí demandante-peticionaria, Departamento de la Familia, al estar inconforme con dicha determinación, acudió ante nos mediante recurso de certiorari. En el misma alegó que erró el Tribunal de Primera Instancia al determinar que sólo existe jurisdicción de emergencia a tenor con los postulados del P.K.P.A. en cuanto a las menores H.S.R. y S.T.R. y que no existen los contactos mínimos necesarios para establecer jurisdicción en cuanto a las referidas menores. Además, alega que incidió el foro de instancia al determinar que no era la intención de la señora Rivera Rentas, en cuanto a las menores H.S.R. y S. T.R., el que éstas vinieran a residir a Puerto Rico, cuando de la prueba surge la intención voluntaria de éstas de beneficiarse de las leyes y de la protección del Estado Libre Asociado de Puerto Rico.
Al día siguiente, o sea el 30 de enero de 2004, la parte aquí demandante-peticionaria, Departamento de la Familia, presentó ante nos una moción en solicitud de auxilio de jurisdicción. Ese mismo día, este Tribunal emitió una Resolución ordenando la paralización de los procedimientos, incluyendo la orden emitida a los efectos de que las referidas menores regresen al estado de Massachusetts no más tarde del 30 de enero de 2004. Además, se le concedió a la parte demandada-recurrida, Rivera Rentas, que en un término de quince (15) días mostrara causa por la cual no se debía expedir el auto solicitado y el Tribunal de Primera Instancia en dicho término debía elevar los autos originales, salvaguardando la confidencialidad de los informes sociales.
El 17 de febrero de 2004, compareció ante nos la parte aquí demandada-recurrida, Rivera Rentas, mediante su escrito en oposición. El 31 de marzo de 2004, el Tribunal de Primera Instancia, Sala de Ponce, elevó los autos originales del caso ante nos.
Por ello, con el beneficio de la comparecencia de todas las partes y los autos originales del caso, nos encontramos en posición de resolver.
II
Para el año 1980, el Congreso de los Estados Unidos aprobó la legislación del Parental Kidnaping Prevention Act (en adelante P.K.P.A.), 28 U.S.C. sec. 1738A. El propósito primordial de esta legislación es promover la cooperación entre los estados, facilitar el cumplimiento de los decretos de custodia de otros estados, desalentar la competencia entre varias jurisdicciones y evitar conflictos entre tribunales de distintos estados en lo que respecta a determinaciones de custodia de menores. Declaración de Propósitos del P.K.P.A. de 1980, Pub. L. No. 96-611, sees. 7 (c) (1) - 7 (c) (5), 94 Stat. 3566, 3569 (1980). Véase además: Ortega, Jr. v. Morales Ortega, 131 D.P.R. 783, 788 (1992).
Dicha legislación fue promulgada para proteger la eficacia y validez que tiene un decreto de custodia emitido por un estado al ejercer validamente su jurisdicción. Pérez Pascual v. Vega Rodríguez, 124 D.P.R. 529, 536 (1989). Un estado está obligado a otorgarle entera fe y crédito a un decreto de custodia emitido validamente por otro estado. Id.
Por ello, es que el P.K.P.A. nos señala en la sección 1738-A que:
Ҥ1738A. Full faith and credit given to child custody determinations
(a) The appropriates authorities of every States shall enforce according to its terms, and shall not modify
*163
except as provided in subsection (f) of this section, any child custody determination made consistently with the provisions of this section by a court of another States. ”
De conformidad con lo anteriormente expuesto en el P.K.P.A. se requiere que un estado le de entera fe y crédito a un decreto de custodia de otro estado, siempre y cuando el estado que emitió el decreto lo haya hecho cumpliendo con lo dispuesto en la ley federal. En específico, el P.K.P.A. señala que sus disposiciones son aplicables a Puerto Rico. 28 U.S.C. sec. 1738A(b)(8); Sterzinger v. Ramírez, 116 D.P.R. 762, 786 (1985); Perrón v. Corretjer, 113 D.P.R. 593, 601 (1982).
Un término importante dentro de la legislación federal del P.K.P.A. es el de estado residencia del menor. Este concepto se ha definido en dicha legislación de la siguiente manera:
“(b) As used in this section, the term-
[...]
(4) "home State" means the State in which, immediately preceding the time involved, the child lived with his parents, a parent, or a person acting as parent, for at least six consecutive months, and in the case of the child less than six months old, the State in which the child lived from birth with any of such persons. Periods of temporary absence of any of such persons are counted as part of the six-month or other period;
28 U.S.C. sec. 1738A (b)(4).
De conformidad con lo anteriormente expuesto, se ha interpretado que el estado residencia del menor según lo dispone P.K.P.A. es aquél donde el menor ha residido con sus padres por lo menos seis (6) meses previo a la presentación de la petición de custodia de emergencia. Perrón v. Corretjer, supra, pág. 601; Mainster v. Mainster, 466 So. 2d. 1228, 1229 (Fla. App 2 Dist. 1985). No obstante, que el menor haya residido por un período de seis (6) meses en el estado que se presenta la petición de custodia, no excluye de manera automática la jurisdicción del estado en que se emitió la resolución inicial de custodia. Jesús A. v. Lizette A., 546 N.Y.S.2d. 284, 286 (1989).
Se ha resuelto que para que un estado que no es el de residencia de un menor, asuma jurisdicción sobre una petición de custodia de emergencia, debe probarse que el menor se encuentra en una situación de peligro pelear and present danger") por abuso o negligencia que amerita el ejercer la jurisdicción temporera. Curtis v. Curtis, 574 So. 2d. 24, 28 (1990). Cf. Shook v. Shook, 651 So.2d. 6, 9 (1994).
Al amparo del P.K.P.A., un decreto judicial sobre custodia de un menor es compatible con dicha legislación si cumple con lo siguiente:
7-7
(1) such court has jurisdiction under the law of such State; and
(2) one of the following conditions is met:
(A) such State (i) is the home State of the child on the date of the commencement of the proceeding, or (ii) had been the child's home State within six months before the date of the commencement of the proceeding and the child is absent from such State because of his removal or retention by a contestant or for other reasons, and
*164
a contestant continues to live in such State;
(B) (i) it appears that no other State would have jurisdiction under subparagraph (A), and (ii) it is in the best interest of the child that a court of such State assume jurisdiction because (I) the child and his parent, or the child and at least one contestant, have a significant connection with such State other than mere physical presence in such State, and (II) there is available in such State substantial evidence concerning the child s present or future care, protection, training, and personal relationships;
(C) the child is physically present in such State and (i) the child has been abandoned, or (ii) it is necessary in an emergency to protect the child because he has been subjected to or threatened with mistreatment or abuse;
(D) (i) it appears that no other State would have jurisdiction under subparagraph (A), (B), (C), or (E), or another State has declined to exercise jurisdiction on the ground that the State whose jurisdiction is in issue is the more appropriate forum to determine the custody of the child, and (ii) it is in the best interest of the child that such court assume jurisdiction; or
(E) the court has continuing jurisdiction pursuant to subsection (d) of this section. ”
28 U.S.C. sec. 1738A(c).
Resumiendo lo anteriormente expuesto, los dictámenes de custodia no deben ser modificados por los tribunales de otros estados, a menos que éstos adquieran jurisdicción bajo alguno de los siguientes criterios: porque el menor lleva residiendo en dicho estado por lo menos seis (6) meses consecutivos con sus padres o encargados antes de comenzar el procedimiento de custodia; o que donde se presenta el procedimiento de custodia es el estado residencia del menor antes de ser trasladado o retenido por una de las partes a otro estado durante los seis (6) meses anteriores; o que ningún otro estado tenga jurisdicción bajo los criterios antes mencionados; o que el niño se encuentre físicamente en dicho estado y lo hayan abandonado o exista una situación de emergencia que requiera de su protección porque ha sido víctima de maltrato o abuso; o que el estado con jurisdicción por residencia haya declinado a la misma o ya no la tenga y en el estado que se presenta el procedimiento de custodia sea el más apropiado para decidir dicha controversia por estar disponible la prueba. 28 U.S.C. sec. 1738A(a), (c) y (f); Perrón v. Corretjer, supra, a las págs. 602-604.
Reiteradamente se ha sostenido que un tribunal tiene autoridad para modificar una determinación de custodia decretada por otro tribunal si: tiene jurisdicción y el otro tribunal no la posee o ha declinado ejercerla. Perrón v. Corretjer, supra, a la pág. 603. A contrario sensu, un tribunal no debe ejercitarla si está pendiente una determinación análoga en un tribunal de otro estado que ha intervenido, ajustándose y de manera compatible con la norma jurisdiccional del estatuto. Id.
Cuando Puerto Rico es la jurisdicción de "residencia" bajo las disposiciones del P.K.P.A., las determinaciones de nuestros tribunales deben ser respetadas por otras jurisdicciones estatales. Pérez Pascual v. Vega Rodríguez, supra, a la pág. 535; Sterzinger v. Ramírez, supra; Perrón v. Corretjer, supra. De igual forma, los tribunales de Puerto Rico están obligados a otorgarle entera fe y crédito a un decreto de custodia emitido válidamente por cualquier estado de la Union. Pérez Pascual v. Vega Rodriguez, supra.
"[Ejxiste un criterio definitivo de que el campo está ocupado en lo concerniente a la prohibición federal de que un tribunal modifique una determinación válida de custodia de otro estado o ejercite jurisdicción concurrente de un pleito ya comenzado. Perrón v. Corretjer, supra, a la pág. 604.
*165III
Según surge del expediente ante nuestra consideración, en el caso de autos, el Tribunal del estado de Massachusetts ha estado interviniendo con la madre de las menores H.S.R. y S.T.R., parte aquí demandada-recurrida, desde el año 2002. A esos efectos, tanto el Tribunal de Massachusetts como el Executive Office of Health and Human Services Department of Social Services de Boston ha estado intervenido en el caso de autos, asumiendo dicho Departamento la custodia de las menores, la cual posteriormente se le devolvió a su madre al darle dicha parte cumplimiento al plan de servicio pautado. Además, es importante señalar que de los documentos que obran en el expediente ante nuestra consideración surge que el Executive Office of Health and Human Services Department of Social Services no ha terminado su intervención en el caso de autos, pues surge que hay un plan de servicios hasta diciembre de 2003. (Ap. Certiorari, a las págs. 35-42.)
Además, es importante señalar que en el caso de autos las menores H.S.R. y S.T.R. han vivido en el estado de Massachusetts la mayor parte de sus vidas, lugar en el que estudian y que su presencia en Puerto Rico se debió única y exclusivamente a que estaban de visita y vacaciones en casa de su abuela materna.
El Tribunal de Primera Instancia, Sala de Ponce, correctamente concluye que el estado residencia de las menores es Massachusetts y que el trámite por él pautado se debió a una situación de emergencia, pero el mismo no va dirigido a modificar la custodia de las menores de manera final lo cual le compete a los foro de Massachusetts.
Además, coincidimos con el foro de instancia respecto a que las menores deben ser trasladadas al estado de Massachusetts, previo a la coordinación del Departamento de la Familia de Puerto Rico con el Executive Offices of Health and Human Services Department of Social Services de Boston, sobre la forma en que se va hacer el mismo y que se le entregue a dicho Departamento todos los informes sociales y el Informe de Evaluación de Alegaciones de Abuso Sexual suscrito por Maritza Caro Velázquez, psicóloga clínica de la Clínica de Salud Mental de la Comunidad, Inc. así como cualquier otra evidencia pertinente para la evaluación de maltrato y abuso sexual que haya sido descubierta.
De conformidad con lo aquí dispuesto, es forzoso concluir que no incidió el foro de instancia al determinar que sólo existe jurisdicción de emergencia al amparo del P.K.P.A. y que una vez concluidas las evaluaciones psicológicas sobre abuso sexual, las menores deben ser devueltas al estado residencia de las mismas que en este caso en particular es Massachusetts.
IV
Por los fundamentos anteriormente expuestos, denegamos la expedición del auto de certiorari y se remiten los autos originales al Tribunal de Primera Instancia, Sala de Ponce, para la devolución de las menores S.T.R. y H.S.R. al estado de Massachusetts previa coordinación con las autoridades de esa jurisdicción. Además, se deja sin efecto la orden de paralización de los procedimientos.
Notifíquese inmediatamente vía facsímil y correo ordinario.
Lo acordó el Tribunal y lo certifica la Secretaria General.
Aida Ileana Oquendo Graulau
Secretaria General | 01-03-2023 | 11-23-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2986138/ | Order filed August 27, 2013.
In The
Fourteenth Court of Appeals
____________
NO. 14-12-00401-CV
____________
CAFFE RIBS, INC., A UTAH CORPORATION, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the County Civil Court at Law No. 3
Harris County, Texas
Trial Court Cause No. 839502
ORDER
On August 14, 2013, Tom Mackey Barnes, President of Caffe Ribs, Inc,
filed a request that Justice William J. Boyce be recused from participating in
consideration of this appeal.
Before any further proceeding in this case, Justice Boyce declined to recuse
himself and certified the matter to the entire court. See Tex. R. App. P. 16.3(b). A
majority of the remaining justices, sitting en banc outside the presence of Justice
Boyce, decided against recusal. See id. Accordingly, the recusal request is
DENIED.
Appellant is a corporation, Caffe Ribs, Inc., and the corporation is no longer
represented by counsel in this appeal. Instead, the corporation is attempting to
represent itself pro se through Tom Mackey Barnes, a corporate officer who is not
an attorney. Except for the performance of ministerial tasks, corporations may
appear and be represented only by a licensed attorney. Kunstoplast of Am., Inc. v.
Formosa Plastics Corp., U.S.A., 937 S.W.2d 455, 456 (Tex. 1996); see also Dell
Dev. Corp. v. Best. Indus. Uniform Sup. Co., 743 S.W.2d 302, 303 (Tex. App.—
Houston [14th Dist.] 1987, writ denied).
Motions and briefs submitted pro se on behalf of a corporation will not be
considered. If appellant seeks to file any further motions or briefs in this appeal,
appellant is required to obtain counsel.
PER CURIAM
2 | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2708664/ | NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted May 7, 2014*
Decided May 7, 2014
Before
DIANE P. WOOD, Chief Judge
WILLIAM J. BAUER, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
No. 13‐2484
SYLVESTER JACKSON, Appeal from the United States District
Plaintiff–Appellant, Court for the Western District of Wisconsin.
v. No. 11‐cv‐774‐bbc
RANDALL HEPP, et al., Barbara B. Crabb,
Defendants–Appellees. Judge.
O R D E R
Randall Jackson, a Wisconsin inmate, brought this action under 42 U.S.C. § 1983
claiming that a doctor, nurses, and other staff at Jackson Correctional Institution (“JCI”)
*
After examining the briefs and the record, we have concluded that oral
argument is unnecessary. Thus the appeal is submitted on the briefs and the record.
See FED. R. APP. P. 34(a)(2)(C).
No. 13‐2484 Page 2
violated the Eighth Amendment by failing to adequately treat his chronic back pain and
disregarding an outside podiatrist’s instructions for postoperative care after foot
surgery. On three occasions Jackson asked the district court to recruit counsel. The court
denied each request and eventually granted summary judgment for the defendants,
despite characterizing the many gaps in the evidence as troubling. On appeal Jackson
challenges the grant of summary judgment as well as the refusal to enlist a lawyer to
assist him. Because we conclude that the district court abused its discretion in refusing
Jackson’s requests for a lawyer, and that Jackson was prejudiced by those refusals, we
vacate the judgment and remand for further proceedings.
We recount the evidence at summary judgment in the light most favorable to
Jackson. See Arnett v. Webster, 658 F.3d 742, 749 (7th Cir. 2011); Gil v. Reed, 381 F.3d 649,
651 (7th Cir. 2004). Jackson, who is in his late forties and diabetic, first complained
about hip and back pain shortly after his transfer to JCI in November 2009.
Kenneth Adler, a prison physician, prescribed ibuprofen and authorized Jackson to
have an extra mattress. Dr. Adler later ordered hip X‐rays, which showed degenerative
disease in the right hip, and prescribed naproxen, a pain reliever. But afterward Jackson
complained repeatedly of worsening back pain. In one request for health services, he
said that at night the pain was so severe that often he could not walk to the toilet in
time. His back pain, says Jackson, kept him awake at night, made sitting for long
periods difficult, and sometimes made standing to walk unpleasant.
Over the course of the following year, Jackson saw Dr. Adler several times for his
back pain, but the plaintiff insists that the doctor misrepresented in his medical records
what transpired during those visits. (At summary judgment Dr. Adler submitted an
affidavit, but his account of Jackson’s visits appears to rest entirely on the plaintiff’s
medical records and not the doctor’s independent recollection. Dr. Adler does not
vouch for the accuracy of the information in Jackson’s medical records. Nor does the
doctor confront the plaintiff’s accusations that statements attributed to him in those
records—including records signed by Dr. Adler—are false.) For example, after Jackson’s
first visit in March 2010, Dr. Adler wrote in the medical records that Jackson was “not
taking pain medicines,” which Jackson says is untrue. Dr. Adler then prescribed more
ibuprofen and an evaluation by a physical therapist. That evaluation did not result in
actual therapy (apparently the therapist recommended that Jackson perform exercises on
his own), yet Dr. Adler wrote after Jackson’s next visit in April that his symptoms had
improved with physical therapy. And then after a visit in October, Dr. Adler wrote that
ibuprofen was helping Jackson’s back pain, yet the plaintiff insists that he never said
this and, in fact, told the doctor that his pain was worsening and the ibuprofen was not
No. 13‐2484 Page 3
helping. The doctor even noted in Jackson’s medical records that he lifts weights and
plays basketball daily, which Jackson denies having said and explains would have been
impossible since JCI inmates are not granted daily recreation privileges.
Meanwhile, in December 2010, Debra Tidquist, a nurse practitioner, ordered a
back X‐ray that showed, according to Jackson’s medical records, degenerative changes.
Tidquist declared, however, that “additional treatment” was unnecessary. Jackson
disagreed and continued complaining that his back pain was “severe” and sometimes
“unbearable.” Around the same time Tidquist also ordered a second evaluation by a
physical therapist and prescribed gabapentin, a drug used to relieve pain from nerve
damage. Not until April 2011 did Jackson see the physical therapist, and, as before, he
did not receive therapy after the evaluation. And when Jackson told Tidquist that the
gabapentin was not working, her response was to substitute prescription‐strength
acetaminophen.
As far as this record shows, Dr. Adler and Nurse Practitioner Tidquist did not
investigate other treatment options or consider sending Jackson to a specialist. And
though the plaintiff requested care for his back pain at least 14 times during 2011, there
is scant indication in the record that anything was done before October, not even after
Jackson had reported that his back condition caused him to fall against the sink in his
cell. Indeed, on eight occasions from May to October he was told that a medical
appointment had been scheduled but then was not called to the infirmary. Eventually,
in November 2011, Tidquist ordered another back X‐ray; this time she diagnosed mild
osteoarthritis but again declared that treatment was not indicated.
Jackson’s back pain was not his only ailment during this time. Since late 2009 the
medical staff also had been treating recurring infections in his big toes, which led to
surgical removal of both nails at a hospital in April 2011. The podiatrist instructed that
Jackson’s feet be soaked in soapy water daily for four to six weeks. After the surgery
Jackson was taken back to JCI, where a defendant nurse—he does not say
which—refused to bring a wheelchair or provide open‐toe shoes and instead forced him
to don heavy boots and hustle a significant distance to his cell on foot.
For the next two days, Jackson was called to the infirmary, where nurses
Georgia Kostohryz and Cheryl Marsolek soaked his feet as directed. But then two days
passed without a call from the infirmary, so on the fifth day after his return from the
hospital Jackson complained to Nurse Practitioner Tidquist. That complaint prompted
Kostohryz and Marsolek to give Jackson a foot tub, soaking solution, ointment, and
No. 13‐2484 Page 4
dressing and tell him to tend to his feet himself in his cell. He did for 13 days until the
tub and supplies were taken away when he was moved to a segregation cell. Jackson
notified Tidquist that he needed infirmary staff to resume performing the daily soaks,
and after hearing nothing for three days, he complained to Tammy Maassen, the
manager of the Health Services Unit at JCI. That same day, May 5, Kostohryz told him
that additional soaks were unnecessary. On May 6, after Jackson had replied that
Kostohryz and Marsolek were not authorized to disregard the podiatrist’s instructions,
the plaintiff was taken to the infirmary. Dr. Adler entered the room and declared—after
a quick glance at his feet, says Jackson—that further soaks were unnecessary because
his toes were healed.
This was 22 days after Jackson’s surgery. During those three weeks his feet had
been soaked as prescribed on only 15 days, and all but five of those days by Jackson
himself. Moreover, by the time Dr. Adler countermanded the podiatrist’s instructions
on May 6, five days had passed since staff last followed those instructions. Then on
May 8, two days after the doctor’s appearance, Jackson requested medical attention
because both toes were seeping blood and pus and the right toe was causing him
throbbing pain. Nurse Betty Peterson refused to schedule an exam, explaining that
Jackson, who still was in segregation, had just seen Dr. Adler two days before. That
evening Nurse Kostohryz refused to look at Jackson’s feet when she made her rounds,
and the next day a guard informed him that Marsolek and another nurse, Greg Meier,
had said he should wash off the blood and pus and wait for a call from the infirmary.
He was taken there the next day and seen first by Carla Griggs, a nurse, and then by
Dr. Adler. This time, says Jackson, the doctor did not even glance at his feet before
pronouncing them “well healed” and leaving the room.
During the next six days Jackson’s toes worsened but his requests for attention
went unheeded. A guard, Kevin Clark, said he “did not give a shit” when Jackson
showed him the blood and pus and asked him to contact the infirmary. The plaintiff
also asked Nurse Marsolek to schedule an infirmary visit; at summary judgment
Marsolek averred that Jackson had refused to see anyone except Nurse Practitioner
Tidquist, who was on leave, but in fact, says Jackson, he accepted an appointment with
Dr. Adler on May 16. During that appointment, Nurse Griggs consulted Dr. Adler
before taking a culture and sending Jackson on his way. A day later the lab confirmed
that his toes were infected. Dr. Adler finally prescribed an antibiotic, but it was not until
May 20 that Tidquist reinstated the daily foot soaks, after Jackson had complained that
his back condition made washing his feet in his cell sink painful.
No. 13‐2484 Page 5
When he filed suit Jackson raised many claims that were not joined properly
with those concerning his back pain and postoperative care for his toes. After the
district court alerted him about the misjoinder, Jackson elected to proceed against
Dr. Adler; Nurse Practitioner Tidquist; Nurses Kostohryz, Marsolek, Peterson, Meier,
and Griggs; guard Clark; and HSU manager Maassan. Jackson also named as
defendants the then‐Secretary of the Department of Corrections, then‐warden Randall
Hepp, and a grievance officer, all of whom he had complained to directly. At screening,
see 28 U.S.C. § 1915A, the court allowed him to proceed with his Eighth Amendment
claims against all of these defendants.
Soon after his complaint was screened, Jackson filed his first of three motions
requesting recruitment of counsel, asserting that his case was complex because of the
nature of his claims and number of defendants involved. The district court denied his
request, explaining that it was too early in the proceedings to tell whether Jackson
lacked the ability to litigate his case. Jackson renewed his motion eight months later,
adding that he had been placed on an antidepressant and psychiatric medication, which
made it difficult for him to focus. He also argued that his claims of deliberate
indifference likely would require expert testimony, and that a lawyer’s help would be
needed to highlight misrepresentations by the defendants. The district court again
denied his motion, this time reasoning that Jackson’s submissions so far had been
coherent and showed that he could understand court instructions. In Jackson’s third
motion, filed after the defendants had moved for summary judgment, he renewed his
earlier arguments, and stated that he had been moved to segregation and could not
contact and interview witnesses at JCI. Again the district court denied his request,
explaining that Jackson’s “situation” had not changed enough from when the court
denied his prior motion.
On appeal Jackson contests the denials of his requests for counsel, as well as the
entry of summary judgment. We agree with him that the district court should have
recruited a lawyer, though we also have doubts that granting summary judgment was
appropriate on the existing record. Jackson argues that he needed a lawyer because the
case turned on whether his or the defendants’ versions of his treatment were correct, he
was on “psych” medication during the proceedings, and he could not effectively litigate
whether the level of treatment he did receive was adequate. We review the district
court’s decision not to recruit counsel for an abuse of discretion. Navejar v. Iyiola, 718
F.3d 692, 696 (7th Cir. 2013); Pruitt v. Mote, 503 F.3d 647, 654 (7th Cir. 2007) (en banc).
No. 13‐2484 Page 6
When a plaintiff makes a reasonable attempt to obtain counsel, the district court
must evaluate whether the factual and legal difficulty of the case exceeds that plaintiff’s
ability to litigate it. Navejar, 718 F.3d at 696; Bracey v. Grondin, 712 F.3d 1012, 1016
(7th Cir. 2013). The defendants do not dispute that Jackson suffered from objectively
serious medical conditions. Thus, to survive summary judgment on his Eighth
Amendment claims, Jackson needed evidence establishing that the care he received for
his chronic back pain and for his feet after surgery was so inappropriate that a jury
reasonably could find that the defendants intentionally disregarded risks to his health,
see Hayes v. Snyder, 546 F.3d 516, 524 (7th Cir. 2008), or unnecessarily prolonged his
pain, McGowan v. Hulick, 612 F.3d 636, 640 (7th Cir. 2010). Constitutional claims that
depend on the state of mind of a defendant or that turn on witness credibility may be
too complex for a pro se plaintiff to litigate. Santiago v. Walls, 599 F.3d 749, 761 (7th Cir.
2010); Swofford v. Mandrell, 969 F.2d 547, 552 (7th Cir. 1992). Complexity must be
assessed with an eye toward the plaintiff’s education, literacy level, psychological
history, and litigation experience. See Santiago, 599 F.3d 749 at 762.
Although it may be that Jackson could follow instructions from the court, that
does not mean he also was able to engage in discovery effectively, especially in a case
where medical evidence from outside experts is likely to be critical. Moreover, when
Jackson submitted his second request, he was taking psychiatric medications that made
it difficult for him to focus. And by the time he made his third request, he was
hampered in responding to the defendants’ motion for summary judgment because he
was housed in segregation. The district court’s observation about the gaps in the
evidence, and Jackson’s inability to exploit those gaps in fending off the defendants’
motion for summary judgment, show why help from counsel was essential.
Jackson has shown a reasonable likelihood that a lawyer would have made a
difference in the outcome of his case. Even where a district court has abused its
discretion in declining to recruit counsel, we will reverse only if the plaintiff has shown
he was prejudiced by that denial. Navejar, 718 F.3d at 696; Bracey, 712 F.3d at 1017. The
defendants assert that Jackson has waived any argument that the denial of counsel
prejudiced him. We disagree; in his brief to this court, Jackson argues that the absence
of a lawyer inhibited his ability to challenge the adequacy of the treatment he did
receive, and to identify and contact witnesses who were not present at JCI.
Jackson needed the assistance of counsel, and it is clear that he was prejudiced by
the absence of a lawyer. Accordingly, we VACATE the grant of summary judgment for
the defendants and REMAND for further proceedings. | 01-03-2023 | 08-05-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1882327/ | 124 F. Supp. 607 (1954)
Frances Irene PFLUGH, Administratrix of the Estate of Charles R. Pflugh, deceased, Plaintiff,
v.
UNITED STATES of America, Defendant.
Civ. No. 11561.
United States District Court. W. D. Pennsylvania.
September 29, 1954.
*608 John L. Laubach, Jr. (of Rose, Rose & Houston), Pittsburgh, Pa., for plaintiff.
D. Malcolm Anderson, Jr., Asst. U. S. Atty., Pittsburgh, Pa., for defendant.
GOURLEY, Chief Judge.
In this action under the Federal Tort Claims Act, 28 U.S.C.A. §§ 1346, 2671 et seq., the Government moves to dismiss the proceeding on the ground that the action was not properly instituted by a duly appointed representative of the Estate of Charles R. Pflugh as provided by the Act.
The accident occurred on July 23, 1951, and on July 7, 1953 Frances Irene Pflugh filed the action against the United States of America as Administratrix of the Estate of Charles R. Pflugh, her deceased husband. At the time the action was filed she was not duly appointed as the Administratrix of the Estate of her husband, said appointment not being made in accordance with the provisions of the law of the Commonwealth of Pennsylvania until October 7, 1953. Under the facts in this case, the statute of limitations is two years after the cause of action arises. 28 U.S.C.A. § 2401(b).
Since the deceased husband was a resident of the Commonwealth of Pennsylvania at the time of his death, the law of Pennsylvania controls as to the appointment of the representative of his estate.
Under Pennsylvania law a person entitled to letters of administration may act for benefit of an estate even before taking out letters, and letters of administration, when granted, relate back so as to validate acts previously performed as necessary for proper administration of the estate. Bolitho v. Buch Exp., Inc., D.C., 14 F.R.D. 245; McGlothan v. Pa. R. Co., D.C., 74 F. Supp. 808, this case was reversed on other grounds, 3 Cir., 170 F.2d 121; In re Purman's Estate, 334 Pa. 238, 5 A.2d 906.
In view of the foregoing, since the action was filed by the widow as administratrix of the estate of her husband within the two year period provided by the Federal Tort Claims Act, the motion to dismiss is refused.
An appropriate order is entered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1978552/ | 705 F. Supp. 237 (1988)
UNITED STATES of America
v.
Anthony J. CURCIO, a/k/a "Anthony Rizzo" and Carmen J. D'Amato, a/k/a "Butchie".
Cr. Nos. 88-196-1, 88-196-2.
United States District Court, E.D. Pennsylvania.
December 30, 1988.
*238 Robert E. Courtney, III, Philadelphia Strike Force, Philadelphia, Pa., for plaintiff.
James C. Schwartzman, Philadelphia, Pa., for defendant D'Amato.
Louis Savino, Philadelphia, Pa., for defendant Curcio.
MEMORANDUM AND ORDER
DITTER, District Judge.
Defendant Carmen D'Amato moves to suppress physical evidence seized during a warrantless search of a hidden room on the second floor of a Philadelphia warehouse. For the reasons set forth below, his motion is denied.
FACTS
Most of the facts relevant to this motion are undisputed. In February of 1984, D'Amato entered into a lease for property on Richmond Street, Philadelphia, with David Mermelstein, a partner and co-owner of the Active Realty Company ("Active Realty"), which was an agent for the Active Realty Company Profit Sharing Trust ("Active Trust"), the record owner of the property. The lease was to run from March 1 through June 30, 1984. The lease contemplated a sale of the property from Active Trust to D'Amato. Paragraph 2 of an addendum states:
This is a month to month lease to end in four months in the event they [the leasor and leasee] complete settlement beforehand lease will terminate, otherwise it will continue month to month. Thirty days notice will be given by either party prior to ending occupancy.
The parties orally agreed that if any other tenants could be found to occupy parts of the property, the rental payments from these tenants would be set off against D'Amato's rent.
By October of 1984, the sale of the Richmond Street property had not taken place, although the parties continued to abide by the other terms of the lease. On October 3, 1984, D'Amato's co-defendant, Anthony Curcio, gave Mermelstein a deposit to be credited towards the purchase of the property. Two days later, a sales agreement *239 was drafted, though not signed, between Active Trust and Uptight Siding Company, a business owned by D'Amato and members of his family.
The sale of the Richmond Street property never took place. In early 1985, Hummel Engineering Company began to rent and exclusively to occupy the first floor of 3320 Richmond Street. In March of 1985, Mermelstein refunded all money deposited towards the sale of the property. By May of 1985, the parties agreed that the sale had "fallen through" and that D'Amato no longer intended to buy the property. D'Amato gave a set of keys to the second floor of the property to Mermelstein and retained a set for himself. D'Amato understood that Mermelstein would be showing the second floor to prospective tenants. Mermelstein told D'Amato that he could continue to store boxes of equipment on the first floor until Mermelstein found new tenants for the second floor. As of November 12, 1986, no new tenants had been found.
On November 7, 1986, pursuant to information from an informant regarding the alleged unlawful production of methamphetamine on the second floor of 3320 Richmond Street, Drug Enforcement Administration Agent Fred Butler sought the consent of Active Realty to search the property. That day, Iris Freidfeild, the office manager of Active Realty, signed a consent to search form authorizing DEA agents to search the property at 3318-3322 Richmond Street. On November 12, 1986, before the search took place, Agent Butler also obtained Mermelstein's verbal consent to search the property.
The search was conducted the afternoon of November 12. During the course of the search, the DEA agents noticed that there were some personal effects belonging to D'Amato on the first floor, but they did not search or seize these items. The second floor appeared to have been vacated. Although the space had been divided into small offices, none seemed to be in use. While searching the second floor, Agent Butler discovered a "hidden room" behind a temporary wall that had been built adjacent to the bathroom. By removing a panel, the agents were able to enter the hidden room. Like the rest of the second floor, this room appeared to be unoccupied. With the exception of a water heater, piping, a sink, a ceiling fan, and some shelving, the room contained no fixtures and very few personal items. Before the DEA agents executed a full search of the hidden room, but after the room was discovered and observed, Agent Butler obtained the written consent of Mermelstein, who had since arrived at the property, to search the entire second floor of 3320 Richmond Street.
The DEA agents collected scrapings and residue from the walls, ceiling fan, sink, and insulation of the hidden room, as well as pieces of insulation material, rug padding, fiberglass panels, and bottle stoppers discovered in plain view. Upon laboratory analysis, some of these materials tested positive to the presence of methamphetamine. These materials are now the subject of D'Amato's motion to suppress.
DISCUSSION
I. Standing
In Rakas v. Illinois, 439 U.S. 128, 134, 99 S. Ct. 421, 425, 58 L. Ed. 2d 387 (1978), the Supreme Court held that suppression may only be sought by those whose Fourth Amendment rights have been violated. The proponent of the motion to suppress has the burden of establishing that his Fourth Amendment rights were violated, id. at 130 n. 1, 99 S. Ct. at 424 n. 1; the court then determines whether the movant has a "legitimate expectation of privacy in the invaded place." Id. at 143, 99 S. Ct. at 430. If the area searched was not within the movant's zone of privacy, his constitutional rights were not violated, and he has no standing to challenge the search. Id. at 133-34, 99 S. Ct. at 424-25.
In this case, D'Amato avers that the government cannot properly rely on the third-party consents to search obtained from Freidfeild and Mermelstein in light of his superior property interest as leasee of the second floor of 3320 Richmond Street. To support his claim, D'Amato points to paragraph 24 of the February, 1984, lease *240 with Mermelstein[1] and to paragraph 2 of the addendum, see supra p. 238, both of which provide for a continuation of the lease on a month to month basis, absent written notice of termination by one of the parties. He alleges that neither he nor Mermelstein had ever executed a written notice of termination. He further alleges that he had done repair work and had made improvements for his benefit and for the benefit of Hummel Engineering. When the sale fell through, D'Amato claims that he "negotiated with Hummel," Tr. at 83, in order to remain on the premises for an indefinite period of time in exchange for the value of improvements made. Although this alleged agreement was never reduced to writing, he asserts that Mermelstein orally consented to this arrangement, thereby rendering D'Amato a leasee with a reasonable expectation of privacy in the second floor at the time of the search.
Although the law of property does not control the validity of a third-party consent or the existence of a legitimate expectation of privacy, see Rakas, 439 U.S. at 143, 99 S. Ct. at 430; United States v. Matlock, 415 U.S. 164, 171 n. 7, 94 S. Ct. 988, 993 n. 7, 39 L. Ed. 2d 242 (1974), it is often useful in certain limited circumstances where it has been invoked as the only ground for standing. See United States v. Sledge, 650 F.2d 1075, 1081-82 (9th Cir.1981). Paragraph 24 is a standard Form 50 lease provision that exists for the protection of the landlord so that tenants who continue to occupy property beyond the lease's expiration date remain liable for rent. Paragraph 2 of the addendum parallels the rent guarantee afforded the lessor in paragraph 24 of the lease.
D'Amato's attempt to invoke these lessor-protection provisions to create a month-to-month tenancy in the second floor of 3320 Richmond Street must fail. D'Amato's lease for the entire premises expired two and a half years before the search took place. He had ceased paying rent and had completely abandoned the second floor at least a year and a half before the search. D'Amato did not become a tenant in sufferance simply by virtue of the fact that neither he nor an agent for Active Trust bothered to sign a written notice of termination. Mermelstein's willingness to allow D'Amato to store goods on the first floor hardly created an implied tenancy with respect to the second floor; likewise, without an express agreement between D'Amato and Active Trust,[2] improvements made to the property by D'Amato for his benefit and for the benefit of Hummel did not constitute "rent."
D'Amato has presented no evidence that could lead a reasonable person to conclude that on November 12, 1986, he had any right to possession, custody, or control of the premises; hence, D'Amato had no legitimate expectation of privacy in the area searched. See United States v. Baron-Mantilla, 743 F.2d 868, 870 (11th Cir.1984); see also Abel v. United States, 362 U.S. 217, 241, 80 S. Ct. 683, 698, 4 L. Ed. 2d 668 (1960) (search of defendant's hotel room after he had checked out and paid bill did not violate Fourth Amendment); Sledge, 650 F.2d at 1978-79 (defendant loses legitimate expectation of privacy in abandoned rental property). Compare Stoner v. California, 376 U.S. 483, 84 S. Ct. 889, 11 L. Ed. 2d 856 (1964) (third-party consent invalid *241 where police knew defendant still occupying hotel room). Without a legitimate expectation of privacy, D'Amato lacks standing to challenge the constitutionality of the search. See Baron-Mantilla, 743 F.2d at 870.
II. Third-Party Consent
Even if I were to assume, arguendo, that D'Amato had a legitimate expectation of privacy in the second floor of 3320 Richmond Street, I would nonetheless conclude that under the totality of the circumstances, Schneckloth v. Bustamonte, 412 U.S. 218, 227, 93 S. Ct. 2041, 2047, 36 L. Ed. 2d 854 (1973), the third-party consent at issue here was valid.[3]
In United States v. Gradowski, 502 F.2d 563, 564 (2d Cir.1974), the Second Circuit articulated a concise test based on the Supreme Court's decision in Matlock, 415 U.S. at 171, 94 S. Ct. at 993, to determine the validity of third party consents to search: "Consent to search by one with access to the area searched, and either common authority over it, a substantial interest in it or permission to exercise that access, express or implied, alone validates the search." In this case, the consents to search challenged by D'Amato satisfy not one, but all, of the Gradowski criteria.
D'Amato testified at the suppression hearing that he gave Active Realty keys to the second floor, Tr. at 82, as well as verbal permission to show the space to prospective tenants and to enter for "emergency purposes," Tr. at 79. Thus, as agents of Active Realty, Freidfeild and Mermelstien not only had physical access to the second floor of 3320 Richmond Street, but also had D'Amato's express permission to enter.[4] D'Amato stated that Active Realty was "acting as an agent for myself...." Tr. at 85. In United States v. Baswell, 792 F.2d 755 (8th Cir.1986), the Eighth Circuit affirmed the district court's denial of a motion to suppress evidence seized pursuant to a warrantless, third-party consent search where the district court had found an implied agency relationship between the home-owner and his caretaker, the consenting third party. The court held that this agency relationship, which gave the caretaker the right to enter the home and to "look out for the property," also gave him the "`implied authority' ... to authorize the entry of investigating officers if he thought someone was doing something unlawful." Id. at 759.
Although in Baswell, the evidence was not being offered against the homeowner, who had created the agency relationship, but against another individual with a legitimate expectation of privacy in the home, D'Amato's case nonetheless provides an analogous, if not more concrete, situation. D'Amato intended for Active Realty to act as his "agent." He also intended for Active Realty to take care of the premises in an emergency. D'Amato cannot now claim that Freidfeild and Mermelstein, as representatives of his "agent," Active Realty, did not have the "`implied authority' ... to authorize the entry of investigating officers if [they] thought someone was doing something unlawful." Id.[5] Surely the *242 possibility of criminal activity, past or present, would constitute an "emergency" in the minds of Freidfeild and Mermelstein.[6]
At a minimum, Active Realty had "common authority" over the area searched, Gradowski, 502 F.2d at 564, rendering valid any consent to search executed by an agent of Active Realty, even absent D'Amato's express permission. Common authority exists where there is
mutual use of the property by persons generally having joint access or control for most purposes, so that it is reasonable to recognize that any of the co-inhabitants has the right to permit the inspection in his own right and that the others have assumed the risk that one of their number might permit the common area to be searched.
Matlock, 415 U.S. at 171 n. 7, 94 S. Ct. at 993 n. 7. Courts have applied the Matlock definition to cases involving uses of property other than residential. E.g., United States v. Rizk, 842 F.2d 111 (5th Cir.) (consent search of briefcase), cert. denied, ___ U.S. ___, 109 S. Ct. 90, 102 L. Ed. 2d 66 (1988); United States v. Cook, 530 F.2d 145, 148 (7th Cir.) (consent search of poultry house), cert. denied, 426 U.S. 909, 96 S. Ct. 2234, 48 L. Ed. 2d 835 (1976). The Ninth Circuit has held that common authority need not exist in fact, so long as the police "`in good faith relie[d] on what reasonably, if mistakenly, appear[ed] to be ... authority to consent to the search.'" United States v. Hamilton, 792 F.2d 837, 842 (9th Cir.1986) (quoting Sledge, 650 F.2d at 1081).[7]
D'Amato testified that as of December of 1985, his pest control business, which he had formerly operated out of the second floor, was inactive. Tr. at 86. He did not claim to have any other use for the property after that time. Agent Butler testified that he made an effort to determine who owned the Richmond Street property and whether there were any current leasees of the second floor before pursuing consents to search. Tr. at 31-34. Based on all the testimony, I find that Agent Butler acted with care before deducing that no one occupied the second floor in November of 1986, and that it was reasonable for him to rely on the facts as presented by Freidfeild and Mermelstein in concluding that Active Realty, as record owner of the property, at the very least had "joint access or control for most purposes." Hamilton, 792 F.2d at 842.
*243 Although Mermelstein testified that he entered the second floor less than three times after January of 1985, Tr. at 59, the absence of actual use does not preclude a finding of common authority. In Cook, 530 F.2d 145, the court explained that "the determining factor in the [common authority] decision was that of assumption of the risk." Id. at 149 (term "mutual use" is "given content" by term "assumed the risk"). The assumption of the risk doctrine, first introduced in Frazier v. Cupp, 394 U.S. 731, 740, 89 S. Ct. 1420, 1425, 22 L. Ed. 2d 684 (1969) (by sharing duffle bag with cousin, defendant "assumed the risk that [cousin] would allow someone else to look inside"), and later relied on in Matlock, 415 U.S. at 170-71, 94 S. Ct. at 992-93, has predominated in Fourth Amendment cases. Cook, 530 F.2d at 146. By providing Active Realty with keys to the second floor and by condoning the inspection of the area by potential leasees of Active Realty, D'Amato assumed the risk that Active Realty might allow DEA personnel to inspect the second floor as well. See United States v. Piet, 498 F.2d 178, 181 (7th Cir.) (defendant assumed risk that consenter would permit search when he gave consenter possession of keys to warehouse), cert. denied sub nom., Markham v. United States, 419 U.S. 1069, 95 S. Ct. 655, 42 L. Ed. 2d 664 (1974). In light of the foregoing, any alleged privacy interest in the Richmond Street property that D'Amato might assert would be nonexclusive; therefore, at a minimum, Active Realty had common authority to consent to a search.
III. Enclosed Spaces
D'Amato alluded to the existence of an independent privacy interest in the "hidden room" discovered when Agent Butler moved a wall panel. Indeed, prior decisions have recognized that an otherwise valid third-party consent does not necessarily cover every object or enclosed space. See, e.g., United States v. Block, 590 F.2d 535, 541 (4th Cir.1978) (although mother could consent to search of house, she could not consent to search of son's footlocker found in his room); United States v. Padrone, 657 F. Supp. 840, 847 (D.Del.1987) (authority to consent to search of car does not extend to another's luggage found within car), aff'd without op. sub. nom., United States v. Rubio, 857 F.2d 1466 (3d Cir.), cert. denied, ___ U.S. ___, 109 S. Ct. 512, 102 L. Ed. 2d 547 (1988); United States v. Gilley, 608 F. Supp. 1065, 1068 (S.D.Ga. 1985) (guests in house have separate privacy interest in own luggage which cannot be waived by host's consent to search general premises). In this case, however, any attempt to invoke a separate privacy interest in the hidden room is misplaced. The hidden room is unlike a piece of luggage or a footlocker. It does not constitute personal effects found within the general area searched, nor does it resemble a closed compartment, such as a wall safe, which retains its integrity even if removed from the premises itself. Instead, the hidden room is merely an artificially segregated portion of the second floor which loses its distinction when an access panel is removed from the wall.
In Frazier v. Cupp, 394 U.S. 731, 740, 89 S. Ct. 1420, 1425, 22 L. Ed. 2d 684 (1969), the Supreme Court refused to "engage in such metaphysical subtlties" where the defendant alleged that although he had given the consenting third party permission to share his duffle bag, that permission did not extend to the compartment of the duffle bag in which the police found incriminating evidence. More recently, in United States v. Morales, 861 F.2d 396 (3d Cir.1988), the Third Circuit, distinguishing Block, rejected defendant's assertion of an independent privacy interest in a hollowed-out compartment behind the rear seat of his car. The court held that a third party's valid consent to search the general interior of the car extends to "an immediately apparent, readily accessible compartment." At 401. Applying Frazier and Morales to the facts before me, I find that Freidfeild and Mermelstein's consents to search the entire Richmond Street property, and Mermelstein's specific consent to search the second floor, automatically incorporated the hidden room.
Even assuming that D'Amato's expectation of privacy survived Frazier and Morales, *244 and he were able to establish a special privacy interest in the hidden room, on the basis of the Gradowski test, I would still deny his motion. Agents of Active Realty clearly had the means to access the hidden room by way of a key to the second floor and by the removal of a temporary wall panel. They also had D'Amato's implied permission to exercise this access. D'Amato agreed that prospective tenants could examine the premises. It is certainly foreseeable that a reasonable person would want to inspect the property thoroughly before signing a lease. It is also foreseeable that in the course of such an inspection, that person would decide to examine the water heater, as well as the piping to which it is connected, both of which were contained in the hidden room. Furthermore, it would be reasonable for a potential tenant to measure the dimensions of the second floor and to discover that a portion of the advertised space was "missing." By allowing agents of Active Realty to admit prospective tenants to the second floor, D'Amato not only assumed the risk that those agents would admit DEA personnel to the area, Frazier, 394 U.S. at 740, 89 S. Ct. at 1425, but he also assumed the risk that any observers might discover and inspect the hidden room.
CONCLUSION
D'Amato had no legitimate expectation of privacy in the second floor of 3320 Richmond Street on the day the search took place. Alternatively, any privacy interest he may have retained was properly waived by Active Realty's third-party consent.
NOTES
[1] Paragraph 24 states in pertinent part:
[E]ither party hereto may determine this lease at the end of said term by giving to the other party written notice thereof at least thirty days prior thereto, but in default of such notice, this lease shall continue upon the same terms and conditions in force immediately prior to the expiration of the term hereof ... from month to month.
[2] Hummel Engineering was merely a tenant of Active Trust in March of 1985, and not an agent authorized to negotiate lease agreements with other tenants. Therefore, even if I were to accept as true D'Amato's testimony that he "negotiated with Hummel," Tr. at 83, for permission to remain on the property in consideration for repairs already made to the building, this agreement would not bind Active Trust. Furthermore, it is far from clear whether Hummel intended for D'Amato to remain on the premises as a tenant, or whether its permission merely extended to D'Amato's boxes on the first floor. In any event, I find Mermelstein's testimony that the repair work was voluntary and not in consideration for an extended tenancy, Tr. at 58-59, to be credible and consistent with the other facts.
[3] Schneckloth v. Bustamonte mandates that as an initial matter, "`[w]hen a prosecutor seeks to rely upon consent to justify the lawfulness of a search, he has the burden of proving that the consent was, in fact, freely and voluntarily given.'" 412 U.S. 218, 222, 93 S. Ct. 2041, 2045, 36 L. Ed. 2d 854 (1973) (quoting Bumper v. North Carolina 391 U.S. 543, 548, 88 S. Ct. 1788, 1791, 20 L. Ed. 2d 797 (1968)). D'Amato has not challenged the voluntariness of the consents given by either Freidfeild or Mermelstein.
[4] Active Realty's "substantial interest" in the second floor of 3320 Richmond Street derives from its status as a lessor actively engaged in the search for a tenant, and as an agent for Active Trust, the record owner of the property. This element of the Gradowski criteria requires no further discussion.
[5] D'Amato makes much of the fact that Active Trust, and not Active Realty, is the record owner of the Richmond Street property. D'Amato argues that if I were to find that a consent search per se did not violate his Fourth Amendment rights, I would nonetheless have to conclude that the consents by the agents of Active Realty, as opposed to the trustees of Active Trust, were invalid since Active Realty had no ownership interest in the premises. D'Amato's assessment of the law regarding third-party consents is incorrect. In a third-party consent case, the relevant issue is whether the consenting party has the defendant's authority, either express or implied, to admit others onto the premises. The property interest of the consenting party with respect to the area searched is irrelevant. Furthermore, there is no requirement that the consenting party have a legitimate expectation of privacy in the property. Nevertheless, for the record, I find that any consent to search by representatives of Active Realty, agent for Active Trust, legally binds Active Trust.
[6] The Ninth Circuit has attached "special significance" to the fact that a suppression movant entrusted a key to the premises to the consenting third party. United States v. Gulma, 563 F.2d 386, 389 (9th Cir.1977) (third party's consent to search hotel room did not violate Fourth Amendment where defendant gave him key with no intention to return); United States v. Murphy, 506 F.2d 529, 530 (9th Cir.1974) (employee with key to employer's warehouse for purposes of performing work on premises can consent to search), cert. denied, 420 U.S. 996, 95 S. Ct. 1433, 43 L. Ed. 2d 676 (1975); see also United States v. Dubrofsky, 581 F.2d 208, 212 (9th Cir.1978) (third party with key and access to property can give valid consent). Without more, a key to the premises will not validate a third party's consent to search. In D'Amato's case, however, when considered along with other evidence of access, Mermelstein's key to the second floor destroys D'Amato's expectation of privacy.
[7] The "good faith defense" recognizes that the exclusionary rule is not advanced by excluding otherwise probative evidence seized pursuant to an officer's reasonable, albeit incorrect, belief that a third party has the power to consent. Courts have denied suppression where an officer acted in good faith in ascertaining whether a third party possessed the necessary authority to consent. See Sledge, 650 F.2d at 1080-81 & nn. 4, 5. Therefore, even if I were to have found in Part I that D'Amato had not actually abandoned the second floor, he could not successfully challenge the search since Agent Butler relied in good faith on Mermelstein and Freidfeild's recitation of the facts, the leasehold records, the voided sales agreement, and his own observations. See id. at 1079. Likewise, in Part II, absent express permission by D'Amato for Active Realty to exercise its access to the property, the DEA agents reasonably concluded that Active Realty had D'Amato's implicit authority to admit outsiders to the second floor. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4165755/ | IN THE COURT OF APPEALS OF IOWA
No. 16-0762
Filed May 3, 2017
STATE OF IOWA,
Plaintiff-Appellee,
vs.
MARQUIS TAYLOR,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Gregory D. Brandt,
District Associate Judge.
A defendant challenges his guilty plea to harassment in the second
degree. AFFIRMED.
Jesse A. Macro Jr. of Macro & Kozlowski, L.L.P., West Des Moines, for
appellant.
Thomas J. Miller, Attorney General, and Kristin A. Guddall (until
withdrawal) and Kevin R. Cmelik, Assistant Attorneys General, for appellee.
Considered by Potterfield, P.J., and Doyle and Tabor, JJ.
2
TABOR, Judge.
Marquis Taylor appeals the judgment and sentence following his guilty
plea to harassment in the second degree. Taylor asks us to vacate his
conviction because the plea-taking court did not tell him about the mandatory
surcharge on his fine. For the reasons described below, Taylor may pursue this
issue only by alleging his plea counsel was ineffective in failing to file a motion in
arrest of judgment. Under that framework, we affirm Taylor’s conviction but
preserve his claim counsel was ineffective for possible postconviction-relief
proceedings.
The State charged Taylor with second-degree harassment, a serious
misdemeanor, in violation of Iowa Code section 708.7(3) (2015), based on a
threat of physical harm Taylor voiced to police officers after being arrested for
driving while his license was revoked. Taylor signed a petition to plead guilty that
included information about the potential incarceration (up to one year in jail), as
well as the minimum ($315) and maximum ($1875) fines for serious
misdemeanor offenses.1 See Iowa Code § 903.1(1)(b).
The district court accepted Taylor’s plea on March 10, 2016, and set
sentencing for April 4. At sentencing, the court entered judgment; imposed a
one-year jail term, suspending all but seven days; and ordered Taylor to pay the
minimum fine of “$315 plus surcharge.” That surcharge, mandated under Iowa
Code section 911.1(1), is the focus of this appeal.
1
A plea-offer form filed by the State shortly after Taylor’s arrest included a check box for
“[ ] Fine of $ ___ + 35% surcharge,” but that information was not mentioned during the
guilty-plea proceedings.
3
We first examine whether Taylor may directly challenge his guilty plea or
may do so only through a complaint about his counsel’s performance. Generally,
“[a] defendant’s failure to challenge the adequacy of a guilty plea proceeding by
motion in arrest of judgment shall preclude the defendant’s right to assert such
challenge on appeal.” Iowa R. Crim. P. 2.24(3)(a). But this rule does not apply
to defendants who are not properly advised under rule 2.8(2)(d) that failure to file
a timely motion in arrest of judgment extinguishes their right to assert the guilty-
plea challenge on appeal. State v. Fisher, 877 N.W.2d 676, 680 (Iowa 2016)
(noting “substantial compliance” with rule 2.8(2)(d) will suffice).
Here, the district court substantially complied with rule 2.8(2)(d). The
court spoke with Taylor in person about filing a motion in arrest of judgment if “for
whatever reason” the judge should not have accepted the guilty plea; the court
explained that by missing the deadline Taylor would “give up [his] right to file that
motion, and [he] could not take back [his] guilty plea.” See State v. Taylor, 301
N.W.2d 692, 692–93 (Iowa 1981) (finding sufficient compliance when defendant
was told if he requested immediate sentencing his right to “question the legality
of his plea of guilty” would be “gone”).
Taylor did not file a motion in arrest of judgment. Accordingly, he is barred
from a direct appeal of his conviction. Iowa R. Crim. P. 2.24(3)(a); State v.
Straw, 709 N.W.2d 128, 132–33 (Iowa 2006). Contemplating this bar, Taylor
raises an alternative argument that the failure to file a motion in arrest of
judgment resulted from ineffective assistance of counsel. See Straw, 709
N.W.2d at 133. That alternative argument sets the framework for our analysis.
4
We review claims of ineffective assistance of counsel de novo. See id.
To prevail, Taylor must prove by a preponderance of the evidence (1) his plea
counsel failed to perform an essential duty and (2) the breach of duty resulted in
prejudice. See Strickland v. Washington, 466 U.S. 668, 687−88 (1984). For
guilty pleas, the prejudice element “focuses on whether counsel’s constitutionally
ineffective performance affected the outcome of the plea process.” Hill v.
Lockhart, 474 U.S. 52, 59 (1985). Consequently, Taylor must show “a
reasonable probability that, but for counsel’s errors, he would not have pleaded
guilty and would have insisted on going to trial.” See Straw, 709 N.W.2d at 135–
36 (citation omitted).
In Fisher, our supreme court decided defendants pleading guilty should be
“informed of the mandatory minimum and maximum possible fines, including
surcharges.”2 877 N.W.2d at 686. The Fisher court saw “no meaningful
difference between a fine and a built-in surcharge on a fine.” Id. But because
the court remanded Fisher’s case on a separate basis, it did not decide “whether
failure to disclose the surcharges alone would have meant the plea did not
substantially comply with rule 2.8(2)(b)(2).” Id. at 686 n.6 (holding “actual
compliance with rule 2.8(2)(b)(2) requires disclosure of all applicable chapter 911
surcharges”).
2
The Fisher opinion was issued on April 8, 2016—after the guilty plea and sentencing
hearings occurred in the instant case. Fisher suggested guilty-plea forms should reflect
the minimum fine is not $315 but actually $560.25 when the surcharges are tacked on.
See 877 N.W.2d at 686 (including 35% criminal penalty surcharge, as well as the $10
drug abuse resistance education (DARE) surcharge and the $125 law enforcement
initiative surcharge).
5
Taylor argues on appeal that competent trial counsel should have known
the plea form was deficient and the district court failed to inform Taylor regarding
the mandatory surcharges. He contends he was prejudiced “because his lack of
information on the consequences of the guilty plea caused him to be ordered to
pay a sizable fine and surcharge without proper notice.” The State responds that
Taylor has not established a breach of duty or prejudice in connection with the
plea process despite no express mention of the 35% surcharge. The State
alternatively argues we should preserve the claim for postconviction relief.
We embrace that alternative argument. When a defendant raises an
ineffective-assistance-of-counsel claim “on direct appeal from the criminal
proceedings, we may decide the record is adequate to decide the claim or may
choose to preserve the claim for postconviction proceedings.” Straw, 709
N.W.2d at 133 (discussing options under Iowa Code section 814.7(3)). A
defendant who raises an ineffective-assistance claim on direct appeal is not
required to make any particular record to warrant preservation for postconviction
relief. State v. Johnson, 784 N.W.2d 192, 198 (Iowa 2010). If the defendant
requests that we resolve the claim on direct appeal, as Taylor does here, it is for
us to decide if the record is adequate to do so. See id. If we decide the record is
not adequate, we must preserve the issue for a postconviction-relief proceeding,
regardless of our view of the claim’s potential viability. Id. In the context of this
guilty plea, we need a more substantial record than the one before us to decipher
if Taylor was prejudiced by counsel’s performance. See Straw, 709 N.W.2d at
138 (observing “only rare cases will the defendant be able to muster enough
evidence to prove prejudice without a postconviction relief hearing”); see also
6
State v. Bascom, No. 15-2173, slip op. at 2–3 (Iowa Ct. App. Mar. 8, 2017)
(preserving claim when court ordered defendant “to pay a fine of $3125, ‘plus the
appropriate surcharge’”). Accordingly, we affirm Taylor’s conviction but preserve
for any postconviction action his claim of ineffective assistance of counsel arising
out of the guilty-plea proceedings.
AFFIRMED. | 01-03-2023 | 05-03-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/4165756/ | IN THE COURT OF APPEALS OF IOWA
No. 16-0388
Filed May 3, 2017
STATE OF IOWA,
Plaintiff-Appellee,
vs.
MARK REED BRITT,
Defendant-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Pottawattamie County, Richard H.
Davidson, Judge.
Defendant appeals from a restitution order. APPEAL DISMISSED.
Mark C. Smith, State Appellate Defender, and Patricia Reynolds, Assistant
Appellate Defender, for appellant.
Thomas J. Miller, Attorney General, and Kelli Huser, Assistant Attorney
General, for appellee.
Considered by Doyle, P.J., Tabor, J., and Blane, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2017).
2
BLANE, Senior Judge.
Mark Britt appeals from a district court order compelling him to pay
restitution following his conviction for exercising control over a stolen vehicle.
Because we conclude his appeal was untimely, we dismiss the appeal for lack of
jurisdiction.
On December 9, 2015, the district court issued its final ruling on
restitution, ordering Britt to pay $11,264.15. Britt filed a motion for expanded
findings and relief, pursuant to Iowa Rule of Civil Procedure 1.904(2), on
December 16. The court ruled on that motion on February 29, 2016. Britt filed a
notice of appeal on March 1.
It has long been the rule that only a “proper” rule 1.904(2) motion tolls the
deadline for an appeal. See Hedlund v. State, 875 N.W.2d 720, 725 (Iowa
2016).
The propriety of a rule 1.904(2) motion depends on the
nature of the request it makes of the district court. Rule 1.904(2)
generally gives each party an opportunity to request a change or
modification to each adverse judgment entered against it by the
district court before deciding whether to incur the time and expense
of an appeal. A proper rule 1.904(2) motion does not merely seek
reconsideration of an adverse district court judgment. Nor does it
merely seek to rehash legal issues adversely decided. A rule
1.904(2) motion is ordinarily improper if it seeks to enlarge or
amend a district court ruling on a question of law involving no
underlying issues of fact. Likewise, a rule 1.904(2) motion that
asks the district court to amend or enlarge its prior ruling based
solely on new evidence is generally improper. Ordinarily, a proper
rule 1.904(2) motion asks the district court to amend or enlarge
either a ruling on a factual issue or a ruling on a legal issue raised
in the context of an underlying factual issue based on the evidence
in the record.
Nonetheless, when a party has presented an issue, claim, or
legal theory and the district court has failed to rule on it, a rule
1.904(2) motion is [the] proper means by which to preserve error
and request a ruling from the district court. When a rule 1.904(2)
3
motion requests a ruling on an issue properly presented to but not
decided by the district court, the motion is proper even if the issue
is a purely legal one.
Homan v. Branstad, 887 N.W.2d 153, 161 (Iowa 2016) (citations omitted).
Britt raised several issues in his 1.904(2) motion. He used identical
language to introduce most of his claims: “From the evidence and/or lack of
evidence as a whole, the court has failed to exercise discretion or abused its
discretion or has erred in presumptively finding or concluding the State satisfied
its burden of proving by a preponderance of evidence” a relevant fact. He also
argued the court abused its discretion by imposing a restitution amount greater
than the amount requested by the State. These claims do nothing more than
rehash previous arguments or raise a new argument for the first time. As a
result, the rule 1.904(2) motion was an improper one and did not extend the time
for appeal.1 See id. Britt’s deadline to appeal, absent a proper rule 1.904(2)
motion, was thirty days after the district court’s December 9 ruling. See Iowa R.
App. P. 6.101(1)(b). He did not file his notice of appeal until March 1. We
therefore lack jurisdiction to hear this appeal and must dismiss it. See Hedlund,
875 N.W.2d at 724–27.
APPEAL DISMISSED.
1
In Hedlund, our supreme court noted “rule 1.904(2) has been subject to criticism” and
that it had “initiated an effort to explore its possible amendment.” Hedlund, 875 N.W.2d
at 727. That amendment has come to fruition, effective March 1, 2017. See Iowa Sup.
Ct., In re Adopting Amendments to Iowa R. Civ. P. 1.904 & Iowa R. App. P. 6.10 (Nov.
18, 2016), http://bit.ly/2pAkZyE. The amendment does away with the propriety
requirement. It is our general rule to interpret changes to court rules prospectively “if
there is no additional enactment that expressly makes the law or rule retrospective.”
Iowa Sup. Ct. Att’y Disciplinary Bd. v. K.G.T., 722 N.W.2d 787, 790 (Iowa 2006). No
additional enactment is present here. Nor does Britt argue for retrospective application
of the rule. We will not make his argument for him. See United States v. Dunkel, 927
F.2d 955, 956 (7th Cir. 1991) (“Judges are not like pigs, hunting for truffles buried in
briefs.”). We therefore interpret the rule change to apply prospectively. | 01-03-2023 | 05-03-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/2987335/ | Motion Granted and Order filed March 28, 2013
In The
Fourteenth Court of Appeals
____________
NO. 14-12-00633-CV
____________
JERRY L. STARKEY, TBDL, L.P., AND PBW DEVELOPMENT
CORPORATION, Appellant
V.
GLEN GRAVES, Appellee
On Appeal from the 405TH District Court
Galveston County, Texas
Trial Court Cause No. 09-CV-0620
ORDER
On July 6, 2012, Jerry L. Starkey, TBDL, L.P., and PBW Development
Corporation filed a notice of appeal from the amended final judgment signed April
11, 2012, and the appeal was assigned to this court under our appellate number 14-
12-00633-CV. On August 2, 2012, Glen Graves filed a notice of cross-appeal
from the trial court’s order signed July 13, 2012, granting a motion to modify filed
by Jerry L. Starkey, TBDL, L.P., and PBW Development Corporation, which was
assigned to this court under our appellate number 14-12-00709-CV.
On August 13, 2012, Glen Graves filed an unopposed motion to consolidate
the appeals. The motion was granted and the court consolidated the two above-
referenced causes for all purposes into cause number 14-12-00633-CV.
On March 30, 2013, Glen Graves filed an unopposed motion for a briefing
schedule. The motion is GRANTED. Accordingly we order the following:
Brief of appellants Jerry L. Starkey, TBDL, L.P., and PBW
Development Corporation is currently due April 18, 2013;
Glen Graves’ combined brief,1 as appellee and cross-appellant, is due
30 days after appellants’ brief is filed;
Combined reply brief of appellants and cross-appellees2 Jerry L.
Starkey, TBDL, L.P., and PBW Development Corporation is due 30
days after Graves’ combined brief is filed.
PER CURIAM
1
The combined brief will not exceed 15,000 words.
2
The combined brief will not exceed 7,500 words. | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/4160662/ | MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be FILED
regarded as precedent or cited before any Apr 17 2017, 6:08 am
court except for the purpose of establishing CLERK
the defense of res judicata, collateral Indiana Supreme Court
Court of Appeals
estoppel, or the law of the case. and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Barbara J. Simmons Curtis T. Hill, Jr.
Oldenburg, Indiana Attorney General of Indiana
Michael Gene Worden
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Eaphram Lincey, April 17, 2017
Appellant-Defendant, Court of Appeals Case No.
49A05-1609-CR-2185
v. Appeal from the Marion Superior
Court
State of Indiana, The Honorable David Seiter, Judge
Appellee-Plaintiff Pro Tempore
Trial Court Cause No.
49G10-1507-CM-26403
Vaidik, Chief Judge.
Court of Appeals of Indiana | Memorandum Decision 49A05-1609-CR-2185 | April 17, 2017 Page 1 of 5
Case Summary
[1] Following a traffic stop, Eaphram Lincey was convicted of driving while
suspended and possession of marijuana. He now appeals, arguing that the
police officer did not have reasonable suspicion to stop him. Because the officer
testified that Lincey did not stop at a stop light and a stop sign—both
infractions—the trial court did not err in finding that reasonable suspicion
existed for the traffic stop. We therefore affirm.
Facts and Procedural History
[2] Just after midnight on July 26, 2015, Indianapolis Police Department Officer
David Wisneski was patrolling the northside near 38th Street and Arlington
Avenue when he encountered Lincey operating a motorcycle with a female
passenger. The motorcycle was “wobbling” and traveling unusually slow, so
Officer Wisneski decided to slow down and see if there was a problem. Tr. Vol.
II pp. 7, 44. When Lincey made a right turn at a red light without first coming
to a stop, Officer Wisneski decided to follow Lincey. Id. at 8. Officer Wisneski
then saw Lincey make a left turn at a stop sign without coming to a stop or
putting his foot down. Id. at 9, 48, 55-56. At this point, Officer Wisneski
decided to initiate a traffic stop. During the traffic stop, Officer Wisneski
learned that Lincey’s license was suspended. Officer Wisneski also smelled the
odor of alcohol coming from Lincey. Officer Wisneski informed Lincey of
Indiana’s implied-consent law, and Lincey agreed to take a certified breath test
at the station. Before Lincey was transported, he was searched incident to his
Court of Appeals of Indiana | Memorandum Decision 49A05-1609-CR-2185 | April 17, 2017 Page 2 of 5
arrest for driving while suspended. During that search, marijuana was found in
his pants pocket. He was then taken to the station, where a warrant had to be
obtained for a blood draw.
[3] Thereafter, the State charged Lincey with Count I: Class A misdemeanor
operating while intoxicated endangering a person; Count II: Class A
misdemeanor driving while suspended; Count III: Class B misdemeanor
possession of marijuana; and Count IV operating a vehicle with an alcohol
concentration equivalent (ACE) to at least .08. Before trial, Lincey moved to
suppress the evidence against him, arguing that the officer did not have
reasonable suspicion to stop him. After a hearing at which Officer Wisneski
testified, the trial court denied the motion. A bench trial was then held. Lincey
renewed his motion to suppress during trial, and Officer Wisneski, Lincey, and
the female passenger testified during the in-trial suppression hearing. The trial
court again denied the motion. The court acknowledged that there was
conflicting testimony regarding whether Lincey stopped at both the stop light
and the stop sign; however, the court believed Officer Wisneski and found that
the traffic stop was valid. Trial resumed, and the trial court acquitted Lincey of
operating while intoxicated and operating with an ACE of at least .081 but
found him guilty of driving while suspended and possession of marijuana.
1
The trial court acquitted Lincey of operating with an ACE of at least .08 because the blood draw was done
“outside the three (3) hour window.” Tr. p. 116. And the trial court acquitted Lincey of operating while
intoxicated because the State failed to prove beyond a reasonable doubt that Lincey was intoxicated. The
Court of Appeals of Indiana | Memorandum Decision 49A05-1609-CR-2185 | April 17, 2017 Page 3 of 5
[4] Lincey now appeals.
Discussion and Decision
[5] Lincey contends that Officer Wisneski did not have reasonable suspicion to
stop him and therefore the trial court erred in admitting evidence stemming
from the stop. The Fourth Amendment protects citizens from unreasonable
searches and seizures. U.S. Const. amend IV. Our jurisprudence reflects two
types of police encounters that implicate Fourth Amendment protection:
investigatory stops and custodial arrests. State v. Keck, 4 N.E.3d 1180, 1184
(Ind. 2014). An investigatory stop is generally brief in duration and is
constitutionally permissible so long as the officer “has a reasonable suspicion
supported by articulable facts that criminal activity may be afoot.” Id.
(quotations omitted). If an officer observes a driver commit a traffic violation,
he has probable cause—and thus also the lesser included reasonable suspicion—
to stop that driver. Id.
[6] Lincey acknowledges that Officer Wisneski stopped him based on the officer’s
belief that Lincey “committed two traffic infractions by not coming to a stop at
a stop light and a stop sign.” Appellant’s Br. p. 11. And Lincey does not
dispute that failing to stop at a stop light and a stop sign are infractions.
However, Lincey argues that the officer’s belief was “mistaken[]” and asks us to
court explained that although Lincey was wobbling and driving slowly, there was evidence of potholes in the
road.
Court of Appeals of Indiana | Memorandum Decision 49A05-1609-CR-2185 | April 17, 2017 Page 4 of 5
credit his own suppression-hearing testimony. Id. Lincey testified at the second
suppression hearing that he in fact stopped at both the red light and the stop
sign, but Officer Wisneski testified otherwise. The trial court believed Officer
Wisneski. In reviewing a trial court’s reasonable-suspicion determination, we
do not reweigh the evidence and consider conflicting evidence most favorably
to the trial court. See Finger v. State, 799 N.E.2d 528, 533 (Ind. 2003) (“The
reasonable suspicion inquiry is highly fact-sensitive and is reviewed under a
sufficiency of the evidence standard. Like any matter of sufficiency of the
evidence, the record must disclose substantial evidence of probative value that
supports the trial court’s decision. We do not reweigh the evidence and we
consider conflicting evidence most favorably to the trial court’s ruling.”
(quotation omitted)). Because Officer Wisneski testified that Lincey did not
stop at a stop light and a stop sign, thus committing two traffic infractions, the
trial court did not err in finding that reasonable suspicion existed for the traffic
stop.2 We therefore affirm the trial court’s admission of evidence stemming
from that stop.
[7] Affirmed.
Bailey, J., and Robb, J., concur.
2
Lincey also challenges the traffic stop under Article 1, Section 11 of the Indiana Constitution. Although the
standards are different, his argument is the same: the trial court should have believed his testimony instead of
the officer’s testimony.
Court of Appeals of Indiana | Memorandum Decision 49A05-1609-CR-2185 | April 17, 2017 Page 5 of 5 | 01-03-2023 | 04-17-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/2353688/ | 754 F.Supp. 1526 (1990)
Nancy ARMIJO, as personal representative of the Estate of Luz Armijo, deceased, Plaintiff,
v.
The ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY, a Delaware Corporation, Defendant.
No. CIV 89-293 SC.
United States District Court, D. New Mexico.
November 16, 1990.
*1527 Chris Key, Albuquerque, N.M., for Armijo.
*1528 Katherine C. Pearson, Sorenson and Schutte, P.C., John S. Thal, Modrall Sperling Harris and Sisk, PC, Albuquerque, N.M., for AT & SF Ry. Co.
MEMORANDUM OPINION AND ORDER
CAMPOS, District Judge.
This matter is before the Court on:
1. Defendant's Motion for Partial Summary Judgment,
2. Plaintiff's Motion in Limine Regarding Seat Belt Defense, and
3. Defendant's Motion to Exclude Conclusory Testimony of Plaintiff's Expert that Crossing was Extrahazardous.
The Court, having read the memoranda submitted by the parties, having examined the exhibits attached thereto and being apprised of the applicable law, reaches the following decisions for the reasons set forth below.
This is an action for wrongful death. On October 23, 1987, the Defendant operated a railroad train on its railway line through the North Gabaldon crossing in Belen, New Mexico, where a collision occurred between the train and a motor vehicle driven by Luz Armijo, the Plaintiff's Decedent. Plaintiff claims the death of Luz Armijo was the proximate result of the Defendant's negligent failure to provide adequate warnings at the crossing and Defendant's negligent operation of its train. Defendant claims that Armijo's death was the proximate result of his own negligence and that it was not negligent in any manner in operating the train on the night of the accident. Defendant further claims that any state common law theory of negligence based on Defendant's duty to install warning devices at railroad crossings has been preempted by federal laws and regulations. This last contention is the subject of Defendant's motion for partial summary judgment which the Court will address first.
I. Defendant's Motion for Partial Summary Judgment
Defendant moves the Court for an order granting it partial summary judgment with respect to the Plaintiff's claims that Defendant had a duty to install additional warning devices at the railroad crossing at issue in this case. As grounds therefore, Defendant states that any state common law theory of negligence on the part of Defendant with regard to the installation of warning devices at railroad crossings has been preempted by federal laws and regulations. Plaintiff makes numerous arguments against preemption.
The following facts were submitted by Defendant in its Motion for Partial Summary Judgment as undisputed material facts. According to 56.1 b. of the Rules of the United States District Court for the District of New Mexico, all material facts set forth in the statement of the movant shall be deemed admitted unless specifically controverted. Plaintiff in her Response Brief did not dispute any of Defendant's undisputed material facts. Therefore, the Court will consider admitted the following material facts.
In 1970, the United States Congress enacted the Federal Railroad Safety Act (FRSA) which expressly preempted state law as to the subject matter of any order, standard, or regulation relating to railroad safety issued by the Secretary of Transportation. 45 U.S.C. §§ 421-444. A specific section of the FRSA was devoted to railroad-highway grade crossing safety and required the Secretary of Transportation to report to Congress on procedures to be employed to develop safer grade crossings. 45 U.S.C. § 433(a). In 1973, after the Secretary of Transportation filed his report with Congress, Congress amended the Federal Highway Safety Act to require the states to "conduct and systematically maintain" a list of railroad crossings requiring improved protective or warning devices. 23 U.S.C. § 130(d). In addition, the states were required to "implement a schedule" for the construction and installation of improved railroad crossing protective devices. Id.
In 1983, pursuant to regulations promulgated by the Secretary of Transportation, the Federal Highway Administration *1529 adopted and approved the Manual on Uniform Traffic Control Devices (MUTCD) as the national standard for all traffic control devices. 23 C.F.R. § 655.603 (1990). Consistent with federal regulations, New Mexico adopted the MUTCD as the standard for traffic control devices in New Mexico. N.M.Stat.Ann. § 66-7-101 (Repl.1987). The MUTCD provides that "the determination of need and selection of devices at a grade crossing is made by the public agency with jurisdictional authority." MUTCD, Part VIII at 8A-1. Furthermore, in 1975, the Secretary promulgated regulations mandating that "state laws requiring railroads to share in the cost of work for the elimination of hazards at railroad-highway crossings shall not apply to Federal-aid projects." 23 C.F.R. § 646.210(a) (1990). The Secretary of Transportation determined that "projects for grade crossing improvements are deemed to be of no ascertainable net benefit to the railroads and there shall be no required share of the costs." 23 C.F.R. § 646.210(b)(1) (1990).
Pursuant to the provisions of the Highway Safety Act, in 1984 the State of New Mexico obtained a list of all railroad-highway grade crossings in the State, prepared by the federal Department of Transportation with input from the American Association of Railroads (hereinafter the DOT-AAR inventory), which listed all public railroad crossings in New Mexico based on the likelihood of an accident occurring at a particular crossing during a given year. Cisneros Deposition, p. 10.[1] In 1984, the North Gabaldon Road crossing was number 197 on the DOT-AAR inventory containing a total number of 900 public railroad-highway crossings located in New Mexico. Cisneros Deposition, Ex. 1. Having obtained the DOT-AAR inventory, the New Mexico State Highway Department (through the Railroad & Utilities Section), with federal assistance, prioritized and ranked the railroad crossings for warning device upgrading based on a number of factors calculated by the State. Cisneros Deposition, pp. 9, 10, 30. In July, 1984, the Railroads & Utilities Section completed its statewide study of the 900 railroad crossings listed in the DOT-AAR inventory. Cisneros Deposition, Ex. 2, p. 25. Also, in July, 1984, the Railroad & Utilities Section narrowed the DOT-AAR Inventory to a list of 22 (later amended to 27) projects that the Section concluded should be considered for Federal-Aid Safety Funding. Id. at 26-30. On July 27, 1984, the Railroad & Utilities Section diagnostic team submitted its list of the 22 projects to be submitted for approval by the Federal Highway Administration for federal railroad safety project funding. Id. at 25. The July, 1984 evaluation prepared by the Railroad & Utilities Section ranked the North Gabaldon Road crossing with a priority number of 14 and included the crossing in its 5 year plan. Id. at 27-30. This report included the specific evaluation that the type of warning device to be installed at the North Gabaldon Road railroad crossing was "flashers and gates." Id. at 29.
When the Railroad & Utilities Section determines that a particular railroad crossing is, by virtue of its ranking, the next to have its warning devices upgraded, it first informs the Federal Highway Administration and then informs the railroad (through a railroad representative on the diagnostic team) of that determination and requests a preliminary engineering report and construction cost estimate for installing the additional warning signals. Cisneros Deposition, p. 30; San Miguel Affidavit, ¶ 6.[2] Requests for an engineering report are made by the Railroad & Utilities Section to the railroad-employee member of the diagnostic team to provide engineering advice in terms of railroad operations as to the installation of additional warning devices at particular railroad crossings. Cisneros Deposition, p. 30; San Miguel Affidavit, ¶¶ 5, 6; 23 C.F.R. § 646.204(g) (1990); 23 C.F.R. § 646.216(b)(i) (1990). As of October 23, 1987 (the date of the accident) the State of New Mexico had not requested a *1530 preliminary engineering report concerning upgrading the warning devices at the North Gabaldon Road crossing. San Miguel Affidavit, ¶ 6.
The State of New Mexico receives federal funding to upgrade warning devices at railroad crossings and presently upgrades about ten railroad crossings per year. Cisneros Deposition, p. 10. As of September 30, 1987, the Railroad & Utilities Section had completed seven of the 22 projects listed on the July, 1984 evaluation. Cisneros Deposition, Ex. 2, p. 20. One factor considered by the Railroad & Utilities Section in ranking and prioritizing railroad crossings for the upgrading of warning devices is whether previous collisions have occurred at a particular crossing. Cisneros Deposition, p. 13. Prior to October, 1987, there were no accidents at the North Gabaldon Road crossing. Cisneros Deposition, Ex. 1. In November 1987, following the accident, Mr. San Miguel was contacted by the State Railroad & Utilities Section. San Miguel Affidavit, ¶ 6. The Section requested that Defendant perform the preliminary engineering and prepare a construction cost estimate for upgrading the warning devices at the North Gabaldon Road crossing. Id.
A motion for summary judgment properly may be granted only when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Houston v. National General Insurance Co., 817 F.2d 83 (10th Cir.1987). Here, there appear to be no disputed facts. The issue before the Court is strictly a legal question. The issue is whether Plaintiff's claims that Defendant was negligent in failing to install additional warning devices at the North Gabaldon Road crossing are preempted by federal law.
State law is preempted under the Supremacy Clause of the United States Constitution, Art. VI, cl. 2, in three circumstances. English v. General Electric Company, ___ U.S. ___, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990). "First, Congress can define explicitly the extent to which its enactments pre-empt state law." Id. This is the situation presently before the Court.[3] Congress included in the FRSA a broad preemption provision excluding the states from legislating in any area of railroad safety already covered by regulations adopted by the Secretary. CSX Transportation, Inc. v. Public Utilities Commission of Ohio, 701 F.Supp. 608, 609 (S.D. Ohio 1988), aff'd, 901 F.2d 497 (6th Cir. 1990). Section 434 reads:
The Congress declares that laws, rules, regulations, orders, and standards relating to railroad safety shall be nationally uniform to the extent practicable. A State may adopt or continue in force any law, rule, regulation, order, or standard relating to railroad safety until such time as the Secretary has adopted a rule, regulation, order or standard covering the subject matter of such State requirement. A state may adopt or continue in force an additional or more stringent law, rule, regulation, order, or standard relating to railroad safety when necessary to eliminate or reduce an essentially local safety hazard, and when not incompatible with any Federal law, rule, regulation, order, or standard, and when not creating an undue burden on interstate commerce (emphasis added).
The scope of preemption under the FRSA has been broadly construed by the courts. CSX Transportation at 612-613 citing numerous cases. Section 434 expressly declares that a primary objective of the Act is the establishment of a nationally uniform system of regulation in the rail safety field. Thus, state adopted regulations, with the exception of those designated to eliminate an essentially local safety hazard, are permitted to continue in force only until such time as a federal regulation *1531 covering the same subject matter is promulgated. National Association of Regulatory Utility Commissioners v. Coleman, 542 F.2d 11, 13 (3rd Cir.1976). The FRSA does not merely preempt those state laws which impair or are inconsistent with federal regulations. Burlington Northern Railroad Company v. State of Montana, 880 F.2d 1104, 1106 (9th Cir.1989). It preempts all state regulations aimed at the same safety concerns addressed by federal regulations. Id.
Therefore, if the Secretary acts with regard to the same subject matter as a state law, rule, regulation, order, or standard, unless the state law addresses an essentially local safety hazard, the state law is preempted. Several courts have dealt with the issue of whether federal regulations promulgated by the Secretary (as set forth in the undisputed material facts) have preempted state laws in the area of improvements at railroad-highway crossings. For example, the Federal District Court for the District of Kansas stated:
[I]n the 1970's, Congress, recognizing a need for uniform safety standards, enacted the Railroad Safety Act which imposed nationwide standards, reserving authority to the states for further regulation only under special circumstances. In conjunction with the national regulation of railroad safety, Congress determined that grade crossing improvements were a governmental responsibility rather than the responsibility of the railroads and increased funding to the federal aid program.
Sisk v. National Railroad Passenger Corp., 647 F.Supp. 861, 863 (D.Kan.1986).
This Court is in agreement with those courts that have found that the federal regulations in this area have preempted state law. It is this Court's conclusion, that the Secretary has acted with regard to the installation of warning devices at railroad-highway crossings. The Secretary acted in this area with the promulgation of the procedures outlined in 23 C.F.R. § 646.200 et seq. and with the adoption of the MUTCD as the national standard. The MUTCD specifically states that "the determination of need and selection of devices at a grade crossing is made by the public agency with jurisdictional authority." MUTCD, Part VIII at 8A-1. "Subject to such determination and selection, the design, installation and operation shall be in accordance with the national standards contained herein." Id. By adopting this standard, the Secretary has effectively preempted any state law covering the same subject matter. The New Mexico law cited to this Court by Plaintiff predates the Secretary's action and addresses precisely the subject matter addressed by the MUTCD, that is, what entity is responsible for determining the need and selection of devices at railroad-highway crossings. As stated previously, the FRSA preempts all state regulations aimed at the same safety concerns addressed by the Secretary's regulations. Burlington Northern Railroad Company v. State of Montana, 880 F.2d 1104, 1106 (9th Cir.1989). Therefore, the Court finds that any New Mexico state common law or statutory law placing the duty of determining the need for and the selection of appropriate warning devices at railroad-highway crossings on the railroad is preempted by federal law. Federal law delegates to the public agency having jurisdictional authority, and not to the railroad, the responsibility and the authority for determining the need for and the selection of appropriate railroad-highway grade crossing signals.
While this Court believes that state law was preempted when the Secretary passed regulations dealing with the subject matter of warning devices at railroad-highway grade crossings as discussed above, the Court alternatively finds, that at the very least, under the rationale of Marshall v. Burlington Northern, Inc., 720 F.2d 1149 (9th Cir.1983) the present negligence claim was entirely preempted as of July, 1984. Only two federal appellate courts have considered the question of whether federal grade crossing regulations preempt state law claims against railroads predicated upon negligence in selecting or providing additional warning devices. The Ninth Circuit in Marshall held that preemption *1532 occurs when the state authorities approve the level of protection at a crossing, whereas the Eighth Circuit in Karl v. Burlington Northern Railroad Co., 880 F.2d 68, 76 (8th Cir.1989) ruled there was no preemption. The Ninth Circuit in Marshall stated:
The Secretary, through the Federal Highway Administration, prescribed procedures to obtain uniformity in highway traffic control devices and adopted the Manual on Uniform Traffic Control Devices on Streets and Highways, see 23 C.F.R. § 655.601 (1981), which also was adopted by Montana, see Mont.Code Ann. § 61-8-202 (1981). The manual prescribes that the selection of devices at grade crossings and the approval for federal funds is to be made by local agencies with jurisdiction over the crossing. Thus, the Secretary has delegated federal authority to regulate grade crossings to local agencies.
Marshall at 1154.
The Marshall Court found that the FRSA preempts a state negligence claim when the responsible state agency has made a determination regarding the type of warning device to be installed at a crossing. Id. Therefore, the Marshall Court held that until a federal decision is reached through the local agency on the adequacy of the warning device at a particular crossing, the railroad's duty under applicable state law is not preempted. Id. If this Court follows the reasoning of the Ninth Circuit, the federal decision in this case was made in 1984 when the State of New Mexico Railroad & Utilities Section made the determination, under the MUTCD, as to the type of warning devices to be installed at the North Gabaldon Road crossing. So, at the very least, under the Marshall rationale, the present negligence claim was entirely preempted as of July, 1984.[4]
Thus, the Court finds that the Secretary has acted in this case and state law is preempted. However, § 205 of the FRSA has a savings clause under which states are permitted to adopt regulations to eliminate essentially local safety hazards, even if the Secretary has acted in a particular area of railroad safety. This section reads:
A state may adopt or continue in force an additional or more stringent law, rule, regulation, order, or standard relating to railroad safety when necessary to eliminate or reduce an essentially local safety hazard, and when not incompatible with any Federal law, rule, regulation, order, or standard, and when not creating an undue burden on interstate commerce.
45 U.S.C. § 434.
Plaintiff argues that the North Gabaldon Road crossing in question is an "essentially local safety hazard." The Court does not agree. This savings clause was designed to enable states to respond to local situations which are not statewide in character and not capable of being adequately encompassed within uniform national standards. National Association of Regulatory Utilities Commissioners v. Coleman, 542 F.2d 11, 14-15 (3d Cir.1976). The exception in § 434 was not intended "to permit a State to establish Statewide standards superimposed on national standards covering the same subject matter." *1533 H.R.Rep. No. 91-1194, reprinted in 1970 U.S.Code Cong. & Admin.News, 4104, 4116-4117. Plaintiff is asking this Court to find that the statewide common law duty of railroads to maintain a good and sufficient crossing falls within the local safety hazard exception of § 434. However, based on the legislative history of § 434, it is clear to the Court that statewide laws, such as the tort duty advanced by Plaintiff in this case, would not constitute a law relating to a "local safety hazard." Plaintiff is attempting to do exactly what the House Report specifically states that there is no intent to permit, namely, establishing a statewide standard (a statewide common law duty) "superimposed on national standards covering the same subject matter." The Court finds that the statewide system of tort law imposing a duty on a railroad to determine the need for, select and install warning devices at railroad-highway crossings does not constitute a law relating to a "local safety hazard."
The Plaintiff next argues that if the Court finds that the Defendant's common law duty has been preempted, the preemptive effect of the federal acts is unconstitutional. Plaintiff argues the federal acts provide no right of redress to persons, such as Plaintiff, who are the victims of the negligence of railroads. She states this blanket eradication of the right of redress is violative of the equal protection and due process clauses of the Constitutions of the United States and New Mexico. Plaintiff states that if it is the sole responsibility of the New Mexico State Highway Department to erect appropriate warning devices at railroad crossings, then the sole remedy against the State falls under the New Mexico Tort Claims Act. The Plaintiff further argues that it is unlikely that there is any remedy to be had against the State because there is no waiver of sovereign immunity in this situation. Finally, the Plaintiff argues the application of the preemption doctrine in this case would effectively deprive this Plaintiff of any remedy because of the expiration of the statute of limitations against both the federal and state governments for negligent acts.
The Court agrees with Defendant's response to Plaintiff's arguments. Plaintiff has not been denied access to the courts or a right of recovery. First, the issue of whether Defendant negligently operated the train remains in this case regardless of the Court's finding on the preemption issue. Second, the New Mexico Tort Claims Act does not explicitly retain sovereign immunity for claims in the nature of those being made in the present case. The Act does not specifically address a claim for liability based on the state's negligence in failing to properly prioritize the installation of additional warning devices at railroad-highway crossings. From the Court's cursory look at this issue, it appears that the State of New Mexico would probably not enjoy sovereign immunity for these claims.[5] Finally, the fact that the statute of limitations for a claim against the state or the responsible agency may have passed is not sufficient reason to hold preemption unconstitutional.
Finally, the Plaintiff argues that since this is a matter of first impression in the Tenth Circuit, judicial economy dictates denial of the motion. The Court does not agree with Plaintiff's contention. Judicial economy dictates that if the motion is proper, that is, if it meets the requirements of Rule 56, that it be granted. As the Defendant states, Rule 56 contemplates motions such as the present one as a means of streamlining trials.
Therefore, for the above reasons, Defendant's Motion for Partial Summary Judgment with respect to the Plaintiff's claims that Defendant had a duty to install additional *1534 warning devices at the railroad-highway crossing at issue in this case will be granted.
II. Plaintiff's Motion in Limine Regarding Seat Belt Defense
The Plaintiff requests that the Court exclude any evidence, argument, or inference to be adduced by the Defendant as to the alleged failure by the Plaintiff's Decedent to use a seat belt, and the consequences flowing therefrom. Defendant argues that N.M.Stat.Ann. § 66-7-373 B. (Supp.1990) does not prohibit the jury from apportioning fault and damages as a consequence of Armijo's failure to use a seat belt and if it does, then the statute is unconstitutional as a violation of the separation of powers doctrine and the equal protection requirements of the United States and New Mexico Constitutions.
New Mexico law is clear on this issue. Section 66-7-373 B. (Supp.1990) states:
Failure to be secured by a child passenger restraint device or by a safety belt as required by the Safety Belt Use Act [66-7-370 to 66-7-373 NMSA 1978] shall not in any instance constitute fault or negligence and shall not limit or apportion damages (emphasis added).
The words of the statute clearly and unambiguously prohibit consideration of the violation of the Act as constituting negligence or negligence per se, as well as using evidence of the failure to wear a seat belt to limit or apportion damages.
The Legislature was fully aware of the "seat belt defense" when it enacted this statute. The New Mexico Supreme Court had just recently overruled the "seat belt defense" created by the Court of Appeals in Thomas v. Henson, 102 N.M. 417, 696 P.2d 1010 (Ct.App.1984), aff'd in part and rev'd in part, 102 N.M. 326, 327, 695 P.2d 476 (1985), saying, "we believe that the creation of a `seat belt defense' is a matter for the Legislature, not for the judiciary." This decision was handed down during the 37th Legislature which is the legislature that passed the "Safety Belt Use Act." Furthermore, an earlier draft of § 66-7-373 B. provided for admissibility of this type of evidence,[6] however, the bill which was enacted did not. Therefore, it is clear that the legislature made a conscious choice to preclude evidence of the failure to wear a seat belt to limit or apportion damages. The legislature undoubtedly concluded that seat belt use was desirable, and that although the enactment of a law providing for small fines would encourage people to wear seat belts, an injured plaintiff should nevertheless not be denied recovery when involved in a collision with a negligent tortfeasor.
In addition, the Court finds that Defendant's constitutional challenges to this statute are without merit. First, the Court notes that legislative acts are presumptively valid and will not be declared invalid unless the court is clearly satisfied that the legislature went outside the constitution in enacting them. Richardson v. Carnegie Library Restaurant, Inc., 107 N.M. 688, 693, 763 P.2d 1153 (1988).
With regard to Defendant's separation of powers argument, the Court finds that § 66-7-373 B. is not, as the Defendant contends, a legislative enactment of a rule of evidence, but rather is the enactment of a substantive state policy. It is true as Defendant states that the New Mexico Constitution reposes the inherent power to regulate all pleading, practice and procedure affecting the judicial branch exclusively in the Supreme Court. Miller & Associates, Ltd. v. Rainwater, 102 N.M. 170, 171-172, 692 P.2d 1319 (1985). However, it is also true that the Courts should *1535 not invalidate substantive policy choices made by the legislature under the constitutional exercise of its police powers. Southwest Community Health Services v. Smith, 107 N.M. 196, 199, 755 P.2d 40 (1988). The Court finds it is clearly within the power of the legislature to determine whether or not to impose as a matter of State policy an obligation on its citizens to wear a seat belt and to establish the sanctions for non-conformity with that obligation.
The Court also finds that this statute does not violate the equal protection provisions of the United States and New Mexico Constitutions. Defendant argues that this statute creates a class of defendants who have the random misfortune of allegedly injuring a plaintiff who fails to exercise ordinary care by not wearing a seat belt where in virtually any other instance of a plaintiff's failure to use ordinary care which leads to or contributes to the plaintiff's injury, evidence of the plaintiff's breach of duty would be considered by the jury in apportioning fault and damages. Defendant argues this classification works an injustice against included defendants by making them pay for damages caused entirely by the plaintiff's failure to exercise due care for his safety by failing to use an available seat belt. The problem with this argument is that a common law duty to wear a seat belt did not exist prior to the enactment of this statute and with the enactment of this statute the legislature specifically declined to make failure to wear a seat belt the basis for negligence or fault. Therefore, the statute does not affect the substantive rights of defendants or plaintiffs. In New Mexico, there never was a "seat belt defense" and there still is not a "seat belt defense."
Alternatively, even if this statute can be construed as creating statutory classifications, the Court finds that the equal protection test to be applied in this situation is the rational basis test because this legislation concerns social and economic issues and does not infringe on substantial or important rights nor involve sensitive classes.[7]Richardson, 107 N.M. at 697-698, 763 P.2d 1153. Applying the rational basis test to this legislation, the Court finds that § 66-7-373 B. is rationally related to a valid legislative purpose, namely, encouragement of seat belt use through a fine system, while preserving the right to compensation for injuries caused by negligent tortfeasors.
Therefore, for the above reasons, the Court will grant Plaintiff's Motion in Limine regarding the seat belt defense. Any evidence regarding Plaintiff's Decedent's failure to use a seat belt and the consequences thereof, will be excluded.
III. Defendant's Motion to Exclude Conclusory Testimony of Plaintiff's Expert that Crossing was Extrahazardous
Defendant requests that Plaintiff's expert, Dr. Baerwald not be allowed to offer any testimony which reflects his conclusion that the characteristics of the crossing were such that the railroad was required, as a matter of law, to install additional signals. Because this Court granted Defendant's Motion for Partial Summary Judgment, Defendant's above request is moot. This Court has found, as a matter of law, that any prior state basis for Plaintiff's claims that Defendant was negligent in failing to provide additional warning devices at the North Gabaldon Road crossing have been preempted by federal law. Thus, the motion will be denied as moot, however, due to the disposition of the partial summary judgment motion, Dr. Baerwald will not be allowed to testify that the railroad, as a matter of law, was required to install additional signals.
Therefore,
IT IS THE ORDER OF THE COURT that Defendant's Motion for Partial Summary *1536 Judgment should be, and hereby is, GRANTED.
IT IS FURTHER ORDERED that Plaintiff's Motion in Limine Regarding Seat Belt Defense should be, and hereby is, GRANTED.
IT IS FURTHER ORDERED that Defendant's Motion to Exclude Conclusory Testimony of Plaintiff's Expert that Crossing was Extrahazardous should be, and hereby is, DENIED as moot.
NOTES
[1] Lester Cisneros is the section head of the Railroad & Utilities Section of the New Mexico State Highway and Transportation Department.
[2] Rudy San Miguel is an AT & SF employee and was a member of the State diagnostic team in 1987.
[3] The other two circumstances where state law is preempted are: 1) where state law is in a field that Congress intended the federal government occupy exclusively and 2) where a state law actually conflicts with a federal law. English, supra.
[4] The Court does not find the Eight Circuit's decision in Karl to be persuasive. The Karl Court did not discuss the express preemption provision in 45 U.S.C. § 434. Rather, it focused on generally how state laws may be preempted if they actually conflict with an express or implied federal declaration, or if the state law is in a field that is so pervasively controlled by federal law that no room is left for state rulemaking. Karl at 76. The Karl Court found that neither circumstance was present in that case. Id. However, the Karl decision ignores the first circumstance (as discussed by the Supreme Court in English, supra) where state law is preempted, namely, when Congress defines explicitly the extent to which its enactment preempts state law. As explained in the body of this opinion, Congress explicitly defined the extent to which its enactment would preempt state law in § 205 of the FRSA. In light of the express provision in § 434, there is no need to determine whether state law in this case actually conflicts with the federal law or whether state law is preempted because it is in a field that Congress intended the federal government to occupy exclusively. The Court notes, however, that state law placing the duty to determine the need for and selection of warning devices at railroad-highway crossings on the railroad is in direct conflict with the MUTCD which places this duty on the public agency with jurisdictional authority.
[5] Two cases are cited in the New Mexico Statutes Annotated that would seem to support a waiver of sovereign immunity in this particular situation. First, in Blackburn v. State, 98 N.M. 34, 644 P.2d 548 (Ct.App.1982) the Court held where the Plaintiff's allegations, in large part, concern the placement of signals and signs, the State of New Mexico does not enjoy immunity for such decisions. Second, in Grano v. Roadrunner Trucking, Inc., 99 N.M. 227, 656 P.2d 890 (Ct.App.1982), cert. denied, 99 N.M. 358, 658 P.2d 433 (1983) the Court held that the absence of traffic controls is a condition of a highway and is, therefore, the subject of maintenance, and the state is not immune from liability.
[6] The earlier draft of § 66-7-373 B. which was rejected for the present provision states:
B. Evidence of a violation of Subsection A of Section 3 of the Safety Belt Use Act shall be admissible concerning mitigation of damages, apportionment of damages or comparative fault, with respect to any person who is involved in an accident while violating Subsection A of Section 3 of the Safety Belt Use Act and who seeks in any subsequent litigation to recover damages for injuries resulting from the accident. Such evidence may also be admissible on other issues as determined by the court.
Senate Bill 111, 37th Legislature, 1st Session (1985), p. 2.
[7] Thus far, the only classifications afforded heightened scrutiny under the federal constitution are those based on gender or illegitimacy. The New Mexico Courts have also subjected legislatively created "damage caps" to intermediate scrutiny. Trujillo v. City of Albuquerque, 110 N.M. 621, 798 P.2d 571 (1990). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4165782/ | IN THE COURT OF APPEALS OF IOWA
No. 17-0388
Filed May 3, 2017
IN THE INTEREST OF Z.B., C.C., and P.S.,
Minor Children,
C.T., Mother,
Appellant,
J.C., Father of C.C.,
Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Louise M. Jacobs,
District Associate Judge.
A mother and father separately appeal the termination of their parental
rights. AFFIRMED ON BOTH APPEALS.
Jeremy B.A. Feitelson of Nelsen & Feitelson Law Group, P.L.C., West Des
Moines, for appellant mother.
Tod J. Beavers of Beavers Law Office, P.C., Des Moines, for appellant
father.
Thomas J. Miller, Attorney General, and Ana Dixit, Assistant Attorney
General, for appellee State.
Nicole Garbis-Nolan of Youth Law Center, Des Moines, guardian ad litem
for minor children Z.B. and P.S.
ConGarry D. Williams of State Public Defender’s Office, guardian ad litem
for minor child C.C.
2
Considered by Vogel, P.J., and Doyle and McDonald, JJ.
3
VOGEL, Presiding Judge.
A mother and father separately appeal the termination of their parental
rights.
I. Background Facts and Proceedings
C.C., born April 2001; Z.B., born August 2004; and P.S., born August
2012, came to the attention of the Iowa Department of Human Services (DHS) in
February 2015, upon numerous allegations the mother was not properly
supervising the children and the children were not receiving adequate care. 1
Specifically, the DHS was concerned the children were being left home alone
and were not receiving medical care when needed. In February, the mother was
arrested for shoplifting; P.S. was with her when she was arrested, and the other
children were home alone. In May, while the mother was at work and the
children were home alone, P.S. bit into a detergent pod and became ill; the
mother did not seek medical attention for P.S. when she was informed of the
incident. On June 9, 2015, a child protective assessment was completed and
determined the concerns about denial of critical care and failure to provide proper
supervision were founded.
Throughout June and July 2015, the DHS attempted to engage the mother
in services, but the mother repeatedly missed meetings and appointments and
failed to return phone calls. On July 17, the State filed a petition to adjudicate the
children as children in need of assistance (CINA). The DHS offered services to
the mother, including therapy, parenting classes, and daycare assistance, but the
1
The mother is the mother of all three children. The father is only the father of C.C. The
parental rights of the unknown father of Z.B. were terminated and not appealed. The
parental rights of the father of P.S. were also terminated, but he did not appeal.
4
mother failed to attend classes or therapy and continued to leave the children
home alone under the care of the oldest child. Due to ongoing concerns about
the mother’s supervision and care of the children, the children were adjudicated
children in need of assistance, removed from the mother’s care, and placed in
foster care in September. At some point, the mother moved to Chicago without
providing notification to the juvenile court or the DHS and did not appear at the
CINA adjudication hearing.2 The mother remained in Chicago through early
2016, even though the children had been placed with a family friend in Iowa in
October 2015, and did not have regular visits with the children.
At the beginning of the CINA case, the mother was in a relationship with
P.S.’s father, who was in jail on drug charges. The mother returned to Iowa in
early 2016 and began having supervised visits with her children. She denied that
she remained in a relationship with P.S.’s father. However, she later confirmed
that she remained in a relationship with P.S.’s father, who had been released
from prison, despite concerns from the DHS about his criminal and substance-
abuse history and that he was not cooperating with any services offered by the
DHS. On June 21, 2016, a house where P.S.’s father, a convicted felon, was
residing was raided by law enforcement and large quantities of crack cocaine
and marijuana, a large sum of money, a digital scale, packaging materials, and a
firearm were recovered. The mother initially denied living in the home with P.S.’s
father, but she later admitted to residing in the home. She also denied being in
the home at the time of the raid, though she later admitted to being there and
2
The mother placed two other children, B.P., born 2008; and D.P., born 2007, with their
father in Chicago.
5
knowing that P.S.’s father sold drugs out of the home. She did not find his
source of income to be troubling. The mother also continued to resist services
offered by the DHS.
At the permanency hearing on September 13, the mother claimed she had
ended her relationship with P.S.’s father, even though phone logs revealed she
had spoken to him several times while he was in jail, video revealed she had
taken the children to visit him over Labor Day weekend, and she was pregnant
with his child.3
Throughout the entirety of the CINA proceedings, C.C.’s father was not
active in any way in C.C.’s life and only spoke with the child one time on the
phone.
On September 29, after more than one year of offered services, the State
filed a petition to terminate the mother’s parental rights to Z.B., C.C., and P.S.,
and C.C.’s father’s parental rights. On February 28, 2017, the juvenile court
terminated the mother’s parental rights to all three children under Iowa Code
section 232.116(1)(f) (2016) and C.C.’s father’s parental rights under Iowa Code
section 232.116(1)(b), (e), and (f). Both the mother and father appeal.
II. Standard of Review
“We review proceedings terminating parental rights de novo.” In re A.M.,
843 N.W.2d 100, 110 (Iowa 2014). While we give weight to the factual findings
of the juvenile court, we are not bound by them. Id.
III. The Mother’s Appeal
3
The mother gave birth to this child fathered by P.S.’s father in November 2016. That
child is part of an open CINA assessment.
6
On appeal, the mother claims the State failed to prove the statutory
grounds for termination, termination was not in the children’s best interest, and
termination was not proper due to the closeness of the parental bond between
her and her children. She also requests additional time to work towards
reunification.
A. Statutory Grounds for Termination
Iowa Code section 232.116(1)(f) permits termination if:
The court finds that all of the following have occurred:
(1) The child is four years of age or older.
(2) The child has been adjudicated a child in need of
assistance pursuant to section 232.96.
(3) The child has been removed from the physical custody of
the child’s parents for at least twelve of the last eighteen months, or
for the last twelve consecutive months and any trial period at home
has been less than thirty days.
(4) There is clear and convincing evidence that at the
present time the child cannot be returned to the custody of the
child’s parents as provided in section 232.102.
The mother argues the State failed to prove by clear and convincing evidence the
children could not be returned to her custody.
Based on the record, we agree with the State that significant barriers exist
that prevent the children from being returned to the mother. From the beginning
of this case, the DHS’s main concern has been the mother’s ability to properly
supervise her children such that their safety and well-being could be secured.
Despite a variety of services offered by the DHS, the mother had made little
progress in demonstrating that she can properly supervise her children. For
most of the pendency of these proceedings, the mother has been resistant to
services. When she still had care of the children, she failed to take advantage of
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the DHS-offered daycare assistance and instead chose to continue to leave the
children unsupervised. She has never engaged in parenting classes.
At some point, she left for Chicago without prior warning and did not return
for several months. She has maintained a romantic relationship with a partner
she knew was involved in drug trafficking and was consistently and repeatedly
dishonest with the DHS and care providers about the relationship. At one point,
this relationship led her to reside in a home that was raided by law enforcement
and contained a weapon and materials related to drug trafficking. The mother
has shown her willingness to maintain this relationship and involve her children in
it by taking them to visit her partner while he was in jail, while being deceptive to
those offering her a host of services to sever this harmful relationship. These
actions and inactions demonstrate that the mother has not made progress
towards reaching the point where she can properly supervise her children and
provide a safe environment for them.4
At the termination hearing, the DHS worker assigned to the case
recommended the mother’s parental rights be terminated. The juvenile court
concluded:
There are ongoing concerns about the safety of the children
if returned to the care and custody of any of their respective
parents. The parents have not shown improvement in their
parenting skills or parental decision-making, or even that they are
prioritizing their children over a destructive lifestyle. These children
are safe and secure in their placements, and they deserve a
permanent home.
4
At the termination hearing, the mother claimed she had ended her relationship with
P.S.’s father in September 2016. She also begin attending therapy in the weeks leading
up to termination and, according to her therapist, made some progress. Due to the
mother’s long history of dishonesty with the DHS and care providers, we are unable to
place much weight on these claims.
8
The children need a long-term commitment by adults who
can be appropriately nurturing and supportive of the children’s
growth and development and who can appropriately meet their
physical, mental, and emotional needs.
We agree and affirm the court’s conclusion that the State proved the statutory
grounds under Iowa Code section 232.116(1)(f) for terminating the parental rights
of the mother to all three children at issue in this appeal.
B. Best Interest and Permissive Exceptions
In accordance with Iowa Code section 232.116(2), the juvenile court
considered “the child’s best interest, as such includes safety, risk for adjudicatory
harm, the best placement to meet the child’s physical, mental, and emotional
needs, as well as capacity to provide long-term nurturing.” The court also
considered whether any of the exceptions outlined in Iowa Code section
232.116(3), such as the closeness of the mother’s bond to the children, militated
against termination.
At the termination hearing, the DHS worker testified about the ongoing
effects of the continued CINA proceedings on the children:
They just kind of want answers and to know what their future’s
going to be. I believe that they have some ongoing confusion by
what custodians and caregivers are sharing with them and by what
Mom is sharing with them.
Ultimately, the court concluded termination was in the children’s best interest:
The mother is unable to demonstrate that allowing her to maintain a
legal parental connection to the children in interest is beneficial to
long-term stability for the children. It is quite the opposite. Based
on her history, it is likely that she would continue to expose the
children to inappropriate relationship choices, criminality, and a
level of indifference as she fails to make them a significant priority.
9
We agree termination is in the children’s best interest. We also agree the bond
between the mother and her children does not outweigh the need for
permanency and stability for the children, and therefore, nothing militated against
termination. See Iowa Code § 232.116(3).
C. Additional Time
Iowa Code section 232.104(2)(b) allows for a six-month extension if “the
need for removal of the child from the child’s home will no longer exist at the end
of the additional six-month period.” Yet, with little progress made, inconsistent
efforts toward further progress, and the children suffering adverse effects from
the continuation of the CINA action, we agree with the DHS caseworker’s
assessment and the juvenile court’s conclusion that additional time may be
harmful to the children and would not impact the mother’s ability to properly
supervise and provide adequate care for her children.
IV. The Father’s Appeal—C.C.
On appeal, the father claims the State failed to prove the statutory
grounds for termination, termination was not in his child’s best interest, and
termination was not proper due to the closeness of the parental bond between
him and his child.
In challenging the statutory grounds for termination, the father’s entire and
very brief argument consists of the claim that he did not consent to the
termination. When appealing the termination of parental rights, Iowa Rule of
Appellate Procedure 6.1401—Form 5 requires a party to “state what findings of
fact or conclusions of law the district court made with which you disagree and
why, generally referencing a particular part of the record, witnesses’ testimony, or
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exhibits that support your position on appeal.” Rule 6.201(1)(d) states: “The
petition on appeal shall substantially comply with form 5 in rule 6.1401.” Given
the father’s lack of argument disputing the grounds for termination, we conclude
he has not complied with the rules, and therefore, his claims are waived. See
Iowa Rs. App. P. 6.201(1)(d), 6.1401—Form 5.
Additionally, regarding his claims termination was not in the child’s best
interest and termination was militated by the closeness of his bond with C.C., we
agree with the juvenile court that termination was in the child’s best interest and
that nothing militated against termination. See Iowa Code § 232.116(2), (3).
V. Conclusion
We agree the State proved by clear and convincing evidence both the
mother’s rights to all the children and the father’s rights to C.C. should be
terminated. We also agree that termination was in the children’s best interest.
We therefore affirm the juvenile court’s decision.
AFFIRMED ON BOTH APPEALS. | 01-03-2023 | 05-03-2017 |
Subsets and Splits