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What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
A statement of the outlines of this cause appears in the opinion of Judge Conger in Christie v. Harris, D.C., 47 F. Supp. 39. We need not repeat what he there has said. The appeal comes to us upon a finding that the defendants, Ferber and Kaufman — the authors of the offending play — had not had access to the plaintiff’s play, or knowledge of its existence, or of the plaintiff or her collaborator, or possession of a copy of the play, or acquaintance with any of its incidents or characters. Unless we say that that finding was “clearly erroneous,” the appeal is at an end. Judge Conger saw both the authors, and they were examined at length before him; their testimony left him no escape but to accept it as he did, or to conclude that both deliberately perjured themselves; no lapse of memory will explain what they said. In such a setting nothing should move us to hold that the finding was plainly wrong except a parallelism between the plays which admits of no innocent explanation. We have read them both, and do not find the slightest basis in them for disbelieving the authors’ disclaimers. Such similarities as exist: i.e., the general theme, the mise en scene, the suicide and the rest, are easily accounted for upon the assumption of independent composition. Indeed the only thing which even faintly demands an explanation, is that the lead in each play takes to the stage because of her mother’s defeated histrionic ambitions. That might serve as corroboration, if there were really any tentative inference to corroborate; but there is none. In order to suppose that these two highly experienced and successful authors should have found in the plaintiff’s play cues for the farfetched similarities which she discovers, one must be obsessed, as apparently unsuccessful playwrights are commonly obsessed, with the inalterable conviction that no situation, no character, no detail of construction in their own plays can find even a remote analogue except as the result of piracy. “Trifles light as air are to the jealous confirmations strong as proof of holy writ.”
The attorneys for each of the defendants will be awarded $400 as allowance upon this appeal, and the judgment will be affirmed.
Judgment affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OAKES, Circuit Judge:
The principal issue raised in this appeal is the propriety of the district court’s refusal to permit two jurors to impeach a partial verdict. Questions of sufficiency of the evidence with respect to appellant Hockridge, jury bias, adequacy of the conspiracy instructions, purported withholding of evidence by the Government, and erroneous evidentiary rulings are also presented, but each merits only limited discussion.
Appellants Hockridge, Petri and Easton challenge the judgments of conviction entered after an eight-week jury trial in the United States District Court for the Southern District of New York before Dudley B. Bonsai, Judge. Under Count One of the indictment all three appellants were convicted of conspiracy (a) to misapply moneys of the Chemical Bank (Chemical), Hock-ridge’s employer, (b) to prepare and submit false financial statements for the purpose of obtaining loans from Chemical and from the Bank of New York, and (c) to make false entries in Chemical’s books and reports. They also were found guilty of a substantive count — Count Two — charging misapplication and assisting in the misapplication of approximately $1,145,000 in Chemical funds. Petri, the owner of various shell companies and a borrower from Chemical, was also convicted of substantive Count Eight for preparing a false financial statement of the Oceanic Drug Co. for the purpose of influencing Chemical to loan $75,000 to that company. Hockridge and Easton were acquitted on the Oceanic Drug count, as were all three appellants on Counts Three, Four, Ten through Fourteen, Seventeen, Twenty and Twenty-one. The jury was discharged on February 18, 1977, without having reached verdicts on the remaining counts.
I. FACTS
From September, 1971, through the middle of June, 1972, Petri borrowed in excess of $1,300,000 from Chemical. On over twenty occasions, loans were made to worthless corporations owned in whole or in part by a “mini-conglomerate” controlled by Petri known after November 24, 1971, as Cine-Prime Corp. Chemical ultimately lost over $1,100,000 on these loans.
Petri effected his scheme with the assistance of Hockridge who, as an assistant vice president and loan officer at Chemical, used his authority to grant unsecured loans to Petri’s corporations. Petri originally enticed Hockridge into the conspiracy by satisfying $35,000 in loans which the latter had previously approved to one Daniel Sheddrick. Petri subsequently paid off $23,000 in overdue personal loans that Hockridge had approved to a codefendant, George Whitney. Petri also remunerated Hockridge more directly by diverting $14,-000 of a $75,000 loan Hockridge had approved for one of Petri’s companies to Hoekridge’s checking account in March, 1972. Petri also provided Hockridge with other bribes and gratuities including, but not limited to, stock in Cine-Prime Corp. held by a nominee, a $3,000 mink coat for Hockridge’s wife, sexual favors of a woman paid for the purpose, a pool table and golf clubs.
For all but two of the corporate loans approved by Hockridge, Easton, an officer in several of Petri’s worthless companies, prepared unsigned corporate financial statements submitted to Chemical. Some of these listed non-existent assets. For example, Cord Automobile Co., acquired in bankruptcy for $100, was shown to have more than $260,000 in assets. One statement, that of Todays Stores Services, was dated even before the corporation was formed. Others were false in various particulars.
II. DISCUSSION
A. Sufficiency as to Hockridge
Only Hockridge disputes the sufficiency of the Government’s proof. Viewing the evidence in the light most favorable to the Government, Giasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942); United States v. Falcone, 544 F.2d 607, 610 (2d Cir. 1976), cert. denied, 430 U.S. 916, 97 S.Ct. 1329, 51 L.Ed.2d 595 (1977), we conclude that the evidence supports Hock-ridge’s conviction on both the conspiracy and the substantive counts.
The Government’s proof at trial focused on four areas. First, the evidence permitted the jury to find that Hockridge knew that the financial statements submitted on behalf of Petri’s corporations were false. Second, the jury properly could have found that Hockridge completed false or fictitious documents in connection with several of the loans. Third, the Government’s proof demonstrated that Hockridge knowingly violated the bank’s “group credits rule” by approving loans in excess of his credit authority to two or more corporations controlled by the same party without approval of other lending officers. And finally, Hockridge received the substantial bribes and gratuities detailed above. Clearly, the evidence was more than sufficient.
B. Alleged Jury Bias or Misconduct
All three appellants assert that the jury was infected with prejudice before the deliberations even began. On the fifth day of an eight-week trial, Juror Number Three reported to the judge that several other jurors had remarked that the defendants were guilty. She noted, however, that the jurors were “not speaking about the case per se,” whatever that meant. The district judge proceeded to interview each juror individually in camera. Several said that they had heard nothing of the kind, although six reported that someone had made a passing reference, in jest, to the subject of the defendants’ guilt. Each averred that he or she would not form any opinion of guilt or innocence until all the evidence was presented. Each further recognized the necessity of not talking about the case.
In treating charges of jury misconduct, the trial judge is accorded broad discretion. United States v. Panebianco, 543 F.2d 447, 457 (2d Cir. 1976), cert. denied, 429 U.S. 1103, 97 S.Ct. 1129, 51 L.Ed.2d 553 (1977); United States v. Flynn, 216 F.2d 354, 372 (2d Cir. 1954), cert. denied, 348 U.S. 909, 75 S.Ct. 295, 99 L.Ed. 713 (1955); see Note, The United States Courts of Appeals: 1975-1976 Term Criminal Law and Procedure, 65 Geo.L.J. 203, 370-71 (1976). A criminal trial is of course no place for bias or prejudice, even “in jest.” And faced with the threat of bias, Judge Bonsai acted properly in conducting the in camera interviews. If one juror had been contaminated, the district judge’s prompt action could have contained any spread of the taint. United States v. Torres, 519 F.2d 723, 727-28 (2d Cir.) (“expeditious” voir dire after defendants seen in handcuffs minimized harm where all jurors but one assured judge of continuing impartiality; unsure juror excused), cert. denied, 423 U.S. 1019, 96 S.Ct. 457, 46 L.Ed.2d 392 (1975); cf. United States v. Lord, 565 F.2d 831, 837-39 (2d Cir. 1977) (in camera individual interrogation of juror exposed to prejudicial publicity during trial required); United States v. Pfingst, 477 F.2d 177, 186 (2d Cir.) (individual jurors examined on exposure to prejudicial publicity), cert. denied, 412 U.S. 941, 93 S.Ct. 2779, 37 L.Ed.2d 400 (1973); but cf. United States v. Taylor, 562 F.2d 1345, 1359-60 (2d Cir.) (omission to conduct individual voir dire where jury may have seen defendants in manacles not plain error), cert. denied sub nom. Salley v. United States, 432 U.S. 909, 97 S.Ct. 2958, 53 L.Ed.2d 1083 (1977).
Likewise, on the basis of the jurors’ interview statements, it was not an abuse of discretion to continue the trial upon concluding that the jurors were not prejudiced, a determination which the district judge was in the best position to make. See United States v. Bando, 244 F.2d 833, 838 (2d Cir.), cert. denied, 355 U.S. 844, 78 S.Ct. 67, 2 L.Ed.2d 53 (1957); cf. United States v. Chiarizio, 525 F.2d 289, 293 (2d Cir. 1975) (factual findings at pretrial suppression hearing are reversible on appeal only if clearly erroneous); 3 C. Wright, Federal Practice and Procedure § 678, at 143 (1969) (same).
C. Juror Impeachment of Partial Verdict
Appellants’ principal contention is best understood in its specific factual context. The jury began deliberations on Friday morning, February 11, 1977, and continued until 9:30 that evening. Reconvening on Monday morning, February 14, it deliberated until about 6:30 p. m. when the court informed counsel that it would exercise its prerogative under Rule 31(b) of the Federal Rules of Criminal Procedure to ask the jury whether it had reached a partial verdict. The jurors responded affirmatively, announcing their verdict of guilty on Count One. After the jurors were polled, the guilty verdicts were recorded. Deliberations resumed on Tuesday, February 15. At about 5:00 p. m., the judge received a note from Juror Number Four asking to see him, a request with which he did not immediately comply. The following morning at about 9:30 a. m. he received a note from Juror Number Three. She also sought a meeting with the judge, fearing that she had committed “a grave injustice” by rushing into the verdict.
With consent of counsel, the judge conducted an on-the-record in camera interview with Jurors Three and Four. During the questioning both jurors expressed their concern with the partial verdict. Juror Number Three believed that “there was not evidence to make [her] decide that Mr. Hockridge and Mr. Petri were involved in a conspiracy.” Juror Number Four expressed doubts about Easton’s guilt and indicated that she “felt like [at] the last minute we were railroaded. . . . ” The judge reminded the two jurors that he did not want them “ever to surrender [their] honest convictions.” Juror Number Three replied that she thought she had done so “because of verbal attack.” The judge urged her “to get hardened to that,” to “think about this some more,” and to consider each defendant separately: He then said:
You did come in with a verdict on three of them. I would like you to think about that and resume your deliberations and then we’ll see how it goes today with the deliberations and then perhaps after we finish here I will want to see you again.
Juror No. 3: I don’t understand what you mean. Continue the deliberating—
The Court: After the jury finishes, I think I will want to see you again and talk again about some of these things that you have told me this morning. But 1 think it would be wise if both of you could go back with the jurors.
The jurors then resumed deliberations and never again intimated any doubts of appellants’ guilt on Count One. Indeed, they acquitted a codefendant on Count One that day. On Thursday, February 17, the jury announced its findings that the three appellants were guilty and a codefendant innocent on Count Two, and that all defendants were not guilty on Counts Three and Four. On the sixth and last day of deliberations, Friday, February 18, the jury announced partial verdicts of not guilty as to all three appellants on nine more counts with the exception of Petri who was found guilty on Count Eight. The jury was discharged without reaching verdicts on the remaining counts even though there was no indication that it was deadlocked.
In response to formal post-trial motions to set aside the verdicts, Judge Bonsai held that the jurors’ in camera interview statements could not affect their verdict on Count One. Alternatively, the judge concluded that the two jurors did not “surrender their honest convictions” in finding the appellants guilty on that count.
Challenging the district judge’s adverse ruling, appellants argue vigorously that the statements of the jurors were competent to impeach the verdict on Count One for essentially two reasons. -First, the jury had not been discharged, thereby making Rule 606(b) of the Federal Rules of Evidence inapposite. Second, when a juror has surrendered “a conscientious conviction,” the verdict must be set aside since it was not unanimous. Grace Lines, Inc. v. Motley, 439 F.2d 1028, 1032 (2d Cir. 1971); see United States v. Pleva, 66 F.2d 529, 531-33 (2d Cir. 1933); 6A Moore’s Federal Practice 159.08[4], at 127-28 (1974).
Neither the cases nor the treatises definitely answer the question whether Rule 606(b) bars the impeachment of a partial verdict by the voluntary and spontaneous testimony of a juror prior to the jury’s discharge. In Vizzini v. Ford Motor Co., 72 F.R.D. 132 (E.D.Pa.1976), relied on by the Government, the jury returned a verdict of liability to a civil plaintiff which was recorded, but during deliberations on damages it revealed that the liability verdict was a compromise. The district court let the verdict on liability stand, relying on Rule 606(b), and submitted the question of damages to a new jury. The Third Circuit reversed, 569 F.2d 754 (3d Cir., filed Dec. 16, 1977), but reserved decision on the Rule 606(b) question, holding that the issues of liability and damages were so related as not to permit severability. The appellants’ cases are equally inconclusive. Even the leading treatises ignore the relationship between Rule 606(b) and partial verdicts after which a jury continues its deliberations.
To buttress appellants’ purported distinction between impeachment of complete verdicts on the one hand and partial verdicts followed by continuing deliberations on the other, they suggest that the interests in protecting freedom of deliberation and freedom from post-verdict annoyance, embarrassment, or harassment are not implieated when the impeaching statements or incidents both occur and are inquired into by the court before the jury has been discharged. Appellants’ position, however, is defective for two reasons. First, it mischaracterizes the impeachment of partial verdicts as not implicating the jury’s freedom of deliberation. And second, it overlooks another important interest served by the rule against verdict impeachment — verdict finality.
While the freedom of jury deliberations is less threatened by impeachment of partial verdicts than by impeachment of verdicts generally, it is, nevertheless, clearly impinged. The inquiry requested by appellants in this case is a prime example. It would have necessitated scrutiny of the deliberations of the jury including the mental processes of the jurors, a result inconsistent with the strictures of Rule 606(b). The legislative history of Rule 606(b), while perhaps not determinative, reveals the strong congressional purpose of protecting the jury deliberation process. The House version embodied a suggestion of the Advisory Committee of the Judicial Conference to delete the proscription against testimony on “any matter or statement occurring during the course of the jury’s deliberations,” previously adopted by the Supreme Court. It retained the prohibition against inquiry into the mental processes of the jurors. See H.R.Rep.No.93-650, 93d Cong., 1st Sess. 9-10 (1973). The Senate, however, thought any inquiry into internal deliberations of the jury unsound, and its report, citing McDonald v. Pless, 238 U.S. 264, 267, 35 S.Ct. 783, 59 L.Ed. 1300 (1915), called for reinstatement of the proscription. S.Rep.No. 93-1277, 93d Cong., 2d Sess. 13-14 (1974), U.S.Code Cong. & Admin.News 1974, p. 7051. The Senate view ultimately prevailed. Similar considerations seemingly apply to a partial verdict; the policy against intrusion into internal deliberations remains the same. Furthermore, it must be assumed that in enacting the Federal Rules of Evidence Congress did not act in a vacuum, but rather had in mind the Federal Rules of Criminal Procedure, including Rule 31(b).
Appellants’ position also fails to recognize the important interest in verdict finality which is furthered by Rule 606(b). Finality obviously would be enhanced by extending the rule against impeachment to partial verdicts which have been recorded. A partial verdict should be given final effect since “[i]t would only promote irresponsible hesitation to tell [the jury] that they must reserve their decision altogether until they got through; the appellants had no right in [the jury’s] subsequent vacillations.” United States v. Cotter, 60 F.2d 689, 690 (2d Cir.) (L. Hand, J.), cert. denied, 287 U.S. 666, 53 S.Ct. 291, 77 L.Ed. 575 (1932). The reason for taking a partial verdict is apparent in cases where there has been a long trial and there exists the prospect of long deliberations. By taking a partial verdict, the court is able to hedge against the possibility of juror illness or death or prejudice by publicity. Of course, finality is not sought for its own sake. But where a partial verdict has been recorded, we perceive no reasons of sufficient magnitude to depart from the normal rules governing impeachment of jury verdicts. A recorded partial verdict ought not to be disturbed absent a showing of the type which would permit impeachment of a complete verdict.
In this particular case Judge Bonsai entered into a discussion with the two jurors which to some extent implied that they might, along with the other jurors, reconsider the recorded verdict. To the extent that this may have been error, it was harmless.
After the in camera interviews with Judge Bonsai, the two jurors joined the others in verdicts of guilt and innocence on a number of counts. At no point did they again voice any reservation with respect to appellants’ conviction on Count One. The appellants argue that Judge Bonsai’s conduct in dealing with the two jurors had the effect of coercing them into giving up reasonable doubts they may have had about appellants’ guilt in subsequent deliberations. This contention might have some merit if Judge Bonsai’s in camera conduct had in any way been coercive, but his management of this difficult and novel situation was the opposite of coercive. We emphasize, however, that in the future the appropriate action of the trial judge faced with a similar request by a juror to reconsider a prior recorded partial verdict should be to advise the juror simply that such a verdict is final, avoiding the discussion engaged in here.
D. Other Issues
Appellants’ remaining contentions require scant comment. Hockridge asserts that the Government failed to reveal an ongoing investigation of a “money-washing” operation in several Chemical branches in violation of Brady v. Maryland. The ■inquiry centered on Chemical’s failure to comply with federal currency requirements. How this entirely unrelated investigation would have tended to create a reasonable doubt of Hockridge’s guilt is not demonstrated. Absent such a showing, no new trial is required. United States v. Agurs, 427 U.S. 97, 112-13, 96 S.Ct. 2392, 49 L.Ed.2d 342 (1976).
Hockridge argues that the court failed adequately to explain to the jury the “thrust of the conspiracy count,” Brief for Appellant Hockridge at 34, urging that he was at most a “casual facilitator,” id. at 28. See United States v. Hysohion, 448 F.2d 343, 347 (2d Cir. 1971). We find that the judge’s conspiracy charge was proper under the authorities in this circuit and that the evidence was clearly sufficient to implicate Hockridge as a participant in the scheme to defraud the bank.
Easton contends that the court improperly permitted proof of extraneous crimes committed by himself and Petri. Specifically the Government offered proof to show that Easton and Petri failed to withhold requisite taxes from corporate employees. However, this evidence tended to show how the conspiracy operated by suggesting that the Petri corporations were simply shells formed to obtain loans. As such the evidence was plainly admissible under Federal Rule of Evidence 404(b), without creating undue prejudice, confusion or waste of time so as to be excludable under Rule 403.
Easton also complains that the Government was erroneously permitted to cross-examine him on the increase of his net worth by over $2,000,000 between 1972 and 1974. But he cannot complain now where he failed to object to this line of inquiry at trial. United States v. Braunig, 553 F.2d 777, 780 (2d Cir.), cert. denied, 431 U.S. 959, 97 S.Ct. 2686, 53 L.Ed.2d 277 (1977). Moreover, there was proof that some of the Chemical loan proceeds were diverted to his personal checking account, although he denied this for the most part. Thus the Government could properly inquire into whether he had used Chemical money to finance personal business ventures which culminated in an increase in his net worth. See United States v. Tramunti, 513 F.2d 1087, 1105 (2d Cir.), cert. denied, 423 U.S. 832, 96 S.Ct. 54, 46 L.Ed.2d 50 (1975); United States v. Jackskion, 102 F.2d 683, 684 (2d Cir.), cert. denied, 307 U.S. 635, 59 S.Ct. 1032, 83 L.Ed. 1517 (1939).
None of the other points raised by appellants merits discussion.
Judgments affirmed.
. 18 U.S.C. § 371.
. 18 U.S.C. §§ 656, 2.
. 18 U.S.C. § 1014.
. On April 12, 1977, Hockridge was sentenced on Count One to nine months’ imprisonment and on Count Two to a three-year suspended sentence with probation to commence upon his release from confinement. Petri was sentenced to four years’ imprisonment on each of Counts One and Two and two years’ imprisonment on Count Eight, all sentences to run concurrently. On June 15, 1977, Easton received six months’ imprisonment and a fine of $5,000 on Count One. On Count Two his sentence was suspended and he was given three years’ probation to commence following his release from confinement.
. The $1,300,000 total does not include “rollover” loans. Roll-over loans are those in which the proceeds of a new loan are used, at least in part, to pay off an old one.
. The ceiling on his authority was $50,000 from September, 1971, to March 6, 1972, and then $75,000 from the latter date to June, 1972, when the scheme was discovered and Hock-ridge was dismissed.
. The payment to Sheddrick is revealing. Hockridge approved a $75,000 loan to Oceanic Drug Co. and a $35,000 payment to Cord Automobile Co., two of Petri’s companies. Hock-ridge removed $35,000 from the Oceanic checking account and deposited the moneys in the Cord account. A check was then drawn on the Cord account by Petri and Easton, payable to Sheddrick.
. The $14,000 payoff was made when Hockridge authorized a $75,000 loan to Todays Stores Services, Inc. Hockridge then approved a $14,000 Chemical check payable to the Central Jersey Bank and Trust Co. where he maintained a bank account. He covered the Chemical check by withdrawing $14,000 from the Todays Stores Services’ account.
. He admonished one witness to “tell Petri and Easton to come down off some of these wild balance sheets.”
. On more than one occasion Hockridge falsely stated that certain loans would be used for working capital or for legitimate business investments when in fact the money was used to pay off personal loans or loans made to other companies.
. Hockridge’s subsequent report to the bank that he had received no “gratuities, payments or secret benefits” from Petri or his group failed to mention the $14,000 payoff, see note 8 and accompanying text supra, and belied Hock-ridge’s testimony that the transaction was really a loan from Petri to be used to buy stock.
. Rule 31(b) provides:
Several Defendants. If there are two or more defendants, the jury at any time during its deliberations may return a verdict or verdicts with respect to a defendant or defendants as to whom it has agreed; if the jury cannot agree with respect to all, the defendant or defendants as to whom it does not agree may be tried again.
Fed.R.Crim.P. 31(b). In explicating Rule 31(b),
Professor Wright states that
the jury, at any time during its deliberations, may return one or more verdicts on those counts or defendants on which it is agreed. It may then retire again and resume its deliberations about the remaining charges [citing, inter alia, United States v. Conti, 361 F.2d 153 (2d Cir. 1966), vacated and remanded on other grounds sub nom. Stone v. United States, 390 U.S. 204 [88 S.Ct. 899, 19 L.Ed.2d 1035] (1968)] . . . . In permitting the practice here described, Rule 31(b) is in accord with the prior law [citing, inter alia, United States v. Frankel, 65 F.2d 285 (2d Cir.), cert. denied, 290 U.S. 682 [54 S.Ct. 119, 78 L.Ed. 588] (1933)].
2 C. Wright, Federal Practice and Procedure § 513, at 368-69 (1969).
A guilty verdict may not be challenged on the basis that the jury is sent back for further deliberations on remaining counts after reaching a verdict on one or more counts. United States v. Barash, 412 F.2d 26, 31-32 (2d Cir.), cert. denied, 396 U.S. 832, 90 S.Ct. 86, 24 L.Ed.2d 82 (1969); McDonald v. Commonwealth, 173 Mass. 322, 329, 53 N.E. 874, 875 (1899).
. She told the court that she had been “attacked incredibly” on the first day of deliberations but agreed with the judge that jury deliberations are often “emotional and high strung.”
. Fed.R.Evid. 606(b) states:
Inquiry into validity of verdict or indictment. Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any matter or statement occurring during the course of the jury’s deliberations or to the effect of anything upon his or any other juror’s mind or emotions as influencing him to assent to or dissent from the verdict or indictment or concerning his mental processes in connection therewith, except that a juror may testify on the question whether extraneous prejudicial information was improperly brought to the jury’s attention or whether any outside influence was improperly brought to bear upon any juror. Nor may his affidavit or evidence of any statement by him concerning a matter about which he would be precluded from testifying be received for these purposes.
. We note that the level of symbiosis between liability and damages that existed in Vizzini ordinarily would not pertain to partial verdicts on separate counts of an indictment.
. In United States v. Pleva, 66 F.2d 529 (2d Cir. 1933), the conviction was reversed on appeal where a juror had informed the trial judge while the jury was being polled and before the verdict was recorded that he had voted for conviction because of his own illness. Here, of course, the jurors’ statements were made after the verdict on Count One had been recorded. Grace Lines, Inc. v. Motley, 439 F.2d 1028 (2d Cir. 1971), is similarly unavailing. A juror’s statement on polling that she had consented to the verdict in the interests of unanimity was insufficient to show surrender of an honest conviction. Id. at 1032 (Anderson, J.); id. at 1033-34 (Lumbard, J., concurring). See 6A Moore’s Federal Practice i[ 59.08[4], at 130 (1974). Many cases in this circuit state the usual rule that jurors’ statements received after discharge may not be received to impeach the verdict. E. g., United States v. Grieco, 261 F.2d 414, 415 (2d Cir. 1958) (per curiam) (juror intimidated by “blustering arrogance” of another juror), cert. denied, 359 U.S. 907, 79 S.Ct. 582, 3 L.Ed.2d 572 (1959); Rotondo v. Isthmian S.S. Co., 243 F.2d 581, 583 (2d Cir.) (post-discharge statements explaining reasons for verdict are incompetent), cert. denied, 355 U.S. 834, 78 S.Ct. 53, 2 L.Ed.2d 45 (1957).
. See 6A Moore’s Federal Practice, supra note 16, ¶ 59.08[4], at 123-52; 3 J. Weinstein & M. Berger, Evidence §§ 606[01]-[05], at 606-1-46; 8 Wigmore, Evidence §§ 2345-56 (McNaughton rev. ed. 1961); Wright, supra note 12, § 554, at 488-95; The ABA Standards Relating to Trial by Jury § 5.7 (Approved Draft 1968) [hereinafter ABA Standards],
. Wigmore noted in a non-partial verdict context that “the dangers of uncertainty and of tampering with the jurors to procure testimony, disappear in large part if such investigation as may be desired is made by the judge and takes place before the jurors’ discharge and separation.” 8 Wigmore, supra note 17, § 2350, at 691 (emphasis in original). See ABA Standards, supra note 17, § 5.7(a), at 173. Wigmore points out, however, the danger of abuse from an overactive judge attempting to browbeat a jury out of its sincere conclusion, as in Rex v. Shipley, 21 How.St.Tr. 847, 950n, 951 (1784). Wigmore, supra, § 2350, at 692.
. A partial verdict still requires the affirmative act of assenting to a verdict either by express answer to the clerk at polling in open court or by silence which implies assent. See 8 Wigmore, supra note 17, § 2355, at 717. “The record of a verdict implies a unanimous consent of the jury, and is conclusive and incontrovertible evidence of the fact.” Grinnell v. Phillips, 1 Mass. 529, [530], 542 (1805). Although here there was no individual polling, none was requested. Appellants, therefore, waived the right. See Humphries v. District of Columbia, 174 U.S. 190, 194-95, 19 S.Ct. 637, 43 L.Ed. 944 (1899); United States v. Dye, 61 F.Supp. 457, 459 (W.D.Ky.1945); ABA Standards, supra note 17, § 5.5; cf. Hernandez v. Delgado, 375 F.2d 584 (1st Cir. 1967) (no violation of due process to infer waiver of right to poll jury from silence).
. Concededly, the district judge’s directions to the two jurors were somewhat ambiguous. Ante at 2141. If he was urging the jurors to deliberate further on Count One, we believe that under the view we have taken of Rule 606(b)’s application to partial verdicts, the district judge exceeded his authority. Appellants could not complain of that error, however, since it was favorable to their position.
In any event, Judge Bonsai’s instructions were clearly noncoercive. True, he did not discuss the matter further with the jurors, as he told them he would do. But there did not appear to be any need for additional communications as the jury deliberations progressed. Moreover, although appellants moved to set aside the verdict and for a mistrial when counsel were informed of the colloquy between the judge and the two jurors, no objection to the judge’s failure later to discuss the verdict was ever lodged, nor did appellants ever request redeliberation by the entire jury on Count One. Accordingly, they would have to abide the result reached here even if the recorded partial verdict was not, by virtue of the trial judge’s discussion with the two jurors, entitled to final effect.
. 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963).
. The court charged that “a conspiracy is a combination or partnership, if you will, of two or more people to violate the law . . . It also charged that the Government must prove
that at least two or more persons came to a mutual understanding for the purposes of accomplishing the unlawful plan or scheme described in the conspiracy count which I just read to you. Here, of course, the fact that the defendants knew each other or may have associated with each other or may have discussed mutual or common business interests, that isn’t enough to establish a conspiracy. Mere association isn’t enough.
. E. g., United States v. Rosenblatt, 554 F.2d 36 (2d Cir. 1977); United States v. Kahaner, 317 F.2d 459, 474-82 (2d Cir.), cert. denied, 375 U.S. 836, 84 S.Ct. 62, 11 L.Ed.2d 65 (1963).
. Other crimes, wrongs, or acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however; be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.
Fed.R.Evid. 404(b).
. Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.
Fed.R.Evid. 403.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HOLLOWAY, Circuit Judge.
After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R. App.P. 34(a); Tenth Circuit R. 10(e). The cause is therefore ordered submitted without oral argument.
Sadie Eustace brought this action under the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq., (TILA) and Federal Reserve Board Regulation Z, 12 C.F.R. § 226. Her complaint alleged, inter alia, that defendant Cooper Agency, Inc. (Cooper Agency) and Bogue Brothers, Inc., (Bogue Brothers) failed to comply with requirements of the statute and the regulation by not disclosing the creditor status of Cooper Agency in the transaction. Defendants Cooper Agency and Bogue Brothers denied any violation of the Act and Regulation.
After a non-jury trial the district court entered judgment against plaintiff Eustace and she appeals. She argues that the district court erred in holding that defendant Cooper Agency was not a creditor in the transaction at issue for the purposes of the Act and the Regulation, and in refusing to rule on Eustace’s motion for summary judgment.
I
On August 28, 1980, Eustace and defendant Bogue Brothers entered into an installment credit contract for the purchase of a washer and dryer; Eustace also refinanced the balance which she owed to Bogue Brothers from a previous retail installment contract. I R. 2, 5-6. This contract was assigned to defendant Cooper Agency which had also been assigned the previous retail installment contract. I R. 19.
The complaint in this action alleged that defendants failed to identify both creditors in the transaction, in violation of §§ 226.-8(a) and 226.6(d) of Regulation Z; failed to make the disclosures using the prescribed terminology, in violation of §§ 226.6(a) and 226.8(c)(1) of Regulation Z; failed to make all required disclosures clearly, conspicuously, and in meaningful sequence, and in accordance with the further requirements of the Act and the Regulation; disclosed improper additional information, in violation of § 226.6(c) of the Regulation; and alternatively, failed to make all required disclosures on one side of one page, in violation of § 226.8(a) of the Regulation. I R. 3. In its Memorandum Opinion and Order the district court concluded:
The plaintiff has failed to establish that Cooper Agency was a “creditor” as that term is defined by the Truth in Lending Act in this consumer credit transaction. Therefore, the fact that the plaintiff’s Retail Installment Contract did not identify Cooper Agency as a “creditor” on its face is immaterial and does not constitute a violation of the Truth in Lending Act.
I R. 40. Judgment was entered against plaintiff. I R. 42.
II
The dispositive questions before us are (1) Was the Cooper Agency a creditor under TILA and Regulation Z? and (2) If the Cooper Agency was a creditor, was it identified as a creditor as required by TILA and Regulation Z?
Eustace first argues that the district court erred in holding that Cooper Agency is not a creditor for purposes of the Act and Regulation Z because the “creditor” status of Cooper Agency was never controverted, because the admission that Cooper Agency is a “creditor” is binding and conclusive, and because failure to abide by the admission denies Eustace due process of law. Eustace quotes paragraph 5 of her complaint which alleges:
5. At all times relevant hereto, Defendants, in the ordinary courses of their businesses, regularly extended, offered to extend, arranged or offered to arrange the extension of credit to their customers for which a finance charge is or may be imposed or which is payable in more than four installments.
I R. 2. Defendants admitted the allegations of paragraph 5 and some other aver-ments.
Defendants state that “the admitted fact that Cooper was, in a general sense, a creditor as defined by law, does not establish that Cooper was a creditor in the disputed transaction. Cooper’s role in the transaction was disputed throughout the proceedings.” Brief of Appellees at 4-5. Defendants also say that “the fact that Cooper was generally in the business of being a creditor is perhaps probative of its role in the transaction; however, it is not dispositive.” Id. at 7. We feel it is not clear that defendants admitted that Cooper Agency was a creditor within the meaning of TILA in this transaction. However, in any event the district judge evidently thought this matter to be an issue at trial because he considered the evidence and found that Cooper Agency was not a creditor. Thus the question before us is whether that finding was correct.
Ill
Eustace argues that there was no basis on which to find that Cooper Agency was not a “creditor.” She says that “the fact that Lender had not ‘approved the credit application before the seller of the consumer goods consummated its sale’ ” is not the sine qua non of creditor status for a subsequent assignee of a contract as the court held. Brief of Appellant at 15. On the other hand, defendants argue that the evidence failed to establish that Cooper Agency extended, arranged or offered credit on August 28, 1980. Brief of Appellee at 7.
The district court found that “Cooper Agency was not a ‘creditor’ as that term is defined in the Act in this consumer credit transaction.” I R. 39. We disagree, concluding that this finding was in error. See Ford Motor Credit Co. v. Cenance, 452 U.S. 155, 101 S.Ct. 2239, 68 L.Ed.2d 744 (1981) (per curiam); Boncyk v. Cavanaugh Motors, 673 F.2d 256 (9th Cir.1981). See also Rudisell v. Fifth Third Bank, 622 F.2d 243, 253 (6th Cir.1980). In Cenance, 452 U.S. at 157, 101 S.Ct. at 2240, the Supreme Court found that Ford Motor Credit Co. (FMCC), as the assignee from automobile dealers of retail installment contracts, was a creditor within the meaning of TILA, stating that
a prospective purchaser of an automobile entered into an installment sales transaction with an automobile dealer. Prior to completion of the transaction the dealer submitted the buyer’s credit application to petitioner Ford Motor Credit Co. (FMCC). Once the dealer was notified that the buyer met FMCC’s credit standards, the buyer and the dealer executed a retail installment contract... Pursuant to the arrangement between the dealer and FMCC, FMCC purchased each contract without recourse against the dealer. Although FMCC did not assist in the actual negotiations, it provided the dealer with credit forms, including blank retail installment contracts. Although each did so, none of the dealers was obligated to seek financing from FMCC in perfecting its sales transaction.
Id. at 155-56, 101 S.Ct. at 2239-40. The Court quoted the following language from the opinion of the Fifth Circuit in Cenance, 621 F.2d 130, 133:
“The Meyers [539 F.2d 511] analysis applies with even greater force to the instant situation because here the dealers regularly dealt only with Ford. The dealer and Ford prearranged for the assignment of the finance instrument. At no time did the risk of finance reside with the dealer. The transaction between dealer and automobile purchaser was conditioned upon acceptance of the credit application by Ford. Indeed, the credit application form was prepared by Ford. As in Meyers [539 F.2d 511], it would be elevating form over substance to hold that Ford was anything but an original creditor within the meaning of the Act and Regulation Z.”
452 U.S. at 156-57, 101 S.Ct. at 2240-41. The Supreme Court concluded:
Each dealer arranged for the extension of credit but FMCC actually extended the credit. The facts negate any suggestion that the dealers anticipated financing any of these transactions. The sales were contingent upon FMCC’s approval of the credit worthiness of the buyer. The acceptance of the contract and the assignment became operational simultaneously, and the assignment divested the dealer of any risk in the transaction. In short, we agree with the Court of Appeals that it would be elevating form over substance to conclude that FMCC is not a creditor within the meaning of the Act. (footnote omitted) (emphasis in original).
Id. at 158, 101 S.Ct. at 2241.
Here Bogue Brothers had a dealer financing agreement with Cooper Agency which agreed to purchase security agreements and sales contracts from Bogue Brothers that were acceptable to Cooper Agency. Deposition of Charles Bogue at Ex. I. Bogue Brothers agreed to prepare such contracts on forms satisfactory to and to be furnished by Cooper Agency. Id. Bogue Brothers also agreed to repurchase from Cooper Agency any note, contract or agreement which shall become ninety days or more delinquent. Id. Bogue Brothers did about 90% of its business on credit and assigned all of its installment contracts to a financing entity. Id. at 8, 10. Approximately 65% of these contracts were assigned to Cooper Agency with which Bogue Brothers had been doing business for about 10 years. Id. at 11-12.
Bogue Brothers was Cooper Agency’s largest source of business. Deposition of Lowell G. Engholm at 11-12. If a customer passed Bogue Brothers’ credit check, Bogue Brothers could prepare a contract which Cooper Agency would accept. Deposition of Bogue at 22. Cooper Agency played a role in passing on the credit worthiness of the purchasers only after the fact. Deposition of Engholm at 21. If Cooper Agency had a record that did not turn up in Bogue Brothers’ credit investigation, Cooper Agency made them aware of it; otherwise, Cooper Agency relied on Bogue Brothers’ credit evaluation. Id. During the time the two did business together, there were no more than two or three contracts which Bogue Brothers requested Cooper Agency to return and which Cooper Agency did not purchase. Id. at 18.
The major difference, then, between the transaction here and those in Cenance is that in Cenance the dealer first submitted the buyer’s credit application to FMCC for approval. After the dealer was notified that the buyer met FMCC’s credit standards, the buyer and dealer executed a retail installment contract. FMCC then purchased each installment contract without recourse against the dealer. Here Cooper Agency played a role in passing on the credit worthiness of the purchasers only after the fact. Cooper Agency purchased all but two or three of the contracts which Bogue Brothers assigned to it and Cooper Agency purchased the contracts with recourse against Bogue Brothers. There was no need for Cooper Agency to give prior approval to the buyer’s credit application because Cooper Agency had recourse against Bogue Brothers. We are not convinced that this difference is significant. See Jennings v. Edwards, 454 F.Supp. 770, 773 n. 6 (M.D.N.Car.1978), aff'd, 598 F.2d 614 (4th Cir.1979).
In Boncyk v. Cavanaugh Motors, 673 F.2d 256 (9th Cir.1981), purchasers of used cars brought actions against the car dealers and the financing bank as creditors for violation of TILA. The financing bank claimed that it was not a creditor because it merely accepted the assignment of a completed credit agreement between the buyers and the dealers. At the time of the transactions in question there was in effect an Automobile Dealer Agreement between the dealers and the financing bank. In this agreement, the bank required each dealer to submit evidence of insurance coverage for the vehicle or of the buyer’s agreement to furnish insurance. The dealers, when making a credit sale of an automobile, never intended to carry the paper itself and during 1974 assigned to financial institutions all their automobile credit sales contracts. The agreement- and disclosure statement was prepared by and furnished to the dealers by the financing bank. The bank accepted every contract offered it in 1974 by the dealers. Even before it received any documents concerning the transaction, the bank advised the dealer that the Hughes contract, the contract of one of the purchasers bringing suit, met the bank’s standards for assignment. The bank assumed that contracts, written on the forms prepared and supplied by it, would be assigned to it. Both contracts in question were assigned to the bank on the same day the transaction took place. Id. at 258-59. The court concluded that
[t]he position of the Bank in this case is virtually identical to that of FMCC in the Cenance case. We therefore conclude that the Bank is a creditor.
Id. at 259.
In Boncyk, as here, if the contract was written on forms prepared and supplied by the financing entity, approval of the assignment was given by the financing entity. We conclude that just as the financing bank in Boncyk was a creditor, Cooper Agency is also a creditor within the definition of TILA. The Eighth Circuit has pointed out that
[i]n interpreting the Act, the Federal Reserve Board and the majority of courts have focused on the substance, rather than the form, of credit transactions, and have looked to the practices of the trade, the course of dealing of the parties, and the intention of the parties in addition to specific contractual obligations.
Joseph v. Norman’s Health Club, Inc., 532 F.2d 86, 90 (8th Cir.1976). Moreover the Supreme Court has noted that
[t]he hearings held by Congress reflect the difficulty of the task it sought to accomplish. Whatever legislation was passed had to deal not only with the myriad forms in which credit transactions then occurred, but also with those which would be devised in the future ... The language employed evinces the awareness of Congress that some creditors would attempt to characterize their transactions so as to fall one step outside whatever boundary Congress attempted to establish.
Mourning v. Family Publications Service, Inc., 411 U.S. 356, 365, 93 S.Ct. 1652, 1658, 36 L.Ed.2d 318 (1973).
Here the record shows that Bogue Brothers had a dealer financing agreement with Cooper Agency under which Cooper Agency agreed to purchase security agreements and sales contracts from Bogue Brothers which were acceptable to Cooper Agency. Bogue Brothers agreed to prepare such contracts on forms satisfactory to and to be furnished by Cooper Agency. Bogue Brothers assigned all of its installment contracts, 65% of which were assigned to Cooper Agency, with which Bogue Brothers had been doing business for about 10 years. During the time the two did business together there were no more than two or three contracts which Bogue Brothers requested Cooper Agency to return and which Cooper Agency did not purchase. On these facts we hold that Cooper Agency was a creditor within the definition of TILA.
IV
Defendants say that even if Cooper Agency was a creditor in the transaction, any failure to disclose that fact was only a technical violation of the Act and recovery is not warranted, relying in part on the Truth-in-Lending Simplification and Reform Act, 94 Stat. 168, 15 U.S.C.A. § 1601 et seq. Defendants maintain that with those amendments, it became clear that Congress did not intend that the identity of every potential creditor be treated as material, citing the legislative history of the Simplification Act. Brief of Appellee at 9, 12. We feel that in a case like this which arose at about the time of Cenance, we must apply the Cenance interpretation of the notification requirements, and of the term “creditor.” TILA mandates that each creditor must be clearly identified. The court in Boncyk noted that “it is implicit in the opinion of the Court in Ce-nance that a failure to clearly identify each creditor is a failure to disclose which imposes liability under the TILA.” Boncyk, 673 F.2d 260.
It is true that the Court stated in Ce-nance, “the statement notifying the buyer that the contract was, upon acceptance, assigned to FMCC served the purpose of the Act by disclosing the nature of the relationship of the finance company to the transaction.” Cenance, 452 U.S. at 159, 101 S.Ct. at 2241. However, here although Eustace’s copy of the contract stated “[t]he foregoing security is hereby assigned under the terms of the Seller’s Recourse, recommendation, Assignment and Guaranty on the reverse side hereof unless otherwise indicated,” her copy did not contain on the reverse side the printed language entitled “Seller’s Recommendation, Assignment and Guaranty (With Recourse),” or a statement that the contract was assigned to Cooper Agency. I R. 6. While Eus-tace’s copy did contain a reference to the “Group Creditor Life Policy, pursuant to the agency agreement of Cooper Agency, Inc,” I R. 5, this statement did not clearly identify Cooper Agency as a creditor.
Defendants further argue that plaintiff admitted at trial that all material facts were known to her before she entered into the transaction. Brief of Appellees 10. In this connection, plaintiff did acknowledge she was making payments directly to Cooper Agency. She was asked whether she was contending that she did not know Cooper Agency was a creditor and replied “I guess not.” III R. 14. However, a showing that the creditor had actual knowledge does not excuse a failure to comply with the mandatory disclosure requirements, or prevent recovery under the mandatory remedial provisions of the Act and the regulations. Lauletta v. Valley Buick, Inc., 421 F.Supp. 1036,1040 (W.D.Pa.1976); Desselles v. Mossy Motors, Inc., 442 F.Supp. 897, 901-02 (E.D.La.1978). “The identification [of the creditor] must be made on the disclosure statement even if the creditor has actual knowledge of the seller’s precise role in the financing transaction.” Whitlock v. Midwest Acceptance Corp., 575 F.2d 652, 654 (8th Cir.1978).
We conclude that Eustace’s contract did not clearly notify her of the assignment to Cooper Agency or its status as a creditor, and hold that the mandatory disclosure requirements of TILA, as interpreted by Ce-nance, were not met.
V
Accordingly, the judgment is reversed and the case is remanded to the district court for further proceedings and the granting of relief afforded by the Act.
. The statute provides in part as follows:
(f) The term "creditor” refers only to creditors who regularly extend, or arrange for the extension of, credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, whether in connection with loans, sales of property or services, or otherwise.
15 U.S.C. § 1602 (1976).
The regulation provides in part as follows: (s) "Creditor" means a person who in the ordinary course of business regularly extends or arranges for the extension of consumer credit or offers to extend or arrange for the extension of such credit, which is payable by agreement in more than four installments, or for which the payment of a finance charge is or may be required, whether in connection with loans, sales of property or services, or otherwise.
12 C.F.R. § 226.2 (1980).
. Eustace argues that the district court erred in refusing to grant her motion for summary judgment. No ruling on the motion for summary judgment was entered on the docket sheet. I R. 44-47. Because a non-jury trial was held to resolve these issues, we assume that the district court determined that it should not grant Eus-tace’s motion for summary judgment.
. The district court stated:
In this case. Bogue Brothers sold the washer and dryer to Sadie Eustace. Upon learning that she needed to finance this sale, the seller took her credit application and approved it unilaterally. Bogue Brothers did not seek credit approval from Cooper before consummating the sale nor did it notify Cooper of the transaction. Bogue Brothers filled out a blank retail installment contract which had been supplied to it by Cooper Agency, Inc., a New Mexico corporation which is an installment financing institution. Included in this retail installment contract was a printed paragraph relating to group creditor life insurance which referred to Cooper Agency, Inc. There was nothing else on the face of the contract to identify Cooper Agency, Inc. as the probable subsequent assignee of this retail installment contract.
The contract was signed by Sadie Eustace and L & G Home Furnishings. At the bottom of the form, this statement appeared, "[T]he foregoing security is hereby assigned under the terms of the Seller’s RECOURSE, recommendation, assignment and guarantee on the reverse side hereof unless otherwise indicated.” This sentence was followed by the signature of Charles Bogue, vice-president of Bogue Brothers d/b/a L & G Home Furnishings. The reverse side of the contract included references to Cooper Agency, Inc.
The statements of uncontroverted facts attached to the cross-motions for summary judgment establish that as a general practice, Bogue Brothers originally approves its credit transactions and extends credit to its consumers. As soon as possible thereafter, however, Bogue Brothers assigns its retail installment contracts to corporations, who in the normal course of their business, extend credit. These assignments are routinely recourse agreements and are seldom, if ever, rejected by the assignees. Cooper Agency regularly receives these assignments from Bogue Brothers but Bogue Brothers ultimately decides to which assignees it will send its retail installment contracts.
I R. 37-38.
As we explained in note 7, infra, we find that the district court was in error in stating in the last sentence of the penultimate paragraph above that ”[t]he reverse side of the contract included references to Cooper Agency, Inc.”
. We noted earlier that the appellate record, as originally designated by plaintiff-appellant, did not include the deposition testimony of En-gholm and Bogue, which is cited in plaintiffs appellate briefs. Defendants-appellees have moved to strike all portions of the Brief of Appellants which refer to these depositions. We also noted that a Motion to File Depositions was filed by plaintiffs in district court before trial. Defendants in their response below to this motion stated that "the motion and filings sought thereby are improper. Should the court deem it necessary to see such depositions, it has adequate means to obtain them and filing with the court is therefore not properly facilitated by a motion.” Defendants went on to state that "all of the facts which were disputed among the parties are immaterial to resolution of the pending motions, and that all material facts are currently before the court.” This motion was not ruled on by the district court before trial or the record on appeal was filed.
The appellate brief of plaintiff states that the trial judge’s Memorandum Opinion and Order made findings based solely on the summary judgment record and relied "on deposition testimony never introduced at trial.” Brief of Appellant 22. However the district court’s memorandum discussed Mr. Bogue's contemplation that the retail installment contract would be subsequently assigned to Cooper Agency, citing, "testimony,” but not identifying the witness or witnesses in question. In view of this state of the record, we entered an order on April 11, 1984, stating that "it is not clear from the Memorandum Opinion and Order whether deposition testimony of Bogue and Engholm was presented to and considered by the District Court."
In that order we went on to state that "the civil docket sheet refers to a motion to include depositions in the record on appeal and to a response thereto, and apparently there was no order entered on the motion." Therefore, in our order we further stated that "this court deems it proper that the matter of supplementing the record be determined by the District Court on the basis of the evidence which was presented to it." We partially remanded this cause to the district court for its consideration and ruling on the motion to supplement the record on appeal. The following minute order was entered on April 13, 1984, by the district court:
By direction of the court: it is ordered that the Motion by Plaintiff to include depositions in the record on appeal is hereby granted.
Defendants argue that now including the depositions in the record would violate the local rules and put before us matters not considered by the district court. We note that Rule 8(c) of' the Rules of the United States District Court for the District of New Mexico states that "unless otherwise ordered by the Court, depositions and the responses thereto shall not be routinely filed with the Court. Counsel, however, shall file a certificate with the Court indicating the date the deposition was taken.” On October 15, 1981, a notice of the completion of the depositions of Engholm and Bogue was filed; the docket entry stated that the original transcripts were held by Richard J. Ruben.
In light of these circumstances and the fact that the district court ordered the depositions made part of the record, we find no error in the inclusion of the depositions. We deny the motion to strike and order the supplemental record filed.
. It is true that in James v. Ford Motor Credit Company, 638 F.2d 147 (10th Cir.1980), vacated in part on other grounds, cert, denied in part, 453 U.S. 901, 101 S.Ct. 3134, 69 L.Ed.2d 988 (1981), we did consider the legislative history of the Simplification Act in a case which arose before the effective date of that Act. Here, however, we cannot agree with the defendants that the legislative history of the Simplification Act supports their position. As explained in the text, infra, we are convinced that the plain terms of the statute and regulations, applicable at the time of this transaction, on both the definition of "creditor” and the required disclosures clearly mandate the disclosure of the identity of Cooper Agency as a multiple "creditor.”
. The regulation provides:
Credit other than open end — specific disclosures.
(a) General rule. Any creditor when extending credit other than open end credit shall, in accordance with § 226.6 and to the extent applicable, make the disclosures required by this section with respect to any transaction consummated on or after July 1, 1969. Except as otherwise provided in this section, such disclosures shall be made before the transaction is consummated. At the time disclosures are made, the creditor shall furnish the customer with a duplicate of the instrument or a statement by which the required disclosures are made and on which the creditor is identified. All of the disclosures shall be made together on either:
(1) The note or other instrument evidencing the obligation on the same side of the page and above the place for the customer’s signature; or
(2) One side of a separate statement which identifies the transaction.
12 C.F.R. § 226.8 (1980).
Further the regulation provides that
(d) Multiple creditors or lessors; joint disclosure. If there is more than one creditor or lessor in a transaction, each creditor or lessor shall be clearly identified and shall be responsible for making only those disclosures required by this Part which are within his knowledge and the purview of his relationship with the customer or lessee. If two or more creditors or lessors make a joint disclosure, each creditor or lessor shall be clearly identified.
12 C.F.R. § 226.6 (1980).
. We note that the district court stated that the reverse side of Eustace’s contract included references to Cooper Agency. I R. 38. We believe this statement is in error due to the parties’ agreement that Eustace’s copy did not contain on the reverse side the printed language entitled "Seller's Recommendation, Assignment and Guaranty (With Recourse).’’ I R. 12, 23. Defendants also admitted the correctness of plaintiff’s Exhibit A to the complaint, the reverse side of which did not contain the quoted language or a statement that the contract was assigned to Cooper Agency. I R. 2, 7.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
RONEY, Circuit Judge:
In a case of first impression in this Court, we hold that a foreign banking corporation engaged in the normal activity with resident correspondent banks to facilitate the movement of money is not subject to long-arm jurisdiction in Florida, even though it makes certain passive investments in federal funds. We therefore reverse a money judgment against it.
This is a diversity case. Plaintiff Oriental Imports and Exports, a Florida corporation, sold garments to a purchaser in the Netherlands Antilles. When it did not receive payment for the goods, it sued Madu-ro & Curiel’s Bank, a Netherlands Antilles bank which maintains correspondent bank accounts in Miami, Florida, on the ground that Maduro & Curiel’s Bank wrongfully delivered title documents to the purchaser without payment. Finding jurisdiction under the long-arm statute, the district court held the defendant negligent in the handling of this commercial collection item and rendered judgment for $21,104.24. The court denied punitive damages on the ground that the plaintiff had not demonstrated malicious or wanton conduct. The bank appeals the findings of jurisdiction and negligence. The plaintiff cross-appeals the denial of punitive damages. Since the district court was without in personam jurisdiction, we do not reach the merits of the negligence issue or the cross-appeal.
The facts that control the jurisdictional issue are not in dispute. Maduro & Curiel’s Bank is a Netherlands Antilles bank which acts as a correspondent bank for various Miami banks. It received sale documents from Flagship Bank of Miami, along with a sight draft and an airway bill for goods sold by plaintiff. Prior to that, the president of Oriental Imports had gone to Curacao in the Netherlands Antilles and obtained an order from Jose Faerman & Company, a Netherlands Antilles corporation. Oriental Imports had then delivered certain sale documents (invoices, packing lists and a letter of authority) to Flagship Bank which forwarded them to defendant for delivery to the purchaser Jose Faerman & Company upon receipt of payment for the goods. If the transaction had gone as planned, the customer would have made payment to Ma-duro & Curiel’s Bank, which would have notified its correspondent bank in Miami. The Miami bank would have then debited Maduro & Curiel’s account and credited the seller’s account. Although some facts are disputed, it is clear that Jose Faerman & Company eventually received possession of the goods, and that no payment was ever made to Oriental Imports and Exports.
The law is clear that a federal court in a diversity action may exercise personal jurisdiction over a nonresident defendant only to the extent permitted by the long-arm statute of the forum state. Rubaii v. Lakewood Pipe of Texas, Inc., 695 F.2d 541 (11th Cir.1983); Gold Kist, Inc. v. Baskin-Robbins Ice Cream Co., 623 F.2d 375, 377 (5th Cir.1980). Because the reach of the Florida long-arm statute is a question of Florida state law, federal courts are required to construe it as would the Florida Supreme Court. See Moore v. Lindsey, 662 F.2d 354, 357-58 (5th Cir. Unit B 1981); Jetco Electronic Industries, Inc. v. Gardiner, 473 F.2d 1228, 1232 (5th Cir.1973). The Florida long-arm statute is strictly construed, and the person invoking jurisdiction under it has the burden of proving facts which clearly justify the use of this method of service of process. Bank of Wessington v. Winters Government Securities Corporation, 361 So.2d 757, 759 (Fla.Dist.Ct.App.1978); Elmex Corp. v. Atlantic Federal Savings and Loan Association, 325 So.2d 58, 61 (Fla.Dist.Ct.App.1976).
Since the defendant has no office or agency in this state, the key portions of the Florida long-arm statute require that the defendant “engage in” or “carry on” a business or business venture in the state, commit a tortious act in the state, or engage in solicitation or service activities within the state.
Plaintiff argues that first, the normal activities of a foreign correspondent bank constitute doing business in Florida and second, in addition to such activities, the bank here had investments in the United States which either alone, or coupled with its correspondent bank activities, constitute doing business and third, in any event, the defendant committed a tort within the state and is subject to jurisdiction under that section of the Florida statute.
We first examine whether the bank was “doing business” in Florida through its correspondent bank accounts in Miami. Here we are focusing on the normal activities that would probably be carried on by any correspondent bank. A representative of Citizens & Southern International Bank testified that correspondent accounts facilitate the transfer of funds incidental to the conduct of international trade between citizens of different countries. Maduro & Curiel’s Bank has its principal place of business in Curacao. It has no offices, agents, personnel or property in Florida. It is not licensed to do business in Florida, and has no agent to accept service of process in Florida. It maintains correspondent bank accounts with Miami banks, including Southeast First National Bank and Citizens & Southern International Bank of Miami. Plaintiff introduced evidence that Maduro & Curiel’s Bank had passed at least $150,-000,000 through these accounts in deposits and withdrawals. This was essentially money of its customers. The transactions with the Miami banks were handled by mail or courier.
Although there appears to be no Florida authority directly on point, courts in other jurisdictions have held that the maintenance of a correspondent banking relationship alone is not sufficient to confer personal jurisdiction over a foreign bank. See Faravelli v. Bankers Trust Co., 85 A.D.2d 335, 447 N.Y.S.2d 962, 964-65 (N.Y.App.Div.1982); Nemetsky v. Banque de Developpement de la Republique du Niger, 64 A.D.2d 694, 407 N.Y.S.2d 556 (N.Y.App.Div.1978), aff’d, 48 N.Y.2d 962, 425 N.Y.S.2d 277, 401 N.E.2d 388 (N.Y.1979); Amigo Foods Corp. v. Marine Midland Bank—New York, 39 N.Y.2d 391, 384 N.Y.S.2d 124, 127, 348 N.E.2d 581 (N.Y.1976). In E.I.C., Inc. v. Bank of Virginia, 108 Cal.App.3d 148, 166 Cal.Rptr. 317 (Cal.App.1980), the California court held that it lacked jurisdiction over a Virginia bank which maintained balances and had a correspondent banking relationship with two California banks. Although the California statute allowed the court to “exercise jurisdiction on any basis not inconsistent with the Constitution of California or of the United States,” the court concluded that the correspondent bank relationship did not provide the requisite “minimum contacts” with California to satisfy the due process clause:
[M]ost banks of any size maintain correspondents in all major regions of the country and in selected areas overseas. It would be a distortion of due process to hold that a state acquires general personal jurisdiction over an out-of-state bank (as opposed to in rem jurisdiction) merely because the bank has a correspondent relationship with a bank within the state and a balance on deposit with its correspondent bank.
166 Cal.Rptr. at 320, citing Bank of Ameri-ca v. Whitney National Bank, 261 U.S. 171, 173, 43 S.Ct. 311, 312, 67 L.Ed. 594 (1922). In Whitney, decided before the “minimum contacts” standard of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and without reference to a long-arm statute, the Supreme Court held that a Louisiana bank which maintained six correspondent bank accounts in New York had no “presence” in New York for jurisdictional purposes, and therefore could not be sued in New York.
A Florida case suggests the fact that Miami banks were holding the funds of Maduro & Curiel’s Bank in Florida would not be sufficient for long-arm jurisdiction. In April Industries, Inc. v. Levy, 411 So.2d 303 (Fla.Dist.Ct.App.1982), parties outside of Florida entered into a stock purchase agreement which included an escrow agreement whereby a Miami attorney would hold certain notes in Florida. When the escrow-ee was sued in Florida, the court held that the presence of the corporation’s personal property in Florida pursuant to an escrow agreement entered outside of Florida, and the control of that property by a Florida escrowee, were insufficient contacts to find that the corporation conducted business or had an agency in Florida for the purposes of the long-arm statute.
The reasoning of these cases seems sound. We are persuaded that the Florida long-arm statute, which confers jurisdiction over a nonresident defendant who “operates, conducts, engages in or carries on a business” in Florida, would not be interpreted to permit personal jurisdiction solely on the basis of foreign bank’s correspondent relationship with a Florida bank.
The fact that Maduro & Curiel’s Bank maintained large balances in its Miami accounts, or transferred large amounts of money through these accounts, does not alter this analysis. The inquiry whether a nonresident is conducting business in Florida concerns the nature, not the extent, of the nonresident’s activities in Florida. McLean v. Church of Scientology, 538 F.Supp. 545, 549 (M.D.Fla.1982). The requirement that the defendant have a connection with the forum state substantial enough to make the exercise of jurisdiction reasonable cannot be satisfied by the dollar amount of the transaction, but depends on the facts and circumstances of the case. Elmex Corp. v. Atlantic Federal Savings and Loan Association, 325 So.2d 58, 63 n. 7 (Fla.Dist.Ct.App.1976).
Plaintiff argues that more than an ordinary correspondent banking relationship existed in this case. Focusing upon the agreement between Maduro & Curiel’s Bank and Citizens & Southern International Bank of Miami, which required Citizens & Southern to invest any funds in Maduro & Curiel’s account in excess of $50,000 in the federal funds market, plaintiff argues that by investing in federal funds through a Miami correspondent, Maduro & Curiel’s Bank was conducting business in Florida. A representative of Citizens & Southern International Bank testified that the bank made this opportunity to have excess funds invested available to all of its correspondents.
The cases in which Florida courts have interpreted the long-arm statute do not support the theory that a nonresident’s passive investment of money in Florida provides a basis for jurisdiction. In Klein v. Mega Trading, Ltd., 416 So.2d 866 (Fla.Dist.Ct.App.1982), a New Jersey resident purchased an interest in a Florida limited partnership. Noting that this investment was analogous to the purchase of corporate stock, the court held that the nonresident’s investment was not sufficient contact with Florida to satisfy the long-arm statute. In Compuguide Corp. v. Sachs, 259 So.2d 513 (Fla.Dist.Ct.App.1972), a nonresident corporation’s contract, which was neither entered into nor executed in Florida, to purchase all the stock of a Florida corporation did not constitute doing business in Florida.
MacMillan-Bloedel v. Canada, 391 So.2d 749 (Fla.Dist.Ct.App.1980), held that a nonresident corporation was not “doing business” for jurisdictional purposes even though its wholly owned subsidiary was engaged in business in Florida, because the nonresident corporation was not shown to have “control” over the subsidiary selling its products in Florida. In Volkswagenwerk Atkiengelselischaft v. McCurdy, 340 So.2d 544 (Fla.Dist.Ct.App.1976), cert. denied, 348 So.2d 950 (Fla.1977), the court determined that it lacked jurisdiction over a German corporation which had a wholly owned subsidiary engaged in business in Florida. “Only where there is a showing by plaintiff that the parent corporation exercised such a degree of control over its subsidiary that the activities of the subsidiary were in fact the activities of the parent within the state is substituted service of process permitted.” 340 So.2d at 546.
Although these cases involved Fla. Stat.Ann. § 48.181, the substituted service of process statute which was in effect before the current long-arm statute was enacted, decisions concerning what constituted doing business under Section 48.181 apply to Section 48.193(l)(a). Orange Motors, Inc. v. Reuben H. Donnelly Corp., 415 So.2d 892, 895 n. 3 (Fla.Dist.Ct.App.1982). Under earlier Florida statutes, investment by a nonresident was not a sufficient basis for jurisdiction. See Uible v. Landstreet, 392 F.2d 467 (5th Cir.1968) (no jurisdiction over nonresidents who held stock in Florida corporation as investment for profit); Crockin v. Boston Store, 137 Fla. 853, 188 So. 853, 856 (Fla.1939) (nonresident corporation was not doing business in Florida by owning a controlling interest in a Florida corporation). These cases indicate that Maduro & Curiel’s Bank’s investment in the federal funds market through its agreement with a Miami bank would not suffice for jurisdiction under the Florida long-arm statute.
Neither do Maduro & Curiel’s Bank’s activities in Florida considered collectively show a general course of business activity in the state. Compare Compuguide v. Sachs, 259 So.2d 513 (Fla.Dist.Ct.App.1972) (contract to purchase all of Florida corporation’s stock did not constitute business venture sufficient for jurisdiction) with Anson v. Lemperuer, 390 So.2d 478 (Fla.Dist.Ct.App.1980) (jurisdiction where express object of partnership was to acquire land in Florida and develop condominium units). Instead, the activities show merely a correspondent banking relationship coupled with a passive investment in federal funds. We conclude that these activities of Maduro & Curiel’s Bank do not amount to conducting a business in Florida sufficient for the assertion of long-arm jurisdiction under Fla. Stat.Ann. § 48.193(lXa).
Although Florida courts have occasionally found contacts with banks in Florida to be an adequate basis for jurisdiction, those eases involved nonresident defendants who undertook specific contractual obligations in Florida. In Horace v. American National Bank and Trust Co., 251 So.2d 33 (Fla.Dist.Ct.App.1971), Horace and two others, purchasing 60% of the stock of a Florida corporation, personally appeared at the bank seeking to guarantee the present and future obligations of the corporation. The same day, they opened a commercial checking account, signing the signature card. On the basis of the guarantees, the bank honored the checks of the corporation until the account was overdrawn by $25,000. The court upheld service of process on Horace, a nonresident, stating that by becoming the guarantor of a Florida corporation’s debts he had engaged in business in Florida. In this case, Maduro & Curiel’s Bank has undertaken no agreement on behalf of a business in Florida.
Florida courts upheld jurisdiction over out-of-state banks in two recent cases, where agents of the nonresident banks had allegedly obligated themselves to buy and sell Government National Mortgage Association Contracts. See Bank of Wessingbon v. Winters Government Securities Corporation, 361 So.2d 757 (Fla.Dist.Ct.App.1978); Citizens State Bank v. Winters Government Securities Corp., 361 So.2d 760 (Fla.Dist.Ct.App.1978). These cases make it clear that a nonresident bank need not have a Florida office, agent, or meeting in order for Florida courts to exercise jurisdiction. The banks involved in those cases, however, unlike Maduro & Curiel’s Bank, allegedly made affirmative commitments to purchase particular securities.
Plaintiff contends that jurisdiction may be asserted under Section 48.193(l)(b), which authorizes jurisdiction over one who “commits a tortious act within this state.” The district court found that Maduro & Curiel’s Bank, contrary to the terms of the commercial collection agreements, either obtained the approval and advice of the intended purchaser for payment of a draft prior to release of the documents and then cancelled the intended purchaser’s approval for payment of the draft, or simply released the documents without obtaining payment of the draft as required. If either of these two negligent acts did occur, it occurred in Netherlands Antilles.
This is not a case where the precise location of the alleged tort is difficult to identify. Cf. Rebozo v. Washington Post Co., 515 F.2d 1208 (5th Cir.1975) (out-of-town newspaper published allegedly libelous article circulated in Florida); Bangor Punta Operations v. Universal Marine Co., 543 F.2d 1107 (5th Cir.1976) (foreign corporate defendant advertised and sold trawlers in Florida which were built in violation of plaintiff’s property rights). The negligence alleged here clearly occurred in the Netherlands Antilles, although injury in Florida may have resulted. In Jack Pickard Dodge, Inc. v. Yarbrough, 352 So.2d 130 (Fla.Dist.Ct.App.1977), the court held that a nonresident auto dealer who serviced a car, which was eventually sold to a Florida resident and caused injury in Florida, had not committed a tortious act within the state. “[The dealer] has committed no act in Florida, tortious or otherwise .... [T]he occurrence of the injury alone in the forum state does not satisfy the statutory test.” 352 So.2d at 134. See April Industries, Inc. v. Levy, 411 So.2d 303, 305-06 (Fla.Dist.Ct.App.1982) (no jurisdiction under Section 48.-193(1)(b) where alleged wrong occurred outside Florida). Cf. Watts v. Haun, 393 So.2d 54 (Fla.Dist.Ct.App.1981) (jurisdiction where act essential for tort occurred in Florida). We conclude that jurisdiction under Section 48.193(1)(b) is not appropriate here.
Under Section 48.193(l)(f)(l), Florida courts may exercise jurisdiction over a nonresident defendant who causes injury in Florida by an act outside the state, if at the time of the injury the defendant was engaged in solicitation or service activities within Florida which resulted in the injury. Where a business allegedly breaches a contract outside the state, resulting in damage to plaintiffs in Florida, but does not conduct or solicit business activities in Florida, it does not have the requisite contacts with Florida to sustain jurisdiction under the long-arm statute. Joyce Brothers Storage & Van Co. v. Piechalak, 343 So.2d 97 (Fla.Dist.Ct.App.1977). Maduro & Curiel’s Bank was not engaged in solicitation or service activities within the state of Florida. It did not solicit business or advertise in Florida, and its service activities were locally based in the Netherlands Antilles. Therefore jurisdiction over Maduro & Curiel’s Bank cannot be sustained under Section 48.193(l)(f)(l).
The judgment is reversed and the case is dismissed for lack of personal jurisdiction over the defendant.
REVERSED AND RENDERED.
. Three sections of the Florida long-arm statute, Fla.Stat.Ann. §§ 48.193(l)(a), (b), and (f)(1), are involved.
(1) Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits that person and, if he is a natural person, his personal representative to the jurisdiction of the courts of this state for any cause of action arising from the doing of any of the following:
(a) Operates, conducts, engages in, or carries on a business or business venture in this state or has an office or agency in this state. (b) Commits a tortious act within this state.
(f) Causes injury to persons or property within this state arising out of an act or omission outside of this state by the defendant, provided that at the time of the injury
1. The defendant was engaged in solicitation or service activities within this state which resulted in such injury....
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ARNOLD, Circuit Judge.
This case requires us to determine what legal ceiling, if any, exists for interest rates on loans secured by a first lien on residential real property in Arkansas. We hold that the governing statute is Section 501(a)(1) of the Depository Institutions Deregulation and Monetary Control Act of 1980, 12 U.S.C. § 1735Í-7 note, and that there is no legal limit on interest rates on loans secured by a first lien on residential real property in Arkansas, so long as the requirements of that Section are met.
I.
Lawson Square, Inc., a developer of residential real estate, conceived a project to purchase an apartment complex in Fayetteville, Arkansas, modify the apartments, and resell them as condominiums. In order to finance the purchase and the costs of resale, Lawson Square obtained a loan from FirstSouth, F.A., a federally insured savings and loan association which had its principal place of business at Pine Bluff, Arkansas. The one-year promissory note, which was executed on January 26, 1984, was in the amount of some $1,700,000, and was secured by a first mortgage on the premises of the condominium project. Interest on the note was contracted at a variable rate, to be set monthly at four per cent, above the rate payable on a 90-day Treasury Bill on the last day of the preceding month. A subsequent amendment to the agreement allowed FirstSouth to collect a $1,000 “release fee” upon the resale of each unit, and to recover 105% of the appraised value of each unit as a payment on principal upon resale and release from the lien.
Lawson Square eventually ran into financial difficulties, defaulted on the note, and filed a Chapter 11 petition in Bankruptcy Court. FirstSouth sought relief from the automatic stay; Lawson Square resisted the motion, alleging that the contract interest rate was usurious; the Court granted relief to FirstSouth. From the Bankruptcy Court’s decision of May 14, 1986, 61 B.R. 145 (Bankr.W.D.Ark.1986), affirmed by the District Court in an unpublished opinion on August 12, 1986, Lawson Square appeals. Both courts below held the loan not usurious. For the reasons which follow, we affirm.
The Bankruptcy Court ruled that, assuming the promissory note was not usurious, the amount of the debt exceeded the collateral, and the motion for relief from the automatic stay would be granted. Lawson Square does not dispute this ruling. The only question before us is whether the contracted rate of interest (Treasury-Bill rate plus four per cent.) exceeded any limitation on interest rates which might be provided by Arkansas or federal law. Under both the Arkansas usury limit and the federal limit which Lawson Square claims may apply, unpaid interest on a usurious contract is forfeited, and interest already paid may be recovered in a double amount. If this contract were in fact usurious, the forfeiture of unpaid interest and double recovery of interest already paid might bring the total amount of indebtedness within the value of the collateral. In that case, the creditor would be adequately protected, and denial of the creditor’s motion for relief would have been appropriate.
II.
Amendment 60 to the Arkansas Constitution (now found at Ark. Const. Art. 19, § 13) provides that for “General Loans” (a term which, apart from federal law, would include the present loan) “[t]he maximum lawful rate of interest on any contract entered into after the effective date hereof shall not exceed five percent (5%) per annum above the Federal Reserve Discount Rate at the time of the contract.” Ark. Const. Art. 19, § 13(a)(i). If this provision governed, the present loan would be usurious.
The parties agree, however, that the applicability of Amendment 60 is affected in some way by the Depository Institutions Deregulation and Monetary Control Act of 1980, Pub.L. 96-221, 94 Stat. 132. They disagree as to which part of the Act is relevant, and its effect.
The Act was a comprehensive overhaul of the national scheme of regulation of banks and other lending institutions. Congress was especially concerned about hardships which the unusually high interest rates of that time wrought on financial institutions in states with strict usury laws, and, as a consequence, on potential borrowers who found it difficult to get money. The former usury limit in Arkansas (10% on all loans) was particularly mentioned in Congressional debate. See, e.g., 126 Cong. Rec. 6906 (1980) (statement of Sen. Pryor). Of the five separate preemptions of state usury limits included in the Act, two are applicable to the type of transaction in this case.
The first, Section 522 of the Act, applies to any loan made by a federally insured savings and loan association. It provides that
[i]f the applicable rate prescribed in this section exceeds the rate an insured institution (which, for the purpose of this section, shall include a Federal association the deposits of which are insured by the Federal Deposit Insurance Corporation) would be permitted to charge in the absence of this section, such institution may, notwithstanding any State constitution or statute which is hereby preempted for the purposes of this section, take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidence of debt, interest at a rate of not more than 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal Reserve bank in the Federal Reserve district where such institution is located or at the rate allowed by the laws of the State, territory, or district where such institution is located, whichever may be greater.
12 U.S.C. § 1730g(a).
The second provision of the Act which we must consider is Section 501, which is entitled “Mortgage Usury Laws; Mortgages,” and reads in pertinent part as follows:
(a)(1) The provisions of the constitution or the laws of any State expressly limiting the rate or amount of interest, discount points, finance charges, or other charges which may be charged, taken, received, or reserved shall not apply to any loan, mortgage, credit sale, or advance which is—
(A) secured by a first lien on residential real property, by a first lien on all stock allocated to a dwelling unit in a residential cooperative housing corporation, or by a first lien on a residential manufactured home;
(B) made after March 31, 1980; and
(C) described in section 527(b) of the National Housing Act (12 U.S.C. 1735f-5(b)), except that for the purpose of this section—
(i) the limitation described in section 527(b)(1) of such Act that the property must be designed principally for the occupancy of from one to four families shall not apply;
(ii) ...
12 U.S.C. § 1735Í-7 note.
The two provisions quoted above are not totally exclusive of each other; for certain loans, they overlap. Section 522 can apply to any loan, to be used for any purpose, so long as the lender is a federally insured savings and loan association; Section 501 can apply only to loans or mortgages which are secured by first liens on the kinds of residential property mentioned in that section, but the source of the money may be any of a number of types of financial institutions.
Lawson Square insists that the first provision applies, but not the second; First-South says that the second, but not the first, applies; it is also conceivable that both apply, or neither. The possible results are as follows: (1) if Lawson Square, the debtor, is correct, and Section 522 applies here, then by the terms of that section we must look to Arkansas Amendment 60 for the legal limit of interest which may be charged. That limit is the federal discount rate plus five per cent., and the loan would be usurious. See note 3 supra. (2) If FirstSouth, the lender, is right, then the “limit” of Section 501, i.e., no limit at all, applies, and the loan is of course not usurious. (3) If both provisions apply, then Section 528 of the same Act provides that the higher of the two rates, that is, the Section 501 “no limit,” must prevail. (4) If neither federal preemption section fits, then we must apply the Arkansas law.
Once we have described the labyrinth, its solution is straightforward. We look first to the words of Section 522, noting at the outset that it is contained in “Part C: Other Loans” (as distinguished from “Part A: Mortgage Usury Laws” and “Part B: Business and Agricultural Loans”). Assuming for the moment that those two parts do not apply, we note immediately that the very first clause of Section 522 reads as follows: “[i]f the applicable rate prescribed in this section exceeds the rate an insured institution ... would be permitted to charge in the absence of this section ... The “applicable rate” referred to is the federal discount rate plus one per cent.; the rate that would be permitted in the absence of this section is the Arkansas Constitution’s present limit of federal discount rate plus five per cent. Attempting to substitute these terms for the words which represent them produces a false statement, for in fact the “applicable rate” does not exceed the “permitted rate.” That being the case, we need go no further in Section 522; we know that it does not apply in this instance.
Section 501 completely overrides state usury limits for mortgages and other financing arrangements which are secured by first liens on residential real property. Lawson Square and FirstSouth have stipulated that this loan is secured by “a first lien on residential real property.” District Court Joint Ex. 1. Having preempted any State usury limitations over such loans, Section 501 does not impose a federal limit. It does, however, allow a state to reassert a usury limitation through passage of a law or initiated measure “which states explicitly and by its terms that such State does not want the provisions of subsection (a)(1) to apply with respect to loans, mortgages, credit sales, and advances made in such State.” Pub.L. 96-221, § 501(b)(2), found in 12 U.S.C. § 1735Í-7 note. The Legislature and voters of Arkansas had the opportunity to override Section 501 when they considered Amendment 60 in 1982. But instead of reasserting a State usury limit on mortgage interest rates, that amendment included a section which specifically endorsed the federal preemption. It reads as follows: “The provisions hereof are not intended and shall not be deemed to supersede or otherwise invalidate any provisions of federal law applicable to loans or interest rates including loans secured by residential real property.” Ark. Const. Art. 19, § 13(d)(ii), as amended 1982. The result of Section 501’s federal preemption of State usury laws as to residential real property loans, and Arkansas’s choice not to reassert a limit, is that there is no limit on the legal rate of interest which may be charged on such a loan in Arkansas, so long as the loan is secured by a first lien and the other requirements of Section 501 are met. It follows that, if the loan in question on this appeal is secured by “residential real property,” there is no legal limit on interest, the loan is not usurious, and the courts below were correct in relieving FirstSouth from the automatic stay.
III.
Lawson Square, however, has another string to its bow. In addition to its argument, just rejected, that Section 501 does not apply at all in the present situation, it also argues that the loan involved in this case is not a loan “secured by a first lien on residential real property” within the meaning of Section 501(a)(1)(A). It points out that this loan was obtained by a builder or developer of residential real property, as opposed to an individual resident owner. It points to a statement made on the floor of the House of Representatives immediately before the vote by which the House agreed to the conference report on the bill that became Public Law 96-221. The colloquy relied on went as follows:
MR. MATTOX. Mr. Speaker, the next question is this: Does a loan issued to a builder, a homebuilder, for the purpose of constructing residential dwellings for the purpose of resale to homebuyers constitute a business loan, or is it a residential loan?
MR. ST. GERMAIN. Mr. Speaker, this would be business financing. It is a business loan in that there is indeed interim financing: Therefore, it would be a business loan.
126 Cong.Rec. 6983 (1980).
It might be thought, and indeed FirstSouth argues, that this contention is foreclosed by the stipulation of the parties that the loan was secured by “a first lien on residential real property.” On the other hand, the stipulation could, we suppose, be read simply as an agreement that the property was “residential” in fact, that is, that structures in which people lived, or were to live, had been built on it, thus leaving open the question of law whether the property was “residential” as that term is used in Section 501(a)(1)(A). As a rule, stipulations are not considered binding as to issues of law, and it is conceivable that even a word like “residential,” which has a well-understood meaning in the world, as opposed to in court, might have been used by Congress as a term of art.
We consider then the meaning and legal effect of the colloquy between Mr. Mattox and Mr. St. Germain. We note first that the meaning is somewhat uncertain as applied to the particular facts of the ease before us. The question put by Mr. Mattox appears to contemplate property on which no residential dwellings exist at the time of the loan. He refers to a loan issued for the purpose of “constructing residential dwellings.” In the present case, by contrast, there was already an apartment complex on the property in question. The purpose of the loan was simply to modify the apartments so that they would be attractive for purchase as condominiums. If property on which an apartment complex is already located is not “residential,” it is hard to see what would be. It is, on the other hand, entirely possible that property on which dwelling units are to be, but have not yet been, built, might be considered as something other than “residential” at the time of the loan.
There are other difficulties with the use of legislative history of this kind. The statement, whatever its meaning, may not have been heard by many members of the House of Representatives, and was certainly not heard by any members of the other body, which agreed to the conference report on the same day, March 27, 1980. We think the safer course is to read the statement narrowly, as applying only to property on which no dwelling units existed at the time the loan was made. To read it more broadly would bring it into arguable collision with the plain words of the statute, and when these words are clear, it is often said that legislative history may not be resorted to. E.g., United States v. Missouri Pacific R. Co., 278 U.S. 269, 278, 49 S.Ct. 133, 136, 73 L.Ed. 322 (1929). Perhaps, as some law professors are fond of saying, there is no such thing as unambiguous words. But here, even if there is some arguable ambiguity in the statute, there is also ambiguity in the legislative history, and the words of the statute, if not absolutely plain, are plainer than the words of the colloquy between Mr. Mattox and Mr. St. Germain, in the present context. Whatever doubts exist should be resolved, we think, by interpreting the colloquy narrowly, so as to avoid a conflict between it and the most natural reading of the words of the Act.
We conclude, therefore, that the loan involved here was secured by a first lien on residential real property within the meaning of Section 501, that this provision, rather than Section 522, is the governing law, and that the State of Arkansas has not overridden the federal preemption of interest-rate limits contained in Section 501. Accordingly, the interest charged on this loan was legal, and the judgment of the District Court, affirming the judgment of the Bankruptcy Court, is
Affirmed.
. The Hon. Robert F. Fussell, Chief United States Bankruptcy Judge for the Eastern and Western Districts of Arkansas.
. The Hon. H. Franklin Waters, Chief Judge, United States District Court for the Western District of Arkansas.
. During at least four months during 1984, the floating rate of interest charged on this loan exceeded the maximum rate allowable under the unmodified provisions of Amendment 60(a)(i), as is shown in the following chart:
. Ark. Const. Art. 19, § 13 (1874, repealed 1982).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
AUGUSTUS N. HAND, Circuit Judge.
This suit is concerned with automatic electrical stop mechanisms for knitting machines known as “stop motions.” The complainant appeals from that part of the decree which dismissed the bill with respect to United Slates reissue patent No. 19,-069, and the defendant Adolph Wachsman appeals from that part of the decree which dismissed his counterclaim on( United States patent No. 1,358,483. The claims of the reissue patent No. 19,069 to Jacob Wachsman relied on are Nos. 1, 2, 3, 5, 8, 9, and 10, and .those of patent No. 1,358,483 to Adolph Wachsman relied on are Nos. 1, 2, and 3. Both patents relate to devices used on knitting machines for the purpose of stopping the machines if a knot occurs in a thread or if a thread breaks or runs out. When such contingencies arise, the devices so operate as to close an electric circuit and stop the machine. The devices are either knot detectors or end detectors, depending upon the function they are at the time performing.
Reissue Patent No. 19,069, granted to Complainant Jacob Wachsman.
In this patent the stop mechanism is included in an electric stop circuit and is provided with a plurality of yarn supporting levers so arranged that during the normal operation of the knitting machine the yarn keeps the levers in a circuit open position, but, when a knot occurs in the yarn, one of the levers, is moved to a circuit closing position and, when the yarn breaks, the other lever is moved to close the circuit. The closing of the circuit in either event operates to stop the machine.
The patentee says in the specification that it is an object of his invention “to provide a gravity actuated lever which will tend to lift the thread off the surface of the spring-held lever arms, thereby to reduce the area of contact between the thread and these parts, instead of having the gravity actuated" lever press the thread down on the surface of the spring-held lever arms as in prior structures.” It is mainly because of the lifting operation of the gravity lever that the patentee is thought to have made a contribution to the mechanism of the earlier electric stop machines which has shown practical merit and required inventive thought.
Judge Campbell held in the District Court that the lifting operation of the gravity lever could not be considered important because the fixed guard of the device would deprive the lifting operation of any particular importance by limiting its operations to negligible dimensions, but in the end he only dismissed the bill for noninfringement and did not pass upon the validity of the patent. In our opinion the suit must be dismissed irrespective of failure to establish any infringement because the patent lacks invention.
We think that United States patent No. 706,840 to Martin & Palmer is sufficiently close to preclude invention over what is there disclosed.
Figures 1 and 2 of that patent show a spring-held lever supporting the thread on which a gravity lever rests ready to swing into contact, close the electric circuit and thereby stop the knitting machine whenever a knot in the thread pulls down the spring lever so that the thread slips off its arm and by ceasing to support the gravity lever causes the latter to fall and make the contact. It is also a feature of the Martin & Palmer patent that, if the thread breaks or runs out and thereby ceases to support the gravity lever, the latter will swing into contact and stop the machine. The Martin & Palmer patent, therefore, shows a knot detector and an end detector operating on the same principles as the patent in suit. The chief difference between the two patents is that in the patent in suit the gravity lever supports the thread, while in Martin & Palmer it rests upon the thread. This feature of Martin & Palmer is also shown in United States patent No. 1,784,560 to Jacob Wachsman which the trial court held invalid in the present suit. . There is the further difference that in Martin & Palmer the gravity lever acts both as a knot detector and an end detector and is the only member that makes a contact and stops the machine, whereas in the patent in suit the spring lever when pulled down will act as an additional knot detector and close the circuit, whereas the gravity lever will act as the only end detector. Though, be.cause of the foregoing, it is true that the patent to Martin & Palmer did not literally anticipate the reissue patent, we think that no more than mechanical skill was required to develop the changes of the patent in suit. The most important purpose served by the gravity lever in all these devices is to act as a switch and make a contact that causes the knitting machine to stop running when there is a knot in the thread or where the thread breaks or runs out. We have carefully examined the testimony and find nothing to indicate that the device described by Martin & Palmer was not entirely practicable. It had all the important features of the patent in suit and achieved the same results by only slightly different means. The modifications were not substantial and, in our opinion, required no more than routine capacity rather than that talent which is demanded to justify the granting of a patent.
One form of the device described in the patent in suit includes a fixed guard which complainant says is useful when a thread in the knitting machine develops a slack in preventing the gravity lever from stopping the machine needlessly and the thread from jumping off the spring-held lever arm. Most of complainant’s devices are sold without guards but, if the need for a guard should arise, it would be a simple matter requiring no inventive skill to introduce one.
The advantages claimed for a gravity lever which, like the one in the patent in suit underlies the thread, are not borne out by the testimony. Indeed, many, if not most, of the supposed advantages are based on arguments in complainant’s brief rather than on evidence. One of them on which complainant lays much stress is that his construction reduces friction by lifting the thread away from the spring-held lever. But the thread is bound to rest on the spring-held lever except when the tension is very slight or when on occasion a slack develops in the thread. Accordingly the extent to which under normal running conditions the thread will be lifted by the gravity lever depends almost entirely on the tension which is readily adjustable and can and must be adjusted on all such knitting machines. The second advantage which complainant attributes to his form of gravity lever is that it prevents “jump outs” by forming an enclosure when there is a slackening in the thread. Increased tension will act as a preventive and so will a structure such as defendant uses in which a fixed hook passes into a slot in the spring-held lever. The effectiveness of the gravity lever in providing an enclosure is disputed and in any event such a detail involves no invention. The other supposed advan-^ tages relied on are based on intricate arguments rather than convincing proof and seem to us to lack substantial foundation. As we have already suggested, if a gravity lever were found useful in lifting the thread, it required no talent to introduce one into the mechanism. It is not every change or even every improvement in a crowded art that will justify the granting of a patent monopoly.
Counterclaim Based on Alleged Infringement by Complainant of United States Patent No. 1,.358,483 Granted to Defendant Adolph Wachsman.
The claims of the foregoing patent for a knot detector were strictly limited by our decision in Wachsman v. Wachsman, 47 F.(2d) 579. In that litigation Adolph Wachsman, the defendant herein, sought to have the falling gravity lever, Exhibit T, of complainant’s former device, which serves as an end detector, construed as the equivalent of a “hooked member cooperating with” the “slot” of claim 1 and a “hooked member * * * cooperating with the lever so as to normally form an enclosed space for the passage of the thread to the knitting machine” of claim 3. We held that the claims were not broad enough to justify such an interpretation and limited them to a device having a “fixed hooked member and a slotted member embracing the former.” In the present suit Adolph Wachsman again seeks to broaden the claims of his United States patent No. 1,358,483 so as to cover Exhibits 20 and 0 made by the complainant which have a fixed guard. He argues that this guard with the gravity lever normally forms an enclosed space for the passage of the thread. Whatever we might have thought of the validity of this patent had United States patent No. 451,682 to Townsend, which appears for the first time in the present record, been before us on the former appeal, it is entirely clear that there can be no reason for expanding the claims which were limited by our former decision to a fixed hook inserted in a slotted spring-held lever so far as to treat the guard as the equivalent of a fixed hook. It may be that each device provided an “enclosed space,” but such an enclosed space was old and the patent to Martin & Palmer shows one. Complainant’s devices are principally sold without guards and, if an enclosed space is found to be iinportant under certain conditions to provide a more reliable housing for the thread so that when a slack occurs it cannot jump out, it would seem simple to arrange such a space. But the construction would have to depend for validity on its particular form and usefulness and the defendant should obtain no monopoly covering enclosed spaces in general. The idea and its possible embodiments are altogether too commonplace matters to justify such a control over the art. We think it clear that the complainant has not infringed United States patent No. 1,358,483, and that the counterclaim was properly dismissed.
Claims 1, 2, 3, 5, 8, 9, and 10 of the reissue patent No. 19,069 to Jacob Wachsman are void for lack of invention and claims 1, 2, and 3 of United States patent No. 1,358,483 to Adolph Wachsman are not infringed. The bill and the counterclaim were each properly dismissed by the District Court and its decree is accordingly affirmed without costs.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HASTINGS, Senior Circuit Judge.
John Dodson Littleton brought this diversity action against Lino Mardigan, d/b/a Moon’s Motor Service (Mardigan) and John O’Brien. Plaintiff sought recovery of damages suffered when he was struck by a truck owned by Mardigan and driven by O’Brien. The trial court granted summary judgment on defendants’ motion and dismissed the action. Plaintiff appealed. We affirm.
The motion for summary judgment was based upon the complaint and answer, the affidavit of Mardigan and the depositions of plaintiff, O’Brien and one Robert E. Davis. Plaintiff filed a brief in support of his„naotion in opposition to summary judgment on the ground that there was a genuine issue of fact to be tried by a jury in this ease. Defendants filed a reply brief thereto. At issue was defendants’ claim that plaintiff’s exclusive remedy was limited to his recovery under workmen’s compensation and that he had no independent remedy against them.
The undisputed relevant facts as disclosed by the record and found by the trial court reveal the following. Calumet Trucking Company (Calumet) executed a contract in early 1967 with Youngstown Sheet and Tube Company to fill a lake on Youngstown’s property with slag. Under the contract, Calumet was to haul slag from the Bairstow slag pit in Hammond, Indiana to the lake dump three miles away. Calumet owned sufficient loading equipment and had the personnel to operate it, but needed trucks and drivers to haul the slag. Hence, Calumet leased the trucks and drivers from local truck owners and carried out the contract using leased personnel and equipment that were under the supervision of Calumet foremen. Both plaintiff and defendant Mardigan leased trucks to Calumet and both plaintiff and defendant O’Brien were drivers for Calumet-under such a lease. Such arrangements were evidenced by written leases prepared by Calumet.
The form leases provided that the lessors, in this case plaintiff and defendant Mardigan, were to furnish the trucks and truck drivers as well as pay the drivers and keep the trucks in repair. The lessee, Calumet, was to see that the trucks contained the proper registration card from the Public Service Commission of Indiana; was responsible for obtaining sufficient liability insurance; and was required to furnish the trucks with such identification cards as were necessary to inform the general public that they were being operated by, for and under the control of Calumet. Also, the contract provided that the truck driver “will be responsible to the Lessee and be under the supervision and control of the Lessee and shall perform his services in any reasonable and lawful manner that the Lessee may direct.”
In compliance with such leases, both plaintiff’s and Mardigan’s trucks carried Calumet signs and used Calumet’s P.S. C.I. permits. Calumet foremen gave the initial directions to the truck drivers on how to load their trucks and conduct themselves around the pit. Calumet employees ran the loading equipment, set up the route to be run by the trucks, weighed the loads of slag and generally supervised and controlled the details of the operation at the slag pit and the dump. It is undisputed that Calumet’s foremen did exercise control over the drivers at the site of the accident. All three deposition witnesses, including plaintiff, acknowledged that Robert E. Davis, the night foreman at the site of the accident, was in control. Plaintiff said of Davis: “Well, his job was to just keep everybody working, to see that the job was running right, to see that the grade over in Youngstown Steel was being taken care of right. He was the general boss.” Further, that “if I was driving reckless, no lights on my truck or trying to haul too much weight or anything that would hinder Calumet Trucking, he would sure let me know about it. * * * He ran the show.” Davis had authority to recommend dismissal of drivers and had done so. In sum, the area was within Calumet’s control. It fully exercised it.
The occurrence of the accident was aptly described by the district court in its memorandum of decision: “The accident occurred while Littleton [plaintiff] was hauling slag during the morning of June 23, 1967. Plaintiff was being loaded at the slag pit prior to making the last trip of the night. He had left the cab of his truck to check the right rear tires of his rig when he was struck from behind by defendant Mardigan’s truck, which defendant O’Brien was pulling in beside plaintiff’s truck.” Plaintiff first reported the accident to Davis immediately after it occurred.
Pursuant to the provisions of the Indiana Workmen’s Compensation Act of 1929, as amended, Burns’ Ind. Stat.Ann. § 40-1201 et seq., 1965 Repl., Vol. 8, Part 1, IC 1971, 22-3-2-1 et seq., plaintiff filed a claim for workmen’s compensation benefits against Calumet for his injuries and has received benefits thereunder. Plaintiff is thus es-topped from denying that he was Calumet’s employee at the time of his injury. If he has any remedy against defendants in the case at bar it can only flow from the Indiana Workmen’s Compensation Act. Section 40-1213 of the Act, IC 1971, 22-3-2-13, provides in substance that one who receives compensation may sue a potentially liable party to recover damages, other than the employer and a person in the same employ. Hence, it is critical here to determine who was the employer of O’Brien at the time of the accident; that is, whether he was employed by Calumet or Mardigan.
In resolving this question the trial court quite properly looked to the borrowed servant doctrine as considered by the Indiana courts. It has been said: “One may be in the general service of another and, nevertheless, with respect to particular work, may be transferred, with his own consent or acquiescence, to the service of a third person, so that he becomes the servant of that person, with all the legal consequences of the new relation. The true test in determining who the master is, in a case of this character, is, not who actually did control the actions and movements of the servant in doing the work, but who had the right to control.” Sargent Paint Co. v. Petrovitzky, 71 Ind.App. 353, at 359, 124 N.E. 881, at 883 (1919). “In determining who is the master, we must inquire whose is the work being performed. As before stated, this is answered by ascertaining who has the power to control and direct the servant in the performance of the work.” Id., at 360, 124 N.E. at 883.
In N.Y. Cent. R. R. Co. v. Northern Ind. Pub. Serv. Co., 140 Ind.App. 79, 221 N.E.2d 442 (1966), referred to as the “Nipsco case”, the court stated, at 84, 221 N.E.2d at 446, that the. borrowed servant doctrine was one “which states that an employee while generally employed by one party, may be loaned to another in such a manner that the special employer may be responsible for the acts of the employee under the doctrine of respondeat superior. Indiana has recognized this doctrine.” See also Uland v. Little, 119 Ind.App. 315, 321-322, 82 N.E.2d 536 (1949); Standard Oil Company v. Soderling, 112 Ind.App. 437, 446-447, 42 N.E.2d 373 (1942), aff’d 229 Ind. 47, 95 N.E.2d 298 (1950); Bates Motor Transport Lines, Inc. v. Mayer, Admx., 213 Ind. 664, 671, 14 N.E.2d 91 (1938).
It is undisputed that both Little-ton (plaintiff) and O’Brien (defendant) were similarly employed. Littleton was a self-employed truck owner who leased his truck to Calumet with himself as the truck driver. O’Brien was originally employed by Mardigan who leased a truck to Calumet with O’Brien as the driver. Both drivers were engaged in having their trucks loaded with slag at the site of the accident to be hauled to the Youngstown dump. This was Calumet’s work under its contract with Youngstown. Both trucks carried Calumet signs and used Calumet P.S.C.I. permits. These latter factors have been held to be important considerations in determining who the employer is. Gas City, etc., Co., Inc. v. Miller, 107 Ind. App. 210, 214-215, 21 N.E.2d 428 (1939), relying upon Bates Motor Transport, 213 Ind. at 671, 14 N.E.2d 91. The facts, taken together with an earlier showing that Calumet had the right to control the truck drivers in the performance of Calumet’s work, conclusively establish to our satisfaction that the borrowed servants, Littleton and O’Brien, were the employees of the borrowing employer, Calumet, for the purposes of respondeat superior.
We are left with the final contention raised by plaintiff, namely, that the issue of who is the employer of a borrowed servant is one of fact for a jury to decide; that reasonable men could surely, differ as. to the meaning of the facts in this case; and that therefore the trial court erred in entering summary judgment.
As pointed out in various Indiana cases, the critical question here “is usually a question of fact for the jury or court.” See the Nipsco case, 140 Ind.App., at 86, 221 N.E.2d at 446. However, in Sargent, 71 Ind.App., at 366, 124 N.E. at 885, citing with approval Foster v. City of Chicago, 197 Ill. 264, 64 N.E. 322 (1902), in referring to a written contract providing for the furnishing of labor and materials in a city sewer construction job, the Indiana court stated: “The contract being in writing, the court correctly held that it was a question of law for the court to say whether the injured party was a servant of the city or of Sheehy [the contractor].” In Nipsco, and other cases holding that the issue of who is the employer of a borrowed servant is one of fact for the jury, it clearly appears that there was a genuine issue as to material facts. See Rule 56(c), Federal Rules of Civil Procedure, 28 U.S.C.A.
In the case at bar, as the trial court observed, the determining factors are the interpretation of the lease contract, hereinabove referred to, a question of law, and consideration of the undisputed facts relating to the “whose work” and “control” factors, above detailed. We agree with the trial court that here the critical facts are undisputed and that “reasonable men could not dispute that both the intent of this contract and the actual field practice were to give control of the truck drivers to the lessee.”
We have considered other questions raised by plaintiff and find them without merit or without material relevance to the issues for determination here.
We hold that the district court did not err in concluding as a matter of law that O’Brien was exclusively employed by Calumet at the time of the accident in question. We affirm the summary judgment in favor of defendants and the dismissal of plaintiff’s action.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SELYA, Circuit Judge.
Appellants Roland and Miriam M. reside in Concord, Massachusetts, with Matthew M., their 15-year-old son. Matthew is “handicapped” within the meaning of the Education of the Handicapped Act, 20 U.S.C. §§ 1400-1485 (1982 & Supp. V 1987) (the Act). When a controversy arose over his educational course, the Bureau of Special Education Appeals (BSEA), an adjunct of the Massachusetts Department of Education (MassEd), ruled that the Concord School Committee (Concord) had offered Matthew an appropriate education, but ordered the parents reimbursed for certain interim expenditures. On an ensuing petition for judicial review, the federal district court upheld the qualitative finding and decided that appellants should defray all the contested expenses. We affirm.
I. OVERVIEW
Through the medium of the Act, funds are allocated to assist the states in educating handicapped children. To receive federal money, a state must provide all handicapped children with “a free appropriate-public education.” 20 U.S.C. §§ 1400(c), 1414(b)(2)(A), 1416; see Burlington v. Department of Educ., 736 F.2d 773, 784-85 (1st Cir.1984) (Burlington II), aff'd, 471 U.S. 359, 105 S.Ct. 1996, 85 L.Ed.2d 385 (1985).
Substantively, the “free appropriate public education” ordained by the Act requires participating states to provide, at public expense, instruction and support services sufficient “to permit the child to benefit educationally from that instruction.” Board of Educ. v. Rowley, 458 U.S. 176, 203, 102 S.Ct. 3034, 3049, 73 L.Ed.2d 690 (1982). While a state may not depart downward from the minimum level of appropriateness mandated under federal law, “a state is free to exceed, both substantively and procedurally,.the protection and services to be provided to its disabled children.” Burlington II, 736 F.2d at 792; see also 20 U.S.C. § 1401(18)(B). Some states have elected to go considerably above the federal floor. See, e.g., Burke County Bd. of Educ. v. Denton, 895 F.2d 973, 983 (4th Cir.1990) (North Carolina requires that opportunity be given to handicapped students to reach their “full potential commensurate with the opportunity given other children”). Massachusetts is such a jurisdiction: the Commonwealth defines an appropriate education as one assuring the “maximum possible development” of the child. See Stock v. Massachusetts Hosp. School, 392 Mass. 205, 211, 467 N.E.2d 448, 453 (1984); see generally Mass.Gen.L.Ann. ch. 71B, §§ 1-14 (West 1982 & Supp.1990). Because state standards are enforceable in federal court insofar as they are not inconsistent with federal rights, David D. v. Dartmouth School Comm., 775 F.2d 411, 423 (1st Cir.1985), cert. denied, 475 U.S. 1140, 106 S.Ct. 1790, 90 L.Ed.2d 336 (1986); Burlington II, 736 F.2d at 789 & n. 19, we refer to, and consider, Massachusetts law where relevant in the pages which follow.
As' a procedural matter, the Act commands that states and local education agencies (LEAs) like Concord “assure that handicapped children and their parents... are guaranteed procedural safeguards with respect to the provision of free appropriate public education.” 20 U.S.C. § 1415(a). The primary safeguard is the obligatory development of an individualized education program (IEP). Rowley, 458 U.S. at 181, 102 S.Ct. at 3038; Doe v. Defendant I, 898 F.2d 1186, 1189 (6th Cir.1990); see also 20 U.S.C. 1401(18); Mass.Gen.L. ch. 71B, § 3. That document compiles information and goals anent a particular student’s educational progress. It must include statements about the child’s current performance, long-term and short-term instructional targets, and objective criteria for measuring the student’s advance. See 20 U.S.C. § 1401(19); - 34 C.F.R. § 300.346 (1989).
Under the Act, mainstreaming is preferred. States must educate handicapped and non-handicapped children together “to the maximum extent appropriate,” see 20 U.S:C. § 1412(5); Rowley, 458 U.S. at 202, 102 S.Ct. at 3048, and special education must be provided in “the least restrictive environment,” see 34 C.F.R. § 300.552(d); Mass.Gen.L. ch. 71B, § 2; Mass.Regs.Code tit. 603, § 112.0 (1986). In Massachusetts, therefore, an IEP must address a handicapped student’s needs “so as to assure his maximum possible development in the least restrictive environment consistent with that goal.” David D., 775 F.2d at 423.
The development of an IEP requires the participation of a team of individuals, including the parents, the child’s teacher, designated specialists, and a representative of the LEA. See 20 U.S.C. § 1401(19); 34 C.F.R. § 300.344; Mass.Regs.Code tit. 603, § 311.0. Once promulgated, an IEP must be reviewed annually and revised when necessary. See 20 U.S.C. §§ 1414(a)(5), 1413(a)(1), (11); 34 C.F.R. § 300.343(d); Mass.Gen.L. ch. 71B, § 3. If complaints arise, the state must convene “an impartial due process hearing.” See 20 U.S.C. § 1415(b)(2). In the Commonwealth, this function is performed by the BSEA. Mass. Gen.L.Ann. ch. 15, § 1M (West Supp.1990). The hearing’s outcome is reviewable in either state or federal court, and the reviewing tribunal has broad discretion to grant appropriate relief. See Burlington, 471 U.S. at 369, 105 S.Ct. at 2002; Doe v. Brookline School Comm., 722 F.2d 910, 917-18 (1st Cir.1983); Carrington v. Commissioner of Educ., 404 Mass. 290, 294, 535 N.E.2d 212, 215 (1989). The court’s focus is upon the educational program which finally emerges from the administrative review process, not the IEP as originally proposed. See Springdale School Dist. v. Grace, 693 F.2d 41, 43 (8th Cir.1982), cert. denied, 461 U.S. 927, 103 S.Ct. 2086, 77 L.Ed.2d 298 (1983).
II. BACKGROUND
We summarize the factual underpinnings and procedural history of this dispute, presenting additional details as necessary in the course of our opinion.
Matthew has a number of disabilities, including difficulties with visual motor skills, visual perception, visual tracking, fine motor coordination, and gross motor coordination. He is easily distracted and has trouble maintaining and regaining concentration. Consequently, Matthew finds it hard to relate to peers and his real-world functioning is impaired. He often talks to himself, destroys nearby objects, proves unable to get himself ready for school, eats sloppily, and so forth. Nevertheless, he possesses normal intelligence and enjoys significant potential for academic progress.
From kindergarten through fifth grade, Matthew attended the Concord public schools. He was placed in a self-contained classroom with other learning-disabled children. In June 1986, at the end of fifth grade, Matthew’s parents unilaterally moved him to Landmark, a private residential school. Some three months later, when the new school year was about to start, the parents rejected Concord’s 1986-87 IEP — which called for Matthew’s continued placement in public school — instead enrolling him at Landmark for the school year. Concord did not consent.
At the parents’ request, the BSEA undertook to determine Matthew’s appropriate placement for 1986-87. It was not until June 1987 (after the school year had ended) that the decision was announced. Finding that Matthew’s “major presenting problem” was a lack of socialization skills (rather than a learning disability per se), the BSEA, through its hearing officer, made a detailed comparison of Concord as opposed to Landmark, concluding that the former proposed a better program and that Matthew’s needs were “not so severe as to dictate a residential placement.” Hence, Concord’s 1986-87 IEP was adjudged appropriate with the addition of a supplementary, after-school socialization component. Although the BSEA acknowledged that Landmark was not the last agreed-upon placement, it nevertheless ordered Concord to reimburse appellants for first semester costs there.
Disappointed, the parents brought suit. In the district court, they assigned error to BSEA’s determination that Concord was an appropriate placement and to its refusal to grant reimbursement of Landmark-related expenses for the complete 1986-87 school year. Concord cross-claimed against MassEd, contending that the BSEA exceeded its authority by ordering any reimbursement.
In the meantime, Concord duly convened a team to prepare Matthew’s 1987-88 IEP. When issued on July 29, 1987, it proved to be much the same as the 1986-87 IEP. On August 28, Matthew’s parents rejected it. The federal court action was stayed while the BSEA held another round of hearings. On August 19, 1988, through a second hearing officer, BSEA ruled that the 1987-88 IEP was substantively acceptable and that certain claimed procedural defects were excusable. The BSEA also found that Landmark’s regimen was too restrictive and did not suitably address Matthew’s capacity to be mainstreamed. The decision duly noted Matthew’s progress at Landmark over the previous months — but the hearing officer remained “unconvinced that a nexus exist[ed]” between Matthew’s improvement and his tenure at Landmark. Appellants thereupon amended the federal court complaint to embrace their assertion that the second BSEA decision was unfounded.
At a trial encompassing both school years, the district court accepted only the administrative record as evidence and prevented the parents from calling certain additional witnesses. After briefing and argument, the judge found that the suggested IEPs were appropriate. She therefore affirmed defendants’ placement determinations for 1986-87 and 1987-88, but reversed the BSEA’s order that Concord reimburse Landmark’s fees for the first semester of the first school year.
III. SCOPE OF JUDICIAL REVIEW
We divide this phase of our analysis into two segments, discussing separately the criteria which govern (1) the district court’s review of the state agency’s decisions, and (2) appellate review of the district court’s judgment.
A. Trial-Level Review.
In this type of case, the law demands that the district court:
... shall receive the records of the administrative proceedings, shall hear additional evidence at the request of a party, and basing its decision on the preponderance of the evidence, shall grant such relief as the court determines is appropriate.
20 U.S.C. § 1415(e)(2). The court’s principal function is one of involved oversight. “[T]he Act contemplates that the source of the evidence generally will be the administrative hearing record, with some supplementation at trial,” and obligates the court of first resort to assess the merits and make an “independent ruling based on the preponderance of the evidence.” Burlington II, 736 F.2d at 790; see also Rowley, 458 U.S. at 205, 102 S.Ct. at 3050; Abrahamson v. Hershman, 701 F.2d 223, 230 (1st Cir.1983); Burlington v. Department of Educ., 655 F.2d 428, 431 (1st Cir.1981) (Burlington I). Nevertheless, the district court’s task is “something short of a complete de novo review.” Colin K. v. Schmidt, 715 F.2d 1, 5 (1st Cir.1983).
The required perscrutation must, at one and the same time, be thorough yet deferential, recognizing “the expertise of the administrative agency,... considering] the [agency’s] findings carefully and endeavoring] to respond to the hearing officer’s resolution of each material issue.” Burlington II, 736 F.2d at 791-92. Jurists are not trained, practicing educators. Thus, the statutory scheme binds trial courts to give “due weight” to the state agency’s decision in order to prevent judges from “imposing their view of preferable educational methods upon the States.” Rowley, 458 U.S. at 207, 102 S.Ct. at 3051. Hence, the court must render what we have called a “bounded, independent decision[] — bounded by the administrative record and additional evidence, and independent by virtue of being based on a preponderance of the evidence before the court.” Burlington II, 736 F.2d at 791.
Tracking the Act’s two overriding concerns, the trial court’s assessment of the IEP must address both procedural guarantees and substantive goals. The court must ask two questions:
First, has the State complied with the procedures set forth in the Act? And second, is the individualized educational program developed through the Act’s procedures reasonably calculated to enable the child to receive educational benefits?
Rowley, 458 U.S. at 206-07, 102 S.Ct. at 3051. While the inquiry is necessarily as multifaceted as the Act, the sufficiency of the IEP remains the paramount concern: “The ultimate question for a court under the Act is whether a proposed IEP is adequate and appropriate for a particular child at a given point in time.” Burlington II, 736 F.2d at 788; see also Defendant I, 898 F.2d at 1191.
B. Appellate Review.
We have yet to address explicitly or in detail the standard by which the court of appeals should gauge the district court's ultimate determinations in cases under the Act. We do so today.
The question of whether an IEP is “adequate and appropriate”' is a mixed question of fact and law. Accord Lachman v. Illinois State Bd. of Educ., 852 F.2d 290, 293 (7th Cir.), cert. denied, 488 U.S. 925, 109 S.Ct. 308, 102 L.Ed.2d 327 (1988); Gregory K. v. Longview School Dist., 811 F.2d 1307, 1310 (9th Cir.1987). Like other mixed questions, measuring the adequacy and appropriateness of an IEP asks nisi prius to determine whether certain facts possess, or lack, legal significance in a given case. See, e.g., Pavlidis v. New England Patriots Football Club, Inc., 737 F.2d 1227, 1231 (1st Cir.1984); Sweeney v. Board of Trustees, 604 F.2d 106, 109 n. 2 (1st Cir.1979) (collecting examples), cert. denied, 444 U.S. 1045, 100 S.Ct. 733, 62 L.Ed.2d 731 (1980). In short, the district court is required to make an evaluative judgment, applying “a legal standard to a particular set of facts.” TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 450, 96 S.Ct. 2126, 2133, 48 L.Ed.2d 757 (1976).
Absent a showing that the wrong legal rule was employed, we have rather consistently taken the view that the district court’s answer to a mixed factlaw question is reviewable only for clear error. See, e.g., RCI Northeast Services Div. v. Boston Edison Co., 822 F.2d 199, 202 (1st Cir.1987); Pavlidis, 737 F.2d at 1231; Sweeney, 604 F.2d at 109 n. 2. Our past decisions under the Act have implicitly followed this approach. See David D., 775 F.2d at 415; Burlington II, 736 F.2d at 790; Colin K., 715 F.2d at 6; Abrahamson, 701 F.2d at 227; Doe v. Anrig, 692 F.2d 800, 808 (1st Cir.1982). Clear-error review seems peculiarly apt in the section 1415(e)(2) milieu, as gauging the adequacy and appropriateness of IEPs is a chore inevitably presenting “questions] whose determination ‘require[ ] delicate assessments... [that] are peculiarly ones for the trier of fact.’ ” New England Anti-Vivisection Soc., Inc. v. United States Surgical Corp., 888 F.2d 1198, 1203 (1st Cir.1989) (quoting TSC, 426 U.S. at 450, 96 S.Ct. at 2132). The fact that district courts frequently decide these cases without live testimony, on the basis of the administrative record, does not detract from the wisdom of clear-error review. See, e.g., Anderson v. Bessemer City, 470 U.S. 564, 574, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985) (rationale underlying clearly erroneous rule applies unabated to findings “based... on physical or documentary evidence”); In re Tully, 818 F.2d 106, 109 (1st Cir.1987) (clear-error standard applies “unconditionally to factfinding emanating from a ‘paper’ record”); Custom Paper Prod. Co. v. Atlantic Paper Box Co., 469 F.2d 178, 179 (1st Cir.1972) (the “appellate function does not differ” because no witnesses testified in person). We hold that, in the absence of a mistake of law, the court of appeals should accept a district court’s resolution of questions anent adequacy and appropriateness of an IEP so long as the court’s conclusions are not clearly erroneous on the record as a whole.
In the case before us, there was no “legal” error. The district court phrased the central issue as “whether the [IEP] addresses the child’s special educational needs so as to assure his maximum possible development in the least restrictive environment consistent with that goal.” We approve the court’s articulation of the governing legal principle. We are relegated, therefore, to ascertaining if the court’s ensuing determination that Concord’s educational plans for Matthew were “adequate and appropriate” was clearly wrong.
IV. ADEQUACY AND APPROPRIATENESS
We come now to the heart of the matter: the sufficiency of the IEPs proposed by Concord, endorsed by the BSEA, and found satisfactory by the court below. On the premise that one should look before leaping, we deem it advisable to delineate the yardstick by which adequacy and appropriateness must be measured prior to confronting appellants’ particularized challenges. We keep in mind that, in cases arising under the Act, the burden rests with the complaining party to prove that the agency’s decision was wrong. See Kerkam v. McKenzie, 862 F.2d 884, 887 (D.C.Cir.1988); Spielberg v. Henrico County Public Schools, 853 F.2d 256, 258 n. 2 (4th Cir.1988), cert. denied, - U.S. -, 109 S.Ct. 1131, 103 L.Ed.2d 192 (1989).
A. The Yardstick.
In storming these ramparts, appellants rely heavily on the particulars of Massachusetts’ requirement that its special education programs “assure the maximum possible development” of handicapped students. See Mass.Gen.L. ch. 71B, § 2; see also Stock, 467 N.E.2d at 453. This substantive standard is admittedly higher than the federal “educational benefit” floor, Burlington II, 736 F.2d at 789, and makes the formulation and evaluation of IEPs a more complicated task in the Commonwealth than elsewhere. Be that as it may, the parents’ claim that their son’s academic progress at- Landmark necessarily demonstrated the inadequacy of Concord’s IEPs will not wash: even under the Massachusetts standard, a program which maximizes a student’s academic potential does not by that fact alone comprise the requisite “adequate and appropriate” education. In a nutshell, appellants’ per se approach is far too simplistic.
Let us be perfectly clear. Congress indubitably desired “effective results” and “demonstrable improvement” for the Act’s beneficiaries. Burlington II, 736 F.2d at 788. Hence, actual educational results are relevant to determining the efficacy of educators’ policy choices. See Defendant I, 898 F.2d at 1190. But, appellants confuse what is relevant with what is dispositive. The key to the conundrum is that, while academic potential is one factor to be considered, those who formulate IEPs must also consider what, if any, “related services,” 20 U.S.C. § 1401(17), are required to address a student’s needs. Irving Independent School Dist. v. Tatro, 468 U.S. 883, 889-90, 104 S.Ct. 3371, 3375, 82 L.Ed.2d 664 (1984); Roncker v. Walter, 700 F.2d 1058, 1063 (6th Cir.), cert. denied, 464 U.S. 864, 104 S.Ct. 196, 78 L.Ed.2d 171 (1983).
Among the related services which must be included as integral parts of an appropriate education are “such development, corrective, and other supportive services (including... psychological services... and counseling services) as may be required to assist a handicapped child to benefit from special education.” 20 U.S.C. § 1401(17); see also 34 C.F.R. § 300.13; Mass.GemL. ch. 71B, § 1 (defining special needs to be addressed by special education). So long as the means for doing so fit within the statutory compendium, the-Act “require[s] that all of a child’s special needs must be addressed in the educational plan.” Burlington II, 736 F.2d at 788; see also 34 C.F.R. Pt. 300, App. C, Question 44 (“the IEP for a handicapped child must include all of the specific special education and related services needed by the child— as defined by the child’s current evaluation”). Thus, purely academic progress— maximizing academic potential — is not the only indicia of educational benefit implicated either by the Act or by state law.
Moreover, appellants’ argument misperceives the focus of an inquiry under 20 U.S.C. § 1415(e)(2): the issue is not whether the IEP was prescient enough to achieve perfect academic results, but whether it was “reasonably calculated” to provide an “appropriate” education as defined in federal and state law. See Rowley, 458 U.S. at 207, 102 S.Ct. at 3051; Defendant I, 898 F.2d at 1191; Denton, 895 F.2d at 980; Colin K., 715 F.2d at 4. This concept has decretory significance in two respects. For one thing, actions of school systems cannot, as appellants would have it, be judged exclusively in hindsight. An IEP is a snapshot, not a retrospective. In striving for “appropriateness,” an IEP must take into account what was, and was not, objectively reasonable when the snapshot was taken, that is, at the time the IEP was promulgated. See 34 C.F.R. Pt. 300, App. C, Question 38 (IEP’s annual goals “describe what a handicapped child can reasonably be expected to accomplish”); see also 34 C.F.R. § 300.349. For another thing, the alchemy of “reasonable calculation” necessarily involves choices among educational policies and theories — choices which courts, relatively speaking, are poorly equipped to make. “Academic standards are matters-peculiarly within the expertise of the [state] department [of education] and of local educational authorities.... ” Stock, 467 N.E.2d at 455. We think it well that courts have exhibited an understandable reluctance to overturn a state education agency’s judgment calls in such delicate areas — at least where it can be shown that “the IEP proposed by the school district is based upon an accepted, proven methodology.” Lachman, 852 F.2d at 297. As Chief Justice (then Justice) Rehnquist has written:.
The primary responsibility for formulating the education to be accorded a handicapped child, and for choosing the educational method most suitable to the child’s needs, was left by the Act to state and local educational agencies in cooperation with the parents or guardians of the child_ In the face of such a clear statutory directive, it seems highly unlikely that Congress intended courts to overturn a State’s choice of appropriate educational theories in a proceeding conducted pursuant to § 1415(e)(2).
Rowley, 458 U.S. at 207-08, 102 S.Ct. at 3051. Beyond the broad questions of a student’s, general capabilities and whether an educational plan identifies and addresses his or her basic needs, courts should be loathe to intrude very far into interstitial details or to become embroiled in captious disputes as to the precise efficacy of different instructional programs. See Rowley, 458 U.S. at 202, 102 S.Ct. at 3048; Defendant I, 898 F.2d at 1191; Stock, 467 N.E.2d at 455.
There is one final basis on which we reject appellants’ per se argument. An IEP must prescribe a pedagogical format in which, “to the maximum extent appropriate,” a handicapped student is educated “with children who are not handicapped.... 20 U.S.C. § 1412(5)(B); 34 C.F.R. § 300.550(b)(1). Congress’ stated preference requires, in the eyes of both federal and state authorities, that education of the handicapped occur in “the least restrictive environment.” See 34 C.F.R. § 300.552(d); Mass.Gen.L. ch. 71B, §§ 2, 3. Mainstreaming may not be ignored, even to fulfill substantive educational criteria. “Just as the least restrictive environment guarantee cannot be applied to cure an otherwise inappropriate placement, similarly, a state standard cannot be invoked to release an educational agency from compliance with the mainstreaming provisions.” Burlington II, 736 F.2d at 789 n. 19; see also Roncker, 700 F.2d at 1063 (“a placement which may be considered better for academic reasons may not be appropriate because of the failure to provide for mainstreaming”).
Correctly understood, the correlative requirements of educational benefit and least restrictive environment operate in tandem to create a continuum of educational possibilities. See Rowley, 458 U.S. at 181 n. 4, 102 S.Ct. at 3038 n. 4; Burlington II, 736 F.2d at 785 n. 12; Abrahamson, 701 F.2d at 229 n. 10. To determine a particular child’s place on this continuum, the desirability of mainstreaming must be weighed in concert with the Act’s mandate for educational improvement. See Lachman, 852 F.2d at 296. Assaying an appropriate educational plan, therefore, requires a balancing of the marginal benefits to be gained or lost on both sides of the maximum benefit/least restrictive fulcrum. Neither side is automatically entitled to extra ballast.
For these reasons, then, comparative academic progress, in and of itself, is not necessarily a valid proxy for, or determinative of, the degree to which an IEP was reasonably calculated to achieve the mandated level of educational benefit.
B. The Substantive Adequacy of the IEPs.
The precepts we have just surveyed frame the inquiry facing the court below: the issue was not whether Concord’s program was “better” or “worse” than Landmark’s in terms of academic results or some other purely scholastic criterion, but whether Concord’s program, taking into account the totality of Matthew’s special needs, struck an “adequate and appropriate” balance on the maximum benefit/least restrictive fulcrum. On this issue, the record sustains the district court’s affirmative conclusion.
In the first place, the district court was bound to give “due weight” to the agency’s judgment. See Rowley, 458 U.S. at 207. Second, the court obviously agreed with the BSEA hearing officers that Matthew required not only academic help but also socialization training and motor skills assistance. Having canvassed the evidence presented by Matthew’s teacher, his parents, and the treating professionals, we cannot say that such a conclusion constituted clear error. As a matter of maximizing Matthew’s educational benefit, those special needs were properly considered by the IEP team, notwithstanding the parents’ rather singleminded focus on academic results. See Hudson v. Wilson, 828 F.2d 1059, 1063 (4th Cir.1987); see also Mass. Gen.L. ch. 71B, § 2. The IEP ensured socialization therapy with a psychologist and occupational therapy to improve Matthew’s motor skills. Landmark’s regimen provided no motor skills training and no specific program of socialization therapy. It follows that Concord could lawfully implement an educational plan which it reasonably considered more appropriate and well-rounded than the Landmark program, especially when its IEP explicitly provided for more, and better diversified, “related services” keyed to Matthew’s specific handicaps. See, e.g., Wilson v. Maraña Unified School Dist., 735 F.2d 1178, 1182-83 (9th Cir.1984).
Additionally, appellants’ imprecations all but ignore the mainstreaming requirement. Defendants’ 1986-87 IEP proposed a nonresidential day program in public school. The plan called for Matthew to be taught in both self-contained classrooms (i.e., with other handicapped students) and in regular classrooms, thus allowing increased mainstreaming in classes like social studies and science where he had attained an acceptable level of performance. In contrast, as a residential school catering to a learning-disabled clientele, Landmark posed a much more restrictive environment and afforded decreased prospects for mainstreaming.
Last but not least, there was considerable room for the BSEA, and the district court, to find that the advantages inherent in the IEP did not severely compromise educational benefits. Concord’s teacher-student ratio was within the range recommended by two professionals who were treating Matthew (Drs. Cushna and Kinsb-ourne). Its faculty, by many measures, was more experienced and better credentialed than Landmark’s. Matthew's progress from 1984 to 1986 — a period which had been spent, for the most part, in the Concord public schools — was described by Dr. Cushna as “most astonishing.” Although the evidence showed that peer interaction remained a persistent problem, Matthew had been making good academic progress and was gaining self-confidence during the interval immediately before his parents unilaterally changed his placement.
In light of the evidence of Matthew’s specific needs and the differences, plus and minus, between the IEP, on the one hand, and the Landmark program, on the second hand, there was substantial proof from which the state agency could rationally conclude that the IEP was adequate and appropriate. Mindful of this evidence, and the weight to be accorded agency determinations in eases under the Act, we cannot say that the district court erred in striking the balance of factors in favor of the BSEA’s resolution of the question presented. Where the evidence permits two plausible views of adequacy/appropriateness, the agency’s choice between them cannot lightly be disturbed.
To this point, we have discussed the 1986-87 IEP to the virtual exclusion of the 1987-88 IEP. Yet, what we have written about the former applies full bore to the latter. Because the parents insisted that Concord not reevaluate Matthew, the 1987-88 IEP was drafted along the same lines as the 1986-87 plan. It reflected a mixture of self-contained and heterogeneous classes, speech/language training, and occupational therapy. The 1987-88 IEP also included a substantial after-school socialization component designed to bring Matthew into contact with both handicapped and non-handicapped children. One new feature was a specific allotment of time to an academic tutorial program. The alternative — Landmark’s program — remained substantially unchanged. For the same reasons as pertained in the previous year, the BSEA permissibly determined Concord’s 1987-88 IEP to be appropriate and substantively adequate. The lower court’s ratification of that finding was not clearly wrong.
C. The Procedural Adequacy of the 1987-88 IEP.
The scope of a district court’s inquiry into a state’s compliance with the procedural requirements of the federal Act encompasses not only the substance of special education, but also the adequacy of the process through which a particular IEP has been created. See Rowley, 458 U.S. at 206, 102 S.Ct. at 3050; Burlington II, 736 F.2d at 783, 787. In this case, appellants assert that certain procedural defects in the formation of the second IEP were so severe as to render it infirm.
We limn the guideposts. Courts must strictly scrutinize IEPs to ensure their procedural integrity. See Defendant I, 898 F.2d at 1190. Strictness, however, must be tempered by considerations of fairness and practicality: procedural flaws do not automatically render an IEP legally defective. See id. at 1191. Before an IEP is set aside, there must be some rational basis to believe that procedural inadequacies compromised the pupil’s right to an appropriate education, seriously hampered the parents’ opportunity to participate in the formulation process, or caused a deprivation of educational benefits. See id.; Denton, 895 F.2d at 979, 982; Burlington II, 736 F.2d at 786.
Appellants urge, without citation to competent authority, that the district court should have shifted the burden to Concord to demonstrate that the alleged procedural defects referable to the 1987-88 IEP were harmless. We disagree. Congress’ special emphasis on the provision of procedural protections springs from the hope that an abundance of process and parental involvement will help ensure the creation of satisfactory IEPs acceptable to all concerned. See Rowley, 458 U.S. at 205-06, 102 S.Ct. at 3050; Burlington II, 736 F.2d at 783. Inasmuch as the caselaw makes manifest that the party allegedly aggrieved must carry the burden of proving that the educational agency erred in its substantive judgment, see supra p. 991 and cases cited, logic suggests that the burden be allocated in the same way when a party’s attack is garbed in procedural raiment. The court below correctly imposed the de-voir of persuasion on the complainants in respect to the harmfulness of the claimed procedural shortcomings. See Kerkam, 862 F.2d at 887; Spielberg, 853 F.2d at 258 n. 2; Burlington II, 736 F.2d at 794.
Turning to specifics, appellants’ complaints fall into two categories. In terms of output, they cite the use of computerized forms, the lack of a prioritized listing of Matthew’s educational objectives, and the bareness of Concord’s promise that Matthew would participate in further mainstreaming “when ready.” In terms of input, they remonstrate that the IEP relied on information gathered from persons (1) not present at the team meeting, and (2) whose identities were not contemporaneously revealed. The district court concluded that the asserted “procedural defects in the preparation of the 1987/88 IEP taken together were not sufficient to render the IEP inadequate.” The conclusion seems unimpeachable.
We believe it is important that, during the team meeting, appellants were given all the information that was ultimately used to fashion the IEP. Such disclosure was plainly sufficient to alleviate any potential problem stemming from the use of pre-printed forms or the cursory nature of Concord's comments. Cf., e.g., Defendant I, 898 F.2d at 1191 (“Adequate parental involvement and participation in formulating an IEP... appear to be the Court’s primary concern in requiring that procedures be strictly followed.”). While personalized detail will always be helpful in evaluating an IEP, we decline the invitation
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BROOKS, Circuit Judge.
This appeal involves questions relating to the federal income tax liability of the plaintiff-appellee, Consumers Power Company. Consumers brought suit to recover a portion of the income taxes it paid for the taxable years 1954 through 1957. Two issues are presented on review. First, Consumers argues that it should have been able to deduct from its gross income as ordinary and necessary business expenses payments made to the Electric Companies Advertising Program (ECAP), an organization of privately owned electric power companies, for a national advertising campaign carried on during the four year period in question. Second, Consumers contends that it was correct in deducting the face amount of certain death benefit certificates it issued to retiring employees in the years in which the certificates were issued rather than in the years when the death benefits were actually paid. The District Court disallowed the deductions for the expenses of the advertising program, but permitted Consumers to deduct the face amount of the death certificates in the years in which they were issued. See, 299 F.Supp. 1180 (1969).
The payments Consumers made to the Electric Companies Advertising Program were its pro rata share of the cost of a national advertising campaign. An examination of the materials used show the campaign had a two-fold purpose: 1. explaining how electricity can make for more comfortable living, and 2. pointing out the “bad features” of publicly owned electric power companies as compared to privately owned companies. The advertisements for which the District Court disallowed deductions were the ones which in some way attacked public power. Some of the disallowed advertisements made a hard sell attack on public power calling it “creeping socialism”, while others simply suggested that private power companies can provide faster service because, unlike with publicly owned power companies, there was no waiting to have funds appropriated for the needed electrical facilities. Many of the advertisements were directed toward the Tennessee Valley Authority, and several admonished the public to let their congressmen know how they felt about governmental ownership of electric power companies.
The deductibility of the cost of these advertisements is governed by whether it was an “ordinary and necessary” business expense (Title 26 U.S.C. § 162). The Internal Revenue has promulgated 26 C.F.R. § 1.162.20(b) in * * sK # * conjunction with the “ordinary and necessary” business expense section of the Code. This regulation has been considered by the courts at various times. See, Cammarano v. United States, 358 U.S. 498, 79 S.C. 524, 3 L.Ed.2d 462 (1959); American Hardware & Equipment Company v. Commissioner of Internal Revenue, 202 F.2d 126 (4th Cir. 1953); Roberts Dairy Company v. Commissioner of Internal Revenue, 195 F.2d 948 (8th Cir. 1952); Southwestern Electric Power Company v. United States, 312 F.2d 437, 160 Ct.Cl. 262 (1963). And our review of the disallowed advertisements in light of the interpretation given 26 C.F.R. § 1.162.20 (b) by these cases supports the District Court’s determination of nondeductibility. Several of the advertisements are what might be called border line cases for deductibility, but we defer to the District Court’s judgment in those cases. However, it should be noted that this regulation, 26 C.F.R. § 1.162.20(b), is apparently capable of infinitely encompassing proportions. In a situation similar to the present one, where no legislation is pending, and a company’s chief competitor is governmentally owned, the regulation could possibly be extended to disallow a deduction for the cost of an advertisement which simply conveys a competitive message. It is not inconceivable that the expenditures for this type of advertisement might fall into the disallowed category of expenditures which according to the Internal Revenue “include, but shall not be limited to * * * ” attempts to “influence members of a legislative body * * * indirectly by urging or encouraging the public to contact such members for the purpose of proposing, supporting or opposing legislation.” Such type of coercive use of this regulation to discourage private industry from competing in an ordinary business fashion with a publicly owned business would clearly not be in keeping with the intent of the “ordinary and necessary” business expense provision of the Code.
The other question presented on this appeal is whether Consumers should have been able to deduct the amount of certain death benefit certificates issued to retiring employees in the year the certificates were issued or only in the year the benefits were actually paid. The District Court allowed the deduction in the year in which the certificates were issued. It based its decision in part on the argument that Title 26 U.S.C. § 404 (a) and (a) (5) would not apply under these circumstances because Consumers’ death plan was not a plan for “deferred compensation”. However, 26 C.F.R. § 1.404(a)-l (a) (1) states that “section 404(a) also governs the deductibility of unfunded pensions and death benefits paid directly to former employees or their beneficiaries.” In addition, death benefit plans have in the past been classified as compensations. See, New York Post Corporation v. Commissioner of Internal Revenue, 40 T.C. 882 (1963); Seavey & Flarsheim Brokerage Company v. Commissioner of Internal Revenue, 41 B.T.A. 198 (1940). Our examination of Consumers’ death benefit plan, and the circumstances surrounding its establishment, leads us to the conclusion that it was a program of deferred compensation for services rendered. Thus, Title 26 U.S.C. § 404(a) controls and Consumers can only deduct the amount of death benefits paid under its plan in the years in which the payments are actually made.
Affirmed in part, reversed in part.
. (b) Taxable years beginning before January 1, 1963 — (1) In general, (i) For taxable years beginning before January 1, 1963, expenditures for lobbying purposes, for the promotion or defeat of legislation, for political campaign purposes * * * or for carrying on propaganda (including advertising) related to any of the foregoing purposes are not deductible from gross income. For example, the cost of advertising to promote or defeat legislation or to influence the public with respect to the desirability or undesirability of proposed legislation is not deductible as a business expense, even though the legislation may directly affect the taxpayer’s business.
* # :!: !¡í *
(2) Expenditures for promotion or defeat of legislation. For purposes of this paragraph, expenditures for the promotion or the defeat of legislation include, but shall not be limited to, expenditures for the purpose of attempting to—
(i) Influence members of a legislative body directly, or indirectly by urging or encouraging the public to contact such members for the purpose of proposing, supporting, or opposing legislation, # sj< * *
. * * * if compensation is paid or accrued on account of any employee under a plan deferring the receipt of such compensation, such * * * compensation shall not be deductible under section 162 or section 212; but, if they satisfy the conditions of either of such sections, they shall be deductible under this section, subject, however, to the following limitations as to the amounts deductible in any year.
}Ji S{« $ íj<
(5) In the taxable year when paid, if the plan is not one included in paragraph (1), (2), or (3) (not here involved), if the employee’s rights to or derived from such employer’s contribution or such compensation are nonforfeitable at the time the * * * compensation is paid.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LEVIN H. CAMPBELL, Circuit Judge.
On March 7, 1972, the H. K. Porter Company (Porter) mailed tender offers to the stockholders of Nicholson File Company (Nicholson), obligating itself to buy 437,000 shares of Nicholson common stock at $42 per share by April 4, 1972, or any extension of that date. Only 132,292 shares were tendered by the actual closing date, April 14, 1972, which shares Porter bought. Porter brought this action for damages in the district court against Nicholson and its directors and officers, alleging that to defeat Porter’s request for tenders, they had issued false, fraudulent and misleading statements to Nicholson stockholders to induce them not to tender, in violation of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j, and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5, and of § 14(e) of the Securities Exchange Act of 1934, 15 U.S.C. § 78n(e).
Defendants filed a motion to dismiss under F.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. The district court, pursuant to careful opinions, dismissed the § 10(b) and 10b-5 claim, 341 F.Supp. 508, but denied the motion with respect to the § 14(e) claim. 353 F.Supp. 153 (D.R.I. 1972; supplemental opinion, Id. 1973). Both sides have appealed, the defendants having been granted permission to do so by the district,court. 28 U.S.C. § 1292 (b). We affirm.
The deceptive activities of which Porter complains may be summarized, from the complaint, as follows:
First, the defendants mailed a letter to the Nicholson stockholders telling them that Nicholson’s directors had endorsed a merger with Walco National Corporation, which the directors considered a better alternative than selling shares to Porter. This proposed merger, it is alleged, was a sham. Second, the defendants brought a securities laws action against Porter and obtained a temporary restraining order against Porter’s acceptance of tenders pending a hearing on a motion for a preliminary injunction. It is alleged that the directors mailed a misleading statement to the stockholders, informing them that Porter’s offer had been “blocked” by an injunction and urging them not to turn in their shares and to retrieve shares already tendered, but omitting to tell them that the injunction was a temporary restraining order and did not constitute a finding that Porter had violated the law. The statement was allegedly further misleading in that it conveyed the false impression that stockholders had the right to take back their shares. Finally, the directors told the stockholders by mail of a merger proposal from VLN Corporation, preferable to both the Wal-co and Porter proposals. It is alleged that this statement was misleading in omitting relevant facts about the value of VLN stock.
I. The § 14(&) Claim
Section 14(e), like other anti-fraud provisions of the securities laws, e. g., § 14(a), 15 U.S.C. § 78n(a), and § 10(b), does not by its terms confer a right of action on anyone for violation of its provisions. This silence, however, is no bar to implying a private cause of action. J. I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964). It “is the duty of the courts to be alert to provide such remedies as are necessary to make effective the congressional purpose.” Id. at 433, 84 S.Ct. at 1560. Nicholson, conceding that a nontendering stockholder would have a right of action against it for damages, see Neuman v. Electronic Specialty Co., [1969-1970 Transfer Binder] CCH Fed.Sec.L.Rep. ¶ 92,591, at 98,705 (N.D.Ill.1969), and that Porter would have a right to sue for injunctive relief, see Electronic Specialty Co. v. International Controls Corp., 409 F.2d 937 (2d Cir. 1969); Butler Aviation Int’l, Inc. v. Comprehensive Designers, Inc., 425 F.2d 842 (2d Cir. 1970), insists that Porter’s is not the interest which § 14(e) was designed to protect and that therefore we should not imply for it a right of action for damages. But we think that such a right of action for damages, properly circumscribed, would effectuate the purposes of § 14(e).
Section 14(e) was part of the 1968 amendments, known as the Williams Act, to the Securities Exchange Act of 1934. The purpose of the Williams Act was to regulate the emerging “tender offer” takeover device in the interest of the investor — just as proxy solicitation had earlier been so regulated. See Note, Cash Tender Offers, 83 Harv.L.Rev. 377 (1969). “[The] bill is designed to make the relevant facts known so that the shareholders have a fair opportunity to make [this] decision.” H.R.Rep.No. 1711, 90th Cong., 2d Sess., 1968 U.S. Code Cong. & Admin.News pp. 2811, 2813 (1968). Little in the legislative history suggests that Congress was motiviated by concern for the plight of frustrated tender offerors or, for that matter, the incumbent management of the target. On the other hand, Senator Williams, sponsor of the amendments, expressed a desire “to avoid tipping the balance of regulatory burden in favor of management or in favor of the offeror.” 113 Cong.Rec. 854 (1967). The Senator stated,
“The purpose of this bill is to require full and fair disclosure for the benefit of stockholders while at the. same time providing the offeror and management equal opportunity to fairly present their case.” Id. at 854-55.
In furtherance of these aims, the statute requires the tender offeror to disclose to the stockholders he solicits information about his identity, plans, resources, etc. § 14(d)(1), 15 U.S.C. § 78n(d)(1), see § 13(d), 15 U.S.C. § 78m(d); in turn, the target’s management is subject to SEC regulation of its efforts to influence stockholder acceptance or rejection and to repurchase its own securities defensively. § 14(d)(4), 15 U.S.C. § 78n(d)(4); § 13(e)(1), 15 U.S.C. § 78m(e)(1).
From the statutory scheme and the legislative history, it seems clear that the overriding purpose of § 14(e) is the protection of the investor. Yet affording for the offeror and the target’s management a cause of action for damages would in many instances further that purpose. With an obvious economic stake in the outcome of the tender offer battle, they have the incentive to detect violations and vigorously pursue remedies. See Bromberg, Securities Law, supra, § 6.3(1040) at 124. Nicholson concedes Porter’s right to sue in equity; but the threat of a damages action no less than an equitable suit may stimulate compliance, to the benefit of the investor. The Supreme Court said in Borak that “[pjrivate enforcement of the proxy rules provides a necessary supplement to [Securities & Exchange] Commission action . . . [T]he possibility of civil damages or injunctive relief serves as a most effective weapon in the enforcement of the proxy requirements.” 377 U.S. at 432, 84 S.Ct. at 1560. This proposition is no less applicable to the tender offer situation. We see no reason why actions by the protagonists in the battle, as well as by the stockholders themselves, would not be effective enforcement weapons.
We find further support for this construction when we look to the context in which § 14(e) was enacted. Rule 10b-5 already covered exchanges of stock generally, including tender offers, but rights of action under it were commonly limited to purchasers and sellers. See Birnbaum v. Newport Steel Corp., 193 F.2d 461 (2d Cir. 1952), cert. denied, 343 U.S. 956, 72 S.Ct. 1051, 96 L.Ed. 1356 (1952). See infra, part II. Since § 14(e) substantially tracks the language of 10b-5 except for its omission of the purchase and sale requirement, it seems reasonable to conclude that its “major contribution [was] a broader standing to sue — accorded both to the offeror and to the opposition.” Chris-Craft Industries, Inc. v. Bangor Punta Corp., 480 F.2d 341, at 361 (2d Cir., 1973). See also Electronic Specialty Co. v. International Controls Corp., supra, 409 F.2d at 940-941.
Finally, implying for the offeror and the target’s management reciprocal rights of action for damages seems only fair given that each has a heavy economic stake, and that each is subject to what has been aptly described as “symmetrical” statutory obligations. Bromberg, Securities Law, supra, § 6.3(1040) at 124. Each is victimized when the other commits illegal acts to defeat or accomplish takeover bids. Tortious interference with a “prospective advantage” or inducement not to enter into a contract are wrongs long recognized at common law, giving rise to actions for damages. See W. Prosser, Law of Torts, c. 25 § 130 at 949 ff., esp. 956-60 (4th ed. 1971); Restatement of Torts § 766; Chris-Craft, supra, 480 F.2d at 360.
Thus, we infer a § 14(e) civil damages remedy for the tender offeror. Accord, Chris-Craft, supra. See Dyer v. Eastern Trust & Banking Co., 336 F.Supp. 890 (D.Me.1971). See also Note, The Developing Meaning of “Tender Offer” Under the Securities Exchange Act of 1934, 86 Harv.L.Rev. 1250, 1259-60 (1973).
It follows, however from the overriding investor-protection purpose of § 14(e) that damages should be denied to a tender offeror to the extent they are inconsistent with that purpose. The statute, in other words, may not be diverted from one designed to assist the investor to one operated principally to benefit one or another of the rival management or control groups jockeying for power.
The district court ruled that Porter (assuming liability is proven) could recover from the corporation itself. We do not disturb that ruling now. A motion to dismiss should not be granted unless it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). We cannot yet know the theory of damages to be established, nor how and to what extent recovery from Nicholson might affect the various Nicholson shareholders (of whom Porter has been one), nor what right of recovery may be available to the other Nicholson stockholders to offset the effect of any corporate loss. In the event Porter establishes a violation of § 14(e), the district court should make findings of the probable impact of recovery from Nicholson on its shareholders. Any recovery in damages from the corporation must be consistent with the primary congressional aim of protecting investors, and the district court would be warranted in denying damages, otherwise established, if it should conclude that to award them would be to subvert that purpose.
Recovery from the individual defendants is, of course, on a different footing. The individual defendants have not yet advanced any good reason why they should not be accountable in damages for illegal action, if any. Permitting them to be held civilly liable for illegal conduct has no greater “chilling” effect than permitting enforcement of the securities law in other respects. If their argument is that § 14(e) imposes unreasonably high standards, it is better directed to Congress. Appellant’s other argument- — -that recovery will lead to indemnification of the individuals by the corporation and hence ultimately will burden its stockholders — assumes much more than we need to assume at this juncture. The posture of the case is presently like Borak when that case was decided by the Supreme Court. We hold simply that the district court has power to grant appropriate relief to Porter should it prove its case. We leave to the district court’s later determination what relief is necessary and appropriate in light of the objects of § 14(e).
II. The § 10(b) Claim
The district court ruled that Porter’s separate § 10(b) and Rule 10b-5 claim must be dismissed on the basis that Porter was not a purchaser or seller, a requirement for 10b-5 actions first established in Birnbaum v. Newport Steel Corp., supra, and applied to the tender offer situation in Iroquois Industries v. Syracuse China Corp., 417 F.2d 963 (2d Cir. 1969), cert. denied, 399 U.S. 909, 90 S.Ct. 2199, 26 L.Ed.2d 561 (1970).“ The Supreme Court has refrained from deciding whether a party, not a purchaser or seller, has a right of action under 10b-5. Superintendent of Insurance v. Bankers Life & Casualty Co., 404 U.S. 6, 13 n. 10, 92 S.Ct. 165, 30 L.Ed.2d 128 (1971), but the Birnbaum doctrine, with modifications, has generally been adopted by the circuits, at least with regard to actions for damages. See, e. g., Herpich v. Wallace, 430 F.2d 792 (5th Cir. 1970); Mount Clemens Industries, Inc. v. Bell, 464 F.2d 339 (9th Cir. 1972); City Nat’l Bank v. Vanderboom, 422 F.2d 221 (8th Cir.), cert. denied, 399 U.S. 905, 90 S.Ct. 2196, 26 L.Ed.2d 560 (1970); Knauff v. Utah Construction & Mining Co., 408 F.2d 958 (10th Cir.), cert. denied, 396 U.S. 831, 90 S.Ct. 83, 24 L.Ed.2d 81 (1969); Simmons v. Wolfson, 428 F.2d 455 (6th Cir. 1970), cert. denied, 400 U.S. 999, 91 S.Ct. 459, 27 L.Ed.2d 450 (1971).
We interpret the enactment of § 14(e) in 1968, dealing specifically with tender offers, as recognition of the inadequacy of other provisions of securities laws, especially § 10(b) and Rule 10b-5, to provide a comprehensive and sure remedy, at least for those who were not purchasers or sellers of securities. Possibly if Congress had not acted, tender offer activity would have stimulated courts to a broader application of Rule 10b-5. We cannot know. But Congress has acted, and we think it both unnecessary and confusing to encourage, at this time, and especially in view of the Supreme Court’s silence, the parallel development of alternative remedies. Here we are not faced with conduct occurring before the enactment of § 14(e) nor some other situation where the injured offeror lacks any possible remedy except under Rule 10b-5. Cf. SEC v. Nat’l Securities, Inc., 393 U.S. 453, 468-469, 89 S.Ct. 564, 21 L.Ed.2d 668 (1969). Absent such special circumstances, we decline to embark upon a re-examination of the purchaser-seller requirement of 10b-5. We hold that § 14(e) provides the exclusive civil remedy available to Porter, and that the district court did not err in dismissing its claim under § 10(b) and Rule 10b-5.
Affirmed.
. Section 10, 15 U.S.C. § 78j:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce or of the mails, or of any facility of any national securities exchange—
* * * * *
(b) To use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.
17 C.F.R. § 240.10b-5:
It shall be unlawful for any person, directly or indirectly, by the use of any means or instrumentality of interstate commerce, or of the mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or article to defraud,
(b) To make any untrue statement of a material fact or to omit 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, or
(c) To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person, in connection with the purchase or sale of any security.
Section 14(e), 15 U.S.C. § 78n(e) :
It shall be unlawful for any person to make any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, or to engage in any fraudulent, deceptive, or manipulative acts or practices, in connection with any tender offer or request or invitation for tenders, or any solicitation of security holders in opposition to or in favor of any such offer, request, or invitation. The Commission shall, for the purposes of this subsection, by rules and regulations define, and prescribe means reasonably designed to prevent, such acts and practices as are fraudulent, deceptive, or manipulative.
. Some proponents expressed sympathy for the target companies, but the “Congress insisted it was not playing favorites.” I. A. Bromberg, Securities Law: Fraud—SEC Rule 10b-5 § 6.3(122), at 116.3-116.4 (1971).
. Porter says that Iroquois conflicts with Crane Co. v. Westinghouse Air Brake Co., 419 F.2d 787 (2d Cir. 1969), cert. denied, 400 U.S. 822, 91 S.Ct. 41, 27 L.Ed.2d 50 (1970). Others have said that Crane merely represents an example of the “forced seller” modification of Birnbaum. See Mount Clemens, supra, 464 F.2d at 346; cf. Kahan v. Rosenstiel, 424 F.2d 161, 171-172 (3d Cir.), cert. denied, 398 U.S. 950, 90 S.Ct. 1870, 26 L.Ed.2d 290 (1970). In any event, it appears from subsequent Second Circuit cases that the purchaser-seller requirement, however relaxed, still exists. See Drachman v. Harvey, 453 F.2d 722 (2d Cir. 1972).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
EAST, Senior District Judge.
The Appeal:
The appellants Save the Dunes Council, Inc. and several individuals (Council) appeal the adverse summary judgment entered by the District Court on May 10, 1977 in their causes for a Writ of Mandamus and a Declaratory Judgment with mandatory injunc-tive relief from the action or non-action of the Secretary of the Army (Secretary) under 33 U.S.C. § 426i (prevention or mitigation of shore damage). We note jurisdiction under 28 U.S.C. § 1291 and affirm.
Proceedings in the District Court:
On August 7, 1973, the Council brought suit to compel the Secretary, and through him, the Chief of the Corps of Engineers (Corps) to take remedial action concerning the Corps’ harbor improvements at Michigan City, Indiana. The Council’s complaint in Count I alleged that the Secretary and the Corps had the duty to prevent and rectify shore erosion damage to the Indiana Dunes National Lakeshore (Dunes) allegedly caused by the harbor structures at Michigan City and that the Council was entitled to a Writ of Mandamus, pursuant to 28 U.S.C. § 1361, to compel the Secretary to modify the harbor structures in prevention of unreasonable shore erosion.
In Count II of the complaint, the Council alleged that the harbor improvements constituted a nuisance under federal common law and that the Secretary abused his discretion, granted under various Acts of Congress, by failing to stop or alleviate the shore erosion of the Dunes caused by the harbor structures. They further alleged that the District Court held jurisdiction to abate the nuisance under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 and 706(1), as well as under federal question jurisdiction, 28 U.S.C. § 1331.
On November 2,1973, the Corps moved to dismiss, or in the alternative, for summary judgment. On May 10, 1976, the District Court granted the Corps’ motion for summary judgment under the provisions of Ped.R.Civ.P. 56 and entered judgment for the Corps on the Council’s Count I. The District Court did not deal with the issues under Count II any further than to find:
“[T]he Secretary is currently considering the serious problem of erosion along the [shoreline of the Dunes] in a manner well within the parameters of Title 33.
“[T]he Secretary has properly exercised his discretion by adopting a position with respect to the matter expressed in [Council’s] complaint. Since the court is without jurisdiction to order a course of action more favorable to [Council], this cause must be dismissed.”
Facts:
Michigan City Harbor is located at the mouth of Trail Creek at Lake Michigan, to the east of the Dunes. Development of the Michigan City Harbor (Harbor) began in 1836. Modified several times during the Nineteenth Century, the harbor structures as they now exist were completed about 1910. The structures were rehabilitated in the late 1960’s, without modifications. The Harbor has become a major recreational boating center for the southeastern portion of Lake Michigan.
The shoreline to the east of the Harbor experienced accretion in the period 1870-1940. A Michigan City municipal park, containing a public beach and zoo, is located on the accreted area, immediately to the east of the Harbor. The shoreline to the west of the harbor structures, however, has receded over the years. The erosion above referred to in rather extreme proportion extended into the Dunes through the development of the record before us.
The Dunes was created in 1966 under 16 U.S.C. §§ 460u, et seq., “to preserve for the educational, inspirational, and recreational use of the public certain portions of the Indiana dunes and other areas of scenic, scientific, and historic interest and recreational value in the State of Indiana .
In 1970, the Town of Beverly Shores, Indiana, located within the Dunes, and the Port Authority of Michigan City requested the Corps to study and take remedial action concerning the erosion experienced along the Dunes pursuant to Section 111 of the Rivers and Harbors Act of 1968, 33 U.S.C. § 426i. The Corps undertook a preliminary study of the erosion occurring to the Dunes and the relationship of such erosion to the harbor structures.
The report on this study, called Section 111 Reconnaissance Report, was issued on October 20, 1971. The report concluded that the harbor structures have contributed to approximately 60 percent of the erosion of the Dunes by interfering with the littoral movement of beach building materials to that shore, with high lake levels and steep waves accounting for the remainder. The Reconnaissance Report recommended preparation of a Detailed Project Report to develop plans for mitigation of the shore damage attributable to the harbor structures. The Corps pursued this recommendation and contracted with the engineering firm of Moffatt and Nichol of Long Beach, California, to conduct a study on the Indiana shoreline erosion.
Meanwhile, pursuant to a National Park Service request, the Corps prepared a plan of interim protection for an area where erosion threatened to undermine an access road several miles west of the Harbor. This project consisted of a rock revetment and called for beach nourishment with some 230,000 cubic yards of sand. In 1973, Congress appropriated 3.1 million dollars to the National Park Service for construction of the emergency protection works. The Corps, acting as agent for the Park Service, contracted for the construction of the interim, emergency shore protection works, and construction commenced in the Fall of 1973.
The Corps has, pursuant to resolutions of congressional committees as late as April 11, 1974, issued a final feasibility report, entitled “Interim Report on Indiana Shoreline Erosion,” which recommends authorization of a shore protection project to rebuild the beach west of the Harbor from the Northern Indiana Public Service Company (NIPSCO) property to the existing rock revetment (miles 524 to 526) and to replenish the beach periodically. This plan is designed to mitigate only the erosion caused by harbor structures.
In developing the proposed plan, the Corps considered modification of the harbor structures as an alternative. At the minimum, a detached breakwater and most of the east pier would have to be removed. The Harbor would then lose its function as a harbor of refuge, and increased dredging of the channel would be required. The report states that more extensive removal of improvements would probably be required. The maximum removal plan would result in the loss of a portion of the municipal park to the east of the Harbor and the Harbor outer basin. The NIPSCO power plant, located between the Harbor and the Dunes, would have to be modified.
Construction of the recommended project requires congressional authorization and funding. A draft environmental impact statement for the project has been filed with the Council on Environmental Quality. The report on the recommended project is expected to be submitted to Congress in the next year (1979-80).
Issues:
The issues on review are:
1. Whether the Secretary, acting through the Corps, has any peremptory duty under § 426i to take immediate- structural modification action to remedy the shore erosion on the Dunes when that erosion is primarily caused by federal navigation improvements, and if so, whether that duty may be enforced through mandamus (Count I); and
2. Whether the Secretary’s exercise of discretion is subject to declaratory judgment and mandatory injunctive relief under the APA (Count II).
Discussion:
The Council, as private parties, seeks to compel the Corps, by judicial decree, to remedy a situation causing severe damage to a National Park. No issue is raised as to legal standing of the Council.
It is manifest that the judiciary cannot compel through a writ of mandamus a federal official to perform any function unless the official is clearly directed by law to perform such a duty. This Court has held that mandamus jurisdiction is present only when a clear, plainly defined, and peremptory duty on the federal defendant is shown and there is a lack of an adequate remedy other than mandamus. Vishnevsky v. United States, 581 F.2d 1249 (7th Cir. 1978), citing City of Highland Park v. Train, 519 F.2d 681, 691 (7th Cir. 1975), cert. denied, 424 U.S. 927, 96 S.Ct. 1141, 47 L.Ed.2d 337 (1976), and City of Milwaukee v. Saxbe, 546 F.2d 693, 700 (7th Cir. 1976). The peremptory duty must be either a ministerial one or an obligation to act within a specified range of discretion. Davis Associates, Inc. v. Secretary, HUD, 498 F.2d 385, 389 (1st Cir. 1974); Miller v. Ackerman, 488 F.2d 920, 921-22 (8th Cir. 1973). Finally, mandamus jurisdiction does not lie to direct the exercise of administrative discretion within its lawful boundaries. Wilbur v. United States, ex rel. Kadrie, 281 U.S. 206, 218-19, 50 S.Ct. 320, 74 L.Ed. 809 (1930).
Before delving further into the Council’s entitlement to a writ of mandamus, it is first necessary to meet the prerequisite for any writ of mandamus, namely: is there a lack of an adequate remedy for the Council’s grievances other than mandamus? The Council suggests in their Count II such a remedy by way of declaratory and mandatory injunctive relief under the provisions of the APA, §§ 701, et seq. The Council contends that the Corps’ interim protection work (rock revetment and beach nourishment) was miniscule, and its delay by conducting studies and recommending what to do, rather than taking positive action to modify the harbor structures to prevent further erosion, constitutes unreasonable delay and hence an abuse of the Secretary’s discretion authorized under § 426i. The Council relies upon the holding in Secretary of Labor v. Farino, 490 F.2d 885, 888-93 (7th Cir. 1973). In fact, the Council contends that the District Court did not reach and deal with the issues under Count II (review under APA) in its memorandum opinion. We and the Council read the memorandum with different sights. It is true that the memorandum does not deal with the issues under Counts I and II separately in an A, B topical fashion; however, we read the memorandum as an ultimate finding of fact and conclusion of law that the Council has just simply not presented on the record any cause upon which relief can be granted under either Count II or Count I.
The Council has misplaced its trust in Farino under the facts presented here. In Farino, an employer sought APA review of the Secretary’s denial of an Alien Employment Certification so that he could continue to employ an alien. Congress had provided that before the Secretary could issue such an employment certificate, the Secretary must find and certify that the alien’s entry into the labor market would not adversely affect American labor in various particu.lars. Id. at 887. The Secretary denied the Alien Employment Certification and contended that Congress had committed such certification to his discretion and that judicial review was forbidden under § 701(a) which provides in part:
“This chapter applies, . . . except to the extent that—
“. . .; or
“(2) agency action is committed to agency discretion by law.”
Farino recognizes that the Secretary’s decision did not fall within the very narrow exception and held that under the test and standard of Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971), and the “law to apply” (8 U.S.C. § 1182(a)(14)), the Secretary’s decision was subject to judicial review under the provisions of the APA. Farino then adopts the Overton Park standard and procedures for review by the District Court which are:
“[T]he district court is first required to find whether the Secretary acted within the scope of his authority. As mandated by Section 10(e)(2)(A) of the Administrative Procedure Act, supra, his determination must not be ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ To make such a finding the district court must consider whether the Secretary’s decision ‘was based on a consideration of the relevant factors and whether there has been a clear error of judgment.’ Nevertheless, ‘the ultimate standard of review is a narrow one,’ and the district court may not ‘substitute its judgment for that of the agency.’ 401 U.S. at 415-416, 91 S.Ct. at 823.” 490 F.2d at 889.
There ends Farino’s succor to the Council. Farino puts the Secretary’s decision to that test or standard and does not fault the decision, but only deals with a “procedural issue, viz., whether plaintiffs were afforded an adequate opportunity to be heard before the [Secretary].” Id. at 890. Because of an unclear record, Farino remanded the cause to the District Court for a determination of that issue.
Furthermore, in this case the District Court did review the Secretary’s decision and substantially complied with the Over-ton Park standard and procedure for APA review. It goes without saying that the Council was granted a full due process hearing on its claims before the District Court. The evidence of record was fully considered by the District Court which made the following pertinent findings of fact and conclusions of law:
“[Although the Secretary has authority to perform the acts stated [in § 426i], he is under no obligation to take such action.
“Having determined that the Secretary’s duties are discretionary in nature, the next question is whether the court may compel the performance of such acts. Although district courts are equipped to command discretionary conduct, the federal official remains the ultimate decision-maker. That is, he may decide to take some form of action prescribed by statute, or he may decide to do nothing at all. A court may interfere only when the official’s actions [decision] or inactions [no decision] constitute an abuse of discretion. . . . ”
See Delaware River Joint Toll Bridge Commission v. Resor, 273 F.Supp. 215, 218 (E.D.Pa.1967), citing Paramount Pictures v. Rodney, 186 F.2d 111 (3d Cir. 1951). “The record 3 shows that the Secretary is
“3 Since the court has considered materials outside the pleadings themselves, Rule 56, F.R. C.P., shall govern the disposition of this motion.”
currently considering the serious problem of erosion along the [shoreline of the Dunes] in a manner well within the parameters of Title 33. In 1970, the Town of Beverly Shores, Indiana, and the Port Authority of Michigan City, Indiana, requested the Army Corps of Engineers to study and remedy the erosion dilemma. The following year the Corps prepared a report entitled, ‘Section 111 Reconnaissance Report, Michigan City Harbor, Indiana.’ The report was a preliminary study of the effects of harbor structures on the shorelines of Michigan City and Beverly Shores. The study concluded that ‘[f]urther detailed studies will be required to develop a precise plan of improvement and determine the extent of actual shore damage attributable to the Federal navigation structure.”
We agree. The Secretary, acting through the Corps, rather than taking ill-advised precipitous affirmative action in tearing out the harbor structures, has complied with statutory and administrative requirements for well-advised decision-making.
The provisions of the National Environmental Policy Act, 42 U.S.C. §§ 4331, et seq., (NEPA) require the Corps to “utilize a systematic, interdisciplinary approach . in planning and in decisionmaking . ..” 42 U.S.C. § 4332(2)(A). NEPA further provides for the preparation of an environmental impact statement which, inter alia, includes a discussion of alternatives to the proposed action, 42 U.S.C. § 4332(2)(C)(iii); and in cases involving unresolved conflicts concerning alternate uses of available resources, it mandates study and development of appropriate alternatives. 42 U.S.C. § 4332(2)(E). NEPA, of course, applies to erosion mitigation projects undertaken pursuant to the authority of § 426i. 33 C.F.R. § 209.410(e)(2)(vii).
The Council’s allegations of unwarranted delay on the part of the Secretary are unfounded. The delay was in fact not only warranted but required by the above-mentioned procedures in reaching a decision as whether to demolish or reconstruct the harbor structures. We are satisfied from the record that the Secretary, acting through the Corps, is acting within his discretion without delay and abuse; and that he is proceeding in a reasonable and responsible manner to develop a feasible plan for the prevention of the extreme Lake Michigan water erosion threat to the Dunes. See Chromcraft Corp. v. United States EEOC, 465 F.2d 745, 748 (5th Cir. 1972); and Buckeye Cablevision, Inc. v. United States, 438 F.2d 948, 954 (6th Cir. 1971).
Furthermore, the Corps’ action to date is not subject to our review as unreasonably delayed or arbitrary and capricious under § 706(1) and (2)(A). Pursuant to 5 U.S.C. § 704, only final agency actions are subject to judicial review. In 1974, the Corps’ decision-making and planning processes were still ongoing, and as of this date, no recommendation for project authorization has been sent to Congress. The Council’s suggestion that the harbor structures be modified is being considered by the Corps as an alternative remedial measure. Hence, there is no final agency action, in the literal sense, upon which review can be predicated.
Seven-Up Co. v. FTC, 478 F.2d 755 (8th Cir.), cert. denied, 414 U.S. 1013, 94 S.C.t. 379, 38 L.Ed.2d 251 (1973), recognizes exceptions to the finality requirement regarding interim agency actions that violate constitutional immunities or rights and statutory requirements. Manifestly no statutory requirements or constitutional immunities or rights of the Council have been violated by the ongoing action of the Corps in the premises, nor can reasonable delay in a final decision concerning the proper remedy for the erosion be considered a final denial of all relief. Compare Environmental Defense Fund, Inc. v. Hardin, 138 U.S.App.D.C. 391, 428 F.2d 1093 (1970).
The Council’s cause under federal common law of nuisance has been abandoned on appeal.
We conclude that the record produced in support of the allegations of Count II present no genuine issues as to any material fact and that the Secretary is entitled to a judgment as a matter of law. The District Court did not err in granting the summary judgment.
We return to the consideration of the Council’s prayer for Writ of Mandamus under the allegations of Count I.
The Council speaks of § 426i with a forked tongue. Under its Count II (APA review), they speak of the statute as authorizing discretionary decisions to the Secretary, while at the same time and citing a series of statutes they contend under their Count I (Mandamus) that the section imposes a peremptory duty and obligation to decide to modify the harbor structures. None of the statutes cited governing the activities of the Corps nor other federal statutes of general applicability creates such a simplistic, peremptory duty. All statutes cited by Council, except § 426i are inapposite to the erosion problem at issue in this litigation. 33 U.S.C. § 540 merely vests continuing jurisdiction over improvements in navigable waters in the Secretary and the Corps. 33 U.S.C. § 577 authorizes an emergency fund for flood protection works. 33 U.S.C. §§ 426, 426e and 426g do authorize the Corps to undertake small shore and beach restoration projects in conjunction with local governments. But these statutes expressly leave the determination of whether to proceed with such projects to the discretion of the Corps.
The House Committee Report states that the purpose of § 426i is to enable the Corps to take remedial action if an existing navigation project creates erosion damage. H.Rept.No.1709, 90th Cong., 2d Sess. 58-59 (1968). The report expressly approves the Corps’ policy of including erosion mitigation measures in plans for new navigation projects, and describes the bill as a measure to extend that policy to existing projects. Thus, the legislative history shows that § 426i was not enacted to limit the Corps’ discretion, but, on the contrary, to permit the Corps to apply its expertise and discretion to the problem of erosion damage caused by existing navigational structures.
Section 426i is applicable to the erosion problem of the Dunes, but Council must bear in mind that the Secretary is limited to the first costs of less than One Million Dollars in any action he may decide to direct in alleviating the erosion problem. The Corps estimates the cost of any reasonably effective erosion prevention course of action at many times that limit. Congress bears the brunt of the problem with well considered expertise and advice of the Corps.
The parties have cited no judicial interpretation or construction of § 426i nor has our independent search found any. We hold that the language of § 426i and the congressional intent in enactment grant and authorize only discretionary decision of action or non-action on the part of the Secretary, acting through the Corps, in the premises. No clear, plainly defined and peremptory duty on the part of the Secretary is spelled out or, by any stretch, to be garnered inf eren tially upon which a Writ of Mandamus to comply can be predicated.
We conclude from the record presented that there are no genuine issues as to any material fact and the Secretary is entitled to a judgment as a matter of law. The District Court did not err in granting the summary judgment on Count I.
The memorandum opinion of the District Court entered on May 10, 1977, granting the Secretary’s motion for summary judgment and the judgment entered thereon are each affirmed.
AFFIRMED.
. 33 U.S.C. § 426i provides:
“The Secretary of the Army, acting through the Chief of Engineers, is authorized to investigate, study, and construct projects for the prevention or mitigation of shore damages attributable to Federal navigation works. The cost of installing, operating, and maintaining such projects shall be borne entirely by the United States. No such project shall be constructed without specific authorization by Congress if the estimated first cost exceeds $1,000,000.” (Emphasis added.)
The term “first cost” is defined as all costs for investigation, design, and construction incurred subsequent to transmittal of a Reconnaissance Report to the Office of the Chief of Engineers for approval. 33 C.F.R. 263.15(b)(1).
. The lengthy delay between submission of the Corps’ motion and decision was apparently occasioned by retirement of the judge originally assigned to the case and reassignment of the case.
. Michigan City Harbor is located at approximately mile 523 on the shoreline; the border of the Dunes is at approximately mile 524, one mile west. The base point for these mile figures is undisclosed. A Northern Indiana Public Service Company installation is located on the intervening land.
. Section 702 in its pertinent part provides:
“A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof. . . . Provided, That any mandatory or injunctive decree shall specify the Federal officer . . . (by name or by title) . .
Section 706 in its pertinent part provides:
“The reviewing court shall—
“(1) compel agency action unlawfully withheld or unreasonably delayed; and
“(2) hold unlawful and set aside agency action, findings and conclusions found to be—
“(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
“(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;”
. See Holmes v. United States Board of Parole, 541 F.2d 1243, 1247 n.5 (7th Cir. 1976); Lovallo v. Froehike, 468 F.2d 340, 343 (2d Cir. 1972), cert. denied, 411 U.S. 918, 93 S.Ct. 1555, 36 L.Ed.2d 310 (1973).
. For this reason, the question of whether the Corps’ proposed plan for remedial action is in accordance with Corps’ regulations should be postponed until final action is taken. It should be noted, however, that one of the regulations cited by Council applies to Small Beach Erosion Control Projects, 33 U.S.C. § 426g, and not to § 426i. Projects undertaken pursuant to § 426g involve cost sharing with local governmental units.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HUTCHESON, Circuit Judge.
The order appealed from was entered in the composition proceedings the City of Avon Park had filed on August IS, 1938. By it appellants were, on December 1, 1941, summarily ordered to replace in the interest and sinking fund of the city, the sum of $65,715.20, which had been collected by a tax for the establishment of the sinking fund for the payment of principal and interest on the City of Avon Park, Florida, refunding bonds, issue of 1937. This order was issued under these circumstances. After the issuance on December 31, 1940, of the mandate of the Supreme Court, the district judge, on March 24, 1941, ordered the City of Avon Park, through its mayor, the commissioners, and the clerk, and all other custodians of official city records, involving moneys received or paid out, and R. E. Crummer & Company, fiscal agent of the city to appear before -the court for the purpose of giving the court their respective views as to the further course the proceeding herein should take, and to submit verified statements showing the condition of debt service funds of the city. It was further ordered “that jurisdiction of the case be retained for the purpose of making such orders as may appear appropriate after the facts have been made available.”
Thereafter testimony was taken as to the status of the composition proceedings, as to whether another feasible plan could be submitted, and as to the withdrawal from the sinking fund, and use by the city council, for other purposes, of sums accumulated for the refunding bonds since the filing of the petition. The evidence showing that no feasible plan of composition could be proposed and carried out, and it showing too that the refunding plan having failed, the city council had withdrawn from the sinking fund, the moneys raised to service the refunding bonds under the plan, and had expended them in part for enlarging the facilities of the airport and in part for general municipal purposes, the district judge inquired what there was to be done. Whereupon Mr. Davis, representing the city, stated that the only thing the court could do, would be either to obtain an amended or modified plan of composition or dismiss the proceedings. “If there is not a plan offered by the city then the court can do nothing but dismiss the proceedings.” Mr. Pleus representing Crum-mer & Company then said, “The question before the court is whether or not this court is going to protect its jurisdiction in bankruptcy to the very limit it can go toward rehabilitating the fund which has been dissipated while this court had jurisdiction of the fund, and it is our opinion that the court in protecting its bankruptcy jurisdiction and powers, should require whoever took the funds to restore them.” Thereafter, on August 4, 1941, the district judge issued a show cause order returnable September '15, 1941, to appellants, the present, city commissioners, the prior city commissioners, the contractor, for the airport and his surety, the Barnett Bank and the City of Avon Park.
Appearing to this order appellants and the city answered that upon the coming down of the mandate of the Supreme Court, the court had no further duty in the premises except. to dismiss the cause, and that unable to devise any plan to substitute for the one which was rejected, the commissioners and the city, in the exercise of its and their governmental powers, had deemed it right and' proper, the plan having failed, to expend the sums, which had been collected solely for the refunding bonds if the plan should be approved, and they did expend them in the interest of the city and its people. They further answered that the plan did not require or contemplate that they should be deposited in or with the court, and no order was at any time entered by the court with respect to them until after the plan had' failed and that the plan, not having gone beyond the interlocutory stage, they were never in the custody of the court but always in the custody of the city in its governmental capacity and in the management of its fiscal affairs. There was a further answer that all of the moneys in question had been expended either on the improvement of the airport or for the necessary operating expenses of the city, that the commissioners have never had and neither they nor the city have now, any of said moneys.
The Barnett Bank answered, denying that the funds were in custodia legis, denying that it at any time conspired with the city or its officials, and alleging that it had done nothing with the funds on deposit with it except to pay them over to the city on the check of its proper officers. The hearing concluded, the district judge, on December 1, 1941, entered the order appealed from. This order exonerated the bank from the charges of conspiracy and misapplication of funds, and discharged it from the rule, ordered the appellants to pay the $65,715.20, discharged all of the others cited except the prior city commissioner as to whom decision was. postponed, ando the.,City of Avon Park, as to whom no order was made.
Here appellants, urging that the moneys in question were not in custodia legis but were in the control of the city and its officers and that the plan for the issuing of the refunding bonds having failed, they were lawfully expended under the authority of section 1, Chapter 15907, Acts of 1933, insist that the judgment against them should be reversed. Crummer & Company, on its part, urging that the diverted funds were in custodia legis, that the invoked statute is without application, and that the Barnett Bank, in permitting appellants to withdraw the funds from the sinking fund deposit, were liable as for conversion of them, insists that the judgment, as to appellants, should be affirmed and that on its cross appeal the judgment as to the Barnett Bank should be reversed.
We do not think so. In Leco Properties v. Crummer, 128 F.2d 110, this day decided, we have pointed out the nature and extent of, and the limitations upon, the jurisdiction of the court of bankruptcy in a municipal composition proceeding. Here, unlike there, the city not only is not consenting, after the failure of the plan, to the exercise of jurisdiction over its funds, but is resisting and denying that jurisdiction. Here, unlike there, instead of the order of the court distributing, with the consent of the city, moneys gathered into the debt service funds, since the filing of the petition and still there, the order of the court seeks to call the city and its duly elected officers to account as to, and to control the exercise of, the fiscal affairs and governmental functions of the city.
In the Bekins case, United States v. Bekins, 304 U.S. 27, 50, 58 S.Ct. 811, 815, 82 L.Ed. 1137, the Supreme Court construed Section 403, under which this petition was filed, as not operating to restrict the city’s control over its fiscal affairs, but as leaving it “free to manage [its] own affairs.” The show cause order directed the city to show cause why it should not sell part of its municipal property and place the proceeds in the custody of the court, and, while no summary order has been entered on this portion of the show cause order, the summary order appealed from, held the city officers personally accountable for the city’s moneys spent on the city’s behalf, and thus undertook drastically to control and direct the actions of the city and its officers in regard to its fiscal affairs. We think that this will not at all do. In the first place there is much to be said for appellants’ contention that the use they made of the funds was justified under the Florida statute they invoke. Without, however, undertaking to determine that, we think it plain that the bankruptcy court was without jurisdiction to enter the order complained of. The funds in question had not been deposited in, or otherwise brought into the actual custody of, the court. They had been collected under a tax levy for the sole purpose of establishing a sinking fund for the payment of principal and interest on the refunding bonds provided for in the plan, and if the plan had been carried through, these funds and the refunding bonds would, under the statute, have been deposited with the court or such disbursing agent as the court might appoint or otherwise made available to the creditors, and the city would have received a discharge from the debts which the refunding bonds were issued to take up. The plan failing, these funds, collected and deposited in a special fund for taking care of the refunding bonds under the plan and for no other purpose, were no longer subject to the proposal of the plan but were freed therefrom, and were, thereafter, subject exclusively to the city’s control under applicable Florida law. Whatever accountability therefore, the appellants may be under to the city for their use of the funds, as its officers on its behalf, that accountability was not to the court of bankruptcy or to be settled in a summary proceeding therein.
It follows therefore that the order is affirmed as to the appeal of R. E. Crummer and Co., and reversed on the appeal of appellants, Ware and others, with directions to discharge the appellants and the city from the rule.
Affirmed in part and reversed in part.
Chap. 10, Title 11 U.S.C.A. § 40Í et seq.
The city’s composition was a refunding plan worked out by it and its fiscal agent, R. E. Crummer & Comp*ny. The district court entered an interlocutory .decree confirming the plan. This court, American United Mutual Life Ins. Co. v. City of Avon Park, 108 F.2d 1010, affirmed. The Supreme Court, 311 U. S. 138, 61 S.Ct. 157, 85 L.Ed. 91, 336 A.L.R. 860, finding .the plan discriminatory in favor of Crummer & Company, and that the confirmation of it mast be set aside, reversed the order and remanded the cause to the district court.
This tax was collected under City Ordinance No. 228, enacted October 15, 1940, for the levying of a tax, “for the operation and conduct of the several departments and the payment of the operating expenses, and for the payment of tbe debt service of the city and for other purposes.” The tax for debt service was levied “for the establishment of a sinking fund for the payment of principal and interest on tbe City of Avon Park, Florida, refunding bonds, issue of 1937, in accordance with the resolution of December 14, 1937, authorizing the issuance of said refunding bonds which said taxes, when collected shall be deposited in a special fund and distributed for the purpose above mentioned and for no other purpose.”
Showing: (1) The amount of moneys in each separate debt service as of the date of the filing of the petition; (2) a statement of all collections on account thereof received subsequent thereto; (3) a statement of all disbursements made from the debt service funds; (4) a statement of cash balances therein.
The order recited that it appeared from the testimony that there had .been a wrongful diversion of debt service fund monies; that of such diversion, a part of it was expended upon an airport owned and established by the city in its proprietary capacity; that the monies involved and diverted were assets and resources of the bankrupt municipality which had come within the jurisdiction of the court and which were in custodia legis and that the court has power and authority to require the replacement of the funds. It was therefore ordered, that appellants, the bank, appellee under the appeal of Crurn-mer & Company, and the others named above, show cause why they should not return- to the sinking fund the monies they were responsible for diverting, that the city show cause why it should not sell the airport and put the proceeds of the sale in the sinking fund, and that the city officials show cause why they should not be punished for contempt. And it was further provided:
“11. That all injunctive orders heretofore entered in any manner enjoining or restraining suits or actions against the petitioner on account of securities affected by the Plan, or to enforce any such securities or judgments obtained thereon, be and the same are .hereby dissolved, and shall be of no further force or effect; nor shall the continued pendency of these proceedings in any manner preclude the filing or prosecution of any such suits, actions or enforcement proceedings : Provided, however, that jurisdiction is hereby specifically retained over all present monies in the debt service fund accounts of the City of Avon Park, and any monies which may be placed therein as a result of compliance with future orders of the court in this ease, and any debt service tax collections realized before the end of the present fiscal year; and the court will, át the proper time and after notice to creditors, enter its order providing for an equitable disposition of such funds; and s'aid funds now on hand, or to be so replaced or realized, as aforesaid, shall1 in no manner be the subject of any suit dr action to enforce any securities affected by the Plan of ¿Composition herein, or judgments obtained thereon.
“12. That this 'cause is hereby continued as a pending proceeding, and this court specifically retains jurisdiction for the purpose of entering any and all orders that may appear to be necessary hereafter.”
“Section 1. All funds heretofore or hereafter raised or created by any county or taxing district for the purpose of applying toward the payment of interest or principal of refunding bonds of such county or taxing district, when such refunding bonds are not issued and such funds not otherwise lawfully disposed of shall revert back to the county or special taxing district to be used by the governing body or board of such county or taxing district for such general and lawful purposes of the county or taxing district raising such funds as in the judgment and discretion of such governing body or board shall seem to the best interest of the county or taxing district.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LINDLEY, Circuit Judge.
Plaintiff, an Illinois corporation, instituted suit in the District Court, charging defendant, a New York corporation, with infringement, by the .publication of its magazine, “Taboo,” of plaintiff’s registered trade marks of “Tabu” and “Taboo.” After purported service of process, defendant moved to dismiss because of improper venue and to quash the service of process because of alleged insufficiency. The court allowed both motions, and from the resulting judgment, plaintiff prosecutes this appeal.
Both motions were decided upon affidavits submitted by the respective parties and certain exhibits attached thereto. The facts are undisputed; the only controversy here is as to their ultimate legal effect.
Defendant publishes a magazine bearing the trade mark “Taboo” and the legend that it is published bi-monthly 'by D-A Publishing Company, Mount Morris, Illinois and is entered as second class mail matter at Mount Morris. The magazines are printed, addressed and deposited in the mail at Mount Morris by Kable Company, under a contract with defendant whereby the latter forwards from New York and elsewhere all the material going into them, including written matter, photographs, drawings and engravings. Kable makes the necessary electrotypes from patterns furnished by the publisher. All the material supplied by defendant is sent to Kable from outside the state of Illinois and then set up for printing at Mount Morris. After defendant has read the proof, the magazines are printed and bound at Mount Morris and thereupon become the property of defendant. Some of the magazines are sent to newstands through the mails; others are addressed to individuals as subscribers. Kable wraps, labels and delivers them to the Post Office for mailing to the separate consignees. Various materials are deposited by defendant with Kable at Mount Morris under an agreement whereby they are to remain the property of defendant, though in the possession of Kable; the latter is absolved from liability for damage to or loss of these wares.
Under 39 U.S.C.A. § 226, a publication is admitted to second class mail matter under certain conditions, one of which is that it must be issued from a known office of publication. Under Section 34.25, Postal Laws & Regulations, a known office of publication is an office where the business of the newspaper or periodical is transacted during the usual business hours and such office must be publicized by the publication itself. In accord with the statute and regulations, defendant designated Mount Morris as the public office where its business is transacted during its usual business hours. A subscription was sent from Ohio to the D-A Publishing Company at Mount Morris by registered mail. This letter was accepted by Kable Bros. Company and the subscription forwarded to the New York office and there accepted.
Upon the foregoing facts the District Court held that defendant was not doing business within the state of Illinois. Our question is whether this was the correct decision upon the facts. The Supreme Court of the United States, in International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 158, 90 L.Ed. 95, in an authoritative opinion, considered a somewhat similar situation. After pointing out that historically the question of jurisdiction of the court to render judgment in personam has depended upon the question of whether the defendant is so present within the territorial jurisdiction of the court as to make its judgment personally binding upon him, the court added: “due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Accordingly our question, further narrowed, is whether the contacts of defendant here are such as to satisfy the requirements defined by the Supreme Court. Obviously, as the court said, the presence of the corporation “can be manifested only by activities carried on in its behalf by those who are authorized to act for it.” As the court commented, to the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state and that privilege, in turn, may give rise to obligations and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. The court added that presence in the state in this sense has never been doubted when “the activities of the corporation there have not only been continuous and systematic, but also give rise to the liabilities sued on, even though no consent to be sued or authorization to an agent to accept service of process has been given.” The requirements for jurisdiction, the court said, “may be met by such contacts of the corporation with the state of the forum as make it reasonable, in the context of our federal system of government, to require the corporation to defend the particular suit which is brought there.” In the later case of Travelers Health Ass’n v. Com. of Virginia, 339 U.S. 643, 70 S.Ct. 927, the court distinguished certain earlier cases and repeated the language first above quoted from the International Shoe Company case.
In other words, the rule, as the Supreme Court has defined it, seems clear that the defendant must have certain minimum contacts within the territory of the forum of such character that the maintenance of the suit does not offend traditional ideas of fair play and substantial justice. True it is, as Mr. Justice Minton says in his dissenting opinion in the Travelers case, 339 U.S. at page 658, 70 S.Ct. at page 935: “How many ‘contacts’ a corporation or person must have before being subjected to suit we are not informed.” And likewise, true it is that Mr. Chief Justice Stone in the International Shoe Company case said: “It is evident that the criteria by which we mark the boundary line between those activities which justify the subjection of a corporation to suit, and those which do not, cannot be simply mechanical or quantitative. The test is not merely, as has sometimes been suggested, whether the activity, which the corporation has seen fit to procure through its agents in another state, is a little more or a little less. * * * Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.” In that case, though, as the court said, the defendant maintained no stock of merchandise in the State of Washington, made no delivery of goods in interstate commerce and had no office in Washington, yet its continuous solicitations of business were “systematic and continuous throughout the years” resulting in a large volume of interstate business in the course of which defendant received the benefits and protection of the laws of the state. The court said: “It is evident that these operations establish sufficient contacts or ties with the state of the forum to make it reasonable and just according to our traditional conception of fair play and substantial justice to permit the state to enforce the obligations which appellant has incurred there. Hence we cannot say that the maintenance of the present suit in the State of Washington involves an unreasonable or undue procedure.”
We think the facts of the present case are even stronger in support of jurisdiction of the non-resident corporation than they were in the International Shoe case. Here the New York corporation had made Mount Morris, Illinois, its place of publication in order to qualify with the postal department for mailing second class matter. It stored merchandise with its contractor, Kable, in Illinois, including paper and other materials to be used in printing the magazines. It sent to Kable drawings, reading matter, photographs and engravings, and employed Kable and thereby authorized it to set up the copy and to print the magazines in completed form. It contracted with and thereby authorized Kable from time to time, as the magazines were printed, to wrap them, to address them to defendant’s consignees and to deposit them in the mail addressed to such consignees. These activities were not casual, isolated or disconnected but continuous and connected, in plan and series. If we are to follow the Supreme Court, we can not avoid the conclusion that such activities necessitated contacts which were such, when these magazines were published and placed in the mail at Mount Morris bearing an allegedly infringing mark, as not to exempt defendant from service of process in Illinois. We think that these activities, their extent and their continuity, their nature and their effect, were such inevitably as to constitute doing business in Illinois and, therefore, to render the defendant subject- to suit in that jurisdiction.'
The functions of a magazine publishing company, obviously, include gathering material to be printed, obtaining advertisers and subscribers, printing, selling and delivering the magazines for sale. Each of these, we think, constitutes an essential factor of the magazine publication business. Consequently if a non-resident corporation sees fit to perform any one of those essential functions in a given jurisdiction, it necessarily follows that it is conducting its activities in such a manner as to be subject to jurisdiction. We think this is the inevitable conclusion from the cases cited as well as others, such as International Harvester Co. v. Com. of Kentucky, 234 U.S. 579, 34 S.Ct. 944, 58 L.Ed. 1479, Board of Trade v. Hammond Elevator Co., 198 U.S. 424, 25 S.Ct. 740, 49 L.Ed. 1111, Acton v. Washington Times Co., D.C., 9 F.Supp. 74, Clements v. MacFadden Pubis., Inc., D.C., 28 F.Supp. 274, State of Washington v. Superior Court, 1 Wash.2d 379, 96 P.2d 248, Clover Freight Lines v. Pacific Coast Ass’n, 7 Cir., 166 F.2d 626. Such a conclusion we think, is in accord with “traditional notions of fair play and substantial justice” and is not, therefore, approval of undue process.
Inasmuch as Kable had contracted to and was authorized to carry on activities at Mount Morris for the benefit of defendant, we think that there can he no question but that that corporation was endowed with authority as agent for the service of process. Of course, the corporation could be served only through its officers and, therefore, service was had upon one of the officials. This, we think was sufficient within the Illinois statute, Sec. 17 of the Illinois Civil Practice Act, Ill.Rev.Stat. 1949, c. 110, § 141, governing service of process.
The judgment is reversed with directions that the court vacate the order dismissing the suit and the order quashing service of process.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
PER CURIAM.
This is an employment discrimination case arising under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq. The gravamen of the complaint is that appellant Carol A. Waiters was discharged from her position as a social worker at the Veterans Administration Medical Center, Coatesville, Pennsylvania (“VAMC”), allegedly in'retaliation for having filed an informal EEOC complaint in 1978 and a formal EEOC complaint in 1979 against her superiors at VAMC, and for having testified in an EEOC proceeding brought by a fellow employee in 1981. This appeal is from a judgment of the district court dismissing the action on the grounds that appellant had failed to exhaust administrative remedies with respect to her discharge claim.
Under Title VII, a victim of discrimination may file a complaint in federal district court either (1) within thirty days of final action by the EEOC or the employing agency, or (2) after 180 days pass from the filing of the administrative complaint, if there is no final agency action. Where there is no final agency action, there is no limit on the time in which a suit may be filed in district court. 42 U.S.C. § 2000e-16(c). While appellant did not pursue administrative remedies with respect to her discharge, a review of the record makes clear that her claim that she was discharged in retaliation for filing EEO charges falls within the scope of the EEOC investigation which arose out of her 1979 formal complaint, which also charged retaliation against appellant for asserting her rights under Title VII but on which there was no final agency action. A victim of discrimination is not required to exhaust administrative remedies with respect to a claim concerning an incident which falls within the scope of a prior EEOC complaint or the investigation which arose out of it, provided that the victim can still bring suit on the earlier complaint. Since we conclude that appellant’s current claim falls within the scope of the prior investigation, and that appellant would be entitled to sue on the complaint that led to that investigation, appellant was free to bring this suit without further exhausting her administrative remedies. We therefore reverse the judgment of the district court and remand for further proceedings.
I.
Appellant was hired as a clinical social worker at VAMC in 1971. She had been a federal employee since 1964. In March 1978, appellant filed an informal EEOC complaint against Joseph A. Armstrong, Chief of the Social Work Service at VAMC, alleging that the promotion of a male employee to a GS-11 position in a newly established intensive treatment ward discriminated against her on the basis of her sex. She withdrew the complaint after mediation, which resulted in her being given a position in the new program. Appellant felt, however, that she was a victim of continuing discrimination, primarily because VAMC was inhospitable to her ideas concerning education of medical students. Thus, on August 10, 1979, appellant filed a formal complaint with the EEOC alleging continuing discrimination in retaliation for her filing of the 1978 informal complaint.
After an investigation, the district director of the EEOC found that there was support for appellant’s allegations, and recommended that the VAMC official responsible be “admonished in writing,” that all supervisory personnel at VAMC be given “[r]e-training and re-emphasis of EEO law, principles, procedures, and policy,” and that VAMC “[cjease and desist from committing any discriminatory act’s [sic] against [appellant] for having filed a [sic] EEO complaint____” However, no further action was taken by the EEOC, appellant’s complaint was never finally adjudicated by the agency, and no right to sue letter ever issued.
Subsequently, appellant became involved in an attempt to implement a program for Vietnam veterans at VAMC. Although the program proposal was never adopted, appellant became closely involved with many of the veterans and organizations working on their behalf. One of the veterans charged that appellant had made sexual advances toward him. These charges led to an investigation of appellant’s conduct. On November 12, 1981, as a result of the investigation, appellant was notified of her proposed removal, based on numerous allegations of misconduct. Appellant, through her attorney, replied to the allegations in writing on December 11, 1981, and apparently appeared before appellee Parsons, VAMC’s Medical Director, on December 14. On December 23, 1981, Parsons wrote appellant notifying her of her discharge.
Appellant did not thereupon pursue any administrative remedies before the EEOC or the Veterans Administration. Rather, on January 8, 1982, appellant filed a complaint in the District Court for the Eastern District of Pennsylvania under Title VII of the 1964 Civil Rights Act and under 42 U.S.C. §§ 1981, 1983. The complaint alleged that her discharge was motivated by defendant’s desire to retaliate against appellant for exercising her rights under Title VII. The complaint requested a temporary restraining order, which the district court denied. An amended complaint, based on the same allegations and requesting a preliminary injunction, reinstatement, and damages, was filed on January 14. After a hearing, the preliminary injunction was denied.
Subsequently, appellant appealed her dismissal to the Merit Systems Protection Board (“MSPB”). The MSPB ordered the sanction reduced to a sixty-day suspension. On February 28, 1983, the district court dismissed appellant’s complaint on the grounds that she had failed to exhaust her administrative remedies. This appeal followed.
II.
The district court dismissed the present action on the grounds that there was no federal court jurisdiction because the plaintiff had not filed a complaint with the EEOC prior to bringing this action. After the district court ruled, the Supreme Court held that the timely filing of a complaint with the EEOC is not a jurisdictional prerequisite to bringing suit in federal court under Title VII. Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 392-98, 102 S.Ct. 1127, 1131-35, 71 L.Ed.2d 234 (1982). Standing alone, Zipes would require that we vacate the district court’s decision and remand the case for reconsideration of whether the doctrines of waiver, estoppel, or tolling should be applied. We decline to base our decision solely on Zipes, however, because we find that there are alternative grounds fairly raised on this appeal that enable us to dispose of the appeal without requiring that the district court now determine whether the exhaustion requirement has been excused on one of the grounds referred to in Zipes.
III.
In general, before filing a Title VII suit, a federal employee charging an employer with discrimination must file a complaint with the EEOC, and allow 180 days to pass during which the EEOC will attempt to resolve the dispute without resorting to litigation. At the end of the 180 day period the employee is entitled to sue, regardless of the pendency of EEOC proceedings. The statute of limitations begins to run, however, only in the event that there is “final agency action.” Final agency action can take the form of a “right to sue” letter, in which the agency states that it sees no reason to take action, or can consist of an agreement reached between the employing agency and the EEOC. See 42 U.S.C. § 2000e-16.
Where discriminatory actions continue after the filing of an EEOC complaint, however, the purposes of the statutory scheme are not furthered by requiring the victim to file additional EEOC complaints and re-starting the 180 day waiting period. This court has recognized this fact in permitting suits based on new acts that occur during the pendency of the case which are fairly within the scope of an EEOC complaint or the investigation growing out of that complaint, without requiring the victim to file additional EEOC complaints and wait another 180 days to sue. See Hicks v. ABT Associates, 572 F.2d 960, 966 (3d Cir.1978); Ostapowicz v. Johnson, 541 F.2d 394, 399 (3d Cir.1976), cert. denied, 429 U.S. 1041, 97 S.Ct. 741, 50 L.Ed.2d 753 (1977). See also Gupta v. East Texas State University, 654 F.2d 411 (5th Cir. Unit A 1981). The rationale behind these decisions is that once the EEOC has tried to achieve a consensual resolution of the complaint, and the discrimination continues, there is minimal likelihood that further conciliation will succeed. This slim likelihood of successful conciliation does not justify forcing the victim to wait an additional 180 days to file suit. The relevant test in determining whether appellant was required to exhaust her administrative remedies, therefore, is whether the acts alleged in the subsequent Title VII suit are fairly within the scope of the prior EEOC complaint, or the investigation arising therefrom. See Hicks, 572 F.2d at 965-66; Ostapowicz, 541 F.2d at 398-99; Gamble v. Birmingham Southern Railroad Co., 514 F.2d 678, 689-90 (5th Cir.1975).
IV.
The appellant’s formal complaint charged “retaliation” for the filing of her informal complaint a year earlier. Although the specific incident which was the basis of the formal complaint was the “restricted implementation of suggested proposals regarding education of medical students,” the EEOC district director concluded that a pattern of events that occurred after the filing of the informal complaint demonstrated that officials at VAMC “retaliated” against appellant for filing the informal complaint. The remedies recommended by the district director all focused on avoiding further discriminatory acts. The investigation clearly went beyond the specific problem alleged in the formal complaint, and found evidence of retaliatory intent in a pattern of actions by the official of VAMC.
Appellant alleges that her discharge was the product of this same retaliatory intent. The government responds that the different circumstances in this case — different officials are alleged to be responsible for the allegedly discriminatory acts, more than thirty months passed between the formal complaint and the discharge, and the alleged retaliatory acts are of a different nature — preclude us from holding that the claim based on the discharge is within the scope of the investigation that arose from the formal complaint. While it is true that the allegedly discriminatory officials and acts are different, the core grievance — retaliation—is the same and, at all events, it is clear that the allegations of the appellant’s complaint fall within the scope of the district director’s investigation of the charges contained in the 1979 formal complaint. Under these circumstances, the policy of promoting conciliation would not be furthered by allowing the defendants to delay having to answer in court for retaliatory action allegedly taken against appellant for asserting her rights. See Weise v. Syracuse University, 522 F.2d 397, 399, 412 (2d Cir.1975).
We hold that this suit is not barred by the requirement that a complainant exhaust administrative remedies before commencing legal action. We will therefore reverse the judgment of the district court and remand for further proceedings.
. The facts set forth herein are essentially uncontradicted.
. The district director’s findings, in relevant part, were:
Evidence gathered by the Commission in the form of sworn witness testimony shows that following complainants [sic] reassignment to the new position, complainant was subject to harassment by the A.D.O. [allegedly discriminatory official]. Witness testimony shows that the A.D.O. felt complainant questioned and contradicted him by pursuing the informal EEO complaint. Subsequent to the re-assignment to the position complainant sought, an effort was made to remove complainant from the Student Education Committee. The size of the committee was reduced from 8 to 7 members. The committee determined that complainant had the highest number of unexcused absences according to the administrative record. The complainant was identified as the member to be rotated off the committee for the year July 1, 1979 to June 30, 1980. Subsequently, a committee member resigned and complainant was allowed to stay. As a result of the harassment experienced by complainant, she was forced to by-pass the channeling process in an attempt to ensure that her proposals were received by appropriate individuals____
Since the complainant was subjected to harassment after the informal EEO complaint was brought to the attention of the A.D.O., and since the agency offers no explanation which bears scrutiny for the differential treatment received by the complainant, it is reasonable to conclude that complainant was discriminated against because she opposed practices made unlawful by Title VII.
. The record does not include any record of proceedings before the EEOC, VAMC, or the Merit Systems Review Board. A hearing scheduled for December 14 before Parsons is referred to by appellant's attorney in his December 11 letter.
. The reasons given for appellants' discharge were:
1. Violations of the privacy of patients, whose cases appellant allegedly discussed with a representative of a local Vietnam veterans organization.
2. Refusal to testify before the V.A. investigatory panel.
3. Making statements to persons outside the V.A. unfavorable to and "contrary to the best interests of” the V.A.
4. A statement of a patient concerning the charges of sexual misconduct made against appellant by another patient.
5. Various statements and conversations with patients involving sexual matters.
6. "Unprofessional” conduct also involving sexually oriented conversations or physical contact with patients.
. The district court found that appellant would not suffer irreparable injury because her injury could be compensated by a backpay award, and that her likelihood of success on the merits "was somewhat remote.” Waiters v. Parsons, No. 82-0088 (E.D.Pa. January 20, 1982).
. In the wake of that order, this case involves only appellant’s claim for backpay for the sixty-day suspension period, and her claim for counsel fees.
. Although the district court's order does not explain why the claims under 42 U.S.C. §§ 1981 and 1983 were dismissed, we affirm that part of the order on the basis that, in the employment discrimination context, a federal employee’s sole federal remedy is under Title VII. See Brown v. General Services Administration, 425 U.S. 820, 835, 96 S.Ct. 1961, 1969, 48 L.Ed.2d 402 (1976).
. In the case of an employer other than the federal government, a complaint must first be filed with the state agency charged with enforcing the laws against employment discrimination, if one exists. 42 U.S.C. § 2000e-5(c) and (d).
. After a federal employee has exhausted her remedies within the employing agency, she must file a complaint with the EEOC. The EEOC refers the complaint to a hearing examiner, who will hold an informal "pre-hearing conference” to attempt to settle the issue. If no agreement can be reached, the complaint proceeds to a formal, adversary hearing within the EEOC.
The statutory scheme reflects an attempt to balance the competing values of protecting the right of employees to nondiscriminatory treatment, and of avoiding the cost of litigation over discriminatory employment decisions that might be rectified by a consensual agreement. The favored means of resolving employment discrimination disputes is a mutually acceptable resolution, worked out informally under the aegis of the EEOC.
. The Fifth Circuit has held that all claims of "retaliation” against a discrimination victim based on the filing of an EEOC complaint are "ancillary” to the original complaint, and that therefore no further EEOC complaint need be filed. Gupta, 654 F.2d at 413-14. We decline to adopt this per se rule.
. See supra note 2.
. The summary judgment cannot be affirmed on the alternative ground that there are no disputed issues of material fact. The unresolved issue in this case — the intent of the VAMC officials in discharging appellant — is particularly unsuitable for disposition on summary judgment.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Defendant-appellant Felice was indicted on 12 counts of racketeering and embezzling of union funds. Nine of the counts were dismissed by the District Judge on defendant’s motions for acquittal, and the jury found appellant guilty on Count 12 only, involving embezzlement of $332.80 from the union’s Health and Welfare Fund. This issue is the sole subject of the appeal.
The facts show that Felice had purchased a woman’s ring while in Hawaii at a Teamsters Union Conference, and had paid for it by charging it on his American Express card. The American Express bill was mailed to his union office and the union bookkeeper paid it from union funds, according to her testimony, at a time when she was unable to ask Felice about it. This expenditure was, however, approved at an executive board meeting of the Local while Felice was presiding. Defendant’s basic argument is that American Express had made a mistake by listing the place of purchase as “La Galleria Original” rather than “Pex of Hawaii,” and that the bookkeeper had made a mistake in paying it by union check. Appellant also claims that he was deprived of a proper charge reflecting his mistake defense when the District Judge did not submit the charge on that subject which his counsel had submitted.
In answer to all of the above the government argues that the evidence shows defendant’s personal participation in approving payment by the union’s Health and Welfare Fund of the ring purchase, and that the District Judge gave strong instructions on the government’s burden for proving beyond reasonable doubt “that Mr. Felice had a fraudulent intent to deprive the union of its funds” and “to act with intent to defraud means to act willfully and with specific intent to deceive or cheat” and that “he did so with fraudulent intent to deprive the union’s Health and Welfare Fund of its funds.”
On review of this record we find that the charge taken as a whole was ample to protect defendant against conviction for any reason other than intentional fraud, and that the evidence was sufficient to support the jury verdict.
The judgment of conviction is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
TENNEY, District Judge:
This is an application for enforcement and a cross-petition for review of an order of the National Labor Relations Board (“NLRB” or “Board") against Aces Mechanical Corp. (“Aces”). The Board’s order charges that Aces violated section 8(a)(1) of the National Labor Relations Act (“Act”), 29 U.S.C. § 158(a)(1) (1982), by threatening to dismiss employee Steven J. O’Toole (“O’Toole”) for insisting on his alleged right to be shop steward, and that Aces violated section 8(a)(3) and (1) of the Act, 29 U.S.C. § 158(a)(3) and (1), by conditioning O’Toole’s employment upon his relinquishment of his claim to be shop steward. The Board ordered that Aces cease and desist from such practices and that it make O’Toole whole for losses suffered as a result of those practices.
The central issue on this appeal is whether the Board should have deferred to a prior arbitral decision. For the reasons that follow, we find that the Board should have deferred, and consequently, we deny enforcement.
Background
In March 1982, Aces hired O’Toole as a journeyman plumber at the Dag Hammarskjold Towers project in New York City. Shortly thereafter O’Toole was appointed shop steward by Stratis Scarlatos (“Scarlatos”), the business agent of Local 2 of the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States and Canada, AFL-CIO (“the Union”). The effective collective bargaining agreement required the appointment of a steward where more than four men were employed at plumbing work. The steward was to be a competent working journeyman plumber whose function was to notify the union business agent when disputes arose on the job. It was the steward’s duty to insure compliance with the sanitary and safety provisions of the collective bargaining agreement. In addition, he was to work as a plumber. More particularly to the present case, the steward was to be appointed by the union business agent “from the employees on the job.” If it was necessary to replace a steward, the selection was also to be made by the business agent. A steward was subject to the same rules and regulations as other journeymen but could only be removed for violation of the collective bargaining agreement or incompetency.
On September 17, 1982, O’Toole was discharged for job misconduct, including excessive drinking during working hours, unauthorized absences and lateness, being pugnacious and threatening to the job foreman and failing to perform his duties as a journeyman plumber. On September 20, 1982, the first work day after his discharge, O’Toole and the business agent Scarlatos met with the men on the job and, at Scarlatos’ suggestion, the men left the job but returned the next day at the request of William Gross (“Gross”), the president of the Union.
O’Toole having filed a grievance protesting his termination, a Joint Arbitration Committee of the Plumbing Industry met to hear testimony on November 3, 1982, but the members were deadlocked and the meeting was adjourned.
Later that same day Gross called Aces’s president Norman Burg (“Burg”) and asked him to rehire O’Toole. Burg initially refused but Gross advised him that he was having trouble with Scarlatos, that the men would leave the job and that he could not prevent it. Gross suggested to Burg that O’Toole would come back as a working journeyman and Burg, expressing concern over Aces’s liability on its performance bond if there was a strike, agreed to take O’Toole back as a working journeyman on a temporary basis pending the final arbitral determination. Burg asked Gross to tell O’Toole that he would not be the shop steward. Burg also advised the foreman and superintendent that O’Toole would return to work as a journeyman plumber but not as shop steward.
When O’Toole returned to the jobsite on November 4,1982, the foreman advised the other plumbers that O’Toole was returning as a journeyman plumber and not as shop steward and advised O’Toole that if he felt he was still steward he would not be permitted to work. O’Toole disputed his status but was unable to reach Scarlatos so he worked the remainder of November 4 without incident.
On November 5, 1982, Scarlatos went to the jobsite and met with the superintendent who told him that O’Toole could work as a plumber but not as shop steward. When Scarlatos disputed this, O’Toole was called to the scene and shortly thereafter Burg arrived. Burg told Scarlatos that, according to Gross, O’Toole would not be shop steward pending the outcome of the arbitration. Scarlatos and O’Toole then met with the journeymen precipitating a work stoppage, lasting from November 5, 1982 to November 17, 1982, which was terminated only after legal action on Aces’s behalf was commenced against the Union, Scarla-tos and Gross.
While the work stoppage was in progress and on November 12, 1982, O’Toole filed a charge against Aces with the Board alleging that O’Toole was discharged on September 17,1982 because he was engaged in protected concerted activity on behalf of the Union.
Due to the deadlock in the joint arbitration committee it was necessary for arbiters to be appointed in accordance with the collective bargaining agreement. Meetings of the three arbiters were held on February 9, 1983 and February 28, 1983, at which time they found that there was just cause for O’Toole’s discharge. A final award in favor of Aces was rendered on March 7, 1983. The minutes of the meetings of February 9 and 28 clearly show that the arbiters were presented with and considered evidence relating to O’Toole’s return to work on November 4 and 5, 1982.
On July 9, 1984, approximately sixteen months after the award in Aces’s favor, the Regional Director of the Board determined that the Board would defer to the arbitration award with respect to O’Toole’s discharge on September 17, 1982. However, although O’Toole had only filed a charge with the Board relating to the September 17, 1982 discharge, it issued a complaint against Aces on July 25, 1984 based on the alleged discharge of O’Toole On November 5, 1982.
The hearing of the complaint was conducted by an Administrative Law Judge (“AU”) who found in favor of Aces. The AU advanced two reasons for his decision: (1) the arbitral award of March 7, 1983 should be deferred to, and (2) the events of November 4 and 5, 1982 did not constitute a violation of section 8(a)(3) and (1) of the Act.
The Board, however, concluded (the chairman dissenting) that Aces violated section 8(a)(1) of the Act (29 U.S.C. § 158(a)(1)) in that it implicitly threatened O’Toole with discharge by telling him he could not continue to work if he insisted on his right to act as shop steward, and violated section 8(a)(8) and (1) of the Act (29 U.S.C. § 158(a)(3) and (1)) by conditioning his continued employment upon relinquishing his right to act as shop steward.
The order of the Board requires Aces to cease and desist from the unlawful conduct found and from, in any like or related manner, interfering with, restraining or coercing employees in exercise of their rights under section 7 of the Act (29 U.S.C. § 157). The order further affirmatively re- ' quires Aces to compensate O’Toole for any loss of earnings and benefits suffered as a result of its discrimination against him from November 5, 1982 until March 7, 1983.
Discussion
The Board found that there was no waiver of O’Toole’s “right” to be appointed shop steward in November 1982. We do not reach that issue however for we find that the Board abused its discretion in refusing to defer to the arbitral decision.
The Board refused to defer to the arbi-tral decision after it concluded that the question before it was not “factually parallel” to the matters decided by the arbitral panel. In contrast, the AU had determined that the questions before the Board and the arbitral panel were “intertwined,” and that the arbitral panel necessarily had decided the question of the propriety of the November 5th discharge.
In Nevins v. NLRB, 796 F.2d 14 (2d Cir.1986), we determined that statutory and contractual issues are “factually parallel” if the arbiters’ decision on a threshold issue is such that the statutory claim cannot stand. Id. at 18. Here, the question decided by the arbitral panel was whether Aces had just cause to discharge O’Toole on September 17th. In light of the arbitral decision on this question—which held that O’Toole was discharged for just cause—it is clear that, according to the terms of the bargaining agreement, O’Toole was ineligible to serve as shop steward on November 5th since he was not “in good standing” as of that date.
We recognize that the Board enjoys wide discretion in deciding whether to defer to an earlier arbitral determination. Liquor Salesmen’s Union Local 2 v. NLRB, 664 F.2d 318, 326 (2d Cir.1981), cert. denied, 456 U.S. 973, 102 S.Ct. 2236, 72 L.Ed.2d 847 (1982). The enforceability of an NLRB order hinges on whether its decision constituted an abuse of administrative discretion. NLRB v. New York University Medical Center, 702 F.2d 284, 288 (2d Cir.1983), judgment vacated on other grounds, 464 U.S. 805, 104 S.Ct. 53, 78 L.Ed.2d 73 (1983). Although the Board may modify its internal guidelines, it cannot irrationally apply them.
The Board’s most recent articulation of the standard to be applied in determining whether the Board should defer to an arbitration panel is set forth in Olin Corp., 268 N.L.R.B. 573 (1984). The Board will defer if (1) the proceedings were fair, (2) all parties had agreed to be bound, (3) the legal conclusions were consistent with the goals of the Act, and (4) the statutory issues were factually parallel to the contractual issue. Id. at 573-74. This formulation reflects the inherent conflict between the Board’s policy of remedying unfair labor disputes and the encouragement of settling grievances through collective bargaining.
The ALJ applied the Olin test to the facts of the present case and concluded that deferral was appropriate. When analyzing the case, the AU took into account that the policy of the Board is to require the party opposing deferral to unmask the defects in the arbitration proceeding. Altoona Hospital, 270 N.L.R.B. 1179 (1984). The AU found that the issue of the November dismissal “is so intertwined with the original discharge of O’Toole on 17 September, that the arbitration proceeding that resulted from the earlier discharge could not help but discuss later events including the 5 November incident.” Appendix (“App.”) at 39.
The AU’s interpretation of the Olin test as applied to this case was reasonable. The minutes of the February 9 hearing state that O’Toole “was offered a job as a journeyman but insisted he was still the steward. The Business Agent told the men not to work without a steward. The men left the job.” Id. Furthermore, the minutes of the February 28 hearing state “[i]t was Mr. O’Toole’s understanding he was back as a steward but the foreman said no, you work as a journeyman. The Business Agent met with the contractor, Mr. Norman Burg, who stated that if it was Mr. O’Toole’s intent to be the steward he didn’t want him backhand Mr. O’Toole left the job.” Id. Thus, the arbiters were presented with evidence on the issue of the November 5 dismissal, and their decision effectively decided the issue. Chemical Leaman Tank Lines, Inc., 270 N.L.R.B. 1219, 1219-20 n. 3 (1984).
The Board claims that since the arbitral award did not specifically refer to the November 5 dismissal, this shows the issues were different. To the contrary, as long as the facts were presented to the arbiters, the omission of a reference to the November 5 discharge does not preclude a finding of factually parallel issues if there is no express statement to the contrary. Ryder Truck Lines, Inc., 273 N.L.R.B. 713 (1984); Yellow Freight Systems, Inc., 273 N.L.R.B. 44 (1984). Accordingly, we find that the criteria set forth in Olin have been met.
Moreover, the Board has failed to enunciate sufficiently its reasons for rejecting the AU’s determination. The Board noted that although the arbiters were presented with the facts relevant to the November 5 discharge, “it does not mean the issues are factually parallel when they clearly are not.” App. at 20. It is a fundamental principle of administrative law that the Board must furnish reasons for its decision. Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 197, 61 S.Ct. 845, 853-54, 85 L.Ed. 1271 (1941). When applied to this case, the principle requires that the Board refer to specific facts inconsistent with the AU’s finding. The Board’s decision leaves ambiguous why the AU’s determination was rejected.
Conclusion
For the reasons we have articulated, we rule that the Board’s order was an abuse of discretion. The NLRB’s petition for enforcement is denied; Aces’s cross-petition is granted.
. The statute provides that it shall be an unfair labor practice for an employer "to interfere with, restrain, or coerce employees in the exercise of their rights guaranteed in section 157 of this title.” 29 U.S.C. § 158(a)(1).
. In pertinent part the statute states that it is an unfair labor practice to discriminate "in regard to ... tenure of employment ... or condition of employment to encourage or discourage membership in any labor organization." 29 U.S.C. § 158(a)(3).
.It is undisputed that the union could waive O’Toole’s right to be shop steward, provided the waiver was “clear and unmistakable.” See Metropolitan Edison Co. v. NLRB, 460 U.S. 693, 708, 103 S.Ct. 1467, 1477, 75 L.Ed.2d 387 (1983); Chesapeake & Potomac Telephone Co. v. NLRB, 687 F.2d 633, 636 (2d Cir.1982).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KEARSE, Circuit Judge:
Plaintiff June E. Hogan appeals from a judgment of the United States District Court for the Western District of New York, John T. Elfvin, Judge, dismissing so much of her complaint as asserted a negligence claim against defendant Norfolk & Western Railway Company (“N & W”) in connection with the death of her husband Michael J. Hogan (“Hogan”). Defendant Consolidated Rail Corporation (“Conrail”) appeals from so much of the judgment as dismissed its cross-claim against N & W. The district court granted partial summary judgment dismissing the claims against N & W on the ground that plaintiff and Conrail had failed to come forward with sufficient evidence that any negligence by N & W contributed to the accident leading to Hogan’s death. The court later directed that a final judgment embodying its partial summary judgment be entered pursuant to Fed.R.Civ.P. 54(b). For the reasons below, we conclude that the Rule 54(b) certification was an abuse of discretion and that this Court lacks jurisdiction to hear the appeals.
I. BACKGROUND
The undisputed facts and the evidence developed in the pretrial proceedings thus far reveal the following. Hogan was employed by Conrail as foreman of a track maintenance crew. On the morning of October 19, 1987, just prior to the fatal accident, Hogan’s Conrail crew was making repairs on tracks in Portland, New York. The pertinent section of Conrail track was approximately 114 feet away from tracks owned by N & W, and at the same time an N & W crew was cutting brush in the vicinity of its own tracks. Prior to the accident, Conrail employees had observed brush-cutting debris flying onto the Conrail right-of-way from the direction of the N & W operation and had complained to Hogan that the debris could cause injury to members of the Conrail crew. Hogan had indicated that he would try to talk to the N & W crew. Hogan was found dead after he was run over, on Conrail property, by a truck owned by defendant Excelsior Truck Leasing Company (“Excelsior”) and driven in reverse by an employee of Conrail. The driver of the truck did not see Hogan until after the accident. There were no eyewitnesses.
Plaintiff commenced this wrongful death action against Conrail, N & W, and Excelsior, asserting claims against Conrail under the Federal Employers’ Liability Act, 45 U.S.C. §§ 51-60 (1988) (“FELA”), and against N & W on a common-law negligence theory, premising jurisdiction on both FELA and 28 U.S.C. § 1332 (1988) (diversity of citizenship). Her claim against N & W asserted that N & W had been negligent in the brush-cutting operation and had caused debris to hit Hogan, suggesting that this had rendered him unable to avoid being run over by the Conrail-operated truck. Conrail cross-claimed against N & W on the same premise, contending that N & W was at least jointly liable for Hogan’s death.-
The parties proceeded to conduct discovery seeking to determine, inter alia, the cause of the accident. A Conrail employee who saw Hogan lying in front of the Conrail truck immediately after the accident testified that Hogan had a head laceration and that there was a piece of wood in the vicinity of his head and shoulders. The coroner who had been called to the scene stated in an affidavit that he had not seen any wood, metal, or freshly cut brush near Hogan’s body. He had observed a crushing injury to Hogan’s head, but his report did not mention a laceration. No debris was found in Hogan’s head wound; and no blood or human tissue was found on the piece of wood that the Conrail employee had seen near Hogan’s head.
In light of the evidence elicited during discovery, N & W moved pursuant to Fed. R.Civ.P. 56 for dismissal of the claims against it on the ground that plaintiff and Conrail had failed to come forward with any evidence to indicate that any N & W debris had struck Hogan or any other possible causal connection between N & W’s activities and Hogan’s death. N & W contended that it was entitled to summary judgment because there was insufficient evidence to constitute a prima facie case of negligence against it. In a Memorandum and Order dated January 15, 1991 (“Decision”), 1991 WL 5142, the district court agreed.
The court noted that though under New York law the plaintiff in a wrongful death case “is emburdened by a lower standard of proof than in a personal injury case, where the victim is available to testify as to cause ..., this does not mean that a plaintiff may maintain a wrongful death cause of action based only upon speculation or guesses.” Id. at 6. In the present case, the court noted that there was “no evidence whatsoever that the piece of wood found near Hogan’s head actually hit him,” id. at 9; that the coroner and pathologist had found that Hogan’s death was caused by multiple skull fractures and extreme skull compression, compatible with a truck running over his head; and that at the time of the accident, substantial noise had been created by a Conrail train passing, with whistle blowing, raising the possibility that Hogan had simply failed to hear the truck’s back-up alarm. The court concluded as follows:
Thus, there is simply no evidence that links — with more than mere conjecture— N & W’s brush-cutting activities with Hogan’s demise. While it is possible that Hogan may have been hit by a piece of flying debris, such a conclusion simply cannot be reached without speculation. There are too many unknowns and too many other possible reasons for the accident. He may have slipped and fallen into the path of the truck. He may have, for some medical reason, fallen. He may have been looking away, distracted, and simply not heard the truck’s back-up alarm. “If the circumstantial evidence presented lends itself equally to several conflicting inferences, the trier of fact is not permitted to select the inference it prefers, since to do so would be [the] equivalent of engaging in pure speculation about the facts.”
Id. at 9-10 (quoting Mehra v. Bentz, 529 F.2d 1137, 1139 (2d Cir.1975), cert. denied, 426 U.S. 922, 96 S.Ct. 2628, 49 L.Ed.2d 375 (1976)).
In an order dated June 4, 1991, the court directed that a final judgment dismissing all claims against N & W be entered pursuant to Rule 54(b), stating the following reason:
This Court finds that the January 15, 1991 summary judgment was a final judgment as to Norfolk & Western because it disposed of all claims against that party. This Court also finds that there is no just reason to delay any appeal from this summary judgment. See Fed.R.Civ.P. rule 54(b). Indeed, if entry of final judgment is denied presently and, on appeal from the judgment involving the remaining defendant(s), it is determined that this Court’s January 15, 1991 summary judgment was incorrectly granted, a complete new trial would have to be held. Because Conrail asserts that Norfolk & Western is at least partly responsible for any liability that might be determined against Conrail, this Court deems that the correctness vel non of its January 15, 1991 summary judgment should be determined prior to trial.
June 4, 1991 Order at 2, 1991 WL 100549. These appeals followed.
II. DISCUSSION
On appeal, Plaintiff and Conrail contend that the district court erred in granting summary judgment in favor of N & W, arguing that the evidence here “would clearly support a jury finding that [N & W]’s negligence proximately caused Hogan’s death.” (Conrail brief on appeal at 22.) Following oral argument, this Court asked the parties to submit briefs on the question of “whether the grounds stated in the district court’s June 4, 1991 order, directing that a final judgment be entered pursuant to Fed.R.Civ.P. 54(b) on the partial summary judgment granted in favor of [N & W] were sufficient for a Rule 54(b) certification.” Having received those briefs, we conclude, for the reasons below, that the certification was an abuse of discretion and that this Court lacks jurisdiction to hear these appeals.
In addition, we raise a question as to federal subject matter jurisdiction over the claims against N & W, to be explored by the district court.
A. Appellate Jurisdiction
Rule 54(b) provides an exception to the general principle that a final judgment is proper only after the rights and liabilities of all the parties to the action have been adjudicated. It empowers the district court to enter a final judgment as to fewer than all of the parties in an action, but “only upon an express determination that there is no just reason for delay.” Fed.R.Civ.P. 54(b). The determination of whether to grant Rule 54(b) certification is committed to the discretion of the district court and will be set aside only for an abuse of discretion. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8-10, 100 S.Ct. 1460, 1465-66, 64 L.Ed.2d 1 (1980) (to justify reversal, district court’s determination must be “clearly unreasonable”); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76 S.Ct. 895, 900-01, 100 L.Ed. 1297 (1956); Cullen v. Margiotta, 811 F.2d 698, 711 (2d Cir.), cert. denied, 483 U.S. 1021, 107 S.Ct. 3266, 97 L.Ed.2d 764 (1987). The district court’s discretion, however, is to be exercised sparingly in light of the “ ‘historic federal policy against piecemeal appeals,’ ” Curtiss-Wright Corp. v. General Electric Co., 446 U.S. at 8, 100 S.Ct. at 1465 (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. at 438, 76 S.Ct. at 901).
Where the complaint is dismissed as to one defendant but not others, the court should not, as a general matter, direct the entry of a final judgment pursuant to Rule 54(b) if the same or closely related issues remain to be litigated against the undismissed defendants. See, e.g., Cullen v. Margiotta, 811 F.2d at 710; Arlinghaus v. Ritenour, 543 F.2d 461, 463-64 (2d Cir.1976) (per curiam) (appeal dismissed where decision of issues presented would implicate rights of other defendants who were not parties to the appeal). In such circumstances, where the resolution of the remaining claims could conceivably affect this Court’s decision on the appealed claim, see Campbell v. Westmoreland Farm, Inc., 403 F.2d 939, 943 (2d Cir.1968); Cullen v. Margiotta, 618 F.2d 226, 228 (2d Cir.1980) (per curiam), the interlocutory order of dismissal should normally remain interlocutory and therefore subject to appropriate revision until the liabilities of all the defendants have been adjudicated, see Fed.R.Civ.P. 54(b) (interlocutory order adjudicating “rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and ... is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties”). Certification under Rule 54(b) should be granted only where there are “ ‘interests] of sound judicial administration’ ” and efficiency to be served, Curtiss-Wright Corp. v. General Electric Co., 446 U.S. at 8, 100 S.Ct. at 1465 (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. at 437, 76 S.Ct. at 900-01), or, in the “infrequent harsh case,” Ansam Associates, Inc. v. Cola Petroleum, Ltd., 760 F.2d 442, 445 (2d Cir.1985), where “there exists ‘some danger of hardship or injustice through delay which would be alleviated by immediate appeal,’ ” Cullen v. Margiotta, 618 F.2d at 228 (quoting Brunswick Corp. v. Sheridan, 582 F.2d 175, 183 (2d Cir.1978)). A district court’s statement simply that “there is no just reason for delay”, is not sufficient to indicate that the case is an exceptional one in which piecemeal appeals should be permitted. See, e.g., Hudson River Sloop Clearwater, Inc. v. Department of the Navy, 891 F.2d 414, 419 (2d Cir.1989); Ansam Associates, Inc. v. Cola Petroleum, Ltd., 760 F.2d at 445; Cullen v. Margiotta, 618 F.2d at 228.
In the present case, we do not. regard the district court’s reason for entering a Rule 54(b) certification as sufficient. Though the court stated that “there [wa]s no just reason to delay,” it gave no indication that the case was an exceptional one or that there would be any unusual hardship in requiring plaintiff and Conrail to await, in accordance with normal federal practice, the disposition of the entire case before obtaining appellate review of the dismissal of their claims against N & W. Rather, the court’s purpose in seeking to enter an immediate final judgment of dismissal in favor of N & W was to obtain pretrial appellate review of its assessment of the evidence against N & W. Thus, the court noted Conrail’s assertion that N & W would be “at least partly responsible for any liability that might be determined against Conrail,” and stated that the reason for its certification was its desire that “the correctness vel non of its ... summary judgment ... be determined prior to trial,” in order to avoid, if it had erred in its assessment of the sufficiency of the evidence against N & W, “a complete new trial.” June 4, 1991 Order at 2. Though we sympathize with the district court’s desire to avoid a retrial of the entire case if its assessment of the evidence as to N & W’s role is erroneous, the interrelationship of the dismissed and surviving claims is generally a reason for not granting a Rule 54(b) certification, not a reason for granting it, see, e.g., Cullen v. Margiotta, 811 F.2d at 710; id. at 711 (“In a case involving multiple claims, the court should not enter final judgment dismissing a given claim unless that claim is separable from the claims that survive.”), either because the remaining proceedings in the district court may “illuminate appellate review of” the dismissed claims, Cullen v. Margiotta, 618 F.2d at 228, or because those proceedings may suggest that the dismissal should be modified as is expressly permitted by Rule 54(b). Here, for example, it is possible that further discovery by plaintiff or further investigation by Conrail could bring to light evidence sufficient to warrant submitting claims against N & W to a jury. Were this to occur, it would be open to the district court under Rule 54(b), if no final judgment has been entered, to amend its interlocutory order accordingly. The appropriate course of action for the district court, in order to minimize the likelihood of a dupli-cative retrial, is to take care not to grant summary judgment without viewing all the evidence in the light most favorable to the nonmoving party and drawing all reasonable inferences in favor of that party, not to ask for an interim opinion from the court of appeals, thereby forcing successive appellate panels to review the case. See generally Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 631 (2d Cir.1991) (federal concept of sound judicial administration and efficiency is not normally furthered by “hav[ing] piecemeal appeals that require two (or more) three-judge panels to familiarize themselves with a given case, instead of having the trial judge, who sits alone and is intimately familiar with the whole case, revisit a portion of the case if he or she has erred in part and that portion is overturned following the adjudication of the whole case”). The concern expressed by the dissent, i.e., to avoid piecemeal trials, would be present in virtually any case in which the district court dismisses some of the parties from the case and proceeds to trial with respect to others. To deem sufficient under Rule 54(b) a finding simply that an immediate appeal might avoid the need for a retrial, as advocated by the dissent, could only contravene the federal policy against piecemeal appeals.
In sum, absent any special circumstances indicating that adherence to the normal and federally preferred practice of postponing appeal until after a final judgment has been entered, disposing of all the claims of all the parties, will cause unusual hardship or work an injustice, the district court’s preference to have pretrial appellate review of its assessment of the sufficiency of the evidence to support a given claim is an improper basis for entry of an immediate partial final judgment. Accordingly, we conclude that the Rule 54(b) certification in the present case was an abuse of discretion and that we lack jurisdiction to hear the present appeals.
B. District Court Jurisdiction
In light of the possibility of N & W’s involvement in further proceedings in the district court or in an eventual appeal from a final judgment, we also address a question as to the district court’s subject matter jurisdiction over the claims against N & W, the answer to which is unclear on the record before us.
Plaintiff premised subject matter jurisdiction of her claims in part on FELA and in part on diversity of citizenship. FELA provides jurisdiction over the claims against Conrail because Conrail was Hogan’s employer, but not over the other defendants. This Court has never squarely addressed the question of whether a plaintiff may invoke pendent party jurisdiction under FELA, see Roco Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292, 1296 (2d Cir.1990) (discussing Eighth Circuit’s disallowance of pendent party jurisdiction under FELA), and though “supplemental jurisdiction” over similar claims is currently authorized by 28 U.S.C.A. § 1367 (West Supp.1991) (effective December 1, 1990, district court generally has supplemental jurisdiction over state-law claims against a non-diverse party if it has original jurisdiction over related claims against another party), the present suit was commenced before that authorization became effective.
The district court did not suggest that it had pendent or supplemental jurisdiction over the claim against N & W but rather found that it had diversity jurisdiction on the basis that “plaintiff is a citizen of Ohio and all three defendants are stated to have a principal place of business in Pennsylvania. Complaint at ¶¶ 2-4.” Decision at 5. The allegations of the complaint were, however, insufficient to plead diversity jurisdiction, and it is not clear from the record before us that such jurisdiction existed. For diversity purposes, a corporation is deemed to be a citizen both of the state in which it has its principal place of business and of any state in which it is incorporated. 28 U.S.C. § 1332(c)(1). The complaint alleged that N & W was “incorporated in a number of states” (Complaint 114), without identifying any of those states. N & W denied this allegation without revealing its state of incorporation. N & W also did not answer responsively to the complaint’s allegation that the court had diversity jurisdiction, taking the position that this was an allegation of law to which no response was required. Though there may be some dispositive information elsewhere in the record, so far as we are aware, N & W could be, like plaintiff, a citizen of Ohio.
Accordingly, we suggest that the district court determine whether there was a proper factual basis for plaintiff’s invocation of diversity jurisdiction with respect to her claim against N & W.
CONCLUSION
We have considered all of the parties’ arguments in support of appellate jurisdiction and have found them to be without merit. The appeals are dismissed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BRIGHT, Senior Circuit Judge.
Jaster Lee Marbley seeks habeas corpus relief pursuant to 28 U.S.C. § 2254 from his conviction in an Arkansas state court for aggravated robbery. The district court denied relief after holding an evidentiary hearing on Marbley’s petition. Marbley appeals to this court asserting that the district court erred in refusing his claim of ineffective assistance of counsel. We affirm the judgment of the district court.
I. BACKGROUND
Marbley and a co-defendant were charged with the robbery of a liquor store which occurred on December 15, 1986 at 3:59 p.m. in Pine Bluff, Arkansas. The Circuit Court of Jefferson County appointed Joe Holmes to represent both Marbley and his co-defendant. Holmes met twice with Marbley, once shortly after his appointment and again approximately one week before trial. At the evidentiary hearing on Marbley’s petition, Holmes testified that he did not interview any witnesses on Marbley’s behalf because Marbley told him he was not guilty. He further testified that he did not explore any alibis because Marbley did not advise him that he had an alibi. Marbley, however, testified that he told Holmes of persons who could verify his whereabouts at the time of the robbery.
In any event, Marbley proceeded to trial where overwhelming evidence of his guilt was presented. The robbery resulting in Marbley’s conviction took place at the Flamingo Liquor Store in Pine Bluff, Arkansas. Virgil Lee Noble, the store clerk on duty at the time of the robbery proffered eyewitness testimony that Marbley entered the store, pointed a sawed-off shotgun at her and ordered her to give him the money in her cash register. Noble testified that she knew Marbley because he came into the liquor store almost every day. She also testified that Marbley and his co-defendant had been in the store together to buy liquor earlier that day. Noble testified that after she gave Marbley the money, he took off running toward the Mad Butcher, a grocery store about one block south of the liquor store, and then turned toward Lake Pine Bluff. Noble identified Marbley at a show-up at approximately 6:00 p.m. on the day of the crime. She also described the robber’s clothing to police immediately after the robbery and identified Marbley's clothing when it was introduced into evidence at trial as the same clothing Marbley was wearing when he robbed the store. She identified Marbley in court at trial.
Other witnesses corroborated Noble’s testimony. Doreta Peterson testified that she knew Marbley and that she saw him on a bridge on Lake Pine Bluff coming from the direction of the Mad Butcher on December 15, 1986 between 4:00 and 4:15 p.m. with a handful of money. Peterson testified that Marbley offered her $3.00 for a cigarette. Elijah Pace testified that he was on Lake Pine Bluff fishing between 3:00 and 4:15 p.m. when Marbley came on the bridge from the direction of the Mad Butcher. He confirmed Peterson’s testimony that Marbley was carrying a handful of money and stated that Marbley paid him $3.00 to take him to the Ben Mar Apartments, where Marbley lived. Shortly after the robbery, Marbley was found by the police in Apartment 10A at the Ben Mar Apartments, lying on the sofa with his eyes closed and with money in his hands.
The only witnesses called on behalf of the defense were Marbley and his co-defendant. Marbley was convicted of aggravated robbery following a jury trial and sentenced to life imprisonment.
In his petition for writ of habeas corpus, Marbley contends that his conviction must be overturned due to the ineffective assistance of his trial counsel, Joe Holmes. After holding an evidentiary hearing on the petition, United States Magistrate John F. Forster, Jr. recommended that it be denied because, although Holmes’ representation of Marbley was deficient, Marbley failed to demonstrate that he was prejudiced by Holmes’ inadequate representation. Chief United States District Judge Eisele agreed and denied the petition. Marbley appeals.
II. DISCUSSION
In Strickland v. Washington, 466 U.S. 668, 687, 104 S.Ct. 2052, 2064, 80 L.Ed.2d 674 (1984), the Supreme Court set forth a two-prong test for determining whether trial counsel’s performance of his duties is so defective as to warrant reversal of a conviction. Marbley must show, first, that Holmes’ representation fell below an objective standard of reasonableness and, second, that his defense was prejudiced by Holmes’ deficient performance.
We agree with the district court that Holmes’ representation of Marbley fell below an objective standard of reasonableness. He made no attempt to determine if Marbley, who insisted he was innocent, had any alibi or witnesses who could support his claim of innocence. The record indicates that Marbley hand-wrote a statement for the police following his arrest in which he stated that he was playing dominoes with a friend on the day the robbery occurred. At the very least, Holmes should have attempted to locate this friend to corroborate Marbley’s claim.
Nevertheless, even though Holmes’ representation of Marbley was defective, Marbley has failed to demonstrate that he was prejudiced thereby. Marbley provided at least three different alibis for his where-written statement to police, he states he was playing dominoes with a friend. At trial, he testified that he was at home at the time of the robbery and that police arrested him at 3:45 p.m., approximately fifteen minutes before the robbery occurred. At the evidentiary hearing, he testified that he was playing dominoes with someone named Lula and other friends when the robbery occurred. None of these alibis hold up in light of the testimony of Lula Allen and of Marbley’s niece, Cynthia Marbley, that Marbley appeared at Lula Allen’s apartment sometime after 4:00 p.m. on the date of the robbery flashing money.
III. CONCLUSION
Given the weakness of Marbley’s alibis, together with the overwhelming evidence of guilt presented at trial, including an eyewitness identification, Marbley has failed to demonstrate that he was prejudiced by Holmes’ failure to inquire into Marbley’s alibis. We, therefore, affirm the district court’s denial of Marbley’s petition for writ of habeas corpus.
. The Honorable G. Thomas Eisele, Chief Judge, United States District Court for the Eastern District of Arkansas.
. Although the Magistrate referred to this witness as Virginia Noble, the trial transcript identifies her as Virgil Lee Noble.
. Marbley's petition for writ of habeas corpus alleges several bases for relief. Only his allegations of ineffective assistance of counsel are before us on appeal.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION
Before LUMBARD, MERRILL and WRIGHT, Circuit Judges.
MERRILL, Circuit Judge:
This is the third occasion on which we have considered the Kuney family partnership, the trusts created of partnership interests and the tax consequences of the manner in which a division of income has thus been accomplished.
Section 704(e)(1) of the Internal Revenue Code of 1954, 26 U.S.C. § 704(e)(1), dealing with family partnerships, recognizes that a partnership interest can, for .tax purposes, be created by gift.
“Recognition of interest created by purchase or gift. — A person shall be recognized as a partner for purposes of this subtitle if he owns a capital interest in a partnership in which capital is a material income-producing factor, whether or not such interest was derived by purchase or gift from any other person.”
However, 26 C.F.R. § 1.704-l(e)(l)(iii) states a familiar caveat. In part it provides:
“A transfer is not recognized if the transferor retains such incidents of ownership that the transferee has not acquired full and complete ownership of the partnership interest.”
With reference to family partnership interests held in trust, 26 C.F.R. § 1.704-l(e)(2)(vii) provides in part:
“A trustee may be recognized as a partner for income tax purposes under the principles relating to family partnerships generally as applied to the particular facts of the trust-partnership arrangement. A trustee who is unrelated to and independent of the grantor, and who participates as a partner and receives distribution of the income distributable to the trust, will ordinarily be recognized as the legal owner of the partnership interest which he holds in trust unless the grantor has retained control inconsistent with such ownership. However, if the grantor is the trustee, or if the trustee is amenable to the will of the grantor, the provisions of the trust instrument (particularly as to whether the trustee is subject to the responsibilities of a fiduciary), the provisions of the partnership agreement, and the conduct of the parties must all be taken into account in determining whether the trustee in a fiduciary capacity has become the real owner of the partnership interest. Where the grantor (or the person amenable to his will) is the trustee, the trust may be recognized as a partner only if the grantor (or such other person) in his participation in the affairs of the partnership actively represents and protects the interests of the beneficiaries in accordance with the obligations of a fiduciary and does not subordinate such interests to the interests of the grantor.”
In Kuney v. Frank, 308 F.2d 719 (9th Cir. 1962), when the family partnership was first before us, we held that under the facts as recited as to the taxable years in question there was retention by the trustors of such incidents of ownership of the substance of the transfer as to preclude recognition of the transfer for income tax purposes.
In Kuney v. United States, 448 F.2d 22 (9th Cir. 1971), the family partnership was last before us (on this occasion as to taxable years 1958 through 1963, and with only one trust involved — that with Kuney, Jr., as trustor, and Kuney, Sr., as trustee). We noted that the district court had not examined into the manner in which the trustee had acted with respect to the interests of the beneficiaries but instead had relied on the fact that the trust instrument remained unchanged, reasoning from that fact that the question of ownership remained unchanged and required the Kuney v. Frank result. We noted that what was remarkable about the trust instrument was not that a broad scope of powers was retained by the trustor, but that the powers granted to the trustee were extraordinarily broad. We noted that under these circumstances, if retention of incidents of ownership by the trustor is to be found, it is not through the terms of the trust instrument but must be through his influence over the trustee; that under the regulations familial relationship and amenability of the trustee to the wishes of the trustor present a potential of ownership retention but the question “whether the trustee in a fiduciary capacity has become the real owner of the partnership interest” is made to depend on the manner in which the trustee actually conducts himself with reference to the trust. In this respect we noted that “it is apparent that many of the practices of which we had been critical [in Kuney v. Frank] ceased during the taxable years here in question.” 488 F.2d at 24. We stated:
“The question, under the regulations * * * is ‘whether the trustee in a fiduciary capacity has become the real owner of the partnership interest.’ And this will depend on whether he ‘actively represents and protects the interests of the beneficiaries in accordance with the obligations of a fiduciary and does not subordinate such interests to the interests of the grantor.’ ”
(448 F.2d at 24). We remanded in order that consideration might be given to the manner in which the trustee had conducted himself with reference to the trusts.
Hearing on the remand followed, after which the district court, in a memorandum decision, recited that the United States had pointed to two practices of the Kuneys, Junior and Senior, that it contended were not in accordance with the obligations of a fiduciary and operated to subordinate the interests of the beneficiaries to those of the grantor. The district court agreed with the United States, rendering judgment in its favor, and this appeal was taken by the taxpayers.
The first of the two practices on which the United States relied related to the fact that the Kuneys had, as partners, drawn compensation fixed at $5,000 each and that by agreement with the partnership it was provided that the compensation should be taken, so far as possible, from partnership capital gains. The United States argues that this constituted a tax benefit to the trustors that otherwise would have been enjoyed by the trust partners.
However, the Kuneys as managing partners were required by regulation to pay themselves suitable compensation for their services in the management of the partnership affairs. 26 C.F.R. §§ 1.704 — l(e)(l)(i), 1.704 — l(e)(3)(i)(a). Had they failed to do so the Service could have added to their taxable income such amount as it felt was appropriate. The fact that capital gain income is involved does not alter this principle, nor can it change the general inquiry as to the trustees’ conduct. Capital gains, in the hands of the trustors, may well have been put to their maximum usefulness as tax benefits, and the tax recovered by the United States may have been reduced by this manner of making payment, but the question is whether the trusts (not the United States) suffered by the arrangement. We fail to see how the trusts could be said to have suffered unless the value of the benefit conferred was such as to constitute undue compensation.
There is nothing in the record to which we have been cited to establish that the extent of benefit conferred on the trustors or detriment suffered by the partnership as a result of this arrangement amounted to undue compensation. To the contrary, the salary payments made by the partnership to the Kuneys appear reasonable in light of the large amount of capital gain and rental income accruing to the partnership as a result of the Kuneys’ services. In fact, the $5,000 salary taken by each Kuney represents a substantial decrease from the $25,000 salary paid to each Kuney by the partnership in the years prior to the capital gain arrangement. Of course, the payment of $5,000 in capital gains affords a greater benefit to the trustors and a greater detriment to the trusts than the payment of a similar amount in ordinary income. But this fact alone cannot constitute compensation as undue. If capital gain payments were precluded, the trusts might well have had to pay the Kuneys larger salaries in order to afford them reasonable compensation at ordinary income tax rates.
We conclude that the trust cannot be said to have suffered by reason of the capital gain arrangement where the value of the benefits conferred has not been shown to constitute undue compensation.
The second of the two practices of which the United States complains has to do with the rental charged by the partnership for equipment owned by it and leased to a family corporation controlled by the Kuneys, Senior and Junior, in which corporation the trusts had no interest. The United States criticizes the fact that rental at one point was reduced, and also criticizes the fact that the rental rate was 100% of the depreciation deduction allowed the partnership plus interest on the adjusted basis at bank rates. The United States points out that in time this would result in the corporation paying almost nothing for an item of equipment which had been fully depreciated. (The United States concedes that since the partnership used accelerated depreciation schedules the rental rate would be very high in the first year of the life of any item.)
There is nothing in the record to which we have been referred to establish that the rental calculated in this fashion was unduly low or that the manner of computing it was, on the whole, disadvantageous to the partnership. There seems to be nothing inherently wrong in gearing rental rates to depreciation deductions, see Riss & Co., Inc., ¶ 64,190 P—H Memo TC (1964), especially where, as here, the lessee also undertakes to pay all ownership costs (including repairs, maintenance, insurance, and property taxes) and the lessor is able to reap large capital gains on the sale of the depreciated assets. Moreover, the fact that the rental had been reduced in 1959 does not inevitably lead to the conclusion that the rental was too low or that the trustees were subordinating the interests of the trusts to their own benefit. The reason for the reduction was that the 20% minority shareholders of the lessee corporation felt that the prior rental figure of 130% depreciation was too high. While the reduction in rental certainly resulted in less income to the partnership from the previous arrangement, the resulting rental rate was not, as we have seen, unduly low. Nor does the fact of a reduction inherently establish that the trustees were acting in their own, and not the trusts’ interests. Section 704(e) was not meant to tie the trustees to inflexible or rigid positions in the face of changing business needs, aijd the trustees could well independently conclude that in this situation a reduction of rental was in the best business interests of the partnership.
We conclude that the trusts cannot be said to have suffered by reason of the rental charged or the manner of calculating it.
Based on these practices cited by the United States, the district court concluded that the trustee had acted in derogation of the interests of the beneficiaries, subordinating their interests to those of the trustor, and concluded that the income received by the trust should be taxed to the trustor as his income.
In this we feel the court was in error.
Reversed.
. The partnership interests are, in essence, divided in fourths between Kuney, Sr.; Kuney, Jr.; trust for child of Kuney, Sr. (with Kuney, Jr., as trustee); trust for children of Kuney, Jr. (with Kuney, Sr., as trustee).
. Even where the trustor names himself as trustee and could quite rationally be regarded as in “control” of himself, this is not per se an undue retention of incidents of ownership.
Here, too, under the regulations the fact of retention of ownership will depend on how the trustor behaves himself as trustee. The regulations recognize that a trustor in such a situation may be able, in his capacity as trustee, to refrain from subordinating the interests of his beneficiary to his own interests as trustor.
. The United States cited a third practice of which it was critical as to which it now concedes that criticism was not justified.
. For example, the capital gains achieved solely through the Kuneys’ efforts in the years 1958-60 were respectively $36,557.88, $72,-740.00, and $45,054.47. The rental income, while fixed by contract and thus less subject to the Kuneys’ supervision, was also high: a total of $316,196.72 in 1959 and $245,591.82 in 1960.
. This decrease was substantially offset by the salary allotted each Kuney by the corporation in which the Kuneys held a controlling interest. However, the record shows that, at least for most of the years in question, the total amount of compensation taken by each Kuney (from both the partnership and the corporation) was less than the $25,000 salary paid to each under the original arrangement with the partnership.
. At the hearing on remand counsel for the United States appeared to concede that pegging rental to depreciation would result in a higher rental figure than otherwise might be expected.
Throughout these proceedings the United States has asserted the generalization that the Kuneys have sought to minimize the income of the partnership (and thus reduce their individual taxable income) and maximize the value of their corporate holdings. We are cited to nothing in the record to support this generalization. To the contrary, testimony of Kuney, Jr., given at trial, was to the effect that “By the end of 1963, the last year at issue in this case, the original trust investment of $200,000 had multiplied by three hundred and twenty-one per cent where the corporate investment of $500,000 had increased by forty-four per cent.”
. Section 1245 of the Internal Revenue Code, enacted to curb precisely this sort of practice, was not in effect until after December 31, 1962, and thus was inapplicable to most of the years in question.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
Defendant Smith was convicted of three counts of unlawful distribution of heroin in violation of 21 U.S.C. § 841(a) (1970), and sentenced to 1 — 3 years on each count, the sentences to run concurrently. The convictions arose out of three sales made at 10:15 p. m. on April 16, 1974; at 10:30 p. m. on the following night, April 17th; and at 10:10 p. m. on April 22d. Defendant claims that the trial judge erred in failing to grant him a continuance to comply with the alibi notice rule, Rule 2-5(b) of the Criminal Rules of the United States District Court for the District of Columbia, and in refusing to allow the defendant to present alibi witnesses because of his failure to comply with the rule.
On July 16, 1974, the prosecutor served a demand for notice under Rule 2-5(b) upon Smith. No response was received prior to August 13th. At a status hearing on that day, defense counsel told the court that defendant proposed to present an alibi for the evening of April 16th, but that counsel had not been able to supply the necessary names and addresses to the prosecution. In fact, at that time defense counsel had only one name, which had been supplied by defendant for the first time the morning of the hearing. (Pretrial Hrg. Tr. 2).
The trial court, noting that the ten days specified in the rule and in the demand sent to defendant had long since expired, ruled that defendant’s alibi witnesses would not be allowed to testify in his behalf. A one week’s continuance was granted, at defense counsel’s request, to allow him to prepare other aspects of his case. At trial defendant was not allowed to put on alibi witnesses, although he was allowed to testify on his own behalf that he was in Baltimore with his wife’s family on the night of April 16th, and an alibi instruction was given to the jury.
Under Rule 2 — 5(b) as then in effect, the trial judge must exclude alibi testimony (other than that by the defendant himself) if the notice rule is not complied with, unless there is “good cause shown.” The only reason offered here for the lack of compliance was defendant’s failure to provide his counsel with the requisite names. The defendant had been informed by his counsel of the Government’s notice “and I have got to have those names.” The proposed witnesses were members of defendant’s wife’s family who lived only an hour away, and no explanation is given for defendant’s delay.
However, defendant claims that, even where failure to comply with the rule may be attributable to a defendant’s negligence, the sanction of refusing to grant a continuance or to allow a late tender of the information is excessive, and in violation of defendant’s right, guaranteed by the Fifth and Sixth Amendments to the Constitution, to present a defense.
Defendant did not present to the trial court his contention that the sanction was excessive to the point of being unconstitutional, or any suggestion of a lesser sanction for enforcement of the objective of the rule.
In Williams v. Florida, 399 U.S. 78, 90 S.Ct. 1893, 26 L.Ed.2d 446 (1970), the Supreme Court upheld a similar state rule against an attack under the Fourteenth Amendment, rejecting inter alia the contention that the rule violates the due process right to a fair trial. In Wardius v. Oregon, 412 U.S. 470, 93 S.Ct. 2208, 37 L.Ed.2d 82 (1973), the court held that such due process validity depends on provision of reciprocal discovery rights for the defendant against the government — a feature contained in the district court rule before us. Subsequent to the trial and appellate argument in the case at bar the Supreme Court held that a court may consistently with the Sixth Amendment, enforce a preclusion sanction against a defendant who insists on offering testimony of a witness while resisting disclosure of his prior (and possibly inconsistent) statements and reports. United States v. Nobles, 422 U.S. 225, 95 S.Ct. 2160, 2171, 45 L.Ed.2d 141 (1975). Exclusion of testimony by an alibi witness for lack of advance notice was upheld in Rider v. Crouse, 357 F.2d 317, 318 (10th Cir. 1966). There is as yet no Supreme Court precedent on that point, and we know of no precedent at all as to a late pretrial tender.
The evolution of sound rules and doctrines to govern the question of alibi witnesses is a matter that has occupied the courts and legislatures. As of December 1, 1975, Rule 12.1(d) of the Rules of Federal Criminal Procedure, as proposed by the Supreme Court and approved by Congress, gives the trial judge discretion to admit alibi testimony notwithstanding the failure to give timely notice to the prosecution. Experience under the rule will likely give rise to helpful guidelines, as to when alibi witnesses may be excluded, how evidentiary questions arising from the exclusion should be handled, and whether there should be any comment on the absence of the alibi witnesses. This case is governed by an earlier rule that also provided some flexibility, for though it speaks in one sentence in mandatory language, in the next it admits exceptions for good cause shown. But the new rule would go further, for it would apparently permit the trial judge to admit alibi testimony even where there was no excuse for delay if convinced that this was necessary to avoid injustice.
Our judicial function must be exercised in the light of the record as a whole. The later proffered alibi witnesses are family friends. Defendant did not give their names to his counsel when timely asked. They related to only the first of three occasions in April 1974 covered by the undercover officer who testified he had thrice bought narcotics of defendant. This is not a case of mistaken identity. The undercover officer identified defendant in a pretrial lineup (Tr. 17). Defendant admitted being at the pertinent location on the other two nights — his explanation being that he was there as a user, not a seller, of heroin (Tr. 81-82). While conceivably, a convincing alibi for April 16th might have cast doubt on the testimony of the undercover officer, who identified defendant as the person who sold him drugs on all three nights, this is offset not only by the strong evidence on identification but by the officer’s testimony, on cross-examination, that he gave a description of the narcotics seller after the first buy (Tr. 78). Defense counsel abstained from any followup questions as to the nature of that identification — a course that many would regard as reflecting commendable prudence. The jury deliberated only 33 minutes.
The trial judge entered concurrent sentences. Even clearly presented constitutional claims are subject to rules of harmless error. In view of the solid identification evidence, it seems most unlikely that the alibi testimony of relatives would have raised a doubt in the minds of the jury. While no single point is logically conclusive, the case as a whole leaves us with the conviction that there is no substantial prejudice, and that substantial justice will not be denied by our ruling that the judgment is
Affirmed.
. Rule 2-5(b), as in effect at the time of trial, provided that, upon demand by the prosecutor, a defendant must produce, within ten days, a notice of his intention to offer an alibi defense. ^ The Notice must specify the place at which defendant claims to have been and the names and addresses of witnesses upon whom he intends to rely. The prosecution must reciprocate by providing the defense with the names and addresses of the witnesses upon whom it intends to rely in establishing the defendant’s presence at the scene of the crime or in rebutting defendant’s alibi. If either party fails to provide this information within the specified time periods, the court is required, unless good cause is shown, to exclude the testimony of that party’s alibi witnesses.
. Later, at trial, counsel asserted that he had had three names ready to give the prosecution at the earlier hearing (Tr. 86).
. The proposed Federal Rule of Criminal Procedure 12.1, slated to become effective December 1, 1975 (Pub.L.No.94-64, (July 31, 1975)) makes exclusion of alibi witnesses for noncompliance discretionary. However, appellant fails to point out, and the record on appeal does not reveal, any circumstances which would make the exclusion here an abuse of discretion.
. “I explained to my client that the Government served a notice requesting alibi witnesses on us, and I told my client to give me their names and addresses.” (Pre-trial Hrg. Tr. 2).
“That is correct, your Honor. And I have advised my client I have got to have those names.” (Pre-trial Hrg. Tr. 3).
“[M]y client did not get the names of those people to me in time for me to stay within the ten-day rule . . . ” (Tr. 85).
. (d) Failure To Comply. — Upon the failure of either party to comply with the requirements of this rule, the court may exclude the testimony of any undisclosed witness offered by such party as to the defendant’s absence from or presence at, the scene of the alleged offense. This rule shall not limit the right of the defendant to testify in his own behalf.
The rule as finally formulated is identical (except for its section number), to the original version submitted by the Supreme Court to Congress. Compare, Communication From the Chief Justice of the United States, Proposed Amendments to the Federal Rules of Criminal Procedure, H.R.Doc.No.292, 93d Cong., 2d Sess. 42-43 (1974), with Pub.L.No. 94^64, § 3 (July 31, 1975). The House Bill submitted to the Committee on the Judiciary would have made exclusion of alibi witnesses mandatory upon non-compliance with the disclosure requirements. H.R. 6799, 94th Cong., 1st Sess. (May 7, 1975). However, in the Bill reported out by the Judiciary Committee, rule 12.1(d) was returned to its original discretion^ ary form. H.R.Rep.No.247, 94th Cong., 1st Sess. (May 29, 1975), U.S.Code Cong. & Admin.News 1975, p. 1358 (Pamphlet No. 7).
. In the case at bar, the prosecutor was allowed to comment on their absence in argument (Tr. 97), but the court refused to give a missing witness instructions upon which the jury might have drawn an inference from their absence. Previously, after prosecutor asked defendant the names of the people he stayed with on April 16 (Mary Simmons and Jane Simmons) he followed-up, without objection “Now, did you see them in court today?” “A. No, sir.” (Tr. 84).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STEPHEN H. ANDERSON, Circuit Judge.
Petitioner, Carl Edwin Case, was tried in state court and convicted on a jury verdict of felony murder and criminal sexual penetration in the first degree. Following an unsuccessful state appeal Case sought federal habeas relief. The district court conditionally granted Case’s petition on one ground, and denied relief on another. Both parties have appealed.
The issue upon which Case prevailed involves an allegation of jury misconduct. Case asserts that the state trial court violated his constitutional rights when it refused to question the jury after its verdict, with respect to allegations of internal jury misconduct “and/or” improper external influence. Case’s Answer and Reply Brief at 2. Those allegations arose from evidence that one or more jurors crossing the street to the parking lot after the last full day of trial may have either said or heard the following two comments: “[tjhat little gal [a state rebuttal witness] was lying on the stand this afternoon, that was obvious;” and “[h]e will be found guilty, there is no other way it can go.”
The second issue arises from the state trial court’s denial of a continuance toward the end of the trial to enable the defense to bring in a newly-discovered witness. The witness supposedly would testify to having seen the victim several days after the date upon which the murder was charged to have occurred.
The district court referred Case’s petition to the United States Magistrate for recommended findings and disposition. Based solely upon his review of the state court record, the magistrate determined that by refusing to hold a hearing at which the jurors could be examined, the state trial court “effectively denied Petitioner the opportunity to present his claim of bias and prejudice,” thus inflicting “a wrong of federal constitutional dimension.” Following a hearing at which the missing witness testified, the magistrate found against Case on the continuance issue.
The magistrate recommended that Case’s petition be granted unless the state retried him within 120 days. The district court adopted the magistrate’s recommendations and entered judgment accordingly. We reverse on the jury misconduct issue, and affirm on the continuance issue.
I.
JUROR MISCONDUCT ISSUE
A. Background.
The guilt phase of Case’s trial lasted five and one-half trial days, beginning Tuesday, October 19, 1982 and ending at midday on Tuesday, October 26, 1982. The alleged incident of juror misconduct occurred Monday afternoon, October 25, apparently after court had recessed for the day. However, it did not come to light until after the guilt phase of Case’s trial had concluded and the jury had returned a guilty verdict.
Deloris Reich, an individual unconnected with the trial, testified that between 4:20 p.m. and 4:40 p.m. Monday afternoon she observed “maybe a few” more than twelve people, in various groupings, cross the street during a period spanning a few minutes. R.Vol. XI at 2236, 2238, 2243-44. At another point Reich stated that “people started coming across the street, quite a few people. I don’t have any idea how many. They just kept coming.” R.Vol. X at 1902. They were crossing from the direction of the courthouse toward the vicinity where the jurors’ cars were parked. R.Vol. XI at 2249-50. After viewing the jury the following day Reich was able to state positively that at least some members of the jury were among the people she observed crossing the street. R.Vol. X at 1903-07, 1911; R.Vol. XI at 2236-37.
As one group consisting of three or four men passed, Reich heard one of them say “[t]hat little gal was lying on the stand this afternoon, that was obvious.” R.Vol. X at 1902; R.Vol. XI at 2237. At the time Reich’s back was turned to the group and her attention was directed to her daughter who was in a parked vehicle, and with whom Reich had been conversing. Thus, Reich was not able to state who made the remark or who was in a position to hear it. R.Vol. X at 1902-03; R.Vol. XI at 2245.
A few minutes later as Reich was crossing the street to get to her own vehicle she passed two women, one of whom was heard by Reich to remark “[h]e will be found guilty, there is no other way it can go.” R.Vol. X at 1908; R.Vol. XI at 2238. Reich’s back was to the women when the remark was made, R.Vol. XI at 2246, and her attention was directed toward getting across the street. R.Vol. X at 1908. However, she turned upon hearing the remark and looked at the women, observing the side of one woman’s face. R.Vol. XI at 2246.
Reich testified “I will not and cannot swear that the lady on the jury is the one that said those words, nor a man on the jury said those words.” R.Vol. X at 1911. However, as indicated, Reich was firm in her conclusion that jurors were among those crossing the street, and she felt that the two ladies, one of whom made the remark in question, were members of the jury, but simply was unable to say “for absolutely sure.” R.Vol. XI at 2248-49. She expressed similar feelings with respect to at least one of the men in the group from which the other remark in question had been heard. Id.
Reich, who was aware that a trial was going on, thought the two remarks in question were odd, R.Vol. X at 1914, R.Vol. XI at 2246, but did nothing about the matter until the following day, Tuesday, when she called Pam Thompson, a radio reporter friend of hers. Reich asked Thompson about the trial and was told that the jury had found Case guilty. Reich told Thompson she was not surprised by a guilty verdict “because of what I heard.” R.Vol. XI at 2247.
The sentencing phase of Case’s trial commenced the following day, Wednesday, October 27. Apparently Thompson had Reich come to the courthouse that morning to see if she could identify members of the jury as those whom Reich had observed crossing the street. Reich was able to identify at least eight of the jurors (inclusive of the two alternates). R.Vol. X at 1907. Thompson then broadcast an account of what Reich had overheard. The matter came to the attention of Case’s counsel, who brought it up with the trial court immediately following the noon recess that same day. The court informed counsel that he had learned of the incident the previous evening, and had spoken to Reich on the telephone, but decided not to pursue the matter when Reich stated that she did not know if any jurors were involved.
Since Reich had purportedly identified some of the jurors that morning the trial court permitted representatives of the two sides to go to Reich’s home to record an interview with her. R.Vol. X at 1900. A motion by defense counsel for an immediate voir dire of the still-impaneled jury was denied.
At 3:30 p.m. that same afternoon, Wednesday, October 27, one of Case’s counsel, and an investigator for the state, returned to court with a tape of an interview with Reich in which she substantially recounted the events already described. The tape was played to the court and counsel in chambers. Case’s counsel then moved again for a voir dire of the jury and the motion was once again denied. R.Vol. X at 1917.
The following afternoon, Thursday, October 28, after the jury had retired to deliberate on Case’s sentence, the trial court held an evidentiary hearing on the jury misconduct issue. As the following exchange between the court and Case’s counsel indicates, the defense was not limited in any way as to what it could present in that hearing, with the exception of a voir dire of the jury:
“MR. MITCHELL: ... And I think the first thing that comes first is presenting whatever evidence I may have in that regard, Your Honor, in addition to what was submitted to the Court yesterday on the record [referring to the tape recording of Reich’s interview.]
THE COURT: I’ll be frank with you, nothing was submitted to the Court yesterday insofar as I could tell. But you may submit any other evidence. And I told you at that time you could.”
R.Vol. XI at 2231 (emphasis added).
Case’s counsel then produced Reich, who was examined and cross-examined under oath in open court, generally repeating what she had stated in the recorded interview. No other evidence was proffered.
At the conclusion of the hearing Case’s counsel moved in the alternative for a mistrial on the ground of jury misconduct, and, for the third time, that permission be granted to voir dire the jury because of the evidence presented by Reich. Both motions were denied without explanation, R.Vol. XI at 2250, although the trial court had explained at the outset of the eviden-tiary hearing that:
“THE COURT: I’m willing to listen to see if there was jury misconduct. And if there is jury misconduct and you can prove it to the Court, you are entitled, depending on when it occured, [sic] to a new trial, maybe to a new sentencing hearing. I don’t know.”
R.Vol. XI at 2232-33. See also R.Vol. IX at 1818-20. And, earlier, the court stated:
“But this is the way the lady sounded to me, and it just — we don’t know how many people are crossing the street.... She doesn’t know anything about this as to who said what to whom, and there isn’t any sense in pushing it.”
R.Vol. X at 1917 (emphasis added). Thus, it is a fair inference that the trial court found no factual basis for the claim of juror misconduct sufficient to justify a voir dire of the jurors.
Following the evidentiary hearing and the denial of Case’s motions to interrogate the jury or for a mistrial, the jury was brought back into the courtroom and announced their verdict that Case not suffer the death penalty. R.Vol. XI at 2252. The court then pronounced sentence and the jury was discharged.
On appeal to the New Mexico Supreme Court the issue was stated as whether “the trial court abused its discretion by refusing to declare a mistrial or voir dire jurors following an allegation of juror misconduct.” State v. Case, 676 P.2d at 246. The court declared the standard to be: “If there is no evidence of probable juror impropriety, the trial court does not abuse its discretion by refusing to voir dire the jury.” Id. The court made the following findings with respect to Reich’s testimony:
“A review of the record indicates that Reich was crossing the street with a group of people when she overheard the remarks but that she had no idea who made the remarks.... [S]he would not say positively that any comment she overheard was made by a juror or overheard by members of the jury. She admitted that she could not say that any juror said anything.... Reich was equivocal as she could not say that any juror made or heard the remarks in question."
State v. Case, 676 P.2d at 246-47 (emphasis added). Based on its findings, the Supreme Court concluded:
“There was insufficient proof of juror misconduct to overcome the presumption that the jury obeyed its instructions. We therefore find that the trial court did not abuse its discretion by refusing to voir dire the jury, nor by denying a motion for mistrial.”
Id. at 247.
Case’s initial appeal to this court was remanded to the United States District Court (Nos. 85-2937 and 86-1042, unpublished, March 6, 1987), for an evidentiary hearing at which either party could supplement the record on the jury misconduct issue. A hearing was held, but neither Case nor the state offered anything further. Thus, Case’s claim stands solely on the state court record and findings.
B. Discussion.
Our review of the district court’s decision centers on the effect and the deference, if any, to be accorded to the findings of the state courts. The magistrate’s report, adopted by the district court, omitted any discussion of the state court findings. The state argues that the district court improperly failed to accord a presumption of correctness to those findings. Case contends that his petition presents only a constitutional question of law, or one of mixed fact and law, requiring a de novo review of the record. More particularly, Case argues that the issue requires an independent federal review to determine whether there was sufficient evidence to compel a voir dire of the jurors:
“The issue in this case is not whether the jury was biased or even whether jury misconduct occurred but rather whether there was sufficient evidence of jury misconduct and the prejudicial nature of that misconduct to mandate voir dire of the jury on that subject. The ultimate issue of what amount of evidence is enough to require under the federal constitution an inquiry of the jurors is a question of law.”
Case’s Answer and Reply Brief at 12-13.
Sufficiency of the evidence can be considered to be a mixed question of law and fact. See Graham v. Wilson, 828 F.2d 656, 659 (10th Cir.1987), cert. denied, 484 U.S. 1069, 108 S.Ct. 1035, 98 L.Ed.2d 999 (1988); Herring v. Blankenship, 662 F.Supp. 557, 565 (W.D.Va.1987). Thus, according to Case, the state court findings are entitled to no deference.
The general rules are not in doubt. Explicit and implicit findings by state trial and appellate courts “shall be presumed to be correct,” 28 U.S.C. § 2254(d), unless one of seven factors listed in section 2254(d) are present, or the federal court concludes that the state court findings are not fairly supported by the record. Rushen v. Spain, 464 U.S. 114, 120, 104 S.Ct. 453, 456, 78 L.Ed.2d 267 (1983); Marshall v. Lonberger, 459 U.S. 422, 432, 103 S.Ct. 843, 849, 74 L.Ed.2d 646 (1983); Sumner v. Mata (Sumner I), 449 U.S. 539, 545-47, 550, 101 S.Ct. 764, 768-769, 770, 66 L.Ed.2d 722 (1981); Baca v. Sullivan, 821 F.2d 1480, 1482 (10th Cir.1987); Bedford v. Smith, 543 F.2d 726, 729-30 (10th Cir.1976).
The presumption applies to basic, primary, or historical facts and the inferences that can properly be drawn regarding them. Marshall v. Lonberger, 459 U.S. at 431-32, 103 S.Ct. at 849-50; Cuyler v. Sullivan, 446 U.S. 335, 341-42, 100 S.Ct. 1708, 1714, 64 L.Ed.2d 333 (1980) (“ ‘[I]ssues of fact’ refers ‘to what are termed basic, primary, or historical facts: facts “in the sense of a recital of external events and the credibility of their narrators ”(emphasis added) (quoting Townsend v. Sain, 372 U.S. 293, 309 n. 6, 83 S.Ct. 745, 755 n. 6, 9 L.Ed.2d 770 (1963))); Phillips v. Murphy, 796 F.2d 1303, 1306 (10th Cir.1986).
No presumption of correctness attaches to legal conclusions or determinations on mixed questions of law and fact. Those are reviewed de novo on federal habeas review. Sumner v. Mata (Sumner II), 455 U.S. 591, 597, 102 S.Ct. 1303, 1306, 71 L.Ed.2d 480 (1982); Chaney v. Brown, 730 F.2d 1334, 1346 (10th Cir.1984). However, the presumption of correctness will continue to apply to any findings of fact underlying mixed questions, typically “ultimate” constitutional issues such as due process. Marshall v. Lonberger, 459 U.S. at 431-32, 103 S.Ct. at 849-50; Sumner II, 455 U.S. at 597, 102 S.Ct. at 1306; Archuleta v. Kerby, 864 F.2d 709, 711 (10th Cir.), cert. denied, — U.S. -, 109 S.Ct. 2108, 104 L.Ed.2d 669 (1989); Hunt v. Oklahoma, 683 F.2d 1305, 1309 (10th Cir.1982). This will even be the case when, as here, those findings might resolve or dispose of the “ultimate” mixed question. See, e.g., Baca v. Sullivan, 821 F.2d at 1482; Phillips v. Murphy, 796 F.2d at 1306.
In the broadest terms, the issue presented here is whether Case’s due process rights were infringed when the trial court refused permission to voir dire the jury regarding the alleged juror misconduct. This ultimate issue of due process is a mixed question of law and fact. Cf. Chaney, 730 F.2d at 1346; Hunt, 683 F.2d at 1309. Thus, the section 2254(d) presumption does not apply to this ultimate issue.
However, whether or not the jurors made or heard the comments in question is unquestionably a matter of basic, primary, or historical fact. See Rushen v. Spain, 464 U.S. at 120, 104 S.Ct. at 456. That is especially true where, as here, the fact determination necessarily included an evaluation of the demeanor and credibility of the sole witness, Deloris Reich. Questions of witness credibility are usually considered to be issues of fact. See Brown v. Allen, 344 U.S. 443, 506, 73 S.Ct. 397, 445, 97 L.Ed. 469 (1953). The state trial court was in a far better position than any other tribunal to assess the credibility of Reich, having taken her live testimony. Such practical considerations are relevant to distinguishing issues of fact and law. As the Supreme Court suggested in Miller v. Fenton, 474 U.S. 104, 113-14, 106 S.Ct. 445, 451-52, 88 L.Ed.2d 405 (1985):
“[T]he decision to label an issue a ‘question of law/ a ‘question of fact/ or a ‘mixed question of law and fact’ is sometimes as much a matter of allocation as it is of analysis. [Citation omitted]. At least in those instances in which Congress has not spoken and in which the issue falls somewhere between a pristine legal standard and a simple historical fact, the fact/law distinction at times has turned on a determination that, as a matter of the sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.”
See also Graham v. Wilson, 828 F.2d 656, 659 (10th Cir.1987), cert. denied, 484 U.S. 1069, 108 S.Ct. 1035, 98 L.Ed.2d 999 (1988).
As our summary of the record discloses, the state courts both explicitly and implicitly determined that at best Reich’s testimony was equivocal and uncertain. “[S]he could not say that any juror made or heard the remarks in question.” State v. Case, 676 P.2d at 247.
Case urges that the testimony was enough to trigger a constitutional requirement for further investigation by way of a voir dire of the jurors. We disagree. Giving full deference to the state’s findings, Reich’s testimony supports nothing more than speculation and conjecture. No constitutional duty to resort to the drastic step of a post-verdict voir dire of a jury can arise on evidence which raises nothing more than a mere possibility of misconduct. See Tanner v. United States, 483 U.S. 107, 126, 107 S.Ct. 2739, 2750, 97 L.Ed.2d 90 (1987).
Although Case invokes virtually all of the exceptions to the presumption of correctness under 28 U.S.C. § 2254(d), we conclude that none apply. Other than the fact that the trial judge declined to voir dire the jurors regarding the alleged misconduct, Case can identify absolutely no shortcomings in the procedure by which the material facts were investigated, developed, and resolved. The judge gave Case every opportunity to investigate the incident, using nonjuror sources. Case received a full, fair, and adequate evidentiary hearing to present his arguments. After hearing all the testimony and arguments presented on the issue, the trial judge ruled against Case on the merits, and that was affirmed by the state supreme court. On federal habeas review Case was given a further chance to present evidence on the jury misconduct issue and chose not to do so. With respect to the final exception under section 2254(d), despite Case’s argument to the contrary, our independent review of the state court record satisfies us that the factual determinations by the state courts are “fairly supported.” In short, no section 2254(d) exception applies to diminish or avoid the statutory presumption of correctness which we must accord to the state court findings.
Finally, if a federal court seeks to avoid the presumption under one of these eight exceptions, it must explain its reasons in writing. Sumner I, 449 U.S. at 551, 101 S.Ct. at 771 (“[W]e now hold that a habeas court should include in its opinion granting the writ the reasoning which led it to conclude that any of the first seven factors were present, or the reasoning which led it to conclude that the state finding was ‘not fairly supported by the record.’ ”). The federal magistrate failed to explain clearly, as required by Sumner I, the reasons why he chose to overlook the section 2254(d) presumption. In fact, no reference to section 2254(d) is made at all. Even assuming the magistrate did consciously consider the import of section 2254(d) but found the presumption not to apply because of one of the enumerated exceptions, we are unsure which exception the magistrate intended. We do not believe the magistrate’s findings, adopted by the district court, fulfilled the directives of Sumner I, and Smith v. Phillips, 455 U.S. 209, 218, 102 S.Ct. 940, 946, 71 L.Ed.2d 78 (1982).
According the full presumption of correctness to the state court findings on the basic and primary facts from which this issue arises we cannot conclude that the state trial court violated Case’s constitutional rights when it refused to conduct a post-verdict voir dire of the jury. The district court’s decision to the contrary, and which failed to set forth reasons why the presumption of correctness should not apply, is erroneous.
II.
In his petition to the district court Case also alleged that he was denied his right to present evidence in his own defense when he was denied a continuance to obtain the testimony of a witness, Michelle Kent, who was alleged to have seen the victim a few days after the date upon which the victim was supposed to have been murdered. After a hearing at which Ms. Kent testified, the magistrate concluded that Kent’s tentative identification testimony would not have been sufficient to create a reasonable doubt that did not otherwise exist in the minds of the jurors. Therefore, Case was not materially prejudiced by the trial court’s refusal to grant a continuance. The district court adopted the magistrate’s recommendation, and denied Case’s petition on this issue.
As previously indicated, the guilt phase of Case’s trial began on Tuesday, October 19, 1982, and concluded at midday on Tuesday, October 26, 1982. On Friday afternoon, October 22, 1982, during the case-in-chief for the defense, Case’s counsel learned that a woman may have seen the victim alive after the date upon which she was alleged to have been murdered. Counsel represented to the court that the witness, who turned out to be Michelle Kent, was unavailable and that counsel did not know her whereabouts, although an investigator was attempting to find out that information. Case’s counsel then stated to the court: “I doubt very seriously the Court would grant us a continuance to find this particular witness. If the Court is going to grant us a continuance, that is great and I would move for one on this particular witness, but the declarant is un-available_ We have been unable to locate her.” R.Vol. VII at 1355. A second request for a continuance was made the following Monday, after the defense had rested and the state had completed its rebuttal. R.Vol. VIII at 1573-75. Case’s counsel represented to the court at that time that Michelle Kent had been located, and he moved for a continuance, “to rent a plane, or whatever, to fly that girl back out here so I can put her on the stand.” R.Vol. VIII at 1574. Counsel then made a proffer that Kent would testify “she did see the victim on the sixth day of January, five days after her alleged murder, and that the victim was alive and well, and that Kent did recognize her.” Id. The state objected on the ground, among other things, “that the defense was asking for an opportunity to reopen its case.” Id. at 1575. The court thereafter denied the motion for a continuance. The third request for a continuance came the next day, midway through surre-buttal. At that time defense counsel was still seeking time to prepare a witness certificate. R.Vol. VIII at 1613-15. The trial judge again denied the motion and stated that if the defense had spent as much time investigating as they had in filing thirty motions right before the trial they might have found the witness sooner. R.Vol. VIII at 1616.
Kent testified at the hearing on this issue before the United States Magistrate. She stated that she knew the victim, Nancy Mitchell, pretty well, having gone to school with her during the several months prior to her death. Kent and Mitchell were two of the eight cheerleaders for the school, practicing together daily, and traveling together to football games at least once a week. In addition, Mitchell had taken Kent home “a lot of times,” and Kent visited the Mitchell home on two or three occasions. Kent further testified that Mitchell had “real blonde, blonde hair and it was real straight.” She also described it as “white, real white.” EHT at 11.
With respect to the incident in question, Kent testified that a few days, maybe a week, after January 1, 1982, she saw a woman whom she believed to be Nancy Mitchell. On that occasion, Kent was standing with Tammie Simmons in front of her house on the west side of Halgaino, three houses south of Church Street, a four lane roadway. The two women heard someone honk a car horn. They looked in the direction of the noise. Kent saw a person for a few seconds at least 100 feet away, driving a blue car, which was moving onto Church Street from the drive-through at the Pizza Mill, which was located on the northeast corner of the intersection. The woman driving the car waved. And, she turned herself towards Kent such that Kent could see her hair and part of her face. Kent testified:
“[W]e heard someone honk and we looked and she was waving, and she had blonde hair, and it looked like her, I am not for sure it was, but it looked like her, and she was waving at us, so I said, ‘Look, there is Nancy’ or ‘It looks like Nancy’ because she was missing no one had seen her, and so we waved.”
EHT at 10. Kent acknowledged that Mitchell’s car was a gold Camaro, not the blue car which Kent observed. EHT at 15.
After listening to Kent’s testimony, and observing her demeanor on the witness stand, the magistrate found that Kent’s testimony was equivocal, and called attention to the following excerpt from Kent’s testimony:
“Q. Now, Ms. Kent, you are not at all sure this was Nancy Mitchell, are you?
A. It looked like her. I don’t know if it was or not.
Q. You don’t know if it was or not?
A. No.
Q. It could have been someone else?
A. It could have been.
Q. You are uncertain as to whether it was Nancy Mitchell or not?
A. Uh-huh.
Q. Have you ever told anyone you were positive it was Nancy Mitchell?
A. No.
Transcript at 20-21. On re-direct examination, Kent responded as follows:
Q. How well do you know Nancy Mitchell?
A. Pretty well.
Q. Okay. And you saw this person, you saw her hair and at least half of her face; is that right?
A. Uh-huh.
Q. Okay. Let me put it this way: Would you say that you were pretty sure that it was Nancy Mitchell.
A. It looked a lot like her.
Transcript at 24.”
Amended Magistrate’s Proposed Findings and Recommended Disposition at 3-4.
With respect to cases on direct appeal, we review the district court’s decision to deny a continuance for abuse of discretion, and do not reverse unless we conclude that the denial was arbitrary or unreasonable and materially prejudiced the appellant. See United States v. West, 828 F.2d 1468, 1469 (10th Cir.1987). In West, we stated that “[t]he determination whether ‘the denial of a continuance constitutes an abuse of discretion turns largely upon the circumstances of the individual case.’ ” Id. at 1469-70 (quoting United States v. Flynt, 756 F.2d 1352, 1359 (9th Cir.1985)). We thereafter listed several factors which may be considered in determining whether a denial of a continuance is arbitrary and unreasonable, including:
“the diligence of the party requesting the continuance; the likelihood that the continuance, if granted, would accomplish the purpose underlying the party’s expressed need for the continuance; the inconvenience to the opposing party, its witnesses, and the court resulting from the continuance; a need asserted for the continuance and the harm that appellant might suffer as a result of the district court’s denial of the continuance. No single factor is determinative and the weight given to any one may vary, depending on the extent of the appellant’s showing on the others.”
United States v. West, 828 F.2d at 1470 (citations omitted).
However, when a denial of a continuance forms a basis of a petition for a writ of habeas corpus, not only must there have been an abuse of discretion, but “it must have been so arbitrary and fundamentally unfair that it violates constitutional principles of due process.” Hicks v. Wainwright, 633 F.2d 1146, 1148 (5th Cir.1981). See Nieto v. Sullivan, 879 F.2d 743, 749 (10th Cir.1989) (“The standard that governs in a habeas proceeding ‘is “the narrow one of due process, and not the broad exercise of supervisory power.” ’ ” (quoting Darden v. Wainwright, 477 U.S. 168, 181, 106 S.Ct. 2464, 2471, 91 L.Ed.2d 144 (1986) (quoting in turn Donnelly v. DeChristoforo, 416 U.S. 637, 642, 94 S.Ct. 1868, 1871, 40 L.Ed.2d 431 (1974)))). “There are no mechanical tests for deciding when a denial of a continuance is so arbitrary as to violate due process.” Ungar v. Sarafite, 376 U.S. 575, 589, 84 S.Ct. 841, 850, 11 L.Ed.2d 921 (1964).
The parties devote a great deal of argument to questions relating to the diligence of Case’s counsel, usefulness of the continuance, inconvenience, and other factors listed in West. However, we must focus on Case’s need for a continuance and the prejudice or lack of prejudice resulting from its denial, in the context of a fundamental fairness evaluation.
We have read the entire record in this case and are convinced that the trial court’s denial of a continuance did not undermine the fundamental fairness of Case’s trial. Case argues that Kent’s testimony was unique and absolutely fundamental to his defense. Although he was able to present two other witnesses, a husband and wife, who stated that they had seen the victim, Mitchell, at a party on a date subsequent to the alleged date of her murder, that testimony had been discredited by evidence from the state medical examiner that Mitchell could not have been alive on the date of the party. Kent’s alleged sighting was within a shorter and more credible time frame.
However, the tentative and equivocal nature of Kent’s testimony with respect to the fleeting sighting of a girl in a moving automobile, which was not Mitchell’s, more than one hundred feet away from Kent, must be evaluated in the context of the entire trial. Case’s own testimony placed him in the company of the victim and at the scene of the incident in question. There was testimony that prior to that time Case and others had discussed taking the victim to a location and forcing her to engage in sexual intercourse. There was eyewitness testimony that at the place and time in question, the victim was assaulted sexually by Case and others, and beaten into a state of unconsciousness. According to eyewitness testimony Case assisted in dragging the unconscious victim away and abandoning her. In view of this and other evidence, we agree with the magistrate’s finding that “Kent’s tentative identification testimony would not have been sufficient to create a reasonable doubt that did not otherwise exist in the mind of the jurors.” Accordingly, it cannot be said that the district court erred in its conclusion that Case’s constitutional rights were not violated by the trial court’s refusal to grant a continuance to obtain Kent’s testimony.
III.
CONCLUSION
We have carefully considered all of the arguments of the parties, addressing those we deemed necessary. For the reasons stated herein, we AFFIRM the denial of Case’s petition for a writ of habeas corpus on the continuance issue, and REVERSE the conditional grant of the writ on the juror misconduct issue.
. State v. Case, 100 N.M. 714, 676 P.2d 241 (1984).
. Because the magistrate did not receive any live testimony on the issue, but merely made findings based upon a review of the state record, the “clearly erroneous” standard does "not apply with full force" to the magistrate’s findings, Archuleta v. Kerby, 864 F.2d 709, 711 n. 2 (10th Cir.), cert. denied, — U.S. -, 109 S.Ct. 2108, 104 L.Ed.2d 669 (1989); Castleberry v. Alford, 666 F.2d 1338, 1342 n. 2 (10th Cir.1981), or, more accurately stated, the findings are not given the special deference normally accorded findings based upon a court’s assessment of witnesses’ credibility. See Anderson v. Bessemer City, 470 U.S. 564, 575, 105 S.Ct. 1504, 1512, 84 L.Ed.2d 518 (1985).
. 28 U.S.C. § 2254(d) lists the following factors by which the presumption of correctness may be avoided:
“(1) that the merits of the factual dispute were not resolved in the State court hearing;
(2) that the factfinding procedure employed, by the State court was not adequate to afford a full and fair hearing;
(3) that the material facts were not adequately developed at the State court hearing;
(4) that the State court lacked jurisdiction of the subject matter or over the person of the applicant in the State court proceeding;
(5) that the applicant was an indigent and the State court, in deprivation of his constitutional right, failed to appoint counsel to represent him in the State court proceeding;
(6) that the applicant did not receive a full, fair, and adequate hearing in the State court proceeding; or
(7) that the applicant was otherwise denied due process of law in the State court proceeding;
(8) or unless that part of the record of the State court proceeding in which the determination of such factual issue was made, pertinent to a determination of the sufficiency of the evidence to support such factual determination, is produced as provided for hereinafter, and the Federal court on a consideration of such part of the record as a whole concludes that such factual determination is not fairly supported by the record_”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BREYER, Circuit Judge.
The appellants, Tonora Archibald and her mother Gertrude Archibald, brought this civil rights action under 42 U.S.C. § 1983, and pendant claims under state law, against two Boston policemen, the police commissioner and the City of Boston. They claimed damages arising out of a “warrant-less search” of their home. The district court directed verdicts in favor of the commissioner and the City, and submitted the case against the policemen to a jury which found in favor of the policemen. Appellants attack the judgments against them on various grounds and seek a new trial. As they conceded at oral argument, however, they cannot succeed on this appeal if the warrantless entry into their home was in fact justified under the Fourth Amendment. We believe that undisputed facts in the record of this case show that it was.
The following facts were uncontroverted at trial: On February 25, 1980, Mr. Kamya Tivay called Boston police headquarters reporting that he had been robbed. Two policemen, defendants in this case, immediately responded and contacted Tivay, who told them that about ten to fifteen minutes earlier a man, whom he described in considerable detail, had robbed him of $105 and his coat. Tivay added that he had just chased the robber into apartment 2005 at 300 Ruggles Street, a half-block away. They all went to the apartment. The police officers pointed to the door of apartment 2005, and, after Tivay said he was certain the robber had entered it, the policemen knocked. There was no response, but the officers heard noises that sounded like furniture being moved inside. After announcing their presence and hearing only these noises in response, one of the officers broke in through a window. When they entered, guns drawn, they found no robber, but only a small child, who was seriously frightened by the knocking and the entrance. The issue before us is whether on these facts a warrantless entry was justified.
Appellants recognize that a warrantless entry and search of an apartment can escape the Fourth Amendment’s prohibition of “unreasonable” searches because an emergency, reasonably so identified, makes such an entry “reasonable.” They agree that such an entry is reasonable if justified by “exigent circumstances” of the sort described in Warden v. Hayden, 387 U.S. 294, 87 S.Ct. 1642, 18 L.Ed.2d 782 (1967) (police entered a house to search for an armed robbery suspect who had been seen entering that house only five minutes before), or if the police were in “hot pursuit” of a suspect, as in United States v. Santana, 427 U.S. 38, 96 S.Ct. 2406, 49 L.Ed.2d 300 (1976) (the suspect, in view of the police, retreated through a doorway into her own home). They argue, however, that Hayden is limited to cases involving guns, physical danger, and five minutes of elapsed time, and that Santana requires “some sort of chase” involving (in appellants’ words) the “sighting” of the suspect by the police officers.
We do not believe that Hayden or Santana are as limited in their scope as appellants suggest. Certainly other courts have read them as permitting warrantless searches in situations similar to this one. Thus, in United States v. Mitchell, 457 F.2d 513 (6th Cir.), cert. denied, 409 U.S. 866, 93 S.Ct. 161, 34 L.Ed.2d 114 (1972), a warrant-less entry and arrest was upheld although the police relied upon witnesses, not their own observations, in tracing a bank robbery suspect to his home where he was arrested two hours after the robbery. In United States v. Scott, 520 F.2d 697 (9th Cir. 1975), cert. denied, 423 U.S. 1056, 96 S.Ct. 788, 46 L.Ed.2d 645 (1976), a still more attenuated chain of identifying testimony led the police to an apartment house, where they invaded an apartment on the strength of scuffling noises and arrested suspects an hour and forty-five minutes after a bank robbery. See also People v. Escudero, 23 Cal.3d 800, 153 Cal.Rptr. 825, 592 P.2d 312 (1979) (suspect need not be kept physically in view at all times); Commonwealth v. Montgomery, 246 Pa.Super. 371, 371 A.2d 885 (1977) (Hayden governs even though bystander told the victim, not the police, where robbers were); State v. Gallo, 20 Wash.App. 717, 582 P.2d 558 (1978) (victim told police that assailant had gone to house next door); 2 W. LaFave, Search & Seizure § 6.1 & n.66 (1978). Moreover, nothing in the language of Santana or Hayden suggests that all other cases involving chases, “hot pursuit” or “exigent circumstances” must involve “sightings” or exactly similar facts to justify warrantless entry or search. Rather those eases exemplify the types of fact that offer justification. And, such facts are present here.
The crime described to the police officers was a serious crime that is by definition accompanied by violence. The witness seemed trustworthy, for he was able to give a detailed description of the assailant, and to explain coherently what had occurred. He described his own “pursuit” up to the point the officers took over. And, he stated unequivocally that the thief had entered appellants’ apartment, apartment 2005, and led the police unerringly to that apartment. The police officers arrived at the apartment no more than twenty to twenty-five minutes after the theft. Their suspicions were corroborated by the noise inside the apartment, which showed that someone was there, and by the refusal of the occupant to respond to their announcements. They thus could reasonably have believed at that point that a robbery suspect was in the apartment and that further delay could lead to the suspect’s escaping, hiding evidence, or injuring any other apartment occupant. These facts support, in our view, a reasonable perception of exigent circumstances. The mere fact that the police were in fact wrong and that only a child was inside the apartment does not weaken the reasonableness of the perception. Indeed, any contrary ruling would undesirably prevent the police from entering an apartment in other cases similar to this one but for the fact that the suspect is in the apartment holding the child prisoner. The only case that even arguably supports appellants is Wallace v. King, 626 F.2d 1157 (4th Cir. 1980), cert. denied, 451 U.S. 969, 101 S.Ct. 2045, 68 L.Ed.2d 348 (1981), in which the court held that mere grounds to believe that a suspect was present in a house does not justify dispensing with a warrant. But King involved a domestic relations matter and testimony that there was adequate time to secure a warrant — two facts that make the need for warrantless entry significantly less compelling there than in the case before us.
Because the undisputed facts show the search at issue was constitutional, the district court properly denied appellants’ motion for a new trial. Moreover, we need not pass upon appellants’ other assignments of error, which involve admissibility of evidence which was intended to show bad faith on the part of defendants or evidence of damages, for, even if they were well-founded, they would involve errors that were either harmless or irrelevant in the face of the basic validity of the entry and the search. Appellants’ case against the police commissioner and the City of Boston, based upon a charge of inadequate supervision of the police officers, depends, at a minimum, upon a possible finding that there was an unreasonable search. Hence, the directed verdicts in those cases were proper.
The judgments are affirmed.
. Appellants make much of the fact that Mr. Tivay did not explicitly state either that the man who relieved him of his property was armed or that he had used violence. Thus, the appellants claim that the alleged crime was no more than a larceny, compare Mass.Gen.Laws Ann.ch. 265, § 17, 19 (West 1970) with Mass. Gen.Laws Ann.ch. 266, § 30 (West 1970 and Supp.1981), and that the police officers were not entitled to enter an apartment without a warrant in the absence of a crime of violence. Even if the exigency involved in a particular crime diminishes as does the significance of the crime, we note that neither was the crime here reported insignificant, nor is violence a prerequisite to a finding of exigent circumstances. See, e.g., United States v. Santana, supra (suspect had just completed a narcotics transaction).
. The court dismissed the complaints against the City and commissioner on the grounds that there had been no showing that the police officers’ actions were the custom or policy of the City or that any alleged failure to supervise amounted to more than mere negligence. Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed.2d 561 (1976). Because we hold that the entrance was constitutional, we need not consider whether, if unconstitutional, it might lead to a finding of liability against the City and commissioner.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
K. K. HALL, Circuit Judge:
Willis Lee Johnson appeals from an order of the district court affirming a decision of the Secretary of Health, Education and Welfare that he was not entitled to “black lung” benefits sought pursuant to Part B of the Federal Coal Mine Health and Safety Act of 1969, as amended (the Act), 30 U.S.C. § 901 et seq., and the regulations promulgated thereunder. Our scope of review is confined to ascertaining whether the Secretary’s denial was supported by “substantial evidence.” If such support exists, we must affirm. If not, we must reverse, 30 U.S.C. § 923(b), incorporating by reference § 205(g) of the Social Security Act, 42 U.S.C. § 405(g); see Laws v. Cele-brezze, 368 F.2d 640, 642 (4th Cir. 1968). In the instant case, we conclude that the Secretary failed to give proper consideration to certain evidence, and we must remand for further consideration.
There are three evidentiary items which were not given proper treatment:
1. X-ray of July 11, 1974;
2. Pulmonary function test of July 11, 1974;
3. Personal physical examinations.
First, the X-ray of July 11, 1974, was read as positive for pneumoconiosis by claimant’s physician, but was not reread by the Secretary. Although the Secretary makes reference to this film, he concludes that “the consensus of medical opinion is that the X-ray evidence does not establish the existence of pneumoconiosis' prior to July 1,1973.” Thus, the Secretary in effect ignored the film of July 11, 1974, and relied instead on other films which either had been read initially, or on rereading, as negative.
Congress has taken notice of the fact that negative X-rays are not conclusive indicators of the absence of pneumoconiosis. S.Rep.No.743, 92d Cong., 1st Sess., reprinted in [1972] U.S.Code Cong. & Admin.News, pp. 2314, 2316. It is therefore highly conceivable that although the films relied upon by the Secretary were negative, the July 11, 1974, films could have been a positive indicator of pneumoconiosis. At least, the claimant should get the benefit that proper consideration of all the evidence, including this film, would provide. 30 U.S.C. § 923(b).
Second, the pulmonary function test of July 11, 1974, administered by Dr. Frank T. Varney, rendered values which, if related back to June 30, 1973, could have qualified claimant for benefits under the interim regulations. 20 C.F.R. § 410.490(b). However, the Secretary discounted the results of this test on the basis of a report from Dr. Harold I. Passes which read in pertinent part:
I have further examined later reports . at which time an F.E.V.j value was recorded as 2.4 liters with an M.V.V. of 78 liters per minute, and I note that in the accompanying tracings there is no reproducibility of the study, and therefore, no conclusion can be made that the tests are valid or that they are reliable.
A review of the record, briefs and oral arguments does not reveal exactly what Dr. Passes meant by “reproducibility,” and how he came to this conclusion. Additionally, Dr. Varney did not reveal the calculations upon which he based his test findings for forced expiratory volume per second, one of the criteria measured in a pulmonary function test. On remand, Dr. Varney should be given the opportunity to explain specifically how he obtained the various values in the pulmonary function test, and if the experts who might review the test at the request of the Secretary do not concur in its validity, they should explain in detail, and not in conclusory terms, why the test is not valid.
Third, the record contains results of two personal physical examinations administered on October 30, 1972, and on November 7,1973. The first examination revealed some signs of respiratory impairment, as did the second examination. More importantly, Dr. M. S. Wells, who conducted the second examination, stated that plaintiff was suffering from a chronic obstructive pulmonary disease, that plaintiff was disabled and unable to perform sustained work or to work in a dusty environment. Although the Secretary recognized that several physical examinations were conducted, he stated that “there is no evidence of a severe respiratory impairment.” This ' suggests that the Secretary may not have considered the report of Dr. Wells in contravention of his duty to consider all of the evidence as required by 30 U.S.C. § 923(b).
This case must be remanded to the Secretary for further consideration of the claim and with directions to properly consider all the evidence submitted by the claimant. Furthermore, although some of the evidence discussed in this opinion was obtained in tests conducted after the June 30, 1973, cutoff date, it is now well established in this circuit that the Secretary must consider post-cutoff date evidence and indicate the weight it is given. Talley v. Mathews, 550 F.2d 911 (4th Cir. 1977); Arnold v. Secretary of Health, Education and Welfare, 567 F.2d 258 (4th Cir. 1977).
REMANDED.
. The doctor’s report stated:
The percussion note was resonant over both lungs. Auscultation revealed an occasional coarse rale, most all of which disappeared following cough.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
JOHN R. BROWN, Chief Judge:
This case presents aspects of the procedures used to enforce an internal revenue summons. It involves not only the rights of the nontaxpayer witnesses summoned but those of the intervenor taxpayer as well. To wipe out an already worn out cliche, the slate is clean, but not because of a lack of learning earlier recorded. Rather the slate has been wiped clean of a good deal—including, undoubtedly, some of our own declarations in this prolific field. What brings this all about is the decision we have been waiting for in Donaldson, which affirmed our Mercurio decision.
In August 1968, the IRS was conducting an investigation into the tax liability of Taxpayer Donald Pollack for the years 1963-65. It served summonses under the authority of 26 U.S.C.A. § 7602 to compel the production of records in the possession of Ruth Roth-man, Ethel and Gene Snyder, and Roger Newman as president and on behalf of the Imperial Hotel, Inc.
In December 1968 the IRS sought judicial enforcement of the summonses under 26 U.S.C.A. § 7402(b) and § 7604 (a). To each petition was appended an affidavit that Special Agent Bittman (Agent) was conducting an investigation to determine the correctness of Taxpayer’s returns, the failure of the summoned parties to respond, and the necessity of these records to ascertain the tax liability of Taxpayer.
The District Court issued an order directing the respondents to show cause why the summonses should not be enforced. Newman for himself and for Imperial Hotel contested enforcement. Following the traditional pattern under the Civil Rules, Newman responded paragraph by paragraph. He admitted each allegation except that he expressly disclaimed knowledge sufficient to permit him to affirm or deny the allegations that this
(i) “ * * * is a proceeding brought under authority of Sections 7402(b) and 7604(a) of the Internal Revenue Code of 1954, to judicially enforce an Internal Revenue Service summons”
and that
(ii) “ * * * petitioner, [Agent] Bittman, is conducting an investigation for the purpose of ascertaining the correctness of income tax returns filed by Donald A. Pollack for the years 1963 through 1966.”
To this, perhaps out of a nostalgic hope that a federal court would heed state pleading practices, he threw in for good measure a blunderbuss denial of all that he had not expressly admitted or qualified.
Taxpayer sought leave to intervene. In the proposed answer to the petition for enforcement, Taxpayer alleged that Agent was in bad faith in issuing summonses, that he was simply looking for evidence to use in a criminal proceeding, that the summons to Newman was overly broad and lacking in relevance to Taxpayer’s liability, that Agent lacked personal knowledge of the records requested in the summons, and that the summons would violate the Fourth and Fifth Amendment rights of Taxpayer.
The District Court granted each petition to enforce the summonses. As for the intervention of Taxpayer, the Court allowed intervention and then prescribed what was described as a limited appearance in the proceedings before Agent, although this appearance turned out to be one giving Taxpayer a ringside seat, in which Taxpayer could not only see, look, and listen, but also could speak though no one was bound to listen and certainly not to act.
Taxpayer and Newman—this always includes the hotel-appeal from the decree of enforcement, and the Government cross appeals from the Judge-imposed surveillance rights under Paragraph 2 (see note 10, supra).
There is always the temptation to strike out on the “big issue” but we resist this importunity, not because we would lessen the words for posterity, but rather because the little issues shrink the big ones to like size.
Newman’s Appeal
Newman asserts that before the summons can be enforced, he must be afforded an evidentiary hearing conducted under the Federal Rules of Civil Procedure at which he must be allowed discovery. We reject these contentions and hold that the show cause procedures used to enforce the summonses were adequate, proper, and reveal nothing requiring judicial exploration.
Of course Powell requires the Government to “show that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner’s possession, and that the administrative steps required by the Code have been followed—in particular, that the ‘Secretary or his delegate,’ after investigation, has determined the further examination to be necessary and has notified the taxpayer in writing to that effect.” 379 U.S. at 57-58, 85 S.Ct. at 255, 13 L.Ed.2d at 119. But that is a long way from saying as did the discredited Local 174 momentarily that the summoned witness (or taxpayer) can grind it all to a halt if he simply challenges the summons in the enforcement proceeding.
Before the Government is called upon to make this showing, the summoned party must raise in a substantial way the existence of substantial deficiencies in the summons proceedings. Only when so raised is there any need for an evidentiary hearing or—in anticipation of it—the traditional pretrial discovery mechanisms which Roundtree recognizes with appropriate limitations.
To ascertain whether there is any basis for questioning the summons, the traditional show cause order is an effective and appropriate procedural tool. Indeed, it harmonizes procedure with the substantive principle that puts the burden on the summoned party “of showing an abuse of the court’s process,” Powell (note 17, supra). In no way does its use extinguish the adversary proceeding which the decisions call for. Rather it is a principal means by which the enforcing Court can determine whether there is anything to “hear” and if so to give proper scope and direction to an orderly, but expeditious, adjudication of the points in controversy. And contrary to the contention of both Newman and Taxpayer, that its use somehow destroys the jurisdiction of the enforcing Court, the show cause device is proper and in keeping with the Federal Rules of Civil Procedure since F.R.Civ.P. 81(a) (3) expressly recognizes that in enforcement proceedings the rules apply “except as otherwise provided by statute or by rules of the district court or by order of the court in the proceedings” (emphasis added). And Donaldson spells out that the District Court “may limit the application of the [Federal] rules in a summons proceeding.” 400 U.S. at 528-529, 91 S.Ct. at 541, 27 L.Ed.2d at 588.
Here the response to the show cause order was a juridical blank. The answer admitted all save the inconsequential “lack of knowledge” allegations. Not even in the most conclusory terms did Newman attack the summons proceedings along the Powell lines (see note 17, supra) by charging that there was an improper purpose behind the summons, that there was any harassment, that there was any lack of good faith, or that the summons was overreaching or vague. Nor was there even any claim that the summons to supply the documents (see note 6, supra) was overreaching, imposed unreasonable burdens on the producer, or would be difficult or impossible to comply with.
Newman did not raise a single issue. If the objection of the witness is to be helpful to the taxpayer the witness must bear the dual burden of raising and establishing the claimed deficiencies. Otherwise it is the hand of Esau but the voice of Jacob.
The District Court’s order enforcing the summons as to Newman is correct and affirmed.
Taxpayer’s Intervention
Taxpayer appeals from the order enforcing the summons as to each of the named witnesses. Basic to this is the question of Taxpayer’s right to be in the case at all as an intervenor. The Government urges on cross appeal (i) that the District Court erred in permitting intervention in the judicial enforcement proceeding and (ii) Taxpayer should not have granted Paragraph 2 surveillance rights in the agency proceedings. We uphold the Government expressly on (i) and by so doing extinguish Paragraph 2 of the order.
In the hearing to determine intervention in the enforcement proceedings, Taxpayer disclaimed any doctor-patient, attorney-client, or accountant-client relationship with the respondents. His only alleged interest in the records owned and possessed by the respondents is that the records related to his tax liability and that the investigation has the potential of the recommendation of a criminal prosecution of Taxpayer.
Intervention of Right
In granting intervention we are clear from the language of the motion and from the terms of the order that the District Judge treated and allowed it as an intervention of right under F.R.Civ.P. 24(a) (2).
As did the answer of Newman, Taxpayer’s proposed (and later filed) answer admitted all allegations save the two insufficient to deny or affirm replies. But it then went on affirmatively to assert bad faith by Agent and that the purpose of the summons proceeding was solely to obtain evidence for criminal prosecution and consequently the summons was not issued for any purposes permitted by §§ 7602, 7402(b), 7604(a).
Decision on intervention of right is easy. If—and the if is a very big one —there is anything left for such intervention as a “protectable interest” beyond a summons for evidence in a case previously recommended for criminal prosecution, we are positive that the allegations of this answer, treated with all of the indulgence permitted, cf. Barber v. Motor Vessel “Blue Cat”, 5 Cir., 1967, 372 F.2d 626, 1969 A.M.C. 211, are insufficient. We say positive because the allegations found insufficient in DomXdson are not just similar — they are identical — with those stated in Taxpayer’s answer with respect to the critical issues here. This is, of course, no accident.
Since the Supreme Court said that there could be no mandatory intervention for Donaldson, we must conclude that there can be none for Taxpayer here.
Permissive Intervention
Fleeing before Donaldson’s rejection of intervention of right, Taxpayer falls back on permissive intervention under F.R.Civ.P. 24(b) (2). The argument has three aspects. First, Donaldson deals with a denial of intervention, not the grant of it. Second, conceding, as we have held, the Judge treated this one as a mandatory intervention, the granting of it with the consequent surveillance privileges indicates that he would have allowed it as a permissive one. And third, in any event, Taxpayer should be allowed an opportunity on remand to persuade the Judge to grant intervention in the exercise of his discretion.
We need not explore these separately because Donaldson—upholding a denial of intervention—compels rejection of intervention on discretionary grounds. In the course of its analysis of the Reisman dictum and the limitation of it to “the situation of a pending criminal charge or, at most, of an investigation solely for criminal purposes,” (see Note 24, supra), the Court makes this decisive declaration :
“Any other holding, of course, would thwart and defeat the appropriate investigatory powers which the Congress has placed in ‘the Secretary or his delegate.’ ”
400 U.S. at 533, 91 S.Ct. at 544, 27 L.Ed.2d at 591.
Bearing in mind that the allegations here are the identical ones there, this is a flat holding that on charges of this kind intervention by a taxpayer in a summons proceeding against a third party witness would thwart and defeat the policies and mechanisms ordained by Congress. It is the intervention in such situation, not the technical basis—as of right or permissive—for permitting it which thwarts and defeats. Clearly the Court did not mean to allow a single District Judge in the exercise of a wide and often undefinable discretion to ignore if not judicially repeal policies prescribed by the Congress.
Intervention in these circumstances is to be rejected, not by retrenching from the liberal application of the Federal Rules which the amendments reflected, see Atlantis Development Corp. v. United States, 5 Cir., 1967, 379 F.2d 818. Rather it is because valid Congressional policies would be adversely affected if this “outsider” were permitted to take over the controversy significantly. To permit this “would unwarrantedly cast doubt upon and stultify the Service’s every investigatory move.” Donaldson, 400 U.S. at 531, 91 S.Ct. at 543, 27 L.Ed.2d at 589-590.
Surveillance Privileges
Since we hold that neither mandatory nor permissive intervention could be allowed in this case it means that Taxpayer ceases to be a party of any kind to the Court enforcement proceedings. With this falls the Paragraph 2 surveillance privileges. This is especially so since none of the summoned witnesses—the sole respondent parties—raised any litigatable objections or sought or showed any need for any other person, counsel or otherwise, to be present.
Additionally we think it appropriate to take notice of the concurring opinion of Mr. Justice Douglas in Donaldson which asserts that in the summons hearing before the agent, Supreme Court “decisions, however, make clear that the taxpayer has the right to be present at the hearing and to confront and cross-examine witnesses and inspect evidence against him,” 400 U.S. at 538, 91 S.Ct. at 546, 27 L.Ed.2d at 593. But from our position as a subordinate appellate Court it is, at best, a prediction as witness the concurring opinion’s reliance on dissenting opinions save for Jenkins v. McKeithen, 1969, 395 U.S. 411, 89 S.Ct. 1843, 23 L.Ed.2d 404.
In Powell, supra, the Supreme Court observed that an internal revenue investigation is analogous to one conducted by a grand jury or by the Federal Trade Commission. Both are primarily investigatory and inquisatorial unlike the Supreme Court ruled the administrative body to be in Jenkins, supra. Like the grand jury, the Internal Revenue Service “merely investigates and reports. It does not try.” Hannah v. Larche, 1960, 363 U.S. 420, 449, 80 S.Ct. 1502, 1518, 4 L.Ed.2d 1307, 1325. And of that institution the Court went on to state:
“it would be profitable at this point to discuss the oldest and, perhaps, the best known of all investigative bodies, the grand jury. It has never been considered necessary to grant a witness summoned before the grand jury the right to refuse to testify merely because he did not have access to the identity and testimony of prior witnesses. Nor has it ever been considered essential that a person being investigated by the grand jury be permitted to come before that body and cross-examine witnesses who may have accused him of wrongdoing. Undoubtedly, the procedural rights claimed by the respondents have not been extended to grand jury hearings because of the disruptive influence their injection would have on the proceedings * *
363 U.S. at 449, 80 S.Ct. at 1518, 4 L.Ed.2d at 1325.
For similar practical considerations the Court has had no difficulty in accommodating the need for effective exploitation of Congressional directives with the demands of the Constitution. Thus, for example, with the Federal Trade Commission whose function was characterized as the “power of inquisition” it has squarely held:
“The Federal Trade Commission could not conduct an efficient investigation if persons being investigated were permitted to convert the investigation into a trial. We have found no authorities suggesting that the rules governing Federal Trade Commission investigations violate the Constitution * * *"
363 U.S. at 446, 80 S.Ct. at 1517, 4 L.Ed.2d at 1324.
See also In re Groban, 1957, 352 U.S. 330, 77 S.Ct. 510, 1 L.Ed.2d 376, dealing with an investigation before a fire commissioner.
An important factor back of this approach is of course the fact that if accusatory proceedings are begun the person concerned “will be accorded all the traditional judicial safeguards at a subsequent adjudicative proceeding * * *" 363 U.S. at 446, 80 S.Ct. at 1517, 4 L.Ed.2d at 1324. And this applies in the context of an IRS summons situation as Donaldson makes clear.
“What is obviously meant there is a significantly protectable interest. And the taxpayer, to the extent that he has such a protectable interest, as, for example, by way of privilege, or to the extent he may claim abuse of process, may always assert that interest or that claim in due course at its proper place in any subsequent trial. Cf. United States v. Blue, 384 U.S. 251, 86 S.Ct. 1416, 16 L.Ed.2d 510 (1966).”
400 U.S. at 531, 91 S.Ct. at 542, 27 L.Ed.2d at 589.
In today’s complex social and governmental structure in which Congressional policies are effectuated through agencies having investigatory functions the results of which most often lead to quasi civil sanctions but which not infrequently lead to criminal prosecutions, this essential role would be frustrated by requiring those persons not parties who might be later affected to be allowed to take an active part through private counsel in such proceedings. Often such proceedings involve a nationwide industry or industry practice and can start out with no fixed goal since many such agencies “can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.” Morton Salt, 338 U.S. at 642-643, 70 S.Ct. at 364, 94 L.Ed. at 411.
It would be doctrinaire to single out IRS summons proceedings.
Summary
We hold:
(i) The orders enforcing all of the summonses and denying discovery are affirmed.
(ii) Paragraph 2 of the orders granting verbal, visual and audible surveillance appearance privileges to Taxpayer is reversed.
(iii) The orders allowing Taxpayer to intervene are reversed.
Affirmed in part; reversed in part.
. Donaldson v. United States, 1971, 400 U.S. 517, 91 S.Ct. 534, 27 L.Ed.2d 580.
. It appeared under the name of United States v. Mercurio, 5 Cir., 1969, 418 F.2d 1213.
. “For the purpose of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary or his delegate is authorized—
(1) To examine any books, papers, records, or other data which may be relevant oi material to such inquiry;
(2) To summon the person liable for tax or required to perform the act, or any officer or employee of such person, or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, or any other person the Secretary or his delegate may deem proper, to appear before the Secretary or his delegate at a time and place named in the summons and to produce such books, papers, records, or other data, and to give such testimony, under oath, as may be relevant or material to such inquiry; and
(3) To take such testimony of the person concerned, under oath, as may be relevant or material to such inquiry.”
. The Rothman summons called for the following documents: “Each and every document pertaining to the transaction relating to OK #28121 from Washington Federal Savings & Loan Association in the amount of $2,013.12, dated August 2, 1965, and negotiated to Donald A. Pollack.”
. The Snyder summons requested the following documents:
“1. Records of loans received from Donald A. Pollack made or repaid during the years 1963 through 1966. Such records should include cancelled checks, deposit records, collateral, repayment records, and correspondence.
2. Records of real estate transactions with Donald A. Pollack during the years 1956 through 1966. Such records should include deeds, mortgages, closing statements, cheeks, receipts, offers to purchase and correspondence.”
. The records specified in the Newman summons were as follows:
“The following records relate to the years 1963, 1964, 1965, 1966:
1. Retained copies of corporate income tax returns for the years 1962 through 1966;
2. Corporate minute book;
3. Corporate bank accounts including bank statements, cancelled checks, deposit tickets, and check stub book;
4. Corporate ledgers and journals showing income and expenses, drawing accounts, assets, liabilities, loan accounts and capital accounts;
5. Corporate stock records book showing stock purchases and redemptions;
6. Correspondence between corporate officers and Donald A. Pollack.”
. “If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, or other data, the district court of the United States for the district in which such person resides or may be found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, or other data.”
26 U.S.C.A. § 7402(b).
“If any person is summoned under the internal revenue laws to appear, to testify, or to produce books, papers, records, or other data, the United States district court for the district in which such person resides or is found shall have jurisdiction by appropriate process to compel such attendance, testimony, or production of books, papers, records, or other data.”
26 U.S.C.A. § 7604(a).
. The Court had enjoined compliance pending the outcome of the enforcement proceedings.
. The Snyders filed no answer, and Roth-man answered expressing a willingness to come forth with the information should the Court order it.
. The decree provided:
“1. That applicant’s (Taxpayer’s) leave for intervention be granted under the rationale of Reisman v. Caplin, 375 U.S. 440 [84 S.Ct. 508, 11 L.Ed.2d 459] (1963).
2. That applicant’s (Taxpayer’s) intervention and the rights accruing thereunder, be restricted in scope to his appearance at the Respondent’s appearance before the Special Agent, hereinafter ordered, where his right shall be limited to voicing his objections to the production of the records and testimony called for in the summonses issued in the above captioned cases. It is provided, however, that intervenor’s objections will not be allowed to interrupt or delay the proceedings, that the Special Agent shall not rule upon the objections, that the intervenor’s objection shall not excuse the Respondents from producing any item objected to, nor from answering any question objected to, and that intervenor’s objections shall not be heard, nor otherwise passed upon by this Court so long as the intervenor’s tax liability remains in the investigative stage. Nor shall the intervenor be otherwise allowed to delay the enforcement of summons subject to the captioned cases through motions, or other such procedures. It is further provided, however, that intervenor’s failure to voice his objection before Special Agent shall not affect his right to raise objections to the adduced records and testimony at a later proceeding.
3. That intervenor’s oral request for discovery in the captioned cases is denied.”
. See notes 9, supra and 12, infra, as to Rothman and the Snyders.
. Originally Taxpayer sought to intervene in the enforcement proceedings of all three respondents. In Taxpayer’s Supplemental Memorandum we are informed that he “no longer seeks a judicial hearing to contest enforcement of the summonses issued to Snyder and Rothman.” And for a consequent lack of case or controversy, so evaporates Paragraph 2 of the District Court order (see note 10, supra) granting surveillance privileges in the agency proceeding to investigate the records of Snyder and Rothman. Our discussion henceforth will concern itself solely with the proceedings against Newman.
. United States v. Powell, 1964, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112.
. Although the proceedings as a matter of unarticulated practice usually include (as done here) the agent signing the summons as a named party, we regard the Government as the real movant.
. Local 174, etc. v. United States, 9 Cir., 1956, 240 F.2d 387.
. We agree with the Government’s dissection of that case.
“The majority opinion in Local 174, etc., held that the Government must make a specific showing of relevance on each document which is the subject of an administrative summons. It is generally agreed that the holding in Local 174 was overruled sub silentio by Civil Aeronautics Board v. Hermann, 353 U.S. 322 [77 S.Ct. 804, 1 L.Ed.2d 852] (1957), reversing Hermann v. Civil Aeronautics Board, 237 F.2d 359 (C.A. 9th, 1956). See Foster v. United States, 265 F.2d 183, 188 (C.A.2d, 1959), certiorari denied, 360 U.S. 912 [79 S.Ct. 1297, 3 L.Ed.2d 1261]. See also Federal Communications Commission v. Schreiber, 381 U.S. 279, 290 [85 S.Ct. 1459, 14 L.Ed.2d 383] (1965) (citing Civil Aeronautics Board v. Hermann for the principle that latitude must be allowed to administrative agencies in devising their own procedures for discharging their duties).”
(Government Brief, p. 22).
. It was epitomized in Powell:
“It is the court’s process which is invoked to enforce the administrative summons and a court may not permit its process to be abused. Such an abuse would take place if the summons had been issued for an improper purpose, such as to harass the taxpayer or to put pressure on him to settle a collateral dispute, or for any other purpose reflecting on the good faith of the particular investigation. The burden of showing an abuse of the court’s process is on the taxpayer * * *." (Emphasis added).
379 U.S. at 58, 85 S.Ct. at 255, 13 L.Ed.2d at 119-120.
. United States v. Roundtree, 5 Cir., 1969, 420 F.2d 845, 851-852.
. They stress New Hampshire Fire Insurance Co. v. Scanlon, 1960, 362 U.S. 404, 80 S.Ct. 843, 4 L.Ed.2d 826; Daly v. United States, 8 Cir., 1968, 393 F.2d 873, 875-876; and Application of Howard, 3 Cir., 1963, 325 F.2d 917, 919.
. We need not consider Taxpayer’s objections that the summons was issued in bad faith, that it was overly broad and vague, and that the Fourth and Fifth Amendment rights of Taxpayer were violated. Only Taxpayer raised these objections. The summoned parties did not and Taxpayer cannot raise objections which are those only of the witness. See, e. g., DeMasters v. Arend, 9 Cir., 1963, 313 F.2d 79; Hudson v. United States, 5 Cir., 1952, 197 F.2d 845; Foster v. United States, 2 Cir., 1959, 265 F.2d 183, cert. denied, 360 U.S. 912. 79 S.Ct. 1297, 3 L.Ed.2d 1261; Stone v. Williams, 1 Cir., 1966, 356 F.2d 934. In effect we said as much in Mercurio by observing:
“It would seem, upon the most casual observance of this situation, that if the United States were seeking to obtain these records in support of an actual prosecution, following indictment, appellant would have no basis for seeking to have the indictment quashed on the ground of a violation either of Fourth or Fifth Amendment rights, since there would have been no unreasonable search or seizure nor any compulsion of the taxpayer’s giving evidence against himself.”
418 F.2d at 1214.
. It speaks in terms of “interest” in the transaction:
“2. Donald A. Pollack, the Intervenor, has an interest relating to the transaction which is the subject of this action and is so situated that the disposition of this action may, as a practical matter, impair or impede his ability to protect that interest unless the Intervenor’s interest is adequately represented by existing parties, in that a judgment of this Court may adversely and prejudicially effect the substantial rights and privileges secured to him by the Constitution of the United States, as will more definitely appear from the Intervenor’s proposed Answer, a copy of which is attached hereto.”
. See Paragraph I of the order (note 10, supra) which assumed that this was compelled under the “rationale of Reisman v. Caplin.”
. “Upon timely application anyone shall be permitted to intervene in an action: * * * (2) when the applicant 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, unless the applicant’s interest is adequately represented by existing parties.”
. Donaldson closes by posing only two requirements that the Government must meet to enforce the summons:
“We hold that under § 7602 an internal revenue summons may be issued in aid of an investigation if it is issued in good faith and prior to a recommendation for criminal prosecution.”
400 U.S. at 536, 91 S.Ct. at 545, 27 L.Ed.2d at 592.
But earlier the Court had stated:
“It is precisely the latter situation— where the sole object of the investigation is to gather data for criminal prosecution—which is the subject of the Reisman dictum * * * [and] when so read, the dictum comes into proper focus as applicable to the situation of a pending criminal charge or, at most, of an investigation solely for criminal purposes.”
400 U.S. at 533, 91 S.Ct. at 543, 27 L.Ed.2d at 590 (emphasis added).
Along with this riddle we may have one of our own in determining whether emphasis on the continuance of a civil investigation and non-existence of “an inquiry with dominant criminal overtones” in the following key language of Round-tree, supra, can any longer be sustained:
“We have already pointed out that if Roundtree is able to prove that the sole purpose of the summons is to build a criminal prosecution, the summons must fail. Roundtree’s pleadings adequately preserved this defense. If the IRS sustains its contention that this is a civil investigation, the mere fact that evidence might be used against Roundtree in a later prosecution will not support a claim of self-incrimination. [Venn v. United States, 5 Cir.], 400 F.2d [207] at 210-212. If, however, Round-tree can show that the investigation has become ‘an inquiry with dominant criminal overtones’, he is entitled to raise his fifth amendment objections. Stuart v. United States, 5 Cir. 1969, 416 F.2d 459.”
420 F.2d 852.
. Except for names and dates the allegations in our record are identical with the following from Donaldson as our Mercurio opinion reflects:
“Petitioner John P. Grady, special agent, and Bruce B. Miller, special agent, New Orleans, Louisiana, are guilty of bad faith both with the court and the intervenor in asserting that they have been conducting an investigation to ascertain the correct income tax liability of Kevin L. Donaldson, for the calendar years 1964, 1965, 1966 and 1967.
“John P. Grady is a special agent assigned to the intelligence division, Internal Revenue Service, Tampa Florida, and Bruce B. Miller is a special agent assigned to the Intelligence Division, Internal Revenue Service, New Orleans, Louisiana.
“The function of the Intelligence Division is to enforce the criminal statutes applicable to tax laws by developing information concerning alleged criminal violations thereof.
“Special Agent Bruce B. Miller was assigned the investigation of Kevin L. Donaldson for the calendar years 1964, 1965, 1966 and 1967 for the express and sole purpose of obtaining evidence concerning any violations of the criminal statutes applicable to the tax laws of the United States and special agent John P. Grady is assisting special agent Miller in this investigation.”
418 F.2d at 1215-1216.
. Able counsel, Robert E. Meldman, Esq., for Taxpayer here was counsel for Donaldson both in the Fifth Circuit and in the Supreme Court.
. “Upon timely application anyone may be permitted to intervene in an action:
when an applicant’s claim or defense and the main action have a question of law or fact in common. When a party to an action relies for ground of claim or defense upon any statute or executive order administered by a federal or state governmental officer or agency or upon any regulation, order, requirement, or agreement issued or made pursuant to the statute or executive order, the officer or agency upon timely application may be permitted to intervene in the action. In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.”
. United States v. Morton Salt Co., 1950, 338 U.S. 632, 642, 70 S.Ct. 357, 363, 94 L.Ed. 401, 411.
. We have pointed out similar considerations in rejecting Miranda requirements in IRS investigations:
“We cannot agree that every administrative official who confronts a citizen with a request for information that might disclose criminal conduct, thereby exerts a compulsion on the citizen that must be dispelled by the Miranda placebo. In today’s vast and complex network of widespread daily administrative contacts between citizens and government officials, such a holding would open a veritable Pandora’s box. When a census taker returns to recheck information he has received or a building inspector comes to investigate a report of noncompliance with provisions of the city housing code or a game warden who hears shooting out-of-season stops a man he finds in the woods or a bank examiner questions a teller whose figures are out of balance, would each then have to give the Miranda warnings? In each case a governmental official is confronting a citizen and criminal charges may result. There are a thousand and one administrative inquiries routinely made every day in every city which could evoke responses that might form a part of the basis in proof for a charge of perjury, falsification of records, failure to file a report or perform a legal duty or other criminal conduct. Most of these routine administrative confrontations would be rendered ineffective to the citizen and his government by imposing Miranda requirements. Indeed, if the warning became too commonplace, the very purpose of its requirement could be undermined. If “authority” were allowed to supplant custody.—the deprivation of freedom—as the determinant of compulsion, even these routine field investigations which Miranda expressly exempted must fall. Under such a rule a policeman upon stopping a motorist could not ask to see his license without warning him and advising him * * *."
United States v. Prudden, 5 Cir., 1970, 424 F.2d 1021, 3028.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BAZELON, Chief Judge:
Appellant was a lieutenant commander in the United States Coast Guard when he was ordered into retirement. In this suit he challenges the order on a variety of constitutional, statutory and procedural grounds.
Beginning in 1959, appellant was passed over for promotion by three separate Coast Guard selection boards, and by action of the last board he was placed permanently out of line of promotion. The Coast Guard then sought to retire him from active duty under the procedures set forth in 63 Stat. 515 (1949) [then codified as 14 U.S.C. § 235]. Before this action was completed, Congress repealed the authorizing statute and replaced it with a provision allowing the Coast Guard to retire without hearing any lieutenant commander “who has failed of selection for promotion * * * for the second time * * * ” 14 U.S.C. § 285 (Supp.V, 1964). On December 26, 1963, appellant was notified that he would be retired under this section as of June 30, 1964.
Appellant then filed a complaint in District Court seeking to enjoin and declare unlawful his forthcoming retirement; he also sought an order in the nature of mandamus to compel his promotion to commander. The District Court denied the motion for a preliminary injunction and granted summary judgment in favor of appellee. Sohm v. Dillon, 231 F.Supp. 973 (D.D.C.1964); 235 F.Supp. 450 (D.D.C.1964). This is a consolidated appeal from these judgments.
There is, however, another strand to the history of this case. On October 18, 1961, appellant filed a petition with the Board for Correction of Military Records to have his record corrected and to be placed back in the line of promotion. In February 1964, before the Board rendered a final decision, appellant “heard that its recommended decision was adverse.” He then requested and was granted a reopening of the record and later a de novo hearing before a reconstituted Board. Apparently at this point appellant abandoned his remedy before the Board since, so far as the record shows, he has yet to notify them of a hearing date convenient to himself and counsel.
The court first applied the rule for exhaustion of administrative remedies to the Board for Correction of Military Records in Ogden v. Zuckert, 111 U.S.App.D.C. 398, 298 F.2d 312 (1961). There an officer who was protesting the terms of his separation from the Air Force had not sought relief from the Board. After investigating the nature and function of the Board, we stated:
* * * jurisdiction of the [trial] court was not precluded by the omission of plaintiff to seek relief through the Board; but we also conclude that on remand the court may, in its discretion, refrain from exercising jurisdiction to decide the case pending plaintiff’s pursuit of relief at the hands of * * * the Board * * * Id. at 403, 298 F.2d at 317.
Here the District Court relied on Ogden and exercised its discretion by holding that appellant need not exhaust his pending remedy before the Board. We think the court based its exercise of discretion on too broad a view of Ogden. This appears from the following.
1. Unlike the plaintiff in Ogden appellant has affirmatively and successfully invoked the jurisdiction of the Board. There can thus be no fear that the Board will exercise its discretionary jurisdiction by refusing to hear the case. Moreover, it appears that the Board, under its duty to correct errors and remove injustice, has sufficient authority to accord appellant relief. Not requiring appellant to exhaust this available remedy raises problems of forum shopping and unnecessary waste of judicial energies and resources. There is danger that appellant’s unexplained abandonment of the Board was motivated by his fear of an adverse decision and his desire to find a forum more sympathetic to his claims. More important, we are now placed in the position of rendering what may become, in effect, an advisory opinion. If, for example, we adopt a substantial evidence rule and uphold the Coast Guard’s action, appellant would presumably be free to return to the Board, which might review the merits of his case in a more pervasive fashion and grant him the relief he seeks. Nor is appellant prevented from returning to the Board during the pendency of this litigation. In such case, the Board’s decision might drastically alter the issues in the case or render unnecessary any further court review.
2. Holding this suit in abeyance until the Board completes its action would comply with the basic policy of the law that administrative remedies should be exhausted so long as the agency clearly has jurisdiction over the case and so long as resort to the agency is not obviously futile. This policy, although subject to the exercise of discretion, has been applied by numerous courts in the context of Boards for Correction of Military Records, and it has evolved to the point where it can be formulated as a rule that the administrative remedy should be exhausted unless the party invoking the court’s jurisdiction can demonstrate special circumstances. No such circumstances were alleged in this case.
3. Appellant in this suit has challenged the constitutionality of the process by which he was placed out of the line of promotion and retired. He argues that he was deprived of a substantial property right — retention of his rank and promotion- — without notice of allegations of his unfitness; a full evidentiary hearing on these charges including rights of representation, confrontation, and cross examination; the right to challenge inadmissible evidence; and an impartial tribunal. These flaws he contends deprived him of due process of law. Since this case would presumably terminate if appellant prevailed before the Board, requiring exhaustion of administrative remedies would vindicate the fundamental doctrine that courts should avoid passing on unnecessary constitutional questions. This doctrine seems particularly applicable here bcause of the far reaching and difficult nature of the constitutional claims. Moreover, it is possible that the full evidentiary hearing which the Board apparently is prepared to accord appellant will itself cure any constitutional defects in Lthe procedures leading to his retirement.
4. The fact that appellant’s contentions in this case raise complicated and somewhat technical issues of fact also militates toward completion of the administrative process. Appellant, for example, argues that at least two of the fitness reports on which the Coast Guard based its action violated various administrative regulations; he claims that an “ex parte” psychiatric report was secretly and improperly sent to all of his duty stations; and he alleges that he was the victim both of mistaken identity and of a conspiracy or vendetta to discredit him because of his criticism of the administration of certain Coast Guard programs. Whether these allegations are true, and if so, whether they tainted or rendered invalid the action of the promotion boards are factual questions most appropriate for the specialized knowledge and experience of an administrative agency. In addition, resolution of these issues turns, in large part, on the interpretation and application of Coast Guard regulations and practice. Not only is the Board better equipped to decide these questions, but also considerations of securing uniformity in interpretation suggest that we first allow the Coast Guard an opportunity to construe their own regulations. Finally, agency consideration of appellant’s claims may help to narrow the issues and clarify the remaining questions, thereby assisting the court in its review of the case. For example, it may be that the Board’s decision would remove all factual problems from the case and reduce the controverted issue to one of law- — e. g., whether appellant was denied his constitutional rights or whether the Coast Guard’s action was authorized by 14 U.S.C. § 285.
In light of the foregoing we reverse and remand the case to the District Court with directions to stay the case pending hearing and decision by the Board for Correction of Military Records.
So ordered.
. See, e. g., Caddington v. United States, 147 Ct.Cl. 629, 178 F.Supp. 604 (1959) ; Egan v. United States, 141 Ct.Cl. 1, 158 F.Supp. 377 (1958) ; 41 Ops. Atty. Gen. 94, 97 (1952) ; Redd, The Board for Correction of Naval Records, 19 JAG J. 9, 11-12 (1964); Williams, The Army Board for Correction of Military Records, 6 Mil.L.Rev. 41, 46-54 (1959).
. See, e. g., Aircraft & Diesel Equip. Corp. v. Hirsch, 331 U.S. 752, 767, 772-773, 67 S.Ct. 1493, 91 L.Ed. 1796 (1947) ; Hardy v. Rossell, 135 F.Supp. 260, 265 (S.D.N.Y.1955). That the Board has exercised its discretion and accepted jurisdiction, that it is not the same body which rendered the initial administrative decision, and that resort to the Board was not shown to be futile, distinguish this case from those like Levers v. Anderson, 326 U.S. 219, 66 S.Ct. 72, 90 L.Ed. 26 (1945) ; United States v. Abilene & S. Ry., 265 U.S. 274, 280-282, 44 S.Ct. 565, 68 L.Ed. 1016 (1924) ; and Prendergast v. New York Tele. Co., 262 U.S. 43, 48-50, 43 S.Ct. 466, 67 L.Ed. 853 (1923).
. See, e. g., Allen v. Grand Central Aircraft Co., 347 U.S. 535, 539-541, 74 S.Ct. 745, 98 L.Ed. 933 (1954) ; Aircraft & Diesel Equip. Co. v. Hirsch, supra note 2; Myers v. Bethlehem Shipbuilding Corp., 303 U.S. 41, 50-52, 58 S.Ct. 459, 82 L.Ed. 638 (1938) ; 3 Davis Administrative Law §§ 20.01-.03, 20.07 (1958) [hereafter cited as Davis] ; Jaffe, The Exhaustion of Administrative Remedies, 12 Bureado L.Rev. 327 (1963).
. See, e. g., Schwartz v. Covington, 341 F.2d 537 (9th Cir. 1965) ; Reed v. Franke, 297 F.2d 17, 26-27 (4th Cir. 1961) ; Marshall v. Wyman, 132 F.Supp. 169, 176 (N.D.Calif.1955) ; Hiett v. United States, 131 Ct.Cl. 585, 130 F.Supp. 338 (1958). Cf. Beard v. Stahr, 370 U.S. 41, 82 S.Ct. 1105, 8 L.Ed.2d 321 (1962).
. Even if appellant were not granted all the relief he initially sought, it is still possible that he would be satisfied with partial success before the Board — e. g., reinstatement to active duty without promotion.
. See, e. g., Public Util. Comm’n of State of California v. United States, 355 U.S. 534, 539-540, 548-553, 78 S.Ct. 446, 2 L.Ed.2d 470 (1958) (majority and dissenting opinions) ; Aircraft & Diesel Equip. Corp. v. Hirsch, supra note 2, 331 U.S. at 772-773, 67 S.Ct. 1493 ; Reed v. Franke, supra note 4, 297 F.2d at 27; 3 Davis § 20.04. Cf. Hardy v. Rossell, supra note 2, 135 F.Supp. at 265-266.
. Cf. Beard v. Stahr, supra note 4.
. See Reed v. Franke, supra note 4, 297 F.2d at 27.
. See, e. g., Allen v. Grand Central Aircraft Co., 347 U.S. 535, 540, 74 S.Ct. 745, 98 L.Ed. 933 (1954) ; Aircraft & Diesel Equip. Corp. v. Hirsch, supra note 2, 331 U.S. at 767-768, 67 S.Ct. 1493; Hardy v. Bossell, supra note 2, 135 F.Supp. at 265; 3 Davis § 20.03; Jaffe, supra note 3, at 327-329, 335-339, 340-341.
. These rationales of expertise, uniformity and ripeness also underlie the doctrine of primary jurisdiction. See, e. g., Federal Maritime Board v. Isbrandtsen Co., 356 U.S. 481, 78 S.Ct. 851, 2 L.Ed.2d 926 (1958) ; United States v. Western Pac. R.R., 352 U.S. 59, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956) ; Far East Conference v. United States, 342 U.S. 570, 72 S.Ct. 492, 96 L.Ed. 576 (1952) ; Great Northern Ry. v. Merchants’ Elevator Co., 259 U.S. 285, 42 S.Ct. 477, 66 L.Ed. 943 (1922) ; Texas & Pac. Ry. v. American Tie & Timber Co., 234 U.S. 138, 34 S.Ct. 885, 58 L.Ed. 1255 (1914). Thus if the case were analyzed under this rubric rather than that of exhaustion [see, e. g., United States v. Western Pac. R.R., supra at 352 U.S. 63-64, 77 S.Ct. 161; 3 Davis § 19.01 and n. 6; Jaffe, Primary Jurisdiction Beconsidered, 102 U.Pa.L.Bev. 577, 579 (1954)], the proper disposition would still be for the court to stay its hand pending resort to the administrative process.
. Since no irreparable injury was or could be asserted in the circumstances of this case [see, e. g., Meyers v. Bethlehem Shipbuilding Corp., supra note 3, at 303 U.S. 50-52, 58 S.Ct. 459; 3 Davis §§ 20.02-.03 ; Jaffe, supra note 3, at 331-334. Compare Beard v. Stahr, supra note 4, 370 U.S. at 44-45, 82 S.Ct. 1105 (dissenting opinion)], this precondition for requiring exhaustion of the administrative remedy was met.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Appellant Barbara Kay Mullins appeals from the district court’s judgment sentencing her to a six-year term of imprisonment and a four-year special parole term after a jury convicted her of possession with intent to distribute a controlled substance (heroin). Appellant argues that the district court erred in admitting real evidence (a heroin sample) without proper authentication under Fed.R.Evid. 901. We affirm.
Appellant argues in this court that the chain of custody of the heroin sample was not established because of various discrepancies and omissions in the testimony and records relating to the handling of the sample. For example, appellant urges that the weight of the sample varied as measured by various government officials at different times, that the government failed to identify adequately who possessed the sample at various times after police obtained it, and that the sample was not well enough identified by marks on its container or by notes or records of those who handled it. Of course, these matters are within the discretion of the district court and our review is limited to whether that discretion has been abused. United States v. Brown, 482 F.2d 1226, 1228 (8th Cir. 1973).
We have thoroughly reviewed the record and find it amply supportive of the district court’s decision to admit the evidence in question. While the evidence may have raised questions about the handling of the sample, it did not suggest any real basis for establishing the sample to be different from the one taken from the package sent to appellant. There was direct testimony that steps were taken to prevent misidentification of the sample, and the necessary inference from the evidence is some sloppiness in measurement or recording of the sample, not that different samples were confused. Therefore, we have no reason to disturb the district court’s ruling. Further discussion would have little precedential value.
Affirmed. See 8th CIR. R. 14.
. The Honorable Donald D. Alsop, United States District Judge for the District of Minnesota.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
This cause came on to be heard upon the appeal of Elliott Truck Parts, Inc., and upon the cross-appeal of the United States of America;
And having been duly considered upon the oral arguments and briefs of attorneys and upon the record in the cause, this court is of opinion that the judgment of the district court awarding plaintiff the total amount of $38,381.43 [being a modification of plaintiff’s claim mitigating damages] should be affirmed upon the basis of the opinion of United States District Judge Picard, D.C., 149 F.Supp. 52, consisting of his findings of fact and conclusions of law, dealing in detail with the issues involved.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
RONEY, Circuit Judge:
Dewey T. Nabors, Jr. was convicted of conspiracy, possession and importation of marijuana and methaqualone. 21 U.S.C.A. §§ 841(a)(1), 846, 952(a), 963; 18 U.S.C.A. § 2. On appeal, he asserts four errors by the district court: (1) admission of laboratory analyses of the contraband which had been destroyed before Nabors had an opportunity to examine it, (2) admission of evidence that Nabors, as a named insured of the airplane involved in the drug smuggling, failed to file an insurance claim on the airplane or otherwise cooperate with the insurance company, even though the aircraft sustained extreme damage in the drug operation, (3) admission of evidence showing Nabors’ involvement in similar illegal activity four years earlier, and (4) denial of Nabors’ motion to compel the government to affirm or deny the monitoring of international phone conversations in which Nabors discussed drug smuggling. We affirm.
A brief account of the factual background to this case is helpful before going into more detail on the facts and arguments specific to each issue. On April 13, 1980 Michael Warner landed an airplane, leased by Nabors, in middle Georgia near the town of Unadilla. Warner, flying alone, chose the particular landing site, a crop-dusting strip, because bad weather prevented him from landing at his intended destination. Warner immediately set the plane on fire, inadvertently causing local law enforcement officers to arrive at the scene. The officers were able to save some of the airplane’s contents, which they suspected to be marijuana and methaqualone. They arrested Warner, who was convicted in state court of drug charges.
Warner was the key government witness at Nabors’ subsequent trial in federal court. He testified that Nabors had hired him to fly to Colombia, pick- up marijuana and methaqualone from Nabors, and bring it back to Georgia. Nabors did not take the stand in his own defense, electing simply to attack Warner’s credibility and other aspects of the government’s case.
1. Destruction of the Evidence
Two months before Nabors’ trial, the Georgia Bureau of Investigation (G.B.I.) destroyed the alleged contraband taken from the burning plane. As a result, federal authorities could not comply with Nabors’ motion to inspect and test the prosecution’s evidence. Nabors argues the government’s actions deprived him of due process, requiring the exclusion at trial of the laboratory analyses of the seized material and the dismissal of at least the substantive counts of the indictment.
Clearly a defendant in a drug prosecution has a due process right to have an expert of his choosing perform an independent analysis on the seized substance. See United States v. Gaultney, 606 F.2d 540, 545 (5th Cir.1979), modified on other grounds, 615 F.2d 642 (5th Cir.1980), rev’d on other grounds sub. nom, Steagald v. United States, 451 U.S. 204, 101 S.Ct. 1642, 68 L.Ed.2d 38 (1981); cf. Barnard v. Henderson, 514 F.2d 744, 746 (5th Cir.1975) (criminal defendant has right to examine, through his own expert, critical evidence subject to varying expert opinion). The government has a concomitant responsibility to try in good faith to preserve important material and to locate it once the defendant moves for discovery. Armstrong v. Collier, 536 F.2d 72, 78 (5th Cir.1976); United States v. Bryant, 439 F.2d 642, 651 (D.C.Cir.1971). The government does not dispute its responsibility under the law.
The issue here is whether the mistaken destruction of the material, so that the defendant cannot examine it, requires the exclusion of testimony as to the nature of the material by the government witness who tested it. The first question is whether Nabors is entitled to exclusion under a per se rule since the identification of the material as marijuana and methaqualone was central to the prosecution, at least for the substantive offenses. We think not. Two cases are helpful in this conclusion. The recent Supreme Court decision in United States v. Valenzuela-Bernal, 458 U.S. -, 102 S.Ct. 3440, 73 L.Ed.2d 1193 (1982), involved the government’s deportation of potential witnesses, thus putting them beyond the subpoena reach of the defendant. The Court, in a thorough discussion of related cases involving the deprivation of evidence to the defendant, held there to be no due process violation unless the defendant made some plausible showing that the evidence would have been material and favorable to his defense. Id. at -, 102 S.Ct. at 3448, 73 L.Ed.2d at 1205-06. The seminal case in our Circuit involved the government’s refusal to allow the defendant to inspect the alleged murder weapon and a 75% destroyed bullet which killed the victim. Government ballistics experts testified that the bullet came from defendant’s gun. The Court reversed the defendant's conviction, reasoning the bullet was “a piece of critical evidence whose nature is subject to varying expert opinions.” Barnard v. Henderson, 514 F.2d at 746.
There is no evidence in this case to suggest that experts would have disagreed as to the identification of the seized material. Nor in the experience of this Court in cases of this kind, unlike bullet cases, have we found varying opinions among experts as to the identification of these two substances.
Rather than a per se rule of exclusion, the test in this Circuit focuses on “the materiality of the evidence, the likelihood of mistaken interpretation of it by government witnesses or the jury, and the reasons for its nonavailability to the defense.” United States v. Herndon, 536 F.2d 1027, 1029 (5th Cir.1976). Other circuits have also looked to the government’s culpability and the prejudice to the defendant. See United States v. Picariello, 568 F.2d 222, 227 (1st Cir.1978); cf. United States v. Loud Hawk, 628 F.2d 1139, 1152-53 (9th Cir.1979) (en banc) (majority opinion on issue by J. Kennedy) (looking to these factors but indicating the issue is generally not one of constitutional dimensions), cert. denied, 445 U.S. 917, 100 S.Ct. 1279, 63 L.Ed.2d 602 (1980), - U.S. -, 103 S.Ct. 755, 74 L.Ed.2d 972 (1983). Without discounting the right of defendants to examine the material they are charged with possessing, we hold that where the material has been destroyed in spite of the government’s good faith attempt to preserve it, testimony as to the nature of the material need not be suppressed absent some showing that the testing of the material by another expert would have been reasonably likely to produce evidence favorable to the defendant.
Nabors admits there is no indication that the government acted with improper motive when it destroyed the alleged contraband. See United States v. Herndon, 536 F.2d at 1029. The destruction appears to have been a mistake, which occurred despite the efforts of federal and local law enforcement officials to have the evidence preserved. Briefly, after Michael Warner’s trial in state court, the local sheriff’s office returned the seized material to the Georgia Bureau of Investigation laboratory with instructions that it should be preserved. Pri- or to Nabors’ indictment, an Assistant United States Attorney spoke by telephone to the G.B.I. agent in charge of the case, requesting that G.B.I. preserve the evidence for use in a federal prosecution. Unfortunately, a communication breakdown resulted in the destruction of the evidence by the director of the G.B.I. laboratory. Thus, while in retrospect the government perhaps should have done more to ensure the preservation of the evidence, it clearly did not act “for the purpose of inflicting a disadvantage upon the defendant[ ],” United States v. Gordon, 580 F.2d 827, 837 (5th Cir.), cert. denied, 439 U.S. 1051, 99 S.Ct. 731, 58 L.Ed.2d 711 (1978), 439 U.S. 1079, 99 S.Ct. 860, 59 L.Ed.2d 49 (1979), or as part of a policy of “systematic non-preservation” of evidence, United States v. Bryant, 439 F.2d at 652. The government agents knew the law and acted accordingly. Thus exclusion is not necessary to sanction or instruct the government for a violation of law, as is the rationale for some exclusionary rules.
There is virtually no likelihood that the absence of the alleged contraband affected the verdict in a manner prejudicial to Nabors. United States v. Gordon, 580 F.2d at 837. The government, through various witnesses, explained the absence of the evidence to the jury. It presented overwhelming evidence showing the substances were indeed marijuana and methaqualone. The G.B.I. laboratory director testified that he tested the substances and found them to be the two drugs in question. The prosecution presented photographs of the seized material. The local law enforcement agent who removed the material from the burning plane testified that he smelled marijuana. The pilot, Michael Warner, testified the cargo he picked up from Nabors in Colombia consisted of marijuana and methaqualone. According to Warner, Nabors had agreed to pay him $50,000 to transport 900 pounds of marijuana. Nabors had a full opportunity to cross-examine these witnesses. It seems clear that the absence of the material did not deprive Nabors of any useful evidence. He presented no evidence suggesting the material was anything other than the contraband charged. In short, the absence of the seized evidence did not deprive Nabors of a fundamentally fair trial. See United States v. Herndon, 536 F.2d at 1030.
2. Admission of Evidence of Prior Silence
The airplane was insured. At trial, the prosecution presented, in its case in chief, evidence that Nabors had failed to respond to a request by the insurance company for a statement as to Nabors’ involvement in the use and damage of the aircraft. Nabors immediately objected to the evidence, asserting that its introduction violated the self incrimination and due process clauses of the fifth amendment to the Constitution. Emphasizing that he did not intend to testify in his own behalf, Nabors reasoned that the evidence improperly enabled the prosecution to comment on his silence and allowed the jury to infer guilt therefrom.
We decide the constitutional issue on the assumption that the evidence was relevant. Nabors objected and appealed purely on fifth amendment grounds. We generally do not review evidentiary rulings except on the grounds asserted in the contemporaneous objection. See United States v. Arteaga-Limones, 529 F.2d 1183, 1198-99 (5th Cir.), cert. denied, 429 U.S. 920, 97 S.Ct. 315, 50 L.Ed.2d 286 (1976); United States v. Fendley, 522 F.2d 181, 185-86 (5th Cir.1975). In any event, questions of relevance fall within the broad discretion of the trial court. United States v. Linetsky, 533 F.2d 192, 204 (5th Cir.1976); United States v. Dobbs, 506 F.2d 445, 447 (5th Cir.1975).
The constitutionality of admitting the evidence is difficult to decide. The leading Supreme Court cases on the prosecution’s use of a defendant’s silence are not directly on point. In Doyle v. Ohio, 426 U.S. 610, 96 S.Ct. 2240, 49 L.Ed.2d 91 (1976), the Court, in a post-arrest silence case, held the government cannot, consistent with due process, bring up at trial a defendant’s silence after receiving Miranda warnings, even for impeachment purposes. See also United States v. Hale, 422 U.S. 171, 95 S.Ct. 2133, 45 L.Ed.2d 99 (1975) (same result reached based on Supreme Court’s supervisory power over federal courts). In Jenkins v. Anderson, 447 U.S. 231, 100 S.Ct. 2124, 65 L.Ed.2d 86 (1980), however, the Court held that the government can use pre-arrest silence to impeach a defendant. See also Lebowitz v. Wainwright, 670 F.2d 974 (11th Cir.1982). The present ease, involving prearrest silence, differs in two critical respects from Doyle and Jenkins and the other cases concerning the use of a defendant’s silence. First, the government introduced evidence of defendant’s silence in its direct case in a trial in which the defendant never testified. In virtually all the major prior silence cases, the prosecution raised the issue on cross examination or rebuttal in an effort to impeach the defendant-witness. The logical theory of admissibility in this context is that the silence amounts to a prior inconsistent statement. Second, the silence here did not occur in response to a governmental inquiry as is usually the fact in cases dealing with the point. A private insurance company asked Nabors to cooperate in its own investigation of the damage to the plane. The insurer sent its inquiry one and one-half years before the indictment of Nabors. No Miranda warnings were given, and none had to be.
Under one view, this latter distinction might be dispositive of the fifth amendment argument in this case. In a concurring opinion in Jenkins, Justice Stevens, joined by retired. Justice Stewart, wrote:
The fact that a citizen has a constitutional right to remain silent when he is questioned has no bearing on the probative significance of his silence before he has any contact with the police .. . When a citizen is under no official compulsion whatever, either to speak or to remain silent, I see no reason why his voluntary decision to do one or the other should raise any issue under the Fifth Amendment. For in determining whether the privilege is applicable, the question is whether petitioner was in a position to have his testimony compelled and then asserted his privilege, not simply whether he was silent. A different view ignores the clear words of the Fifth Amendment.
447 U.S. at 243-44, 100 S.Ct. at 2132 (Stevens, J., concurring) (footnote omitted). According to Justice Stevens, the prosecution can raise prior silence, even if the defendant does not elect to testify, as long as the evidence is relevant and the silence was not in response to governmental inquiry. Id. at 244 n. 7, 100 S.Ct. at 2132 n. 7.
A majority of the Supreme Court has never adopted Justice Stevens’ analysis, however, so that theory cannot control the decision here. Only one lower court has to our knowledge adopted the Stevens approach. United States v. Robinson, 523 F.Supp. 1006, 1010-11 (E.D.N.Y.1981), aff’d, 685 F.2d 427 (2d Cir.1982). Robinson held that the prosecution did not infringe defendant’s fifth amendment privilege by raising, in its case in chief in a counterfeiting trial in which defendant did not testify, defendant’s silence in the face of an implicit accusation by a cashier that he had handed her counterfeit money. Even there, the evidence might be admissible without the Stevens rationale. Robinson involved silence combined with action at the time the crime was committed. When the Robinson cashier handed back the tendered bills and asked for real money, the defendant, without saying anything, handed the cashier genuine money. The Robinson decision differs from the case at bar in that here the silence occurred independent from the commission of the crime.
We premise our decision that no reversible error occurred in this case on four rationales. First, it seems clear that if Nabors had made some statements to the insurance company, the prosecution could have used them, as not having been compelled by the government. See United States v. Moeller, 402 F.Supp. 49, 53-56 (D.Conn.1975). Presumably, if it could have used Nabors’ statements against him, assuming relevancy, it should be able to use his silence against him, assuming relevancy. The principle that runs through the cases involving silence is that the government cannot use a defendant’s assertion of the constitutional privilege against self-incrimination to incriminate him. E.g., Doyle v. Ohio, 426 U.S. at 618, 96 S.Ct. at 2245. Silence without the claim of constitutional privilege does not implicate that principle of fairness. The Supreme Court has held that the fifth amendment privilege “is not self-executing,” at least where, as here, the inquiry does not obviously call for an incriminating answer. Roberts v. United States, 445 U.S. 552, 559, 100 S.Ct. 1358, 1363, 63 L.Ed.2d 622 (1980). See also United States v. Kordel, 397 U.S. 1, 9-10, 90 S.Ct. 763, 768, 25 L.Ed.2d 1 (1970); United States ex rel. Vajtauer v. Commissioner of Immigration, 273 U.S. 103, 113, 47 S.Ct. 302, 306, 71 L.Ed. 560 (1927). Nabors simply did not respond to the insurance company’s general request for an account of his involvement with the plane. He never asserted the privilege. Because he did not claim it at the time of the silence, he could not claim it at trial.
Second, the evidence here is more than testimonial in nature. Certainly the actions of a defendant which are inconsistent with innocence are admissible without regard to the fifth amendment privilege. Here the point the government was presenting to the jury was Nabors’ failure to make a claim for the insurance proceeds to which he was entitled if he was innocent of criminal involvement with that plane. In closing argument, government counsel, commenting on defense attorney’s suggestions that Nabors did not grant Mike Warner permission to use the plane for criminal activity, said:
If you believe that, don’t you reckon Mr. Nabors would’ve said, “Mike, you took my airplane and committed a crime in it. I don’t want nothing to do with you.” ... And if it was somebody taking his plane without authorization and running off and committing a crime in it and burning it up, don’t you know he’d come up to the insurance company and say, “Look here, I’ve got a loss that’s covered by your insurance, and I demand payment.” He didn’t do that.
Viewed as action, not silence, the evidence does not implicate the fifth amendment privilege against compelled testimony. We need not concern ourselves as to whether there were innocent explanations for this action that rob it of evidentiary value. None were argued.
Third, we are quite aware of the absence of cases which allow the use of silence in the government’s case in chief. Just two and one-half years ago, the Second Circuit commented that it could find “no decision permitting the use of silence, even the silence of a suspect who has been given no Miranda warnings and is entitled to none, as part of the Government’s direct case.” United States v. Caro, 637 F.2d 869, 876 (2d Cir.1981) (suggesting the district court’s admission of evidence of silence in that case might have been error, but holding the error harmless). See also United States v. Lewis, 651 F.2d 1163, 1165-69 (6th Cir.1981) (reversing conviction where government agent testified on direct to defendant’s silence following Miranda warnings). The government cites only one case in which a court allowed the prosecution to comment on a defendant’s silence in its case in chief. United States v. Robinson, 523 F.Supp. at 1011, the case of silence combined with action at the time of the crime’s commission.
Even with the lack of authority for admissibility, however, we cannot figure out why the case should be reversed because of the admission of this evidence. Relevant evidence is, as a general proposition, admissible unless there is some reason for its exclusion. Fed.R.Evid. 402. That the evidence might have called attention to defendant’s failure to testify, the general thesis of the argument on appeal, is not persuasive. Much incriminating evidence presented by the prosecution in criminal cases cries out for an explanation by the defendant and points up his failure to testify. The two cases relied upon by defendant, Helton v. United States, 221 F.2d 338, 341-42 (5th Cir.1955), and United States v. Sprengel, 103 F.2d 876, 882-83 (3rd Cir.1939), are readily distinguishable. In Helton the questions were asked by a police officer; in Sprengel by a government postal inspector. Nabors has given us no persuasive justification for reversing the trial court on this point.
Fourth, the prosecution presented substantial evidence of defendant’s guilt, even without the evidence of Nabors’ silence in response to the insurance inquiry. Michael Warner testified in detail about Nabors’ hiring him to transport the marijuana from Colombia. He also testified to prior similar drug smuggling operations headed by Nabors. The government presented some corroborating testimony, especially about the prior similar acts, including a recording of a telephone conversation between Nabors and Warner in which they discussed a landing site. Nabors presented virtually no rebuttal evidence. In light of the other evidence of guilt, admission of the evidence amounted to harmless error, if error at all. See United States v. Resnick, 483 F.2d 354, 356-58 (5th Cir.), cert. denied, 414 U.S. 1008, 94 S.Ct. 370, 38 L.Ed.2d 246 (1973).
3. Admission of Evidence of Similar, Prior Acts
Over Nabors’ objection, the district court admitted evidence that, four years before the drug smuggling operation charged, Nabors had been engaged with Warner in a series of virtually identical operations. The government’s theory of admissibility, which the district court evidently accepted, was that the evidence went to defendant’s intent to commit the crimes charged.
Under Fed.R.Evid. 404(b), evidence of other crimes is admissible to establish, among other things, intent but is inadmissible to show the defendant’s character. To be admissible, the evidence must satisfy a two-part test:
First, it must be determined that the extrinsic offense evidence is relevant to an issue other than the defendant’s character. Second, the evidence must possess probative value that is not substantially outweighed by its undue prejudice ....
United States v. Beechum, 582 F.2d 898, 911 (5th Cir.1978) (en banc) (footnote omitted), cert. denied, 440 U.S. 920, 99 S.Ct. 1244, 59 L.Ed.2d 472 (1979).
Nabors acknowledges the evidence went to an issue other than character. The extrinsic offenses, involving related drug smuggling operations, require the same intent as the charged offenses, and, based on Warner’s detailed testimony and the corroborating evidence, the jury could find that Nabors committed the extrinsic offenses. United States v. Beechum, 582 F.2d at 913.
The question is whether the danger of unfair prejudice substantially outweighed the evidence’s probative value. The answer to this question is generally for the trial judge. “[T]he decision to admit extrinsic [crime] evidence can be disturbed only for an abuse of discretion.” United States v. Benton, 637 F.2d 1052, 1056 (5th Cir.1981).
The evidence had substantial probative value. Nabors’ assertion to the contrary, his criminal intent appears to have been very much in issue. Through cross-examination of government witnesses, Nabors suggested that he had not operated the airplane in a furtive manner indicative of criminal conduct. The defense brought out, for example, that the insurance policy on the plane provided detailed information about Nabors and that Nabors readily identified himself to airport employees. In his closing argument, defense counsel directly raised the question of criminal intent: “A friend [Nabors] lets him [Warner] fly, there’s nothing wrong with that.” Nabors evidently hoped the jury might conclude he had nothing to do with the illegal drug smuggling operation. In any event, the former Fifth Circuit has held that in a conspiracy case in which the defendant pleads not guilty, extrinsic offense evidence is admissible in the government’s case in chief unless the defendant has affirmatively removed the issue of intent. United States v. Roberts, 619 F.2d 379, 383 (5th Cir.1980).
The evidence cannot be attacked as unnecessary or cumulative. Nabors aggressively challenged Warner’s credibility, emphasizing that the government’s key witness was an admitted perjurer and convicted felon. In addition to Warner’s testimony about the prior offense, the government introduced a tape recording of a telephone conversation between Nabors and Warner just prior to some of the alleged prior offenses in which the two men discussed a landing site for an upcoming flight by Warner. Thus the evidence of the extrinsic drug smuggling operations, which also' entailed an airplane flown by Warner, bolstered the potentially shaky primary evidence of intent.
Balanced against its probative value, the extrinsic offense evidence does not seem to have been unduly or unfairly prejudicial. The judge properly instructed the jury both at the time the government introduced the evidence and prior to sending the jury out that it could not consider the extrinsic crime evidence as proof that Nabors committed the charged offenses. He stated the evidence should be considered only in regard to intent. The limiting instruction minimized the potential for unfair prejudice. United States v. Black, 595 F.2d 1116, 1117-18 (5th Cir.1979).
4. Denial of Motion to Compel Government to Affirm or Deny Existence of Wiretap Interceptions
Pursuant to 18 U.S.C.A. § 3504, Nabors moved just prior to trial to require the prosecution to disclose the use of any electronic surveillance or monitoring in the criminal investigation. The district court denied the motion, terming it both insufficient and untimely.
The controlling statute, 18 U.S.C.A. § 3504, provides in effect that when a defendant claims evidence is inadmissible as illegally obtained by use of an electronic device, the government must affirm or deny the use of the electronic device.
(a) In any trial ... before any court ... of the United States—
(1) upon a claim by a party aggrieved that evidence is inadmissible because it is the primary product of an unlawful act or because it was obtained by the exploitation of an unlawful act, the opponent of the claim shall affirm or deny the occurrence of the alleged unlawful act;
******
(b) As used in this section “unlawful act” means any act [involving] the use of any electronic, mechanical, or other device ... in violation of the Constitution or laws of the United States or any regulation or standard promulgated pursuant thereto.
The claim to trigger this section must be more than an allegation that unlawful surveillance may have occurred. While a mere assertion of illegal wiretapping unsupported by evidence may suffice, it must be a positive statement that unlawful surveillance did in fact take place. In re Baker, 680 F.2d 721, 722 (11th Cir.1982); United States v. Rubin, 559 F.2d 975, 989 (5th Cir.1977), judgment vacated and remanded on other grounds, 439 U.S. 810, 99 S.Ct. 67, 58 L.Ed.2d 102 (1978), rev’d in part on other grounds on remand, 591 F.2d 278 (5th Cir.), cert. denied, 444 U.S. 864, 100 S.Ct. 133, 62 L.Ed.2d 87 (1979); United States v. Tucker, 526 F.2d 279, 282 (5th Cir.), cert. denied, 425 U.S. 958, 96 S.Ct. 1738, 48 L.Ed.2d 203 (1976).
Nabors submitted two affidavits in support of his motion. One, by his attorney, stated essentially that government documents revealed a policy of the National Security Agency (NSA) to monitor international telephone conversations. The other, signed by Nabors himself, stated that Nabors had been a party to international telephone calls concerning the subject of the indictment. It continued:
[BJased on NSA’s policy of surveillance, I am informed and believe, and thereon allege, that some or all of my aforementioned telephone conversations with persons located in Central and South America, were, in all likelihood, intercepted by the United States of America (emphasis added).
Without considering the timeliness of Nabors’ motion, we agree with the district court that it is legally insufficient. First, Nabors’ affidavit is devoid of an unequivocal statement that his calls were actually monitored. See, e.g., United States v. Rubin, 559 F.2d at 989 (statement by defendant that he has “reason to believe” his conversations were monitored is insufficient). Second, Nabors did not allege, as the statute suggests, a causal link between the monitoring and prosecution. Rather, he asked the court to “make inquiry [to] deter-min[e]” whether any evidence was the fruit of illegal surveillance.
AFFIRMED.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PUBLISHED ORDER
Before KOELSCH, BROWNING and WALLACE, Circuit Judges.
Appellants are a non-profit environmental organization and thirteen individuals who live near the San Francisco International Airport. They seek to compel preparation of an environmental impact statement for the airport’s expansion program, contending that such a statement is required by the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq. Specifically, appellants seek to enjoin certain federal officials from committing any more funds to the airport’s expansion program and the City of San Francisco from further constructing a parking garage and a new terminal until an impact statement is prepared. The district court issued a preliminary injunction against the federal officials but declined to enjoin construction of the new terminal and garage, concluding that these projects were not part of the overall expansion program and would not have a substantial environmental impact.
Appellants appealed from the denial of a preliminary injunction against the city. On January 22, 1975, we granted appellants’ motion for an injunction pending appeal. However, we remanded the case to the district court to determine whether appellants should be required to post bond or provide indemnity as a condition of the injunction and, if so, to fix the amounts and terms. The injunction pending appeal was to take effect only after the district court made that determination and appellants complied with any bond or indemnity requirements imposed.
On remand, the district court determined that a $4,500,000 bond was required to protect the City of San Francisco against losses in the form of increased construction costs due to inflation, lost rental income and temporary construction that might be necessary because of the delay. Appellants now move for an order reducing the bond and we grant the motion.
Appellants assert that environmental interest groups and individual plaintiffs usually have limited resources. They contend that if public interest groups and citizens are required to post substan-, tial bonds in NEPA cases in order to secure preliminary injunctions or injunctions pending appeal, plaintiffs in many NEPA cases would be precluded from effective and meaningful appellate review. More importantly, they argue, such bonds would seriously undermine the mechanisms in NEPA for private enforcement. Cf. Natural Resources Defense Council, Inc. v. Morton, 337 F.Supp. 167, 168-69 (D.D.C. 1971).
We recognize that in NEPA, Congress sacrificed some efficiency and economy in order to further a strong policy of environmental protection. However, we need not reach the question of whether no more than a nominal bond may be required in any NEPA case in which environmental groups or individuals procure an injunction pending appeal. Here, we are impressed that another panel of this court has already granted an injunction and thus implicitly concluded that appellants have a likelihood of success. Balancing the conflicting interests, we are persuaded that a $4,500,-000 bond is unreasonable. A bond in the amount of $1,000 is reasonable and we order that such bond be imposed. All other terms of the bonds set by the district court will remain in effect.
True, in pending appeals in People of the State of California v. Tahoe Regional Planning Agency we adopted a district court’s order requiring an appeal bond of $3,500,000. However, these are not NEPA cases. Moreover, there, the State of California, which has ample resources to post bond, obtained an interlocutory injunction against construction by private developers. Here, the situation is materially different: a private organization and citizens, with limited resources, obtained an interlocutory injunction against construction by a governmental entity.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Edlin appeals from the denial of a motion to reduce or modify a sentence of imprisonment, or to stay its execution, pending the outcome of a new trial of a codefendant. We affirm.
In United States v. Johnson, 4 Cir., 337 F.2d 180, we affirmed Edlin’s conviction, though we reversed the conviction of a codefendant, Johnson, because of the use in evidence against Johnson of a speech he had made as a member of Congress on the floor of the House. As to Johnson, the case was remanded for a new trial, and this disposition of Johnson’s case was affirmed by the Supreme Court. United States v. Johnson, 383 U.S. 169, 86 S.Ct. 749, 15 L.Ed.2d 681. Subsequently, Edlin sought a writ of certiorari in the Supreme Court, but his petition was denied on October 10,1966.
Edlin sought relief from the sentence of imprisonment in the District Court on the theory that the Government’s decision to retry or not to retry Johnson, and the outcome of Johnson’s retrial, if he is retried, may bear upon the appropriateness of Edlin’s sentence, since Edlin was convicted as an aider and abettor of Johnson in the commission of the primary offense. Johnson’s guilt, however, was abundantly proved at the initial trial and, if invocation of his congressional privilege makes it possible that he will not be retried, or, if retried, that he may be acquitted in the absence of incriminating evidence inadmissible against Johnson but fully admissible against Edlin, it has but slight, if any, relevance to the propriety of Edlin’s sentence.
We do not review sentences, of course, and we think it well within the discretion of the District Judge to deny the application for modification of Edlin’s sentence, or for postponement of its execution, under the circumstances of this case. Disposition of the motion, before Edlin is in a position to show what the ultimate outcome of Johnson’s retrial may be, was not a denial of his essential right to be fairly and fully heard, for surely the District Court in denying the motion took into account the fact that it is possible that Johnson may not be retried and, if retried, that he may be acquitted.
Denial of the motion for reduction, modification or postponement of service of the present sentence is affirmed.
Affirmed.
. On the day of the oral argument in this case, the United States Attorney for the District of Maryland announced that Johnson would be retried.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALVIN B. RUBIN, Circuit Judge.
Almost a full year has passed since this Court, in Johns v. Department of Justice, 624 F.2d 522 (5th Cir. 1980), considered an appeal from an order of a district court refusing to stay the deportation of Cynthia, then a four-year-old child, who, when she was one day old, had been brought to the United States from Mexico, where she had been born. The immigration judge, after a deportation hearing, had concluded that Cynthia had been brought to the United States illegally and had found her deportable. This decision had been affirmed by the Board of Immigration Appeals, which, however, had granted Cynthia the privilege of voluntary departure. Pursuant to an INS warrant issued on January 30, 1980, Cynthia had been taken from the Johns and had been placed in an institution under the care of Catholic Services Bureau (CSB), for what was then proposed to be a period of 48 to 72 hours, pending arrangement of air transportation to Mexico.
No appeal had been taken from the Board’s final order. Instead, Mark and Eileen Johns, who had brought Cynthia to the United States shortly after her birth and who had reared her as their daughter since then, had filed- suit to enjoin her deportation and for a writ of habeas corpus commanding that she be returned to their custody. Her natural mother, Angela Macias-Rosales, sought to intervene. She contended that the Johns had taken Cynthia illegally and asked that her child be returned to Mexico. The United States had sought dismissal of the proceeding. The district court had denied the Johns’ motion in its entirety and had denied Mrs. Macias-Rosales’ motion to intervene. The Johns had then filed an appeal to this Court.
Because Cynthia had not been represented in the deportation proceeding, we remanded the case to the district court with instructions to appoint a guardian ad litem
to represent Cynthia, to enjoin execution of the deportation order, and to direct the INS to conduct all further proceedings involving Cynthia contradictorily with her guardian ad litem.
It was apparent to all that, in view of her age, the temporary situation was traumatic to Cynthia and its protraction was undesirable. We had no jurisdiction to determine what her personal welfare required, however, because the only issues before us were whether her deportation should be enjoined and whether habeas corpus should be granted to the Johns. Contemplating further INS action, we ordered it to be completed within sixty days and further ordered subsequent district court proceedings to be completed within thirty days thereafter. To avoid further appellate delay, we retained jurisdiction.
Events thereafter, unfortunately, perhaps due to no one’s fault or more likely due to the fault of everyone but Cynthia, and to Cynthia’s continued detriment, took the leisurely course we had hoped to avoid. Our opinion was issued on August 1, 1980. On August 6, the district judge appointed Theodore Klein, Esq. and Rebecca Poston, Esq., both members of the Florida bar, as guardians ad litem for Cynthia. On August 22, the Johns filed a motion seeking her release to their custody pending resolution of the case. This was accompanied by psychiatric and psychological reports stating that the Johns were Cynthia’s “psychological parents” and that she should be returned to their care immediately lest she suffer permanent psychological harm. Cynthia’s mother countered with a motion to deny the Johns’ motion. The INS opposed the Johns’ motion on the grounds, inter alia, that the Johns might flee and that it was doubtful that they provided a desirable home environment. Mr. Klein, as guardian ad litem, also opposed the Johns’ motion. On September 23, the district judge denied the motion.
Meanwhile, on September 5, the federal defendants, represented by the Assistant U.S. Attorney, called the district court’s attention to the passage of time since the entry of this Court’s order and to the failure of either the INS or the guardian ad litem to institute any proceedings. The federal defendants recommended the appointment of a psychiatric and a psychological expert to assist the guardian ad litem. In apparent response to that action, the guardian ad litem petitioned this Court and we granted an additional fifteen days for completion of INS proceedings.
On October 30, Mr. Klein filed a request with the INS District Director for a “stay of deportation.” In the letter requesting the action, he recommended that “custody” be decided by a Florida court. On November 12, the District Director granted the stay by a letter addressed to Mr. Klein. The letter states, in part:
It is very evident from its decision that the Circuit Court is troubled by the fact that Cynthia Johns was not specifically represented by Counsel during the previous legal proceedings. The Court points out that even though Mr. and Mrs. Johns were frequently represented by Counsel, their interests do not necessarily coincide with those of Cynthia. The thrust of the Circuit Court’s decision is that Cynthia’s interests must be considered before a final decision is made regarding her deportation from the United States.
On the basis that the custody of Cynthia Johns will be litigated, and hopefully decided in a Florida Court proceeding, I am granting your request for a Stay of Deportation pending the outcome of those proceedings.
Mrs. Macias-Rosales promptly filed a motion requesting the federal District Court to order Cynthia’s deportation or, in the alternative, to declare the INS to be “without further authority to detain the child” and to “release the child forthwith to the natural mother.” The Johns opposed the motion and asked the Court to order the “immediate release of Cindy” to them.
Meanwhile, on December 5, the guardian ad litem filed a proceeding in the Family Division of the Florida state trial court “to determine the legal custody of Cynthia [Johns].” Mrs. Macias-Rosales, opposing his petition, disputed that court’s jurisdiction. From the Family Court’s decision that it had jurisdiction, she appealed. That appeal is now pending in the Florida Third District Court of Appeals.
The federal District Court treated the pleading filed before it as an application for review of the INS order staying deportation, and denied it on the basis that the District Director has discretion to determine whether to proceed with or to stay a deportation, and that no abuse of discretion had been shown. The District Judge added:
A determination as to the legal custodian of Cynthia is a factor of the utmost importance as to whether or not she will be deported. For that reason, the Guardian Ad Litem’s report supports the Director’s stay to allow further proceedings to determine what is in the best interests of Cynthia.
The Johns and Mrs. Macias-Rosales both filed a new appeal from this order, apparently without noting our retention of jurisdiction in the habeas corpus action, Case No. 80-5135. Because the new appeal was separately docketed as Case No. 81-5062, and none of the parties called special attention to it or requested expedited action, the case was handled routinely — as it should never have been — and its pendency did not reach this panel’s attention until briefing under the usual schedule was completed. Thus, the litigants, most of all Cynthia, who assuredly is the only completely innocent party, have again been victims of delays in the legal process.
In March 1981, Cynthia was finally transferred from the CSB institution to the care of a foster family under CSB supervision. She was attended by an INS guard 24 hours a day until July 23, when the CSB succeeded in having the guard removed. She remains in the foster home, her stay indefinite, her future uncertain. Recognizing this, as soon as the case again reached our attention, we suggested oral argument by conference telephone. All parties consented to this procedure and the case was orally argued. We now order the two nominally separate matters consolidated and consider both in this opinion.
I.
Two INS hearings and a sheaf of ex parte representations by those who contend for Cynthia’s custody leave the history of her separation from her mother and her entry into the United States still disordered. The following facts are culled from the INS hearing and the many documents filed in the various proceedings to which Cynthia has been subjected.
It appears certain that Cynthia is an alien, of Mexican nationality, and that Angela Macias-Rosales is Cynthia’s natural mother. Mrs. Macias-Rosales is 33 years of age, has two children, a girl about three years old and a boy about two years old, who reside with her in Rosarito, Baja California, where, she now operates a restaurant. Whether she is married to the person who is the father of these children and of Cynthia is disputed. There are representations that this man is married to someone else and cannot obtain a divorce. There is an account that Mrs. Macias-Rosales has two older children, aged ten and eleven, who live with her mother.
In 1975, the Johns went to Tijuana, Mexico, to adopt a child. They met Mrs. Macias-Rosales, apparently as a result of arrangements by intermediaries. They visited her in the hospital where Cynthia was born, and left the hospital with Cynthia the day after the child’s birth. They secured a Mexican birth certificate showing them as her natural and lawful parents, and, representing Cynthia to be their child, entered the United States. They, therefore, appeared to need no visa for her and had none.
Mrs. Macias-Rosales contends that the Johns kidnapped Cynthia. She has been attempting to locate Cynthia and secure the child’s return since the Johns left Mexico or shortly thereafter. The Johns claim that Mrs. Macias-Rosales surrendered Cynthia to them for adoption and that their procurement of a birth certificate was a de facto “informal” adoption. There is evidence that the Johns knew that this did not suffice as an adoption. There is evidence for and against the parental fitness of both the Johns and Mrs. Macias-Rosales.
After an INS hearing in California, the Immigration Judge found Cynthia to be deportable, but withheld his final decision for six months. He envisioned that the Johns might be able to adopt Cynthia by proceeding in California state courts and that this might enable Cynthia to remain in the United States. After the six-month period had elapsed, finding that the California courts had taken no action on the merits, the Immigration Judge ordered that Cynthia be deported. Thereafter, the Johns fled with Cynthia to Florida, where they were located several years later. After being located, they failed to report to the INS as they had apparently promised.. The INS, therefore, secured a warrant for Cynthia’s detention and refuses to return her even temporarily to their control.
II.
The Attorney General has primary responsibility for enforcing the statutes requiring the deportation of persons who are not lawfully in the United States. An alien is deportable if he has entered the United States unlawfully without an immigrant visa, 8 U.S.C. § 1251(a), and for a number of other reasons. See, e. g., 8 U.S.C. § 1251. Aliens who are determined to be deportable, “shall be deported” upon the order of the Attorney General. 8 U.S.C. § 1251. His responsibility in this regard is akin to his responsibility for enforcing the criminal laws: in both situations, he has discretion to refrain from instituting proceedings even though grounds for their commencement may exist. See C. Gordon & H. Rosenfield, Immigration Law and Procedure § 5.3e(l) (1981).
If the Attorney General has reason to suspect that an alien is subject to deportation, he may arrest the alien, 8 U.S.C. § 1252(a), or commence deportation proceedings without taking the alien into custody. The Attorney General discharges his responsibility for enforcing the deportation laws through the INS, a division of the Department of Justice, to which hp has delegated many of his responsibilities under the immigration laws. The District Director of the INS, therefore, normally makes the decision to institute deportation proceedings. An immigration judge (formerly called a special inquiry officer) then conducts proceedings to determine the alien’s deportability. Id. at § 1252(h). This is the “sole and exclusive procedure for determining the deportability of an alien” under the sections of law here involved. 8 U.S.C. § 1252(b). The immigration judge is empowered to make all decisions necessary to dispose fully of the case and may order that the alien be deported, that the proceedings be terminated favorably to the alien, or that discretionary relief should be afforded. The immigration judge’s order is final, subject, of course, to further administrative and eventual judicial review.
Deportation orders entered by immigration judges are reviewed initially by the Board of Immigration Appeals (BIA). The BIA is a delegate of the Attorney General and exercises the Attorney General’s reviewing authority in deportation cases. The BIA’s decision, absent exceptional circumstances, is administratively final, subject only to judicial review.
The Attorney General has six months after the order of deportation becomes final in which to effect the alien’s departure from the United States. 8 U.S.C. § 1252(c). During this six month period, the Attorney General has discretion to determine whether the alien should be detained or released on bond or conditional parole. 8 U.S.C. § 1252(c). At the termination of the six months, pursuant to a warrant of deportation issued by the district director, 8 C.F.R. § 243.2, the alien may be deported. If deportation during this time has not been “practicable, advisable, or possible or departure of the alien... has not been effected within such six month period,” the alien is subject to further supervision although detention is not permitted. 8 U.S.C. § 1252(c) & (d). See also 8 C.F.R. § 242.2(d), containing the Attorney General’s delegation of his supervisory power to the District Director.
III.
Deportation is not, however, the inevitable consequence of unauthorized presence in the United States. The Attorney General is given discretion by express statutory provisions, in some situations, to ameliorate the rigidity of the deportation laws. In other instances, as the result of implied authority, he exercises discretion nowhere granted expressly. By express delegation, and by practice, the Attorney General has authorized the INS to exercise his discretion. In fact, not only does the INS, as the Attorney General’s surrogate, exercise his quasi-prosecutorial discretion to commence or not to commence deportation, but even after a final order of deportation has been entered, the District Director exercises discretion to afford aliens relief from deportation.
If the Attorney General decides that an alien is unlawfully in the country, and should not be permitted to remain, he may permit the alien to depart voluntarily at the alien’s expense, see 8 U.S.C. § 1254(e), 8 C.F.R. 243.5; Boulamandis v. Brownell, 247 F.2d 83 (D.C.Cir.1957), so that the alien’s record will not show that he was involuntarily deported, thus creating a barrier to possible future lawful return. See C. Gordon & H. Rosenfield, Immigration Law and Procedure § 5.18b (1981); Comment, Suspension of Deportation: Illusory Relief, 14 S.D.L.Rev. 229, 253 (1976). The Attorney General is also authorized to “withhold deportation” of any alien to any country if the alien’s life or freedom would be threatened there on account of race, religion, nationality, membership in a particular social group, or political opinion. 8 U.S.C. § 1253(h).
The Attorney General also determines whether (1) to refrain from (or, in administrative parlance, to defer in) executing an outstanding order of deportation, or (2) to stay the order of deportation. Although such a stay is usually designed to give a deportee a reasonable amount of time to make any necessary business or personal arrangements, both the length of and reason for the stay lie entirely within the discretion of the Attorney General or his delegate.
The Attorney General has adopted regulations giving the District Director discretionary authority, either on his own or on the request of a party, to stay an order of deportation for such time and under such conditions as the director thinks necessary. Neither the statute nor the regulations permit an administrative appeal from a decision regarding a requested stay to an immigration judge or the BIA. 8 C.F.R. 243.4. See Matter of Paduano, 13 I.N.S. 658 (1971). Although both these forms of discretionary relief were here, requested by the guardian ad litem, the request for deferred action was postponed by the District Director until the termination of the state court proceeding. The district director’s action was limited to granting a “stay of deportation.”
IV.
The entry of a final order of deportation or final action on a request for discretionary relief is subject to judicial review. Such review, of course, does not entail the substitution of a court’s judgment for that of the Attorney General or the designees who exercise his power. See, e. g., Foti v. INS, 375 U.S. 217, 228, 84 S.Ct. 306, 313, 11 L.Ed.2d 281, 290 (1963). The Attorney General’s order must be affirmed unless there has been an abuse of discretion or a complete failure to exercise discretion.
The forum for judicial review depends, however, on the nature of the challenged action. Jurisdiction to review “all final orders of deportation... made against aliens within the United States pursuant to administrative proceedings under [8 U.S.C. § 1252(b)]” lies exclusively in the courts of appeals. 8 U.S.C. § 1105a(a). See 5 U.S.C. §§ 1031 — 1042 (The Hobbs Act). Such a petition for review, however, may not be filed more than six months after the date of the final order of deportation.
The scope of the term “final orders of deportation” is not, of course, self-defining. Recognizing the desirability, reflected in 8 U.S.C. § 1105a, of minimizing multiple review, the Supreme Court held in Foti v. INS, 375 U.S. 217, 84 S.Ct. 306, 11 L.Ed.2d 281 (1963), that the term includes in addition to the actual order of deportation, all orders closely related to the deportation proceeding and entered during deportation.proceedings conducted pursuant to 8 U.S.C. § 1252(b), such as the denial of voluntary departure or adjustment of status. See also Giova v. Rosenberg, 379 U.S. 18, 85 S.Ct. 156, 13 L.Ed.2d 90 (1964) (per curiam).
If, on the other hand, ancillary determinations, such as granting a stay of deportation, are made outside the context of a proceeding under 8 U.S.C. § 1252(b), jurisdiction to review initially is not given to the courts of appeals. Cheng Fan Kwok v. INS, 392 U.S. 206, 88 S.Ct. 1970, 20 L.Ed.2d 1037 (1968). Such ancillary administrative actions are subject to review in declaratory judgment actions, or by requests for injunctions, in the district courts under the Administrative Procedure Act, 5 U.S.C. § 702, and under 8 U.S.C. § 1329, an independent grant of jurisdiction, to the district courts, of cases arising under the immigration laws. See C. Gordon and H. Rosenfield, Immigration Law and Procedure § 8.8 (1981); Currie & Goodman, Judicial Review of Federal Administrative Action: Quest for the Optimum Forum, 75 Colum.L.Rev. 1, 32 (1975). See also Comment, Judicial Review of Final Orders of Deportation,. 42 N.Y.U.L.Rev. 1155 (1967).
The right of the INS to hold an alien in custody pursuant to an order of deportation may also be challenged by application for a writ of habeas corpus. 8 U.S.C. § 1105(a). In such an action, brought initially in the district court, the alien may challenge the legality and constitutionality of his confinement by the INS.
V.
With these jurisdictional lines in mind, we examine the proceedings before us to
determine first, whether the District Court had jurisdiction of the proceedings involved in case No. 81-5062. Five days after the District Director granted what he termed a “stay of deportation,” Mrs. Macias-Rosales filed a motion in the district court requesting that the court either order deportation or declare that the INS is without authority to detain Cynthia and order that the child be released to her natural mother. Shortly after that motion was filed, the Johns filed a pleading urging the court to deny Mrs. Macias-Rosales’ motion and order the immediate release of Cynthia to their custody. The guardian ad litem, arguing in support of the INS action, opposed both of these motions.
The Johns and Mrs. Macias-Rosales are both “aggrieved parties” within the meaning of the Administrative Procedure Act. 5 U.S.C. § 702. They were, therefore, proper persons to appear in the district court.
The district court, treating the two motions as requests to review the entry of the stay, held that the District Director’s action was not arbitrary or capricious, and refused to vacate it. The relief sought by Mrs. Macias-Rosales was not, however, merely the vacation of the stay nor was it, of course, an attempt to appeal the 1977 deportation order. Her motion was an attempt to secure an order commanding deportation. This was plainly a “cause... arising under” the deportation provisions of the immigration laws, 8 U.S.C. § 1329, of which the District Court had jurisdiction. We, therefore, consider the order on its merits.
Our prior opinion, holding that the initial deportation proceedings were conducted without due process, effectively voided that prior adjudication. Had the deportation order remained in force, there would have been no need for further proceedings contradictorily with Cynthia’s guardian ad litem. Deportation of Cynthia would have followed as a matter of course absent the guardian’s intervention. As a result of our prior mandate, the final order of deportation, entered on December 16,1977, must be considered without force. Cynthia is, therefore, in the same position as any alien who appears deportable.
The prior deportation order being void for want of due process, the District Director had discretion either again to commence a deportation proceeding or not to do so. That discretion is, like prosecutorial discretion, immune from review in the courts. While the INS order is framed in terms of a “stay of deportation,” we treat it as a refusal to institute further proceedings and affirm the District Director’s authority to exercise his prosecutive discretion in that manner. We, therefore, affirm the District Court order refusing to vacate the stay.
VI.
The APA generally precludes judicial review of the manner in which the Attorney General chooses to exercise his discretionary authority to inquire into the immigration status of an alien who is seeking admission to this country or is here without proper documentation. Nguyen Da Yen v. Kissinger, 528 F.2d 1194, 1199 (9th Cir. 1975); 5 U.S.C. § 701(a)(2). It would, therefore, be inappropriate for us to instruct the District Director concerning the exercise of his discretion. Because, however, the District Director not only misinterpreted the effect of our prior decree on the deportation order, but also erred in his interpretation of the reasons for that decision, we amplify it, so that his future actions will not be improperly influenced by what may have been a lack of clarity in that opinion.
Our prior opinion must not be read as instructing the District Director that deportability of a person is to be determined solely by what is in that person’s best interests, whether the person be an adult or a child. None resist deportation save those who think it is in their best interests to remain. Instead our mandate was designed only to assure Cynthia due process by requiring that she be represented by a competent guardian ad litem with fidelity only to her. The effect of our prior judgment was to void the original order of deportation because the proceeding underlying that order deprived Cynthia of the process due her under the Constitution. We did not under-take to direct how the District Director should proceed so long as he accorded Cynthia due process.
Whether or not Florida courts have jurisdiction over Cynthia, they can in the proceeding presently pending determine only who is entitled to her custody. Save insofar as a custody determination decides whether a person is the “child” of a citizen, custody is not a statutory factor in determining deportability. See, e. g., 8 U.S.C. § 1101(b)(1)(F), 8 U.S.C. § 1401(a)(3); 8 C.F.R. 211.5. It was neither our order nor our. intention that the resolution of these protracted deportation proceedings await Florida court proceedings to determine Cynthia’s custody. Cf. Huynh Thi Anh v. Levi, 586 F.2d 625 (6th Cir. 1978) (the presence of the alien children in the United States was concededly lawful but only their custody was contested).
All parties agree that Cynthia has been harmed by the disruption of her life that has already occurred. They differ only in how they would repair that part of her life. Her life is in limbo at a time when she is most in need of parental affection and guidance. It was not our direction that the District Director’s decision await another indefinitely prolonged period of legal thrust and counterthrust, but only that Cynthia’s due process rights be protected and her status be adjudicated without delay. This has been accomplished in part by the appointment of the guardian ad litem and by his appearance in all proceedings as Cynthia’s representative. It will be assured by his continued representation of her.
The Attorney General, as we have noted, has delegated his statutory authority to determine deportability and, if deportability is found, discretion in acting on that decision, to the District Director. That officer has a duty to decide whether to proceed against Cynthia. We perceive nothing in either the statute or the regulations that requires him to go through a sort of abstention process, particularly when the state court will decide only whether it has jurisdiction, and, if so, who should have custody of her. The issues before him, whether Cynthia is lawfully in this country, whether she should be deported, whether there is a statutory or factual basis for executive compassion and, if so, whether it should be extended to avoid deportation, and related questions, are no more difficult than issues such as moral turpitude, legality of entry, validity of marriage, and fraud and misrepresentation that are decided in immigration hearings daily. Important issues affecting Cynthia must be resolved, at least initially, and perhaps exclusively, by the District Director. Delay is an act of injustice to Cynthia, not of mercy. It is also, to a lesser degree, a prolongation of the anxiety and distress that disturbs the lives of Mrs. Macias-Rosales and Mr. and Mrs. Johns.
Because the guardian ad litem was appointed by the District Court and acts under the orders of that court, subject to our review, we do consider it appropriate to remind him that he was appointed to assure Cynthia due process and to safeguard her best interests; and that each of the many experts whose opinions are now in the record, whether consulted by him or, by Mrs. Macias-Rosales, or by the Johns, or appointed to advise this Court, has concluded that prolongation of the present crisis in Cynthia’s life is harmful to her, perhaps irreparably. We do not consider it necessary, as a matter of law, that the guardian ad litem await state court adjudication of Cynthia’s best interests. We require only that he satisfy himself that the action he recommends is in her best interests and that he then vigorously pursue that recommendation before the administrative agency and the courts. We intimate no opinion concerning the extent of his duties, if any, with regard to proceedings relating to Cynthia’s custody, a matter not within our jurisdiction.
VII.
The action of the INS in detaining a person is, as we have noted, subject to challenge by petition to the District Court for habeas corpus. 8 U.S.C. § 1105a(a)(9). The Johns raised the habeas corpus issue by a motion “on behalf of Cynthia.” The denial of that motion served as the basis for their initial appeal to this Court. In our prior opinion finding that the deportation proceeding was conducted in contravention of Cynthia’s due process rights, we did not address the merits of the Johns’ petition for habeas corpus. Mrs. Macias-Rosales has also filed a habeas corpus petition in the same District Court, but that case has been allotted to another judge. In neither case has the District Judge made any findings of fact concerning the merits.
A petition for habeas corpus in federal court challenges only the legality and the constitutionality of a person’s detention. See United States ex rel. Marcello v. INS, 634 F.2d 964, 965 (5th Cir. 1981). So long as the petitioner has standing to raise that issue, it neither requires nor permits the federal court to determine who, among private persons competing to care for another, has the right to custody. We find the record insufficient to determine whether the District Court erroneously denied the Johns’ habeas, corpus petition. Because the record contains only ex parte statements concerning the facts surrounding Cynthia’s birth and entry into this country, we are unable to determine whether she' is now being held illegally or unconstitutionally. This Court cannot review such an issue without the benefit of a final determination by a District Court based on its findings of fact. While a petition for habeas corpus directed at the INS is usually reviewed by reference only to the administrative record, the District Court may, if necessary, conduct a hearing to take evidence concerning illegal action that is not reflected in the record. Therefore, we remand the case initially appealed for a determination of the merits of the Johns’ habeas corpus application. In order to avoid duplication of effort, and possible inconsistency of results, that proceeding must be consolidated with Mrs. Mácias-Rosales’ petition and be considered by the same District Judge. The guardian ad litem should appear in the consolidated proceeding to assure that Cynthia, as a person, is accorded her legal rights. Perhaps redundantly, we stress that each habeas corpus proceeding challenges only the legality of Cynthia’s detention, from each of the petitioners, by the INS, and that in neither habeas proceeding does the federal District Court have jurisdiction to determine who, between Mrs. Macias-Rosales and the Johns, has the right to custody. Each of them is proceeding contradictorily with the INS and not against the other. See also note 32, supra.
VIII.
The District Court order issued pursuant to our mandate in case No. 80-5135, appointing guardians ad litem and ordering any deportation proceedings to be pursued contradictorily with them, is maintained in force. The order enjoining Cynthia’s deportation is maintained in force unless a final order of deportation is entered pursuant to proceedings conducted contradictorily with the guardian ad litem.
The District Court order in Case No. 81-5062, refusing to vacate what the district director called a stay of deportation, is affirmed.
Case No. 80-5135 is remanded for modification of the District Court’s order of August 6, 1980, for further proceedings consistent with this opinion. That cause, including the petition for habeas corpus set forth in it, is consolidated with the petition for habeas corpus filed by Mrs. Macias-Rosales and now pending in the District Court, and with Case No. 81-5062. All of these proceedings shall be allotted to the same judge for further proceedings consistent with this opinion.
This Court continues to retain jurisdiction so that any appeals can be expeditiously heard. To avoid the type of delay that occurred previously, the clerk will promptly notify the panel as soon as any pleading of any kind connected with this matter is filed in this Court. The briefing schedule will be set by the panel. The parties are instructed that any pleading filed is to bear Docket No. 80-5135 and the clerk’s special attention is to be directed to it by the attachment of a notice or letter stating: This is a matter in which the Court has retained jurisdiction and is to be given special attention as directed by prior court order.
SO ORDERED.
. We also granted Mrs. Macias-Rosales’ motion to intervene in support of the judgment of the district court.
. While the district court appointed both Mr. Klein and Ms. Poston as guardians ad litem, the pleadings and letters in the file have been signed only by Mr. Klein. We shall, therefore, refer to the court-appointed guardians as the “guardian ad litem.”
. This extension permitted'proceedings to continue until November 15, 1980. The guardian ad litem, apparently believing the entry of the stay by the INS relieved the INS and the guardian of responsibility to complete “all proceedings” by that date, did not communicate further with this Court until, in response to our request, he filed a brief on the issues raised by the present appeal.
. The action was filed in the Circuit Court of the 11th Judicial District in and for Dade County, Florida.
. Counsel inform us that the last brief in the state appellate court has not yet been filed and that the court’s decision cannot be expected before October or November 1981. If jurisdiction is sustained, further proceedings in the state trial court will be necessary to determine what is in Cynthia’s best interests. Its ultimate decision may be appealed. The guardian ad litem has informed us that he will act on the basis of the Florida trial court’s decision, and will not abide an appeal to take further action. His action, however, will not dictate a course to the INS. Although the INS has assured us that it also will be guided by the state court’s decision, this does not necessarily mean that it will accept a trial court decision that has been appealed and is being bitterly contested.
. A former commissioner of the INS estimated that as many as 700 grounds for deportation exist. Hearings on H.R. 4974 before the Subcommittee of the Senate Committee on Appropriations, 83d Cong. 1st Sess. 250 (1954).
. Although, before 1956, every deportation proceeding was commenced with an arrest, such proceedings are now customarily initiated by an order to show cause. See 21 F.R. 99-101; 8 C.F.R. § 242.1. An alien is now arrested only if the public interest requires incarceration or there is a substantial basis for a belief that the alien will flee. See generally C. Gordon & H. Rosenfield, Immigration Law and Procedure §§ 5.3a & 5.4a (1981).
The initial INS action taken in this case was the issuance of an order to show cause why Cynthia should not be deported. Only after the Johns absconded to Florida with Cynthia did the INS detain the child.
. See 8 U.S.C. § 1103(a); 8 C.F.R. 2.1 & 103.1.
. The statute exempts from deportation on certain grounds “an alien otherwise admissible at the time of entry” who is the “child of a United States citizen,” 8 U.S.C. § 1251(f), and provides for adjustment of status of other aliens, 8 U.S.C. I*. 1255, as well as for suspension of deportation of persons who have been present in the United States for lengthy periods. 8 U.S.C. § 1254. The term “child” for purposes of admission to the United States includes an adopted child and a child who is an orphan or who has been abandoned. 8 U.S.C. § 1101(b)(1)(F).
In addition, from time to time Congress has enacted statutes providing special provisions to permit alien refugees to remain in this country by authorizing the Attorney General to adjust their status. See, e. g., as to certain refugees, Act Nov. 2, 1966, P.L. 89-732, §§ 1-5, 80 Stat. 1161; and Act Oct. 20, 1976, P.L. 54-571, § 8, 90 Stat. 2706; as to Indochina refugees (Vietnam, Laos or Cambodia), Act of Oct. 28, 1977, P.L. 95-145, Title I, §§ 101-107, 91 Stat. 1223; as to Cambodian refugees, Act Nov. 9, 1978, P.L. 85-624, § 16, 92 Stat. 3465.
. Before jurisdiction rests in the BIA the alien is permitted to request that the immigration judge reopen the proceedings. See 8 C.F.R. 242.22.
. 8 C.F.R. 3.1(d)(1), (2) & (h) recognize circumstances under which the BIA ruling can be referred to the Attorney General.
. Until 1940 “the deportation statute unyieldingly demanded that an alien illegally in the United States be deported.” See C. Gordon & H. Rosenfield, Immigration Law and Procedure § 7.2a (1981).
. Although not applicable to this proceeding, several other forms of discretionary relief are.available to the district director. See, e. g., Kwon v. United States, 646 F.2d 909 (5th Cir. 1981) (en banc) (adjustment of status).
. See O.I. 103.1(a)(l)(ii) (1975). The factors considered when deciding whether deferred action is appropriate include: (1) advanced or tender age; (2) long-time residence in the United States; (3) medical condition; (4) familial effects; and (5) criminal conduct. See generally, C. Gordon & H. Rosenfield, Immigration Law and Procedure § 5.3e (1981); Wildes, The Nonpriority Program of the Service, 53 Int’l Rel. 25 (1976).
. The complete text of the applicable regulation
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HOGAN, District Judge.
This cause is before this Court upon petition of Stark Ceramics, Inc. (Stark) to review and set aside an Order of .the National Labor Relations Board (Board) and upon the Board’s cross-petition to enforce the Order. The Board’s Decision and Order were issued November 30, 1965, and are reported at 155 NLRB No. 120. The Court has jurisdiction, the alleged unfair labor practices having occurred in East Canton, Ohio, within this judicial circuit. Section 160(e), Title 29 U.S.C.
The Board found that the Company violated Section 8(a) (1) (§ 158(a) (1), Title 29 U.S.C.) of the Act by threatening its employees with loss of benefits or loss of employment if they selected the Union (United Brick and Clay Workers of America, AFL-CIO) as their bargaining representative, by interrogating applicants for employment and newly hired employees about their union affiliations, by assaulting an employee who was engaged in peaceful picketing of Stark’s premises, and by dealing with individual strikers rather than through their Union in an effort to persuade them to abandon an “unfair labor practice” strike and return to work. The Board also found that the Company violated Section 8(a) (3) and (1) (§ 158(a) (3) and (1), Title 29 U.S.C.) of the Act by withholding the annual Christmas bonus and length of service bonus from its employees because they selected the Union as their collective bargaining representative. Additionally, the Board found that Stark violated Section 8(a) (5) and (1) (§ 158(a) (5) and (1), Title 29 U.S.C.) of the Act by withholding those bonuses from its employees without bargaining on the matter beforehand with the Union; by entering into negotiations with the Union with a preconceived determination not to reach agreement; and by conditioning its proposals upon the Union’s dropping the unfair labor practice charges that had been filed with the Board.
The Board’s Order of November 30, 1965, directed the cessation by petitioner of nine practices and mandated affirmative action in six respects. Since that time Stark has bargained with and entered into a contract with the Union and has otherwise fully complied with the Board’s Order in all respects, save one, i. e., the Order for payment in full of the above bonuses for the year 1964; so that Stark’s review is limited to that part of the Board’s Order directing the payment of the bonuses and interest for 1964 and poses the single question of the validity of the Board’s Order in that respect. However, and preliminarily, the Board is entitled to a decree enforcing the remainder of its Order, even though the remaining parts of the Order have been complied with. NLRB v. Heck’s Inc., 369 F.2d 370 (C.A. 6th 1966); NLRB v. Toledo Desk & Fixture Co., 158 F.2d 426 (6th Cir. 1946); NLRB v. Oertel Brewing Co., 197 F.2d 59 (6th Cir. 1952); NLRB v. Globe Wernicke, etc., Inc., 336 F.2d 589 (6th Cir. 1964). We do note from the Board’s Order that the question before this Court concerning the bonuses arose not as an isolated one, but in an aura of substantial anti-union activity.
Beginning in December, 1944, with respect to the Christmas bonus, and in December, 1950, with respect to the Service Award bonus, and in each December respectively thereafter, to and including 1963, Stark paid to its factory employees two bonuses graduated according to length of service. The maximum aggregate per annum to any one individual was about $600.00. The bonuses were separately announced each December with the cautionary statement that they could be paid only out of profits and that no precedent was intended for future years. In the nine years before 1963 the annual operating net profit of the Company before “income taxes, bonuses or profit sharing” averaged over $650,000 a year. Stark’s sales and production dropped sharply in 1963-64 in line with a general industry (structural facing tile) downtrend which had commenced in 1958 and which Stark avoided until 1963. Stark’s net operating profit before income taxes, bonuses and profit sharing for 1962 was $639,000; for 1963 there was a loss of approximately $40,000; for 1964 there was a profit of approximately $86,000. Stark received a net clay depletion refund in 1963 of approximately $145,000, of which about $30,000 represented interest. Stark considered the total depletion refund as a “profit” for bonus purposes in 1963, but at least technically, practically the entire bonus for 1963 was paid out of surplus and not out of net operating profit. The bonuses involved in this ease (to which we shall refer hereinafter in the singular) amounted to approximately $88,000 in 1963. The amount required to pay the 1964 bonus, as ordered by the Board and as computed in Stark’s ordinary methods, is $87,975 (practically the same as the amount required in 1963) some $1,549 more than the operating net profit of the Company for 1964, which amounted to $86,426.80.
For some years prior to 1964, the Union had made unsuccessful efforts to become the bargaining representative of Stark’s employees. Elections were held in March of 1961 and again in February of 1964. In the campaigns before each election, Stark emphasized the bonus to its employees as a “campaign plank.” Responsible Company officials, by letter and orally, repeatedly called attention to “the unique year end bonus,” referred to it as “as much a part of the earnings as the rest of wages.” The estimated cost of the bonus was accrued periodically through the calendar year by Stark, including the calendar year 1964. On February 25, 1964, while the Company was in the midst of the worst financial quarter in its history, insofar as disclosed by the record before us, a Company vice president, in his letter to each employee, pointed to the bonus as one of the benefits enjoyed by the employees without a union and indicated “1964 looked like a good business year.” This was two days before the election of February 27, 1964, won by the Union by a narrow margin. The Union was finally certified on September 29, 1964. During both the pre-election and pre-certifi-cation periods in 1964 supervisory employees of Stark freely commented that a union victory would cost the employees their bonus. Stark’s Board of Directors on November 2, 1964, five days after the certification and before any bargaining session with the Union, voted categorically not to pay the bonus in December, 1964. At the first bargaining session, on November 11, 1964, the Company representative (who, significantly enough, had not even been informed of the action of Stark’s Board) advised the Union representative, who inquired whether the 1964 bonus would be paid, that “we will talk about that * * * in the future.” At the next bargaining meeting on December 9, the Union representative repeated his inquiry, at which time the Company representative replied with an emphatic “no.” It was the Company contention then, as it is before this Court, that if it paid the bonus for 1964 it would suffer a loss for the year. In December, 1964, Stark offered to submit financial data to support this position. The Union countered with the opinion that Stark’s action in withholding the bonus was “punitive because the people joined the Union.” The Union promptly filed an unfair labor practice charge with the Board. In February, 1965, after the Board had issued a complaint respecting this and other charges to which reference has been made herein, the Company, as part of a single offer covering a new contract, offered to pay 25% of the 1964 bonus. The Union asserted that it was willing to bargain about future bonuses and wages, but that the 1964 bonus was a matter pending before the Board.
Stark concedes here, as it did before the Board, the regularity of the bonus payments in previous years and also that the payment or non-payment of the 1964 bonus was a bargainable issue.
The Board found, with respect to the issues before us—
FIRST, that Stark’s motive in deciding to and withholding the 1964 bonus was to discourage Union activity (concluding that Stark, therefore, violated Section 8(a) (3) and (1) of the Act). SECOND, that Stark unilaterally determined not to pay the bonus without any bargaining on the matter, and failed and refused to bargain in respect of that bonus (concluding that Stark had thereby violated Section 8 (a) (5) and (1).
The Board concluded that the proper remedial order was one directing the Company to pay the 1964 bonus in the customary amount.
Petitioner contests the findings, the conclusions, and the propriety of the remedy.
Petitioner urges that the failure to pay the bonus was caused by the unusual financial situation of the Company and that the refusal to bargain was bilateral.
Petitioner also questions the propriety of the remedy, relying mainly upon NLRB v. Citizens Hotel Co., 326 F.2d 501 (5th Cir. 1964).
The scope of our review in respect of the substantive objections of petitioner is limited. Section 160(e), Title 29 U.S. C. provides in part, “The findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall be conclusive.”
If facts are open to conflicting inferences, we are not at liberty to draw an inference different from the one drawn by the Board, whether or not it may seem more plausible and reasonable to us. NLRB v. Challenge-Cook Bro. of Ohio, 374 F.2d 147 (6th Cir. 1967) and cases therein cited.
The question of the motive or motives which actuated the Board of Stark in its unilateral corporate determination is a question of fact and the Board’s determination that the motive was “to discourage Union activity” was certainly a fair inference to be drawn therefrom. The Board need only have found that it was “one” of several motives. In NLRB v. Electric Steam Radiator Corp., 321 F.2d 733 (1963), a case which is remarkably similar to this case in its facts, this Court said:
“In any event, even accepting respondent’s contention that these were reasons why the bonus was not paid, it in no way establishes the fact that these were the only reasons. In addition to such reasons, antiunion motivation could also have been a material contributing reason. It is not necessary that antiunion motivation be the only reason for the discriminatory action complained of. It is sufficient if it is a substantial reason, despite the fact that other reasons may also exist.”
The fact that Stark paid the bonus in December of 1963 in the face of an operating loss only two months before a representation election, whereas it unilaterally determined a few days after certification not to pay the bonus or any part thereof in a year of net operating profit, certainly justifies the inference of substantial relationship between the Board’s (Stark) determination and restraint or coercion or discrimination. We conclude that the findings of the Board on the Section 8(a) (3) and (1) issue are supported by substantial evidence.
With respect to the 8(a) (5) issue, again the conclusion, in the context of the issue in this case, is inextricably entwined with a determination of fact or the appropriate inference to be drawn from admitted facts. The problem is one of “good faith” in approach to the bargaining table. Petitioner urges that prior to the first bargaining meeting on November 9, 1964, both Stark and the Union had irretrievably adopted an “all or nothing” attitude with respect to the bonus; that it takes two persons to bargain; that, therefore, the violation of petitioner was only technical. We do not reach the “mutuality” problem in this case by reason of the finality of the unilateral determination of Stark’s Board and particularly its timing — only days after certification and only weeks before the passage of the time of accrual of the bonus which Stark itself had described during the election contest “as much a part of earnings as the rest of wages.” The fait accompli or preconceived determination, unilateral and final as it was, without notice to or consultation with the certified representative, coupled with the failure to inform Stark’s own representative, are manifestly inconsistent with the principles of collective bargaining, (NLRB v. Crompton-Highland Mills, 337 U.S. 217, 69 S.Ct. 960, 93 L.Ed. 1320 (1949)) and fully justified the conclusion of the Board that Stark refused to bargain and violated Section 8(a) (5) and (1). All preceded the first bargaining meeting and “reflects a cast of mind against reaching agreement.” NLRB v. Katz, 369 U.S. 736, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962).
The Company’s ex post facto effort to bargain in February, 1965 (referred to above and which took place after the Union’s complaint was pending before the Board) made, as it was, as an item in a general overall contract, amounted in essence to a proposal that the Union, as a part of the price of a new contract, withdraw its unfair labor practice charge. So construed — and there was no exception to this conclusion of the Board — NLRB v. Ferraro’s Bakery, 353 F.2d 366 (6th Cir. 1965), Stark’s offer was plainly violative of Section 8(a) (5) for it is a “refusal to bargain” to insist on the dropping of a charge as a condition to obtaining a contract. American Laundry Machinery Co. v. NLRB, 174 F.2d 124 (6th Cir. 1949); Lion Oil Co. v. NLRB, 245 F.2d 376 (CCA 8, 1957).
This leaves remaining the contention of the petitioner with respect to the choice of remedy. The petitioner questions the power of the Board to order the payment of the bonuses and interest and asserts, in any event, that any Board discretion in such matters was abused. In NLRB v. Electric Steam Radiator, supra, this Court upheld the power of the Board to order an employer to pay in 1959 the same bonuses as that company had paid in 1958. The Board’s power to issue such an order has also been upheld by the Fifth Circuit in NLRB v. Exchange Parts, 339 F.2d 829 (5th Cir. 1965), and by the Seventh Circuit in NLRB v. Central Illinois Public Service Co., 324 F.2d 916, (CA 7th, 1963). Section 10(c) of the Act broadly empowers the Board to order “such affirmative action * * * as will tend to effectuate the policies of this Act.” The Board has authority “to mould remedies suited to practical needs” and “which are adapted. to the situation.” NLRB v. Seven-Up Bottling Co., 344 U.S. 344, 73 S.Ct. 287, 97 L.Ed. 377 (1953) and NLRB v. MacKay Radio and Telegraph Co., 304 U.S. 333, 58 S.Ct. 904, 82 L.Ed. 1381 (1938). In respect of matters of remedy as well as substance “[t]he ultimate problem is the balancing of the conflicting legitimate interests. The function of striking that balance to effectuate national labor policy is often a difficult and delicate responsibility, which the Congress committed primarily to the National Labor Relations Board subject to limited judicial review.” National Labor Relations Board v. Erie Resistor Corp., 373 U.S. 221, 83 S.Ct. 1139, 10 L.Ed.2d 308 (1963), citing National Labor Relations Board v. Truck Drivers Union, etc., 353 U.S. 87, 77 S.Ct. 643, 1 L.Ed.2d 676 (1957). The power of the Board to issue this order has been upheld by ample precedent.
In urging abuse of discretion, petitioner relies mainly on NLRB v. Citizens Hotel Co., supra. In that case the Court, upholding the power of the Board to issue a bonus payment order emphasized that the “actual nature of the failure to bargain bears significantly on the remedy to be imposed by the Board.” The facts involved in the Citizens Hotel case are substantially different than the facts in this case. In the Citizens Hotel case the employer not only was lacking any earned surplus (this employer’s earned surplus was ample) but had operated for some forty years without ever making an annual profit; the bonus involved had been paid out of capital funds raised by borrowing over a period of six of the years. In 1961 a Union was certified and the company determined not to pay a bonus for that year. In 1958 the company had drastically reduced the bonus involved in a year in which the company’s losses were modest in comparison with the losses in 1960 and 1961. The Union had not even mentioned the subject of bonus at the first two bargaining meetings. The action of the company in respect of the bonus was the only indication of any anti-union motivation and the Court pointed out:
“No contention is, or can be, made that there is any direct evidence of anti-union motivation such as threats, coercive statements, or declarations made indicating that this action was a reprisal for the September election victory of the Union.”
The Fifth Circuit recognized—
“of course, that there are circumstances in which, to effectuate the dominant policy of collective bargaining in good faith, a restitution order is permissible or required. But we do not think that in the situation revealed by this record of a Section 8(a) (5) violation based solely on an impermissible unilateral change justifies the order here made.”
We have pointed out at the outset that the unilateral action of Stark in respect of the 1964 bonus occurred in a context of unfair labor practices following an actively contested election in which Stark plainly manifested its opposition to the Union. The Board did not abuse its discretion. The petition of Stark Ceramics, Inc. is denied and the National Labor Relations Board petition to enforce should be granted.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ORDER
The order filed July 11, 1988, 851 F.2d 1207 is hereby amended by adding the following sentence to the end of the paragraph before “REVERSED and REMANDED.”:
The district court should exercise its discretion as to whether considerations of judicial economy, convenience, and fairness still weigh in favor of its exercise of pendent jurisdiction or whether it should remand to the state court.
ORDER
On June 13, 1988, the Supreme Court vacated this court’s judgment in this case and remanded for further consideration in light of Lingle v. Norge Division of Magic Chef, Inc., — U.S. -, 108 S.Ct. 1877, 100 L.Ed.2d 410 (1988). Lingle holds the state law claims that do not require interpretation of a collective-bargaining agreement are not preempted by section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. We accordingly reverse our holding that DeSoto’s state law claim was preempted by section 301 and remand to the district court for further proceedings on the state law claim. The district court should exercise its discretion as to whether considerations of judicial economy, convenience, and fairness still weigh in favor of its exercise of pendent jurisdiction or whether it should remand to the state court.
REVERSED and REMANDED.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LUMBARD, Chief Judge.
Edwin Murray appeals from his conviction on two counts of income tax evasion for the years 1952 and 1953 in violation of § 145(b) of the Internal Revenue Code of 1939. He was charged with reporting net income of only $6,-504.45 and $4,038.09 for 1952 and 1953 respectively, whereas his net income for those two years calculated from increases in his net worth was allegedly $24,017.-60 and $19,838.82, respectively. The government claimed that the difference in net income came from gambling activities; the defense was that the apparent increases in net worth came from a loan of $32,000 by one John Lamb. Murray was sentenced to imprisonment for one year and one day on each count, the sentences to run concurrently, and was fined a total of $5,000.
Murray’s appeal alleges that the government’s evidence was insufficient to take the question of his guilt to the jury, that there were errors in the admission and exclusion of evidence, and that the trial judge erred in permitting the government to contradict its bill of particulars in summation. He also claims error in the denial of his pretrial demand for inspection of the transcripts of statements given by him to the Intelligence Division of the Internal Revenue Service. We affirm the conviction.
I. The Sufficiency of the Evidence
Murray attacks Judge Dawson’s denial of his motion for acquittal at the close of all the evidence, claiming that the government did not adduce sufficient proof to permit the jury to find beyond a reasonable doubt that the essential element in the alleged increase in net worth —the purchase and remodeling of a house in New Rochelle, New York, for a total of approximately $32,000 — was not explained by the loan claimed to have been made by John Lamb. Murray does not attack the government’s marshalling of evidence in other respects, and we see no reason to raise any other question as to its sufficiency.
The evidence supports the inference that Murray’s gambling operations in 1952 and 1953 were “capable of producing much more income than was reported and in a quantity sufficient to account for the net worth increases.” Holland v. United States, 348 U.S. 121, 138, 75 S.Ct. 127, 137, 99 L.Ed. 150 (1954). And no attack is made upon the proposition that if the $32,000 expenditure was made out of income during the two tax years under consideration the statute was violated. Thus the question before us is whether the government satisfied its burden of producing sufficient evidence for the jury to find beyond a reasonable doubt, as Judge Dawson properly charged, “that the expenditure was not financed by a loan from John Lamb.” We hold that on this question “taking the evidence in the view most favorable to the government, there is substantial evidence to support the verdict.” United States v. Tutino, 269 F.2d 488, 490, (2 Cir. 1959).
The government’s disproof of Murray’s claim that the New Rochelle house was purchased and remodeled with funds lent him by John Lamb consisted largely of testimony tending to show that at the time of Lamb’s death in 1955 and prior thereto he was in such financial straits that it was highly unlikely that during the period in question he had the resources to lend anyone $32,000. Murray, in his last statement to the Internal Revenue Service, had said that he had paid off his debt to Lamb in 1954 or 1955; the government’s evidence as to Lamb’s financial condition also supported an inference that during those years Lamb had not received such repayment.
The government adduced testimony that John Lamb, who was a member of Father Divine’s Mission in Harlem, lived in a Mission residence for a number of months prior to his death. Sunshine Bright, a housekeeper for the Mission, testified that on a number of occasions Lamb’s checks in payment of his rent of four dollars a week were returned because of insufficient funds; she further testified that Lamb had been dispossessed from his real estate office for nonpayment of rent. A friend of Lamb’s, Rev. William Aaron, testified that between 1953 and 1955 he had on several occasions lent Lamb small amounts of money which had never been repaid, and that during the same period, while Lamb was living in Lamb’s office, he had without payment provided Lamb with food and a blanket. In addition, there was evidence that on his entry into Harlem Hospital in 1955 Lamb had said that he had no income and no bank account. The only significant evidence that Lamb had any money was the statement of an Internal Revenue agent that Lamb’s account at the Manufacturers Trust Company contained an average balance of five or six hundred dollars, but this falls far short of any likelihood that Lamb ever had $32,000 to lend to Murray. Cf. United States v. Sclafani, 265 F.2d 408, 411-412 (2 Cir.), cert. denied 360 U.S. 918, 79 S.Ct. 1436, 3 L.Ed.2d 1534 (1959); United States v. Adonis, 221 F.2d 717, 720 (3 Cir.1955).
Murray did not take the stand at the trial, but the government read into evidence excerpts from several pretrial statements which he made to the Internal Revenue agents who investigated his case. His conflicting versions of the source of the money used to buy and repair the house further strengthen the government’s case. On June 30, 1956 he stated that the transactions had been financed with accumulated savings; on January 3, 1957 he said that his savings had been supplemented with a loan of $12,000 from gambling friends whom he would not identify; on April 23, 1958 he said that $13,000 to $15,000 had come from Lamb; finally on May 28, 1958 he claimed — as did his counsel at trial— that the entire expenditure of $32,000 was financed by a loan of that amount from Lamb. There was no documentary evidence of such a loan.
Murray supported his defense with the testimony of the broker handling the sale of the house that at the closing Lamb had been present and had $20,000 to $22,000 in cash with him which he turned over to the seller; the broker also testified, without objection from the government, that later he had heard that Murray had borrowed the money from Lamb. Seymour Waterman, in whose name title to the house was taken and who was president of the holding company (wholly owned by Murray) to which it was subsequently transferred, also testified, again without objection, that Murray had told him that he was going to borrow money from Lamb to finance the house. This, together with the testimony of Mabel Hope to be considered below, constituted Murray’s defense. We hold that there was ample basis for the jury’s rejection of the defendant’s explanation.
II. Objections to the Admissibility of Evidence
A. Testimony of Mabel Hope — To bolster its contention that the New Rochelle house had been financed by John Lamb, the defense called a Mrs. Mabel Hope, who testified that she had “followed” the Father Divine Mission, knew “Brother” Lamb well, and shortly after 1940 had borrowed $2,000 from him without any documents, to buy a house. She further stated that Lamb had told her “that Murray was a very nice fellow and he felt if [sic] he was his own son, and * * * he would help him in something. He said he would help him to do some kind of business. That is as much as he told me.” This, together with Mrs. Hope’s opinion that Lamb was “a wealthy man,” does not, as we have indicated, detract materially from the substantiality of the evidence supporting the verdict, especially in the light of the fact that Mrs. Hope did not state when it was that Lamb professed his disposition to aid Murray.
More specific attack is made upon the refusal of Judge Dawson to allow Mrs. Hope to answer defense counsel’s question, “Did he indicate that he ever lent Ed Murray money?” We agree with Judge Dawson that any answer to this question would have been inadmissible hearsay. Obviously appellant’s contention that this testimony should have been allowed because certain of the government’s evidence was allegedly hearsay as well is unpersuasive. Nor do we see any force in the argument that Mrs. Hope’s testimony should have been admitted under the hearsay exception relating to statements reflecting the state of mind of the declarant, United States v. Annunziato, 293 F.2d 373, 378 (2 Cir. 1961), cert. den. 82 S.Ct. 240; 6 Wig-more, Evidence §§ 1725-31 (3d Ed. 1959). Clearly a statement by Lamb that he had on prior occasions lent money to the defendant, or even a statement that on this occasion he had lent him the $32,-000 in question (the time reference of the question to Mrs. Hope being unclear) would tend primarily to show not Lamb’s intention or state of mind toward Murray as he spoke but whether or not a loan had actually been made. Thus the out-of-court statement was offered for the forbidden purpose of proving the truth of its contents, and does not come within this or any other exception to the hearsay rule. Shepard v. United States, 290 U.S. 96, 54 S.Ct. 22, 78 L.Ed. 196 (1933); McCormick, Evidence, § 271 (1954).
B. Testimony of Lillian Smith —Lillian Smith, who was called by the government, testified on a variety of matters. She was secretary-treasurer of the holding company which held nominal title in the New Rochelle house, but her testimony about the payment at the closing of the sale (at which she was present) was totally inconclusive. She further testified that, “a few months before” the purchase of the house she had seen Murray with two shopping bags full of money, and that he had gotten the money “from gambling. He hit a number.” On cross-examination, however, she wavered as to the time when she had seen the money, admitting that it might have been as much as four years before the purchase of the house, and further said that she had no knowledge of the source of the money used to pay for the house or whether Murray had engaged in gambling since “years and years ago.” On redirect, Miss Smith testified that she had once done housework for Murray, but denied any other employment connection with him. At that point, over the defense’s objections, the government attorney confronted her with a prior statement signed by her to the effect that at one time she had been a numbers runner for Murray; in the statement dates were not established, but Miss Smith did say that she had not been a runner between 1953 and 1956. The judge permitted the use of the statement on the ground of surprise; Miss Smith denied its accuracy.
The appellant attacks the government’s use of Miss Smith’s prior inconsistent statement to impeach its own witness. We find no error. We agree with the trial judge that it was proper for the government to make use of a prior inconsistent statement of its own witness when she reversed herself on the question whether she had ever worked for Murray as a numbers runner. The implication of the prior statement that she had been a runner, but not in the years 1953 through 1956, might well be that she had been a runner in 1952, the first tax year in question, and thus that at that time Murray had been in the policy business. It was obviously material whether or not Murray was at that time in the policy business, and the government’s case was harmed by Miss Smith’s surprising answer.
The fact that the statement was used to cast doubt upon Miss Smith’s negative testimony, and thus to build the government’s case rather than merely to tear down testimony actually harmful to it does not make it any less admissible. We passed upon a similar situation in Di-Carlo v. United States, 6 F.2d 364 (2 Cir.), cert. denied 268 U.S. 706, 45 S.Ct. 640, 69 L.Ed. 1168 (1925). In that case, in admitting a prior inconsistent statement when a witness testified that she had been unable to identify her assailants as the defendants, we said:
“The latitude to be allowed in the examination of a witness, who has been called and proves recalcitrant, is wholly within the discretion of the trial judge * * * The possibility that the jury may accept as the truth the earlier statements in preference to those made upon the -stand is indeed real, but we find no difficulty in it. If, from all that the jury see of the witness, they conclude that what he says now is not the truth, but what he said before, they are none the less deciding from what they see and hear of that person and in court. There is no mythical necessity that the case must be decided only in accordance with the truth of words uttered under oath in court.” Id., 6 F.2d at 368.
See United States v. Allied Stevedoring Corp., 241 F.2d 925 (2 Cir.), cert. denied 353 U.S. 984, 77 S.Ct. 1282, 1 L.Ed.2d 1143 (1957).
This is not, like United States v. Block, 88 F.2d 618 (2 Cir.), cert. denied 301 U.S. 690, 57 S.Ct. 793, 81 L.Ed. 1347 (1937), a case of an attempt to introduce an entire series of extrajudicial questions and answers when a witness refuses entirely to testify about matters on which he has previously been voluble. Rather, here the presentation was giving the jury an opportunity to determine the truth of Miss Smith’s negative response to a single question by noting her prior inconsistent answer and observing her attempt to reconcile her previous statement with what she now claimed to be the truth. Thus the jury was to draw its conclusion not from the out-of-court statement, but rather from the witness’ in-eourt conduct when confronted with it. So considered, the statement was not hearsay.
Murray also claims that it was error for the trial judge to permit the government to begin its examination of Miss Smith by asking her about her criminal record. She testified that she had been convicted for policy dealings in 1942, 1943, 1956 and 1959, and that in 1939 she had been convicted of violating the election law. Murray’s counsel objected to the relevancy of the testimony, and on two occasions moved for a mistrial. He claims that it was improper to ask questions pertaining to credibility before Miss Smith had given any other testimony, that the convictions brought out were incompetent to reflect on credibility since they were only for misdemeanors not involving moral turpitude, and that Murray was unduly prejudiced by the possible inference from his close connection with Miss Smith that he also had engaged in policy dealings.
The last claim of prejudice is without merit in view of Judge Dawson’s meticulous corrective instructions. He asked Miss Smith explicitly whether her convictions had been in connection with any work she had done for Murray, and her answer was negative. He then went on to say “The jury will realize the fact that she has been convicted is not any indication that Mr. Murray had anything to do with the policy racket,” and he stated that the testimony as to the conviction was to be considered only with relation to her credibility.
We find it unnecessary to consider whether it was error under the circumstances to permit the government to go into the credibility of its own witness in this way at the very outset of her testimony. As this case evolved there was no possibility of any prejudice to Murray from any attack on Miss Smith’s credibility. She gave no affirmative testimony which was in any way helpful to Murray, and in fact Murray’s counsel felt it desirable to argue in his summation that her testimony should not be believed. Thus Murray was more helped than harmed by any attack on her credibility, whatever the government's original motivation may have been.
C. Admission of Books and Records —At the trial, the government asked Murray’s counsel “to produce the books and records of a corporation known as 561-563 West 144th Street Realty, Inc.” On the previous day, the trial judge (off the record and thus apparently out of the hearing of the jury) had advised counsel that unless the books and records were turned over to the prosecution voluntarily, a subpoena would be issued. In court, defense counsel stated to the trial judge that “I have them here, and if you direct me to turn them over, I will.” When the judge responded “Yes,” the papers were made available to the prosecution without any objection or restriction. When, however, during its examination of a former employee of Murray’s accountant, the prosecution attempted to introduce them into evidence, the defense objected to the admission of some of them on the ground of the privilege against self-incrimination in that the books and records also contained personal records of the defendant.
Murray claims error in the trial judge’s failure to give a requested corrective instruction after the government had asked for the records in the presence of the jury. No such instruction was needed, since there was nothing prejudicial in the wording of the request, as quoted in the preceding paragraph. No privilege attached to the corporate rec-ords requested; this is not, like People v. Minkowitz, 220 N.Y. 399, 115 N.E. 987 (1917), a case where the prosecution attempted to prejudice the defendant by making known to the jury the existence of inadmissible personal records,
Nor was the fact that before trial judge Weinfeld had denied the government’s motion for inspection of these doc-umen^s of any relevance. The grounds for the denial had nothing to do with'the admissibility of the documents at trial; Judge Weinfeld merely held that uhe gov-ernment had shown insufficient need to liave them before trial.
Finally, we hold that defend-ant’s objection to the admission of the books in evidence was both too late and n°t in the proper form. The privilege against self-incrimination does not pro-hibit the introduction of incriminating matter in evidence; it merely forbids if to be obtained from the defendant. See Johnson v. United States, 228 U.S. 457, 458, 33 S.Ct. 572, 57 L.Ed. 919 (1913). The time for the defense to ob-ject on the grounds that the records were personally incriminating was before they were turned over to the prosecution, not when the prosecution later attempted to use them in the actual examination of the accountant. Moreover, the defense had a right to withhold only those rec-ords which were personal. The rights of the defendant could have been amply protected if the defense had offered to the government only those parts pertaining to the corporation and had withheld the rest. In any event, the government made no use of the parts of the books pertain-ing to Murray’s personal affairs, and there is no indication that there was in them any matter prejudicial to him.
III. Contradiction of the Government’s Bill of Particulars in Its Summation
Appellant also claims error in the trial court’s permitting the government to argue in its summation that there was no evidence supporting exemptions for three dependents when it had stated in its bill of particulars and in the testimony of the investigating Internal Revenue agent that for purposes of calculating Murray’s taxable income on the net worth theory it had allowed three exemptions. Murray’s counsel argued in his summation that lack of willfulness could be inferred from the fact that in the allegedly fraudulent returns Murray had not attempted to take exemptions for his three children. The government countered with the argument that there was no evidence in the record to show that Murray qualified for the exemptions by actually supporting the children. The trial judge rejected a request that he charge the jury that the government had actually allowed the exemptions, saying “I am not in my charge going to go into minutiae of the case.”
Appellant’s argument rests on the proposition that a bill of particulars binds the government for all purposes in the case in which it is given. The function of a bill of particulars is to enable the accused to prepare for trial and to prevent surprise, and to this end the government is strictly limited to proving what it has set forth in it. See, e. g., United States v. Neff, 212 F.2d 297, 309 (3 Cir.1954). But saying that the government’s case is limited to what it has specified is not the same as saying that for all purposes statements in a bill of particulars are evidence in the case. The bill of particulars merely stated that in arriving at the amount of taxable income alleged in the indictment it had allowed the defendant “four exemptions in each of the years contained in the indictment — one exemption for himself and three for his children.” It was not an admission that such exemptions were actually allowable. See United States v. Nunan, 236 F.2d 576, 588 (2 Cir.1956), cert. denied 353 U.S. 912, 77 S.Ct. 661, 1 L.Ed.2d 665 (1957). It was nothing more than a decision not to contest the propriety of the three exemptions which Murray might claim.
The bill of particulars is not evidence of itself; it is merely a statement of what the government will or will not claim. Thus the record was barren of evidence as to whether Murray supported his three children. Of course the defendant could have sought a concession on this from the government or could have adduced proof of it. As it was, Murray’s counsel chose to make the argument despite the fact that the record contained nothing to support it. Under these circumstances it was entirely proper for the government to argue, in answer to the summation of Murray’s counsel, that there was no proof in the record that he was entitled to the exemptions.
IV. Pretrial Inspection of Murray’s Statements to the Internal Revenue Service
The final point for our consideration is the assignment of error in Judge Edelstein’s denial of the defense’s pretrial motion for inspection of the transcripts of Murray’s several voluntary interviews with agents of the Internal Revenue Service. The motion was based alternatively on Rules 16 and 17(c) of the Federal Rules of Criminal Procedure, 18 U.S.C.A., and Section 6(b) of the Administrative Procedure Act, 5 U.S.C.A. § 1005(b). Judge Edelstein held that the defense had made insufficient showing of the “materiality” required for discovery under Rule 16, that pretrial inspection pursuant to subpoena was unavailable under Rule 17(c) because it had not been shown that the statements were “evidentiary and relevant,” and that Section 6(b) of the Administrative Procedure Act was inapplicable because the statements had not been “compelled” by the Revenue Service. Because of the division among the district judges of this circuit as to pretrial inspection of a defendant’s own statements, we shall elaborate the reasons for our affirmance of Judge E delstein’s denial of the motion.
A. Rule 16 — We hold that a transcription of a question and answer examination of one who later becomes a defendant in a criminal action is not discoverable by him under Rule 16 as within the category of “books, papers, documents or tangible objects, obtained from or belonging to the defendant.” The language of Rule 16, its evolution in the Advisory Committee, see United States v. Peltz, 18 F.R.D. 394 (S.D.N.Y.1955), and the Committee’s final explanatory Note all indicate that Rule 16 applies only to books, papers, documents or tangible objects in which a defendant has had some prior proprietary or possessory interest. The great weight of authority supports our unwillingness to stretch the word “belonging” to the point of saying that a stenographic transcript of a defendant’s words “belongs” to him. See Shores v. United States, 174 F.2d 838, 11 A.L.R.2d 635 (8 Cir.1949); Schaffer v. United States, 221 F.2d 17 (5 Cir.1955); Kaufman, Criminal Discovery and Inspection of Defendant’s Own Statements in the Federal Courts, 57 Colum.L.Rev. 1113, 1114 (1957); Developments in the Law — Discovery, 74 Harv.L.Rev. 940, 1053 (1961). Although Murray’s Q-and-A statements were not signed, we can see no reason why a signed statement would any more have “belonged” to him within the meaning of the rule.
Although on this analysis, it is unnecessary for us to pass upon the assertion in the district judge’s order that the statements were not “material” to the preparation of Murray’s defense, it would seem to us that the statements were material.
B. Administrative Procedure Act § 6(b) — We agree with Judge Edelstein that Section 6(b) is inapplicable to the statements Murray voluntarily made to the Internal Revenue Service. By its terms Section 6(b) applies only to persons “compelled to submit data or evidence,” and Murray’s appearances were not pursuant to summons issued under •§ 7602 of the Internal Revenue Code of 1954, but rather were made of his own volition. Thus the case before us is distinguishable from Backer v. Commissioner, 275 F.2d 141 (5 Cir.1960) and United States v. Smith, 87 F.Supp. 293 (D.Conn.1949), which held § 6(a) applicable to insure representation by counsel in a hearing held pursuant to a subpoena.
C. Rule 17(c) — Although a Rule 17(c) subpoena might under some ■circumstances be used to compel the gov■ernment to produce the transcript of a defendant’s statement for his use as evidence, Murray gave no reason which •would have justified Judge Edelstein in ■exercising his discretion to require the government to produce his statements for inspection before the trial.
“Rule 17(c) was not intended to provide an additional means of discovery,” Bowman Dairy Co. v. United States, 341 U.S. 214, 71 S.Ct. 675, 95 L.Ed. 879 (1951). Its purpose is rather that of the traditional subpoena duces tecum, to permit a party to obtain “books, papers, documents or other objects” for use by him as evidence. The provision for pretrial inspection is merely a subsidiary one, “to expedite the trial by providing a time .and place before trial for the inspection of the subpoenaed materials.” Id. at 220, 71 S.Ct. at 679; see Kaufman, supra, at 1116; Note, 67 Harv.L.Rev. 492, 496-97 (1954). We cannot agree with the implication in Fryer v. United States, 93 U.S.App.D.C. 34, 207 F.2d 134, cert. denied 346 U.S. 885, 74 S.Ct. 135, 98 L.Ed. 389 (1953), that the mere likelihood that the government will use a defendant’s statement as evidence (as Murray’s statements were in fact used at trial) makes them “evidentiary” within the meaning of Rule 17(c) as interpreted by the Supreme Court in Bowman. If Rule 17(c) is interpreted to allow the defense to inspect any matter in the government’s hands which might be used by it as evidence, we see little meaning left in the court’s clear statement in Bowman that it is not an additional discovery device. Rather, we interpret Bowman as saying that Rule 17(c) is a device solely for the obtaining of evidence for the use of the moving party, permitting him to examine the material obtained before trial only where, in the discretion of the court, it is necessary that he do so in order to make use of the material as evidence.
The only apparent evidentiary use to which a defendant could put his own statement would be to impeach the testimony of a government witness about its contents or, perhaps, to bolster his own testimony by showing its consistency with the prior statement in the event that the government introduced evidence of some other inconsistent statement. To be sure, we see no reason why after the government introduces such testimony at trial a defendant could not use Rule 17 (c) to subpoena his prior statement for his own use. Cf. Jencks v. United States, 353 U.S. 657, 77 S.Ct. 1007, 1 L.Ed.2d 1103 (1957). Although Jencks eliminated any requirement of a prior foundation of inconsistency (in the case of third-party witnesses), the Supreme Court did not say that it was not necessary for the defendant to show some fairly immediate evidentiary need for the statements he sought, and it reaffirmed that it was not permitting a fishing expedition in the manner of discovery. We cannot say that there may never be a situation where it would be appropriate to allow a defendant to examine his own statement before trial. Here, however, Murray had made no showing of such special need. Murray had counsel with him at each interview and it is hardly to be supposed that he and his counsel were without any notes of what had happened and without any memory of what was said. Under ordinary circumstances, such as these, we see no reason why there should not be sufficient time for defense counsel to make whatever impeaching or bolstering use of a statement he can if he obtains the transcript at trial. Murray has made no showing that he was in any way prejudiced by reason of not having had his statements made available to him before trial.
Affirmed.
. Section 145(b), Internal Revenue Code of 1939.
“Failure to collect and pay over tax, or attempt to defeat or evade tax. Any person required under this chapter to collect, account for, and pay over any tax imposed by this chapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution.”
. In any event, Murray waived any objection to the use of misdemeanor convictions to reflect on credibility by his failure to raise tlie point specifically at trial. He should not be permitted to raise on appeal a new point which he did not give the trial judge an opportunity to pass upon. See, e. g., United States v. Sansone, 231 F.2d 887, 891 (2 Cir.), cert. denied 351 U.S. 987, 76 S.Ct. 1055, 100 L.Ed. 1500 (1956). Timely objection was especially necessary here because it is not clear on the record what the nature of the convictions was. If, as is likely, they were in fact only for. misdemeanors (the policy violations prob-ably having been under New York Penal Law, McKinney’s Consol.Laws, c. 40, § 974 and the election violation probably under New York Penal Law, § 757(2)) it would have been error to permit their use for impeachment purposes over prop-er objection. See United States v. Pro-voo, 215 F.2d 531, 536 (2 Cir. 1954).
. Rule 16, Federal Rules of Criminal Procedure.
“Upon motion of a defendant at any time after the filing of the indictment or information, the court may order the attorney for the government to permit the defendant to inspect and copy or photograph designated books, papers, documents or tangible objects, obtained from or belonging to the defendant or obtained from others by seizure or by process, upon a showing that the items sought may be material to the preparation of his defense and that the request is reasonable.”
. Rule 17(c), Federal Rules of Criminal Procedure.
“A subpoena may also command the person to whom it is directed to produce the books, papers, documents or other objects designated therein * * * The court may direct that books, papers, documents or objects designated in the subpoena be produced before the court at a time prior to the trial or prior to the time when they are to be offered in evidence and may upon their production permit the books, papers, documents or objects or portions thereof to be inspected by the parties and their attorneys.”
. Section 6(b), Administrative Procedure Act, 5 U.S.C. § 1005(b).
“Issuance of process; investigations; transcript of evidence. * * * Every person compelled to submit data or evidence shall be entitled to retain or, on payment of lawfully prescribed costs, procure a copy or transcript thereof, except that, in a nonpublic investigatory proceeding the witness may for good cause be limited to inspection of the official transcript of his testimony.”
. Compare, e. g., United States v. Peace, 16 F.R.D. 423 (S.D.N.Y.1954) (allowing inspection under Rule 16) with, e. g., United States v. Peltz, 18 F.R.D. 394 (S.D.N.Y.1955), (denying inspection under both Rule 16 and Rule 17 (c)). For a recent thorough collection of the cases, both within this circuit and elsewhere, see United States v. Fancher, 195 F.Supp. 448 (D.Conn.1961).
. The Note states that the rule is a “restatement” of the procedure whereby the 'courts had “made orders granting to the defendant an opportunity to inspect impounded documents belonging to him. * * * ” It would be strange to speak of “impounding” a transcript, signed or unsigned, which had never been in a defendant’s possession.
. Judge Kaufman’s article suggests the situation where the preparation of a defense of insanity might require inspection of the transcript of a psychiatric examination. Kaufman, supra, at 1120.
Judge Kaufman also discusses tlie possibility, raised in Shores v. United States, 174 F.2d 838, 845, 11 A.L.R.2d 635 (8 Cir. 1949), of an inherent judicial power to allow discovery, in cases of need. where it is not explicitly provided for in the rules. He concludes that “the courts remain free to direct discovery under their inherent authority to administer justice in federal courts.” Kaufman, supra, at 1121. We need not here consider whether such power exists, since the facts of this case fall far short of showing any earlier need for the statements.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
RUSSELL, Circuit Judge.
This suit, in the trial court was brought under the Federal Tort Claims Act by the State Road Department of the State of Florida against the United States of America to recover damages resulting from the partial destruction of, and damage to, the Thomas A. Jefferson Bridge across Pensacola Bay, Escambia County, Florida, caused when the bridge was struck by four liberty ships of the government during a severe rain and wind squall in Pensacola Harbor, where the ships were anchored.
In its answer the United States denied its negligence, and asserted separate defenses. The eleventh defense denied the right of the plaintiff to recover in any event the cost of constructing and remov"ing two wooden temporary detour bridges at and around the damaged and destroyed portions of the bridge, constructed for the purpose of opening the bridge to traffic ' while the bridge was being repaired. Following the receipt of answer to interrogatories propounded by the defendant by which it was shown that the Road Department had carried a policy of insurance upon the bridge and had been partially reimbursed by the Aetna Insurance Company of Hartford, Connecticut, the United States by its twelfth defense denied the right of the Road Department to maintain the suit and further asserted that the insurance carrier became subrogated to any claim of the Road Department to the extent of the sum of $215,000.00 paid as insurance; that suit for this sum must be brought by the insurance carrier as subro-gee in its own name as the real party in interest, and that the insured and paid Road Department was not entitled to sue for this sum. The defendant also set up additional defenses which in the present posture of the case it is not necessary to relate. Upon the plaintiff’s motion the Court struck the eleventh and twelfth defense. Thereafter the United States, alleging the existence and payment of insurance as set forth in the twelfth defense and asserting the right of subrogation of the insurance carrier and its right to participate in any recovery from the defendant to the extent of the payment made, and that the Road Department and the insurance carrier “are the real parties in interest in this suit,” and under the law of Florida “are authorized jointly to sue the defendant to recover for the alleged damage to the bridge,” moved that the insurer be made a party plaintiff to the suit. In answer to the motion plaintiff asserted that the right of the insurance carrier to be reimbursed out of any recovery of damages was a question only between the plaintiff and its insurance carrier which would be adjusted between the parties after the judgment, if any was recovered, and that the right of recovery of the entire damage vested in the plaintiff and therefore the insurance carrier was not an indispensable party plaintiff, nor the real party in interest. It was prayed that if any order be entered making the insurance carrier a party plaintiff that the joinder be required “solely in order that all parties for whose benefit the action is being prosecuted by the State Road Department shall appear of record as parties to the cause.” The Court, reciting the existence of the right of subrogation on the part of the insurance carrier and that its joinder would in no way prejudice either the plaintiff or insurance carrier, directed that the insurance carrier should join as a party plaintiff “so that all parties for whose benefit the action is being prosecuted shall appear of record as parties in this cause.” The insurance carrier thereafter filed a formal joinder expressly pursuant to the order of the Court and adopted the pleadings of the plaintiff. Thereafter the defendant filed answer and defenses to the same effect as theretofore filed to the complaint and asserted the additional defense that the claim of the sub-rogee was barred because it had not instituted or joined in the suit within one year after August 2, 1946 as required by the provisions of the Federal Tort Claims Act.
The trial of the case was had before the late United States Circuit Judge Curtis L. Waller of this Court, sitting by designation as United States District Judge. The facts and circumstances of the case were fully developed as is shown by consideration of the lengthy transcript of record now before us. His Honor, Judge Waller, entered detailed findings of fact and conclusions of law adjudging the defendant negligent and overruling its defenses of inevitable accident and “Act of God” and awarded the plaintiff judgment in the amounts of damages stipulated to be proper if recovery for the items claimed was allowed. These findings and conclusions are published in State Road Department of Florida v. United States, D.C., 85 F.Supp. 489. The judgment was for the cost of repairing the permanent bridge $233,211.19, and for the cost of constructing and removing the temporary detour bridges $128,-426.39. The total judgment awarded the Road Department of the State of Florida damages in the amount of $361,637.58. It was further ordered and adjudged that the co-plaintiff insurance carrier was entitled, as subrogee, to receive from the said State Road Department the sum of $215,000.00 out of the proceeds of the judgment. Provision for the payment of attorneys’ fees was also made.
By this appeal three specifications of error are presented by the United States. It is contended first, that the trial court erroneously imposed upon the masters and other officers in charge of the vessels involved prior to and during the squall in which the vessels dragged anchor and collided with the bridge a standard of exercising a very high or extra-ordinary degree of care; second, that Aetna’s claim as a plaintiff was barred by the limitation of the Federal Tort Claims Act, supra, and, third, that the cost of constructing and removing the two temporary detour wooden bridges was not an element of damage recoverable by the Road Department. We have intentionally refrained from repeating in detail the findings of fact and conclusions of law reached by the learned Judge sitting as U. S. District Judge designate. They fully appear in the published report appearing in 85 F.Supp. 489. Reference thereto will afford full understanding of all material facts and circumstances of the case and conclusions of law announced. These we approve in substance.
The first specification of error of the appellant assumes, we think, the application by the trial judge of a standard of care which is not supported when the findings of fact and conclusions of law are considered as a whole. The specification is predicated upon isolated statements appearing in the Court’s discussion. We are convinced from a consideration of the opinion of the Court as a whole that the judgment against the defendant-appellant resulted from no misapplication of law to the facts found by the Court. While some language of the Court may be such as to give grounds for argument upon appeal, we think that consideration of the determination of the Court as a whole demonstrates that such argument is not valid and should be rejected.
It appears from the record that the defense that the claim of the subrogee was barred by the limitations in the Federal Tort Claims Act, supra, had been determined upon motion prior to the trial. It is to the effect of this ruling that the second specification of error is directed. In brief, the contention is that since there were two “real parties in interest” and only one of them filed a timely suit the other is barred. Thus to support its position it was necessary for the appellant to bring into the litigation the additional “real party in interest” and assign to it an independent claim in order to invoke the bar of the Federal Tort Claims Act. Since the Road Department had not been fully reimbursed for its damages even to the main bridge structure, it was in any event entitled to assert a claim and in fact had done so,— prosecuting suit for the full amount. In these circumstances the question could in no event be broader than one of proper parties. The claim had been timely asserted. Determination of whether other additional parties were entitled or indeed required-to join in the suit was a matter distinct from the question of whether an action by one party, likewise entitled to sue, had been begun within the permitted time. In the present case there was only one foundation claim. That was for the damage to the bridge. This was the cause of action. The defendant had the right to bring in the subrogee as an additional party, but when brought in the subrogee had an equitable right to reimbursement, which could be enforced only by establishing thé same claim, or cause of action, of the Road Department. This had been timely filed, and was a sufficient and timely assertion of the claim for the entire damages. It is therefore clear that the fact that the subrogee was entitled to participate in the proceeds of the judgment when recovered furnishes no valid ground for adjudging this amount of the total recovery barred by the provisions of the statute.
That portion of the complaint which sought recovery of the cost of constructing and removing the temporary wooden bridges around those portions of the permanent bridge that was damaged by the defendant is predicated upon the obligation of the defendant State Road Department under a lease-purchase agreement which required the plaintiff to maintain and keep the bridge open at all times, and' obligated it to operate the bridge free of tolls as a part of the State Road system. There appears no dispute that the bridge in question is a State road and also a designated .and numbered U. S. Highway, No. 98. The Road Department relies upon cited statutes of Florida as well as common law right to recover such damages through its designated agency. The appellant contends that in.no event is this item of damage recoverable since if done by the State in its general governmental function to maintain the roads the expense is attributed in contemplation of law to the performance of that duty and not to any other circumstances, and further, that if the obligation be deemed to arise from the lease contract the damages are unrecoverable because too remote. It is also contended that since the statute limits recovery to only “the actual damage to the highway” it does not authorize the recovery of the damages here involved. It is conceded that the detour bridges were built to keep traffic open over the State and Federal highway, of which the damaged bridge was a part. The trial judge in sustaining the motion to strike this defense was of the opinion that a failure to consider the cost of constructing the temporary bridges as a necessary part of the over-all construction costs of the repairs of the permanent bridge would “be to blindly ignore the importance of present day use of arterial highways.” We are impelled to the same view. Under the circumstances here present, where a permanent bridge, which the State has the obligation to maintain and keep open to accommodate a heavy flow of traffic, is damaged, the cost of constructing temporary facilities essential to maintain the regular flow of traffic is so directly related to the injury to the bridge and such, a well understood and necessary consequence of such injury that such expense should be deemed legally a part of the damages sustained by the injury to the permanent bridge. So closely related are the repairs to the permanent bridge and the necessity for maintaining the traffic artery which it affords that we think the expense here in question constitutes “actual damage to the highway” within the fair intent and meaning of the Florida statute. Actual damages are compensatory damages. Expenses which naturally and reasonably follow from an injury to property are proper items of recovery. In recognition of this, Florida Courts permit recovery of the use value of automobiles while waiting repair, and the right to recover the rental expense for an automobile necessary to replace one negligently damaged is well recognized.
We have considered the authorities cited by the appellant, that the proper measure of damages for injury to a non-toll bridge is the cost of repairing and restoring it, as well as adjudications that the cost of maintaining a detour is not a proper item of recoverable damage for injury to a bridge. There can be no quarrel with the text authorities to the effect that the cost of repairing or restoring the bridge is generally the proper measure of damages for injury to it. However this does not reach the precise question here. The cases cited were determined upon consideration of statutes which restricted recoverable damages to such as “resulted to such bridge” or damages which the “bridge may sustain” and the Courts expressly construed the statutes there involved as not authorizing the recovery of consequential damages. The-Florida statute provides for .recovery of actual damage to the highway. “Highway” is a broader term than “bridge” or “structure.” We . have found no Florida decision which construes the Florida statute to exclude the recovery of consequential damages. It is our independent opinion that a fair and reasonable construction of the statute furnishes a basis for the recovery now involved since the damages claimed are the natural and reasonable consequence of the injury to the bridge, the highway.
None of the specifications of error or the arguments in support thereof show reversible error and the judgment of the trial court is
Affirmed.
. 28 U.S.C.A. § 921 et seq. [1948 Revised Judicial Code, 28 U.S.C.A. §§ 1346, 2671 et seq.].
. A statement of these as well as a more full statement of the eleventh and twelfth, defenses herein referred to may be found in State Road Department of State. of Florida v. United States, D.C., 78 F.Supp. 278.
. 28 U.S.O.A. § 942 [1948 Revised Judicial Code, 28 U.S.C.A. § 2401].
. “If the masters of these vessels were merely required to exercise ordinary or reasonable care after the officers of the vessels discovered their peril, then the defendant would doubtless be entitled to a judgment in its favor.”
“Ordinary care or reasonable care was not the test, but a very high degree of care and caution was required under the circumstances present at the time.”
The holding, “that the defendant had the burden of showing himself to be free from the commission or omission of any ' act that proximately contributed to the injury and if it has failed so to do the defenses of inevitable accident and vis major must fall.”
. United States v. Aetna Casualty & Surety Co., 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171.
. Cf. United States v. Memphis Cotton Oil Co., 288 U.S. 62, 67, 53 S.Ct. 278, 77 L.Ed. 619.
. “The Department mil at all times during the continuance of this agreement, maintain the bridge and approaches in good repair and in sound operating condition, and will make all necessary repairs, renewals and replacements.
“The State Road Department shall maintain the roads and protect and preserve the same from trespass and injury * * * as is or will be liable to endanger the comfort and safety of the public travelling on said roads. Said Department shall make and maintain said roads safe for the use of sober, lawabiding citizens who desire to travel over same.”
. “The Department will at all times during the continuance of this agreement operate the said bridge free of tolls as a part of the State Road system.”
. Florida Statutes Annotated 1941 § 341.24 provides: “The state road department shall maintain the state roads and protect and preserve the same from trespass and injury and prevent such use of, and traffic on, said roads as is or will be liable to injure or destroy the same, and is or will be liable to endanger the comfort and safety of public travel on said roads. Said department shall make and maintain said roads safe for the use of sober, law-abiding citizens who desire to travel over the same.
“Any person shall be civilly liable to the department for the actual damage to the highway by reason of his wrongful act, which damage may be recovered by suit, and when collected shall be paid into the state treasury to the credit of the state road tax fund.”
Section 320.54(6), provides: “Civil liability. Whoever damages any state road by any trespass on, unlawful use of, or traffic over such road shall be civilly liable for the amount of such damage, which amount may be recovered at the suit of the state road department, and when recovered shall be turned into the state treasury and placed to the credit of the state road tax fund.”
. Citing as illustrative, The Manhattan, D.C., 10 F.Supp. 45, affirmed 3 Cir., 85 F.2d 427.
. Atchison, T. & S. F. Ry. Co. v. Jarboe Livestock Comm. Co., 10 Cir., 159 F.2d 527, 530; 25 C.J.S., Damages, § 25; 15 Am.Jur. Damages Section 66.
. Allen v. Hooper, 126 Fla. 458, 171 So. 513.
. Maggio v. M. F. Bradford Motor Express, Inc., La.App., 171 So. 859.
. 8 Am.Jur. (Bridges), Sec. 84, p. 973; 11 C.J.S., Bridges, § 100, p. 1137; 9 C. J., Bridges, Sec. 118, p. 499.
. State Highway Commission v. American Mutual Liberty Insurance Co., 146 Kan. 187, 70 P.2d 20; Shell Oil Co. v. Jackson County, Tex.Civ.App., 193 S.W.2d 268; State v. F. W. Pitch Co., 238 Iowa 208,17 N.W.2d 380.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KRAVITCH, Circuit Judge:
The survivors of a man killed in a police shootout in DeKalb Counly, Georgia brought this action pursuant to 42 U.S.C. § 1983 against the officers involved in the shootout, certain county officials, and the County. The district court granted the defendants’ motion for summary judgment on the ground that the decedent’s constitutional rights had not been violated and therefore no section 1983 action could be maintained, 667 F.Supp. 853. We affirm.
I.
On the evening of December 15, 1983, the decedent, George Washington O’Neal, Sr., a patient at Doctor’s Hospital in De-Kalb County, Georgia, went on a rampage through the hospital and stabbed seven people with a pocketknife. Officer Steven Waits, a DeKalb County police officer, arrived at the hospital in response to a police call. Waits, armed with his service revolver, found O’Neal on the second floor, holding a bloody knife. Waits identified himself as a police officer and ordered O’Neal to drop his knife. Ignoring Waits’s demand, O’Neal ran away down the hallway. As Waits chased O’Neal through the second floor corridors, he observed “a lot of blood on the floor ... a piece of intral [sic] of some kind” and a person with a severe stomach wound lying on the floor. Deposition of Steven W. Waits, at 54. He also noticed that the nursing supervisor had a stab wound in his back. Police Report, Plaintiffs Exhibit 2.
After Waits had chased O’Neal for approximately five minutes, Officer Rick Ro-seberry, armed with a shotgun, arrived at the hospital to assist Waits. Roseberry also saw “blood all over the floor” and walls and “a piece of human tissue lying there in [sic] the floor in front of me.” Deposition of Rickie Emmit Roseberry, at 66. Soon after Roseberry’s arrival, the two officers cornered O’Neal at the end of one of the second floor corridors so that O’Neal was standing only six feet from Roseberry and between five and six feet from Waits. With their weapons raised, the officers repeatedly ordered O’Neal to drop his knife and lie on the floor. Instead of complying, O’Neal rushed toward Rose-berry with the knife raised over his head; in response, both officers fired their weapons at O’Neal. Although struck by both shots, O’Neal did not fall, but rather twisted around from the force of the shots, still waving his knife above his head. Immediately after the first volley of shots, Rose-berry fired a second shot, which hit O’Neal in the small of the back and brought him to the ground. O’Neal died as a result of the gunshot wounds.
O’Neal’s survivors brought this section 1983 action against Waits, Roseberry, the Director of Public Safety of DeKalb County, the Chief of Police and Assistant Chief of Police of DeKalb County, and DeKalb County. The complaint alleged that Waits and Roseberry had deprived O’Neal of his constitutional rights by using excessive force against him, and that this use of excessive force was the result of a custom or policy of DeKalb County. Concluding that O’Neal’s constitutional rights had not been violated because the officers had not used excessive force, the district court granted summary judgment for all the defendants. In a separate order, the district court denied the defendants’ motion for attorney’s fees under 42 U.S.C. § 1988 and Federal Rule of Civil Procedure 11. The plaintiffs appeal, arguing that the district court erred in granting summary judgment on the issue of excessive force. The defendants cross-appeal from the denial of attorney’s fees.
II.
To succeed on their section 1983 claim, the plaintiffs must establish that O’Neal was deprived of a constitutional right. Baker v. McCollan, 443 U.S. 137, 138, 99 S.Ct. 2689, 2692, 61 L.Ed.2d 433 (1979); Shillingford v. Holmes, 634 F.2d 263, 265 (5th Cir. Unit A 1981). The plaintiffs advance two plausible constitutional theories to support their section 1983 action; they assert that the officers’ use of force against O’Neal violated his right to substantive due process and his rights under the fourth amendment. We will consider these assertions separately. See Gilmere v. City of Atlanta, 774 F.2d 1495, 1499 (11th Cir.1985) (en banc) (analyzing claim of excessive force under both substantive due process and fourth amendment), cert. denied, 476 U.S. 1115, 106 S.Ct. 1970, 90 L.Ed.2d 654 (1986).
A. Substantive Due Process
The starting point for any discussion of a substantive due process claim in the context of police abuse is Rochin v. California, 342 U.S. 165, 72 S.Ct. 205, 96 L.Ed. 183 (1952), in which the Supreme Court held that incriminating evidence obtained by subjecting a criminal suspect to a stomach pump was inadmissible. As the Court explained, substantive due process is violated when the government engages in actions that “ ‘offend those canons of decency and fairness which express the notions of English-speaking peoples even toward those charged with the most heinous offenses.’ ” Id. at 169, 72 S.Ct. at 208 (quoting Malinski v. New York, 324 U.S. 401, 416-17, 65 S.Ct. 781, 788-89, 89 L.Ed. 1029 (1945)). In other words, government conduct that “shocks the conscience,” id. at 172, 72 S.Ct. at 209, or “offend[s] even hardened sensibilities,” id., 72 S.Ct. at 210, transgresses the bounds of substantive due process.
Since Rochin, the lower courts have developed more definite standards for identifying substantive due process violations. In determining whether force used by police officers amounts to a constitutional deprivation, a court must consider “‘the need for the application of force, the relationship between the need and the amount of force that was used, the extent of the 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.’” Gilmere v. City of Atlanta, 774 F.2d 1495, 1500-01 (11th Cir.1985) (en banc) (quoting Johnson v. Glick, 481 F.2d 1028, 1033 (2d Cir.), cert. denied, 414 U.S. 1033, 94 S.Ct. 462, 38 L.Ed.2d 324 (1973)), cert. denied, 476 U.S. 1115, 106 S.Ct. 1970, 90 L.Ed.2d 654 (1986).
The plaintiffs’ substantive due process argument is two-tiered. First, they maintain that the use of gunfire against a suspect armed only with a knife was constitutionally excessive because less harmful methods of apprehension were available. Second, they argue that assuming the first volley of gunfire was constitutional, Rose-berry’s second shot was not. We reject both parts of the plaintiffs’ argument.
Unquestionably, the situation at Doctor’s Hospital on the evening of December 15, 1983 suggested the need for the application of force. O’Neal had just stabbed several people and, at the time he was shot, was charging at Roseberry with his knife raised over his head. He refused to respond to the officers’ demands that he surrender, leaving them with the definite impression that force was required to stop him from hurting Roseberry or someone else. Moreover, the amount of force used did not exceed the need for the use of force. The plaintiffs maintain that O’Neal’s rights were violated because the officers could have disarmed him by negotiating with him or by using a baton or stungun, instead of resorting to gunfire. However, they point to no authority holding that the Constitution requires police officers to use a minimum of force to apprehend a violent, dangerous suspect who is threatening the lives of the officers and others nearby. In this case, the use of gunfire to disarm O’Neal was not excessive in light of the obvious danger he posed to the lives of others. In addition, the undisputed evidence demonstrates that the officers fired their guns in a good faith effort to stop O’Neal, not out of a malicious desire to cause harm. Although the injury inflicted was the worst possible, death, the result of the use of force is but one factor to be considered in determining if such force was excessive. Despite the tragic outcome of Waits’s and Roseberry’s encounter with O’Neal, we remain convinced that they did not use excessive force in attempting to subdue him. In short, then-reaction to O’Neal’s violent behavior does not “shockQ the conscience” or “offend ... hardened sensibilities.” Rochin, 342 U.S. at 172, 72 S.Ct. at 209-10.
Our opinion does not change because Roseberry fired a second shot at O’Neal. As the plaintiffs admitted in their brief and at oral argument, Roseberry fired his second shot “immediately” after his first, and at the time of the second shot, O’Neal was still on his feet, holding his knife and spinning from the force of the first volley of shots. These undisputed facts convince us that Roseberry’s second shot was part of his initial reaction to O’Neal’s attempt to stab him, and not, as the plaintiffs would have us believe, a brutal, gratuitous use of force against a visibly disabled suspect. Viewed as part of his initial reaction to O’Neal’s attack, and in light of the unusual circumstances facing the officers that evening, Roseberry’s firing of two shots in rapid succession in an attempt to guarantee O’Neal’s apprehension did not constitute excessive force.
B. The Fourth Amendment
The plaintiffs also base their section 1983 action on the fourth amendment, which provides in pertinent part that “[t]he right of the people to be secure in then-persons ... against unreasonable searches and seizures shall not be violated.” As the Court recently noted in Tennessee v. Garner, 471 U.S. 1, 105 S.Ct. 1694, 85 L.Ed.2d 1 (1985), “there can be no question that apprehension by the use of deadly force is a seizure subject to the reasonableness requirement of the Fourth Amendment.” Id. at 7, 105 S.Ct. at 1699. Reasonableness is determined by “ ‘balancing] 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.’ ” Id. 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)).
Under this balancing test, the plaintiffs’ fourth amendment claim must fail. Although O’Neal’s “fundamental interest in his own life need not be elaborated upon,” id. at 9, 105 S.Ct. at 1700, even such a weighty interest may be counterbalanced by governmental interests in effective law enforcement, as in this case. Waits and Roseberry used deadly force to protect themselves and the people at the hospital from O’Neal, who was armed and, as the blood-covered floors and injured bodies demonstrated, extremely dangerous. Considering the trying circumstances that the officers faced, their reaction, including Ro-seberry’s second shot, was reasonable and hence within the bounds of the fourth amendment.
III.
On cross-appeal, the defendants argue that the district court abused its discretion in not granting them attorney’s fees under 42 U.S.C. § 1988 or Federal Rule of Civil Procedure 11. Pursuant to section 1988, a district court may award attorney’s fees to prevailing defendants if “ ‘the plaintiff’s action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith.’ ” Hughes v. Rowe, 449 U.S. 5, 14, 101 S.Ct. 173, 178, 66 L.Ed.2d 163 (1980) (quoting Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421, 98 S.Ct. 694, 700, 54 L.Ed.2d 648 (1978)). “The fact that a plaintiff may ultimately lose his case is not in itself a sufficient justification for the assessment of fees.” Id., 101 S.Ct. at 178. Similarly, a court may require a party or its counsel to pay reasonable attorney’s fees to the prevailing party pursuant to Federal Rule of Civil Procedure 11 as a sanction for filing an action that has no factual or legal foundation. See Donaldson v. Clark, 819 F.2d 1551, 1555-56 (11th Cir.1987) (en banc).
Simply because the district court granted the defendants’ motion for summary judgment does not mean that the plaintiffs’ action was frivolous. As the district court pointed out in its order denying fees, in ruling on the motion for summary judgment, it “reviewed a great deal of caselaw [sic] on the issue of when deadly force constitutes unreasonable and excessive force within the meaning of the Constitution,” and “did not find any case with a fact situation similar to the one at hand.” We agree with the district court that although the plaintiffs’ section 1983 suit does not merit relief, their causes of action were plausible. Given this, we cannot say that the district court abused its discretion in denying attorney fees under section 1988 or Rule 11. Cf. Hughes v. Rowe, 449 U.S. at 15, 101 S.Ct. at 179 (allegations properly dismissed for failure to state a claim deserved and received careful attention of the courts and thus were not groundless or without foundation).
For the foregoing reasons, the judgment of the district court is AFFIRMED.
. The plaintiffs claim that O’Neal’s outburst was caused by medication he was given while a patient at the hospital.
. The complaint also asserted pendent state claims against Roseberry and Waits for wrongful death and against Doctor’s Hospital for wrongful death and medical malpractice. Upon granting summary judgment for the defendants, the district court dismissed the pendent claims without prejudice.
. In pertinent part, 42 U.S.C. § 1983 provides as follows:
Every person who, under color of any statute, ordinance, regulation, custom or usage, of any State ... subjects, or causes to be subjected, any citizen of the United States ... to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law.
.The complaint alleged that the defendants had violated O’Neal’s rights "to life, equal protection of the laws, and freedom from cruel and unusual punishment under the Fifth, Eighth and Fourteenth Amendments to the United States Constitution." The district court noted that “[i]n response to defendants’ motion for summary judgment, plaintiffs appear to assert that O’Neal’s life was unreasonably seized in violation of the Fourth Amendment." Accordingly, the district court analyzed the plaintiffs’ claim under the fourth amendment, even though it was not mentioned in their complaint. In their briefs to this court, the plaintiffs continue to argue that O’Neal’s rights under the fourth amendment were violated. Thus, we will also proceed on the assumption that the plaintiffs’ claim is brought under both the fourth and fourteenth amendments.
As for the remaining constitutional claims asserted in their complaint, the plaintiffs concede that their eighth amendment claim must fail as a matter of law; their equal protection claim is also groundless and does not merit discussion.
. The plaintiffs stress that Roseberry’s second shot hit O’Neal in the back, as if this conclusively demonstrates that this shot was fired "maliciously and sadistically for the very purpose of causing harm.” Gilmere, 774 F.2d at 1501. As the plaintiffs admit, however, Roseberry fired his second shot “immediately" after his first. At the time Roseberry fired his second shot he could not have known that O’Neal would twist around from the force of the first round of shots and consequently be hit in the back by the second shot. Ilius, the fact that Roseberry’s second shot hit O’Neal in the back does not transform Rosebenys conduct into a violation of substantive due process.
. The dissent maintains that summary judgment was improper because there is a conflict in the record regarding the proportionality of the force used, and "such conflict is for the ultimate fact finder, not this court, to resolve and then weigh against the fact that O’Neal lost his life.” The dissent, however, seems to confuse the process of finding historical facts, a function of the jury, with the distinct process of determining whether those historical facts constitute a substantive due process or fourth amendment violation, a function of the court. See Gilmere, 774 F.2d at 1500-01 (court must determine whether there was substantive due process violation by looking to four factors); Tennessee v. Garner, 471 U.S. 1, 8, 105 S.Ct. 1694, 1699, 85 L.Ed.2d 1 (1985) (reasonableness under fourth amendment is question of law). The proportionality of the force used, the focus of the second prong of the Gilmere due process test and a factor in determining reasonableness under the fourth amendment, is for the court, not the jury, to consider. In a case such as this, where the historical facts are undisputed, it is this court's duty to decide, as a matter of law, whether the facts support the appellants’ constitutional claim.
. Citing Gamer, the plaintiffs argue that the officers violated O’Neal’s fourth amendment rights because they shot at him although he was not trying to escape. The passage from Gamer that the plaintiffs rely upon states as follows:
[I]f the suspect threatens the officer with a weapon or there is probable cause to believe that he has committed a crime involving the infliction or threatened infliction of serious physical harm, deadly force may be used if necessary to prevent escape, and if, where feasible, some warning has been given.
471 U.S. at 11-12, 105 S.Ct. at 1701.
We are not persuaded by this argument. Initially, we take issue with the plaintiffs’ underlying factual assumption that O’Neal was not trying to escape when he was shot. O'Neal’s attempt to stab Roseberry could very well be interpreted as an attempt to escape from the officers and continue his rampage through the hospital. Next, we note that the plaintiffs have misread Gamer to hold that a police officer can no longer use deadly force to defend himself against a suspect’s use of deadly force, unless the suspect is also trying to escape. A more sensible interpretation of the above quoted passage is that a police officer may, under certain circumstances, use deadly force to prevent the escape of a suspect; it does not mean that the use of deadly force is limited to those instances where a suspect is trying to escape.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
DENISON, Circuit Judge.
Federal prohibition agents, acting under a search warrant, found a brewing establishment in operation in the basement of a dwelling owned by Mrs. Kasprowiez, and occupied as a home by her and her husband, Joseph. There were 11 copper vats, of 100 gallons each, in which mash was fermenting.' The finished product being sent out contained substantially 4 per cent, of alcohol. Three men were found in the basement. All five were indicted under three counts for manufacturing intoxicating liquor, possession thereof, and maintaining a nuisance. They were convicted, and all join in this writ of error.
The three men found in the basement complain that there was no evidence against them to make a case for the jury. It appeared that two of them were in working clothes and seemed to be carrying on the operation. This inference which the jury drew as to them was not without substantial support. The third man claimed to be the owner of one of the automobiles standing in the yard, and which was being regularly used in carrying away the finished product. The conclusion that he was at least aiding and abetting the manufacture was justified.
The main question relied upon in the court below and here is that the search warrant was unauthorized, and hence that the evidence thus obtained from a dwelling house was inadmissible. The question sharply presented is whether the manufacture of intoxicating liquor in a dwelling house may be of such commercial character as to justify a search warrant. This is the question which we expressly reserved in Staker v. U. S. (C. C. A.) 5 F.(2d) 312, saying (page 313): “Whether, if the evidence adduced were sufficient to indicate that the magnitude of the manufacture was of such a degree as fairly to necessitate the conclusion that the manufacture was but a step in the sale or marketing of the product, a search warrant could properly issue, we are not called upon to decide.”
The seareh warrant now involved was issued upon an affidavit, the sufficiency of which must be tested by its statements of fact rather than by its conclusions. We therefore disregard the allegation made in terms that the premises were being used for business purposes and for the sale of intoxicating liquor, and look only to the circumstances expressly stated. These were, in brief, that the premises consisted of this house and a garage in the rear upon an alley. The garage opened through, so that automobiles drove into the back yard. Prohibition agents had watched the place for three days, and had seen four different automobiles, making two to five trips each per day, drive in and away after opportunity to load up in the garage, and also had seen men rolling out of the basement and into the yard or garage a large number of sueh half barrels as are commonly used for beer. Other details were stated, and all together fully justified a conclusion that beer was being manufactured in the basement on a scale which resulted in an output of several barrels per day, which output was being regularly hauled away to other parts of the city — in other words, that beer was being there manufactured upon a commercial scale for commercial purposes, and not merely for home use.
Coming to the search warrant statute (section 25, tit. 2, National Prohibition Act [Comp. St. § 10138%m]), and disregarding any doubt whether the basement, by lease, had become so segregated as to lose its character as part of the dwelling, we see that the critical questions must be:
(1) Was this dwelling being used for “some business purpose such as a store, shop, saloon, etc.”?
(2) Was this dwelling being used “for the unlawful sale of intoxicating liquor”?
If either question can rightly be answered in the affirmative, the warrant was lawful; otherwise, not.
We pass the first question by without intimation of opinion, and go to the second. In our judgment the stated circumstances tended to show that the dwelling was being used for the sale of liquor, within a liberal but permissible scope of definition; and in defining the terms used in this statute it is not to be forgotten that section 3 of title 2 of the act (Comp. St. § 10138%aa) directs that “all the provisions of this act shall be liberally construed, to the end that the use of intoxicating liquor as a beverage may be prevented.”
We cannot assume that any sales were being completed in the dwelling as if over a counter, with simultaneous delivery and payment; but commercial sales regularly prosecuted involve, not only manufacture, but storage, ready for delivery to purchasers, as well as the soliciting of orders, the delivery from the storage place to the purchasers who call for it, or the carrying to another delivery point, and the maintenance of a headquarters for supervising the selling business. From the facts here stated it is fairly probable that the four automobile operators were buying at this brewery and delivering and reselling on their own account — at least as probable as that they were in the employ of the manufacturers. The yard and the premises just outside of the house were certainly being used for the delivery of the goods, either to the purchasers or on the way to the purchasers. The manufactured product was doubtless more or less in storage within the dwelling for the purpose of sale, whether title passed to purchasers within the dwelling or later. «Under these circumstances we have no hesitation in concluding that it could be rightly said that the dwelling was being used for “the purpose of sale.”
The search warrant was directed to (among others) the assistants and agents of the Commissioner of Internal Revenue. It was executed and returned by one who signed as “Federal Prohibition Agent.” The service was sufficiently regular. We take -judicial notice that a prohibition agent is an assistant and agent of the Commissioner of Internal Revenue in the enforcement of the National Prohibition Act, being Comp. St. § 10138¼ et seq. Crinnan v. U. S. (C. C. A.) 1 F.(2d) 643, 645.
We have assumed that the affidavit and the warrant are accurately described in the opinion of the District Judge. They have not properly been made any part of the record for review.
All the judgments are affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALVIN B. RUBIN, Circuit Judge:
Two defendants convicted on various counts related to trafficking in counterfeit watches appeal their convictions. One defendant contends that the court’s jury instruction so misstated the law that it was plainly in error, and the other contends that (1) the evidence was insufficient to support his conviction on two counts and (2) the government was required to produce the actual watches sold as the best evidence that the defendants had trafficked in counterfeit goods. Finding these arguments to be without merit, we affirm.
Special Agents of the U.S. Customs Service executed a search warrant on the premises of Geramian Collection II, a jewelry store owned and operated by Massoud Geramian and Firouz Yamin. They seized 324 replica Rolex, Piaget, Cartier, and Gucci watches from the closet and desks in the back office of the store. They also seized invoices indicating that during the past seventeen months the store had sold more than six thousand counterfeit watches. These invoices included sales made when the store was known as M & B Imports and was co-owned by Massoud Geramian and his brother, Behroz Geramian. Massoud and Yamin incorporated the business under the name Geramian Collection II, Inc. when Behroz sold his interest to Massoud. Both Massoud Geramian and Yamin were indicted on charges of trafficking in counterfeit watches. Both were found guilty and are now appealing their convictions. We consider separately each of the three issues raised.
I.
Geramian argues that the court gave an improper jury instruction by misstating the standard for conviction under 18 U.S.C. § 2320. That statute provides criminal penalties for anyone who “intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services.” The statute defines counterfeit mark as a spurious mark “the use of which is likely to cause confusion, to cause mistake, or to deceive.”
In explaining the definition of a counterfeit mark, the judge instructed the jury:
The prosecution is not required to prove that the defendant ever had an intent to deceive or defraud anyone. The Government simply has to show that the use of the spurious trademark is likely in the future to cause either confusion, mistake, or deception of the public in general.
... The public in general includes persons who have no intent to purchase such as the recipient of a gift or the guest in the house who simply views goods as well as purchasers and potential purchasers.
The intent here is an intent by the defendant to copy the trademark even if there is concededly no intention to deceive the purchaser.
Geramian argues that this instruction permitted the jury to find the confusion element satisfied by the mere viewing of a counterfeit watch by a disinterested member of the public who has no intention of purchasing. He contends that such a construction is an erroneous interpretation of the statute.
Because no objection was made to the instruction, the plain-error standard governs analysis of this issue. To constitute plain error, the error must have been so fundamental as to have resulted in a miscarriage of justice.
The judge’s instruction made no such error. The statute’s application is not restricted to instances in which direct purchasers are confused or deceived by the counterfeit goods. “Section 2320(a) is ‘not just designed for the protection of consumers. [It is] likewise fashioned for the protection of trademarks themselves and for the prevention of the cheapening and dilution of the genuine product.’ ”
As the Eleventh Circuit stated in United States v. Torkington,
It is essential to the Act’s ability to serve this goal that the likely to confuse standard be interpreted to include post-sale confusion. A trademark holder’s ability to use its mark to symbolize its reputation is harmed when potential purchasers of its goods see unauthentic goods and identify these goods with the trademark holder. This harm to trademark holders is no less serious when potential purchasers encounter these goods in a post-sale context. Moreover, verbal disclaimers by sellers of counterfeit goods do not prevent this harm.
Geramian argues that because all of the witnesses who had purchased watches from the defendants testified that they were never deceived into thinking that they were purchasing authentic goods and in turn deceived no subsequent purchasers, there was no evidence to support a finding by the jury of post-sale confusion. Gerami-an contends that the judge’s instruction permitted the jurors to find confusion on the part of some hypothetical disinterested members of the public, a finding that would run counter to the evidence.
Geramian interprets “post-sale confusion” too narrowly. The jury need not find actual confusion. The statute expressly requires only likelihood of confusion. The jury heard testimony from experts that members of the public constantly bring counterfeits in for repair only to find out that they are not genuine. Those who purchased watches from the defendants testified to the similarity between the originals and the counterfeits they bought. The evidence was, therefore, sufficient to permit the jury to find that the watches sold had the potential to deceive or to cause confusion or mistake.
II.
Yamin argues that the evidence was insufficient to support the jury’s guilty verdict on Counts 1 and 12 of the superseding indictment. In evaluating the sufficiency of the evidence on appeal, the reviewing court must consider the evidence in the light most favorable to the government, with all reasonable inferences and credibility choices made in support of the jury's verdict. The evidence is sufficient if a rational trier of fact -could have found the essential elements of the crime beyond a reasonable doubt.
Count 1 of the indictment charges Yamin with conspiracy to traffic in counterfeit goods in violation of 18 U.S.C. §§ 371 & 2320. The essential elements of the offense of conspiracy under § 371 are an agreement between two or more persons to commit a crime against the United States and an overt act by one of them in furtherance of the agreement. The government must prove beyond a reasonable doubt that the defendant knew of the conspiracy and that he voluntarily became a part of it. The existence of a conspiracy may be proved by circumstantial evidence and may be inferred from concert of action.
Yamin argues that the evidence showed no more than his mere association with co-defendants Massoud and Behroz Geramian. Yamin and Massoud Geramian, however, were joint owners of a corporation that sold thousands of counterfeit watches. While Massoud personally made most of the sales, the government presented ample evidence of Yamin’s knowing participation in a conspiracy to make the sales.
Patti Fischer testified that over a period of several years she purchased counterfeit watches for the total sum of $31,122.87 and that on three separate occasions she purchased watches from Geramian at Yamin’s apartment. A number of witnesses testified either that they bought counterfeit Rolex and Gucci watches directly from Ya-min, or that Yamin produced watches for a prospective purchaser to examine, or that Yamin was present when Geramian was negotiating the sale of counterfeit watches under circumstances from which Yamin’s knowledge of the proceedings can be inferred.
This evidence, which we need not recount in detail, was sufficient for the jury to find beyond a reasonable doubt that Yamin was an active and knowing participant in the conspiracy to traffic in counterfeit goods.
Yamin also contends that the evidence was insufficient to support his conviction on Count 12 of the indictment which charged him with knowingly and intentionally trafficking in counterfeit goods in violation of 18 U.S.C. §§ 2 & 2320. This count refers to the sale of a counterfeit Rolex watch to an undercover agent. Yamin argues that because he did not actually take the money or write up the invoice, the sale was not made by him.
Even if the sale had not been actively negotiated and closed by Yamin, Yamin could be found guilty as a principal for aiding and abetting Geramian in that sale. To convict a defendant as an aider and abetter, the government must show that the defendant committed an act that contributed to the execution of the criminal activity and that he intended to aid in its commission. The undercover agent testified that Yamin was present in the back room of the store when she bought a counterfeit Rolex and that Yamin brought her the watch that she purchased. He also called her bank to see if her check was good. From this testimony the jury could conclude beyond a reasonable doubt that Yamin had at least aided and abetted in the sale of a counterfeit watch.
III.
Count 9 charged Yamin and Geramian with violation of 18 U.S.C. §§ 2 and 2320 by the sale of watches to a particular customer (Patti Fischer), and Count 11 alleged violation of the same statutes by the sale of watches to another named customer. Yamin claims that the government failed to introduce the best evidence of the counterfeit marks, namely the watches themselves. He contends that Federal Rule of Evidence 1002, the best evidence rule, bars the admission of testimony about the marks absent proof of one of the unavailability exceptions.
This novel argument appears plausible because it is, at least in part, the writing on the watch that makes it a counterfeit. Thus it may be argued that it is the content of that writing that must be proved. The purpose of the best evidence rule, however, is to prevent inaccuracy and fraud when attempting to prove the contents of a writing. Neither of those purposes was violated here. The viewing of a simple and recognized trademark is not likely to be inaccurately remembered. While the mark is in writing, it is more like a picture or a symbol than a written document. In addition, an object bearing a mark is both a chattel and a writing, and the trial judge has discretion to treat it as a chattel, to which the best evidence rule does not apply.
Several witnesses, including the two identified in Counts 9 and 11, testified that they bought watches with the counterfeit trademarks. Furthermore, 324 counterfeit watches, seized from the defendants’ store, were admitted into evidence. These watches were discovered in the back office where every witness testified to having seen counterfeit watches. The seized watches were identified by experts as imitations of various models made by Piaget, Rolex, Cartier, and Gucci. The jury compared the seized watches with originals or pictures of the originals. In addition, the actual watch sold to the undercover agent was introduced into evidence. The inference that the seized watches that were entered into evidence were the same as, or substantially identical to, the watches sold to the various witnesses is too strong to be seriously questioned. And, in any event, Yamin did not properly preserve his “best evidence” contention. Rule 1002, Federal Rules of Evidence, is a rule governing the admissibility of evidence. However, relevant evidence admitted without objection may properly support a verdict, so far as it has probative value, even though its exclusion would have been required on appropriate objection. Here, Yamin did not object on the basis of the “best evidence” rule to the admission of any testimony or evidence proffered by the prosecution, but only raised the “best evidence” contention in argument in support of a motion for judgment of acquittal at the close of the prosecution’s case. Absent “plain error” — which is not shown here — this does not suffice to preserve the contention that the evidence in question should not have been admitted. See Fed.R.Evid. 103(a)(1).
For the foregoing reasons, the judgment is AFFIRMED.
. 18 U.S.C. § 2320(a) (1984).
. Id. at (d)(l)(A)(iii).
. United States v. Hernandez-Palacios, 838 F.2d 1346, 1350 (5th Cir.1988).
. Id. at 1350-51.
. United States v. Gantos, 817 F.2d 41, 43 (8th Cir.1987), cert. denied, — U.S. -, 108 S.Ct. 175, 98 L.Ed.2d 128 (1987) (quoting United States v. Gonzalez, 630 F.Supp. 894, 896 (S.D.Fla.1986)).
. 812 F.2d 1347, 1353 (11th Cir.1987). See also United States v. Infurnari, 647 F.Supp. 57, 59-60 (W.D.N.Y.1986).
. Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1942); United States v. Nixon, 816 F.2d 1022, 1029 (5th Cir.1987), cert. denied, — U.S. -, 108 S.Ct. 749, 98 L.Ed.2d 762 (1988).
. Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979); United States v. Bell, 678 F.2d 547, 549 (5th Cir.1982) (en banc), aff’d, 462 U.S. 356, 103 S.Ct. 2398, 76 L.Ed.2d 638 (1983).
. United States v. Graves, 669 F.2d 964, 969 (5th Cir.1982).
. 18 U.S.C. § 2.
. United States v. Stovall, 825 F.2d 817, 827 (5th Cir.1987).
. Fed.R.Evid. 1001 (advisory committee notes).
. See United States v. Duffy, 454 F.2d 809 (5th Cir.1972).
.Id. at 812.
. See, e.g., McCormick On Evidence § 54 (3rd ed.).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
COFFIN, Circuit Judge.
In a contract dispute between The Chedd-Angier Production Co., Inc. (Chedd-Angier) and Omni Publications International, Ltd. (Omni) over the production of a scientific television series, the jury awarded Chedd-Angier full contract damages, apparently concluding that Omni breached some agreement between the parties. Omni challenged the jury verdict on several grounds and now appeals from the denial of its motion for judgment notwithstanding the verdict or for new trial. In a companion case, Chedd-Angier appeals from the district court decision that Omni did not engage in unfair or deceptive acts or practices in violation of Mass.Gen.Laws Ann. ch. 93A, § 11. After a careful review of the record, we affirm the judgments below on all counts.
Omni, a New York corporation, is the publisher of OMNI magazine, a monthly publication devoted to developments in science, technology and medicine. Robert Guccione, the chairman of Omni, publishes the OMNI magazine and several sexually explicit adult magazines, including Penthouse. Chedd-Angier is a Massachusetts based film and television production company founded in 1980 by John Angier, its president, and Graham Chedd, its treasurer. The parties came together in the summer of 1980 when Guccione and Kathryn Keeton, the president of Omni, decided to create a science and technology television program based on OMNI magazine, and Chedd-Angier was looking for corporate underwriters to finance a science television magazine series. After a number of meetings involving Guccione, Keeton, Chedd, Angier and David Rothkopf, an employee of Tilley, Marlieb and Alan, Inc., Omni’s advertising agency, the parties entered into a two-page letter agreement on December 8, 1980 pursuant to which Chedd-Angier would produce a one-hour pilot television program “about science, technology and related subject areas”, with the intention of producing “a successful and long-running TV series.” The letter agreement further provided that:
“If the pilot is completed and successful and seems to be the basis for a commercially viable series, then you [Omni] and we [Chedd-Angier] intend to continue forward to make the series, on terms that will be agreed at that time. If, on the other hand, the pilot is not completed or we cannot agree on terms, or the pilot is not a success, or if you do not wish to carry on working with us, or if we do not wish to carry on working with you, or if you or we see at any time the likelihood of a successful pilot is not worth additional expenditures, you will pay all costs incurred to date and then both you and we will be free to develop and produce independently any science programs that we are interested in, including those similar to the pilot.”
The agreement provided for the production of a pilot using on-camera reporters, retaining for Guccione the “sole right of approval over the final cut of the program”, “final selection” of the major elements of the program and even approval rights over “day to day operations.” It also provided that any additional expenses had to be approved by Guccione or Keeton in advance.
In the weeks following the December 8 agreement Chedd-Angier began active work on production of the pilot and the series. At the same time, Omni began to market the proposed series in order to sell it to network or affiliate stations. Omni extensively advertised the series proclaiming it to be a joint effort from both the publishers of OMNI magazine and the Chedd-Angier production company, “the most acclaimed science producers in America.”
In January, 1981, Omni requested that Chedd-Angier produce a promotional tape (Promo) for the program, and authorized payment of $45,000 for its production. In February, with a rough version of the Promo, Keeton, Rothkopf, Chedd and Angier met with representatives of the American Broadcasting Company (ABC) who expressed possible interest in purchasing the series. On March 5, Rothkopf telephoned Chedd-Angier and in words or substance said that ABC had agreed to air an Omni series — “It’s a go on the series.”
Guccione, not yet having approved of the promotional tape, met with Keeton, Roth-kopf, Chedd and Angier on March 13 to view it for the first time. Apparently Guc-cione objected to aspects of the tape, including the use of reporters. Nevertheless, according to Angier, Keeton said that Guccione approved of the use of the reporters.
On March 17 Chedd-Angier sent a letter addressed to Guccione and Keeton outlining the proposed terms for production of the series which incorporated many of the terms and conditions agreed upon in the December 8 contract, including a producers’ fee for Chedd-Angier of 15%. In addition, Chedd-Angier specifically requested approval to hire the two reporters who had appeared in the promotional tape. Neither Guccione nor Keeton ever signed the agreement, although on April 2 in a telephone conversation, Rothkopf accepted the proposed budget figures with some modification.
On April 4, 1981 Chedd and Angier met with Guccione and Keeton in New York to review creative aspects of the series, including a television set design which Guc-cione had commissioned from an Italian movie set designer. Chedd and Angier ob-jeeted to the set because it was incompatible with the use of the reporter format. To Guccione’s suggestion that perhaps Chedd-Angier “should consider not using reporters”, Chedd and Angier replied that Guc-cione had previously agreed to the use of reporters, that it was too late to make the changes he was suggesting, that it would be too expensive, and that it was inconsistent with the contract and difficult if not impossible to do.
A memorandum written by Rothkopf to Keeton subsequent to this meeting suggests that as of April 9 Omni had decided not to use reporters, to terminate Chedd-Angier and to form their own production company. The memorandum indicated that Omni was exploring the viability of in-house production and was concerned about the effect of the proposed “change” in production company on ABC’s decision regarding the series. Although Chedd-Angier was told on April 16 that Guccione was upset because they had objected to the dropping of the reporters, it was not until April 22 that Rothkopf, instructed by Guc-cione and Keeton, telephoned Chedd and Angier and informed them of Omni’s decisions. He also asked them at that time for an accounting of the $212,000 that had been advanced by Omni.
One week later, on April 29, Chedd wrote a letter to Discover magazine, a science magazine published by Time, Inc., in which he stated that Chedd-Angier’s only signed document with Omni “explicitly gives either party the right to terminate the arrangement at any time, and either party then has the right to do anything in the science field it wishes.”
In its Memorandum and Order dated January 5, 1984 denying Omni’s motion for judgment notwithstanding the verdict or for a new trial, the district court summarized the parties’ positions:
“The entire course of conduct between the parties was marked by numerous meetings and communications. At trial, both defendant Omni and plaintiff Chedd-Angier introduced into evidence numerous exhibits in support of their respective positions. In substance, Chedd-Angier claims that Rothkopf, acting as Omni’s agent, entered into an agreement with Chedd-Angier on March 5, 1981, for the production of the Omni series. Chedd-Angier claims that the entire course of dealing between the parties evidenced their intent to jointly produce the Omni series, and that Omni made oral expressions of agreement on terms for the production of the series on a number of occasions subsequent to March 5, 1981. Until notified of their termination, Chedd-Angier had been continually at work on the series. Omni claims, however, that the December 8, 1980 agreement, by its terms, controlled the rights and obligations of the parties to the end of their relationship and that, as a matter of law, there are no facts to support the allegation of a superseding oral contract for the series. Omni claims that the plaintiff’s work for the series was performed at the assumed risk that it would not be asked to produce the series.”
The case came to trial in October 1983. Six of the eight counts brought by Chedd-Angier were submitted to the jury. Count 1 alleged the breach of the December 8 agreement in which Chedd-Angier sought unreimbursed production costs and a production fee for its work on the promotional tape. Chedd-Angier claimed that the December 8 agreement was intended to cover production costs of the Promo as well as the pilot. On Count 2, Chedd-Angier sought contract damages of some $275,000 for breach of an oral contract to produce the television series. The same damages were sought and were charged by the court for: breach of the duty of good faith and fair dealing (Count 3); promissory estoppel (Count 5); and misrepresentation (Count 7). On an implied-in-fact contract claim (Count 4), the measure of damages was limited to the reasonable value of services rendered, or quantum meruit. The jury found in favor of Chedd-Angier on a general verdict and awarded $223,175.00 in damages. Finally, Chedd-Angier sought multiple damages predicated on unfair or deceptive acts and practices under Mass.Gen.Laws Ann. ch. 93A, § 11 (Count 6) and Omni counterclaimed to obtain an accounting for the money it advanced to Chedd-Angier under the December 8 agreement. These claims were tried to the district court, and judgment was entered against Chedd-Angier on the 93A claim, and against Omni on the counterclaim.
Omni raises principally four issues on appeal. First, Omni challenges the sufficiency of the evidence to support the jury’s findings that there was an agreement— whether oral, written, implied-in-fact, or based on promissory estoppel — and that Omni breached that agreement, its duty of good faith under that agreement or knowingly misrepresented its intentions. Second, Omni claims that the district court committed prejudicial error in charging the jury that it must award full contract damages for the series should it find for Chedd-Angier on the counts of promissory estop-pel, breach of duty of good faith or misrepresentation. Third, Omni contends that the trial court’s failure to order an accounting for the $212,000 advanced to Chedd-Angier entitles Omni to a new trial. And finally Omni claims that the court’s refusal to ask voir dire questions concerning Guccione’s link to Penthouse magazine allowed jury bias to infect the fairness of the trial. Omni claims that on the basis of the trial errors and the sufficiency of the evidence claims, it is entitled to a judgment notwithstanding the verdict or a new trial.
Appellate review of a jury verdict is extremely restricted and should be granted cautiously and sparingly. To do otherwise deprives the party of a decision by jury. We are compelled, therefore, even in a close case, to uphold the verdict unless the facts and inferences, when viewed in the light most favorable to the party for whom the jury held, point so strongly and overwhelmingly in favor of the movant that a reasonable jury could not have arrived at this conclusion. Rios v. Empresas Lineas Maritimas Argentinas, 575 F.2d 986, 989-90 (1st Cir.1978). Simply put, where it is possible to disagree about the outcome, the matter must go to the jury. Dumas v. MacLean, 404 F.2d 1062, 1064 (1st Cir. 1968).
Omni has failed to persuade us that the facts of this case so conclusively point to a verdict in its favor that fair-minded people could not disagree about the outcome. The evidence was as conflicting as it was voluminous and as such this case is not one, as the district court noted, “where there is but one reasonable conclusion as to the proper judgment.” We accordingly uphold the district court judgment denying Omni’s motion for judgment notwithstanding the verdict.
In the alternative, Omni contends that the district court abused its discretion in failing to grant its motion for a new trial. A new trial should be granted only where the court is convinced that the jury verdict was a “seriously erroneous result” and where denial of the motion will result in a “clear miscarriage of justice.” Coffran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st Cir.1982). As the district court noted:
“New trials may be granted where the court determines that: the verdict is against the weight of the evidence; material issues were improperly submitted to or withdrawn from the jury; substantial errors were made in the admission or rejection of evidence or instructions to the jury; the jury acted with passion or prejudice or engaged in other misconduct; or the trial was otherwise unfair to the movant. 6A Moore’s Federal Practice H 59.08. A party is not entitled to a new trial merely because the evidence introduced at trial would have supported an opposite verdict. Peterman v. Indian Motorcycle Co., 216 F.2d 289, 292-93 (1st Cir.1954); Dumas v. MacLean, supra. Nor should the judge set aside the verdict merely because he would have reached a contrary result. Peterman,-supra, at 292-93.”
1. Sufficiency of the Evidence
Omni argues on appeal that the district court erred in submitting the oral contract count to the jury because there was no proof that a binding contractual relationship existed between the parties. Omni contends that the parties had only reached the stage of “imperfect negotiation” with final terms still to be worked out. “Agreements to agree”, they argue, are unenforceable. Blair v. Cifrino, 355 Mass. 706, 247 N.E.2d 373 (1969); Marine Midland Bank v. Herriott, 10 Mass.App. 743, 412 N.E.2d 908 (1980); Tull v. Mister Donut Development Corp., 7 Mass.App. 626, 389 N.E.2d 447 (1979). As proof that the parties were still in the “negotiation” stage in March and April, Omni points to documents which suggest that a written agreement was not only contemplated by the parties but was a required condition of contract formation. Omni claims that where the parties intend to draft legal documents, absent those documents no contractual relationship can exist. Blair v. Cifrino, 355 Mass. at 709, 247 N.E.2d at 375; see Wasserman v. Roach, 336 Mass. 564, 567-568, 146 N.E.2d 909 (1958).
Omni’s analysis is correct as far as it goes. The problem, however, is that under Massachusetts law even where a writing was contemplated by the parties, if sufficient evidence exists to show that an oral contract has been entered into, the parties’ intention to memorialize the contract in writing does not defeat the existence of an oral contract. Kilham v. O’Connell, 315 Mass. 721, 724-44, 54 N.E.2d 181 (1944); see Merrill v. Kirkland Construction Co., Inc., 365 Mass. 110, 114, 310 N.E.2d 106 (1974); Alphen v. Bryant’s Market, Inc., 329 Mass. 540, 543, 109 N.E.2d 152 (1952); Nigro v. Conti, 319 Mass. 480, 482, 66 N.E.2d 353 (1946). The Restatement of Contracts 2d, § 27 is in accord with this view:
“Manifestations of assent that are in themselves sufficient to conclude a contract will not be prevented from so operating by the fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; but the circumstances may show that the agreements are preliminary negotiations.”
The question then becomes one of fact, whether the jury had sufficient evidence before it to decide that the parties, intending to create a written contract, orally agreed upon the essential terms of the contract prior to memorializing the contract in writing. To answer this question, we again refer to the district court’s January 5, 1984 Memorandum and Order.
The court specifically and supportably found that Chedd-Angier presented sufficient evidence of Rothkopf’s apparent authority to act on behalf of Omni. Chedd-Angier was therefore justified in its reliance on Rothkopf’s representations when he said “It’s a go on the series” and when he later approved Angier’s proposed budget. The court concluded that enough facts were before the jury for it to find that “the parties had an oral contract; all essential elements of the contract were agreed upon; and Omni never exercised its claimed creative control over the use of the reporter format but, instead, terminated Chedd-An-gier in breach of the oral contract.” While we are convinced that this was a close case, and one that equally could have been decided the other way, after extensive review of the record, we are persuaded that the district court did not abuse its discretion in denying Omni’s motion for a new trial on the oral contract claim.
We are unpersuaded by Omni’s remaining legal arguments on the oral contract issue. In particular, we reject Omni’s contention that a directed verdict is mandated in this case on the basis of Grayson v. Pride Golf Tee Company, 433 F.2d 572 (1st Cir.1970). In Grayson, the plaintiff sued for breach of an oral contract of lifetime employment. In that ease, the district court directed the verdict for the defendant because undisputed documents in evidence were inconsistent with the plaintiff's theory of an oral contract. The documents showed that essential terms of the alleged oral agreement were still unresolved. Id. at 575. The documents in evidence in this case, however, can be read to support not just the defendant’s theory, as in Grayson, but also the theory of the plaintiff’s case. The jury had evidence before it that the essential terms of the contract had been agreed upon, if not by March 5 after Roth-kopf’s telephone call to Chedd-Angier, or by March 13 when Keeton allegedly approved of the reporters, then certainly by April 2 when Rothkopf accepted Chedd-An-gier’s proposed budget for the series. Grayson, therefore, poses no bar to the submission of the contract counts to the jury.
Similarly, we reject Omni’s contention that Chedd’s statement in his April 29 letter to Discover magazine (Discover letter) is an admission by Chedd-Angier which is inconsistent with its theory that a superseding oral contract bound the parties. In that letter, written one week after Omni terminated Chedd-Angier, Chedd stated that no written contract binds Chedd-Angier and Omni. Chedd’s failure to mention the superseding oral contract in the Discover letter is not fatal to Chedd-Angier’s claim, however, because the letter was written after the alleged breach of the oral agreement. Accordingly, we do not believe that the existence of this letter requires reversal under Grayson.
Moreover, review of the record reveals that there was sufficient evidence to support submission to the jury on each of the remaining counts. The court below carefully summarized the evidence in support of each count submitted to the jury concluding that:
“[i]n view of the relatively simple issue that was at the core of the plaintiff’s case, that the parties had actually or impliedly agreed that the plaintiff would produce the series, the evidence would amply support the award of damages based on the production of the series under several of the plaintiff’s theories.”
We believe that in its Memorandum and Order the district court competently evaluated the record and we adopt its discussion of the evidence as our own.
II. Errors in the Jury Instructions
In the district court’s charge to the jury, it instructed that the damages for promissory estoppel and breach of duty of good faith were the full measure of contract damages, an amount arguably equivalent to the fifteen percent producer’s fee. Omni contends that under both theories only reliance damages are available, and therefore, in light of the general verdict, the erroneous damage charges were prejudicial and a new trial is warranted. Although we agree with Omni that an'error in the jury instructions would be prejudicial, we are not persuaded that there was an error in this case.
To determine the proper measure of damages in this diversity action we apply Massachusetts law, Segovia Development Corp. v. Constructora Maza, Inc., 628 F.2d 724, 726 n. 4 (1st Cir.1980), and in doing so, we are guided by the trial court’s interpretation of that law, Garcia v. Frie-secke, 597 F.2d 284, 295 (1st Cir.1979). Massachusetts has recently endorsed the theory of promissory estoppel, although it has chosen not to adopt the doctrine by name:
“When a promise is enforceable in whole or in part by virtue of reliance, it is a ‘contract,’ and it is enforceable pursuant to a ‘traditional contract theory’ antedating the modern doctrine of consideration. See Sullivan v. O’Connor, 363 Mass. 579, 588 n. 6, 296 N.E.2d 183 (1973); Restatement (Second) of Contracts § 90, Comment a (Tent. Drafts Nos. 1-7,1973). We do not use the expression ‘promissory estoppel,’ since it tends to confusion rather than clarity.” Loranger Construction Corporation v. E.F. Hauser- man Company, 376 Mass. 757, 760, 384 N.E.2d 176, 179 (1978).
Under § 90 of the Restatement (Second) of Contracts, adopted in its tentative form by the Massachusetts court in Loranger, damages available under promissory estoppel range from full contract damages to reliance or restitution damages:
“d. Partial enforcement. A promise binding under this section is a contract, and full-scale enforcement by normal remedies is often appropriate. But the same factors which bear on whether any relief should be granted also bear on the character and extent of the remedy. In particular, relief may sometimes be limited to restitution or to damages or specific relief measured.by the extent of the promisee’s reliance rather than by the terms of the promise.” Restatement (Second) Contracts § 90, comment d.
The district court, therefore, was clearly authorized under Massachusetts law to charge contract damages for promissory estoppel; whether to charge full contract damages, or something less, is a matter of discretion delegated to the district court. We cannot say that the district court abused its discretion in this instance.
As to Omni’s remaining claims of error in the jury instructions, we find them either to have been waived (measure of damages for misrepresentation), subsequently cured by the court (charge to the jury that the breach of duty of good faith requires a finding that no contract exists), or without merit (measure of damages for breach of duty of good faith).
III. Whether an Accounting was Warranted
Omni sought an accounting for the $212,000 it advanced to Chedd-Angier under the December 8 agreement. The trial court rejected Omni’s counterclaim concluding that the parties were connected only in an arms-length business relationship and not in a fiduciary relationship. Under Massachusetts law, an equitable accounting is available only if there exists a fiduciary or trust relationship between the parties, Ball v. Harrison, 314 Mass. 390, 50 N.E.2d 31 (1943), and we see nothing in the record to indicate that the commercial relationship between Omni and Chedd-An-gier was transformed into one which was fiduciary in nature. See Broomfield v. Ko-sow, 349 Mass. 749, 212 N.E.2d 556 (1965). Accordingly, we agree with the district court that there was not that “degree of overbearance or ... inequity of positions between the parties” or “sufficient evidence of misappropriation of any funds” to require an accounting in this instance.
IV. Errors in Voir Dire
Omni argues that the jury was biased as a result of its purported knowledge of Guc-cione’s association with sexually explicit magazines and films. Omni claims it is entitled to a new trial because the court refused to allow voir dire questions concerning juror attitudes on these issues and refused to conduct an evidentiary hearing after the verdict was returned to investigate the scope of the juror’s knowledge of Guccione’s activities.
In a pre-trial motion in limine, Omni sought to exclude any mention of Penthouse magazine from the trial, or in the alternative, Omni requested individual voir dire to probe the private opinions of jury members regarding sexually explicit magazines and films. Having granted Omni’s first request, the court declined to individually voir dire the jurors. We find no error in this decision.
The district court was successful in achieving Omni’s alleged objective — disassociating the present contract dispute from Guccione’s more controversial activity. In fact, we think that the court may have chosen the best means of achieving Omni’s goal; eliciting jury bias through the extensive questioning proposed by Omni might have magnified the importance of Guc-cione’s connection with the sexually explicit subject matter and so have been counterproductive.
Moreover, we believe that the trial court acted within its discretion in finding that the alleged evidence of juror bias, elicited through an “objective” telephone poll conducted by employees of Omni’s counsel, did not warrant a post-trial evidentiary hearing to determine the extent of the jurors’ knowledge regarding Guccione’s other activities.
V. Mass. Gen.Laws Ann. ch. 93A
Mass.Gen.Laws Ann. ch. 93A, § 11, provides that “[a]ny person who engages in the conduct of any trade or commerce and who suffers any loss of money ... as a result of the use or employment by another person who engages in any trade or commerce of an ... unfair or deceptive act or practice ... may ... bring an action for damages.” Chedd-Angier alleges that Omni’s action in terminating Chedd-Angier as producer of the series was an unfair and deceptive business practice in violation of Chapter 93A. Chedd-Angier bases its action on a claim of common law misrepresentation, Levings v. Forbes & Wallace, Inc., 8 Mass.App. 498, 504, 396 N.E.2d 149, 154 (1979), and on the claim that Omni’s actions in general were “unscrupulous”. Omni contends that its practices were neither unfair nor deceptive, but moreover that it is exempt from liability under Chapter 93A. The district court entered judgment in favor of Omni:
“I am persuaded from the facts here that both parties had a legitimate dispute over the composition of this agreement. I do not disagree, and I accept the jury’s verdict as to the contract itself. But I do not find any act of deception in Omni’s response to the negotiations that went on between the parties. I think the matter can be fairly described as a falling out over a legitimate dispute as to control, perhaps, and a clash of artistic egos; but not such conduct or rascality as would disturb me. So I find and rule that on that count that there was no fraud, there was no unfair, deceptive acts and practices, and judgment on Count 6 will enter in favor of the defendant.”
The record makes it abundantly clear that Omni’s behavior in its relations with Chedd-Angier does not rise to the level of 93A liability. Chedd-Angier claims that Omni made numerous fraudulent misrepresentations and in reliance on those representations, Chedd-Angier expended time and money to its detriment. Specifically Chedd-Angier refers to the apparent inconsistency between the promotional material distributed by Omni, which referred to Chedd-Angier as the producer of a reporter format science series, and statements made by Omni at trial to the effect that a final decision had not been made prior to April 4 as to who would produce the series and whether a reporter format would be utilized. Additionally, Chedd-Angier alleges that Omni unfairly took advantage of Chedd-Angier’s reputation and expertise in order to sell the series, intending all the while to produce the series in-house. Omni’s delay in terminating Chedd-Angier, they claim, attests to Omni’s fraudulent intentions.
Chedd-Angier’s recitation of the events, however, omits certain crucial information. For example, the December 8 letter agreement expressly provided for extensive marketing of the proposed series. The parties agreed at that time to provide the advertising agents “with the promotional tapes and materials that they need, using as far as possible elements that we have developed for the pilot itself.” At the time of the December 8 agreement the parties envisioned production of a reporter format series, but had made, even under Chedd-Angier’s theory, no binding agreement for the series. Accordingly, the promotional materials, although advertising the collaboration of Omni and Chedd-Angier as a fait accom-pli, necessarily reflected only the parties’ tentative agreement. Claims by Chedd-An-gier that it was misled by the pronouncements in the literature are, therefore, hard to comprehend.
This case “falls within the ordinary rule that false statements of opinion, of conditions to exist in the future, or of matters promissory in nature” are not actionable in a claim for misrepresentation. Yerid v. Mason, 341 Mass. 527, 530, 170 N.E.2d 718 (1960), cited in Saxon Theatre Corp. of Boston v. Sage, 347 Mass. 662, 667, 200 N.E.2d 241 (1964); Continental Financial Services Co. v. The First National Boston Corp., No. 82-1505-T, slip op. (D.Mass. August 30, 1984). Chedd-Angier’s reliance on Cellucci v. Sun Oil Co., 2 Mass.App. 722, 320 N.E.2d 919 (1974), aff'd., 368 Mass. 811, 331 N.E.2d 813 (1975) is misplaced. Although the basis of the misrepresentation in Cellucci was a future event, the signing of the contract, it was in the exclusive control of the defendant. Here settlement of the contract terms involved negotiation between the parties on a number of issues which were unresolved, even according to Chedd-Angier, through mid-March. Reliance on the promotional materials, at least prior to that point, was unreasonable. Saxon Theatre Corp. of Boston v. Sage, 347 Mass. at 667, 200 N.E.2d 241. After the April 4 meeting, in which the use of reporters was again brought into question, Chedd-Angier was put on notice that any reliance on the promotional materials was unjustified.
There is, in addition, little evidence in the record to support Chedd-Angier’s contention that the statements in the promotional literature were knowingly false when made. Chedd-Angier points us to no direct evidence that Omni intended, for example, never to use a reporter format. Similarly, the record does not support the claim that Omni, by its words or actions, tried to induce Chedd-Angier to act in reliance on the representations in the promotional materials. Guccione, after all, never relinquished creative control over the series production. Nor was he silent about his criticisms of the promotional tape.
Perhaps the most damaging evidence against Omni was its thirteen day delay in informing Chedd-Angier of its decision not to use the reporter format and to form its own production company. We believe, however, that this delay reflects lack of complete candor between the parties, rather than a violation of Chapter 93A. Therefore, even if Mass.Gen.Laws ch. 93A did apply to Omni, we affirm the district court’s judgment on this issue.
Finally, Chedd-Angier argues that the district court’s ruling on the 93A claim is irreconcilable with the court’s earlier decision to submit the common law misrepresentation claim to the jury. Assuming without deciding that 93A requires no more proof of deception than common law misrepresentation, we find nothing inconsistent in ruling that the evidence is sufficient to go to the jury on misrepresentation, while at the same time it fails to persuade the court of 93A liability.
We find all remaining claims to be without merit. The judgment of the district court is
Affirmed.
. This figure is equivalent to fifteen percent of the production costs for the series, and is referred to by the parties as the "producers’ fee”.
. Arguably, Massachusetts or New York law should apply in this diversity action. Because the parties have not drawn our attention to any substantive differences in contract law in the two jurisdictions, for convenience we have chosen generally to apply Massachusetts law.
. Omni argues that under Mass.Gen.Laws Ann. ch. 93A, § 3(l)(b) (1975) (original § 3) it is exempt from liability because at least twenty per cent of its gross revenue is derived from transactions in interstate commerce and because the alleged misrepresentation did not occur in Massachusetts. Chedd-Angier claims that the interstate commerce exemption of the original § 3 no longer governs the liability determination in this proceeding because it was deleted effective July 20, 1983. We do not intend by our decision to reach the substantive aspects of the 93A count to pass judgment on the merits of Omni’s claim of exemption. We merely decline to reach that issue here.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BREITENSTEIN, Circuit Judge.
The sole issue in this negligence action is whether at the jury trial the court properly received evidence of payments to the plaintiff (appellant Thompson) from an unnamed source during a period for which he claimed disability.
Plaintiff, an injured longshoreman, sought recovery from a shipowner (ap-pellee Kawasaki Kisen, K.K.) which in turn sought indemnity from the steve-doring company (Bay State), the plaintiff’s employer. The case was begun in a Massachusetts state court and removed to federal court by the shipowner on the ground of diversity. The shipowner filed a third-party complaint against the stevedoring company. The jury found for the shipowner on the claim of unseaworthiness and for the longshoreman on the claim of negligence. The third-party complaint issues were heard by the court without a jury and the stevedoring company was ordered to indemnify the shipowner. The verdict of $7,827 was for less than the payments made to the longshoreman by his employer’s compensation carrier and the court upheld the carrier’s lien.
The longshoreman is dissatisfied with the recovery and his appeal (No. 6447) is based on the alleged erroneous admission of the noted evidence. The stevedor-ing company’s appeal (No. 6457) is directed to the preservation of its third-party defendant’s rights with respect to the scope of any new trial which may be ordered.
The accident occurred when the longshoreman was working in the hold of the ship unloading cargo. He stumbled on a piece of dunnage while carrying a carton of nails. He claimed an injury to his back, was hospitalized, and asserts inability to work. On cross-examination of the plaintiff, counsel for the shipowner asked the following question:
“Q. During this period you were receiving from a source which for the moment I won’t reveal $70 a week, weren’t you ?”
An objection, which we deem appropriate to raise the issue here presented, was overruled. The answer disclosed that plaintiff had received $70 a week for an undefined period and later $52 a week, but at the time was receiving nothing.
Counsel for the longshoreman argues that the trial court erred in requiring an answer to the question on receipt of benefits during the disability period. He relies on Tipton v. Socony Mobile Oil Co., Inc., 375 U.S. 34, 84 S.Ct. 1, 11 L.Ed.2d 4, rehearing denied 375 U.S. 936, 84 S.Ct. 328, 11 L.Ed.2d 268, and Eichel v. New York Cent. R.R., 375 U.S. 253, 84 S.Ct. 316, 11 L.Ed.2d 307. Tipton is not pertinent. There the Supreme Court held that evidence of the receipt of compensation under the Longshoremen’s and Harbor Workers’ Compensation Act was not admissible on the issue of whether the plaintiff was an offshore drilling employee rather than a seaman because that status was to be determined on the basis of the facts of the case — not on the basis of a prior contention of the plaintiff.
Eichel was an action under the Federal Employers’ Liability Act and the Supreme Court held that evidence of the plaintiff’s receipt of a disability pension under the Railroad Retirement Act of 1937 was properly excluded. The Court commented that “it would violate the spirit of the federal statutes if the receipt of disability benefits under the Railroad Retirement Act * * * were considered as evidence of malingering by an employee asserting a claim under the Federal Employers’ Liability Act.”
The instant case is not based on any federal statute but rather on ordinary negligence. No authority of which we are aware holds that the rules of evidence applicable to ordinary negligence cases do not apply when the plaintiff is a longshoreman and the defendant is a shipowner. Rule 43(a), F.R.Civ.P., provides that evidence shall be admitted if it is admissible under the rules of evidence applied in either the federal courts or the courts of the state in which the federal court is held and that the rule which favors the reception of the evidence governs. The case at bar was begun in Massachusetts and removed to federal court because of diversity. Under Massachusetts law evidence of receipt of collateral income is admissible “to affect the weight of plaintiff’s previous testimony that he was disabled from working on account of the accident.” The trial court properly permitted the question to be answered.
In No. 6447 the judgment is affirmed. This action makes unnecessary the consideration of No. 6457 and that appeal is dismissed.
. Although the source of the payments was not identified, the plaintiff and his counsel, both before and after the question in issue, improperly (cf. Eichel v. New York Cent. R.R., 375 U.S. 253, 255, 84 S.Ct. 316, 11 L.Ed.2d 307) brought to the attention of the jury the presence of insurance in connection with the care and treatment which the plaintiff had received.
. 33 U.S.C. § 901 et seq.
. 45 U.S.C. § 51 et seq.
. 45 U.S.C.A. § 228b(a)4.
. See J. H. Horne & Sons Co. v. Bath Fibre Co., 1 Cir., 272 F.2d 8, 10.
. See 5 Moore, Federal Practice, ¶ 43.04, at 1326-1328 (2d ed.).
. McElwain v. Capotosto, 332 Mass. 1, 122 N.E.2d 901, 902.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STALEY, Circuit Judge.
The National Labor Relations Board has found that the employer-members of the Philadelphia Marine Trade Association (“PMTA”) violated § 8(a) (3) and (1) of the National Labor Relations Act. More specifically, the Board determined that these employers wrongfully locked out all of the longshoremen employed by them in the Port of Philadelphia because certain of those longshoremen properly refused to work under conditions found to be unsafe. 138 N.L.R.B. 737 (1962). The case is here on petitions for review filed by the PMTA and by the International Longshoremen’s Association, Locals 1291, 1332, 1566, and 1242. The Board has requested enforcement of its order in its answer to the petition of the PMTA. The PMTA asserts that the Board’s determination is unwarranted, while the union contends that the Board should have found additional violations and that its back pay award is inadequate.
The dispute which gave rise to the instant proceeding was based upon the insistence by one of the employer-members of the PMTA, Atlantic and Gulf Stevedores, Inc., that the longshoremen employed by it use wooden pallets instead of slings to unload a cargo of sugar on the S.S. Caribe. Perhaps the most concise statement of the factual circumstances attending this controversy is contained in the following excerpt from the decision of the Board:
“As the Trial Examiner found, on June 30, 1959, some 90 A & G employees, longshoremen members of Local 1291, reported to the S.S. Caribe to unload a full cargo of bagged sugar. Upon arrival, they learned that they were to unload the bags with the use of pallets rather than slings. They notified their union representatives that they would not unload with pallets as they considered such an operation unsafe. The representatives communicated the longshoremen’s decision to Emery, the pier supervisor of A & G, and a compromise proposal was offered by Emery whereby the longshoremen would unload the ship with slings and then use pallets for re-handling the bags on the dock. By the time Local 1291 accepted, however, the proposal was abruptly withdrawn by William Toner, District Manager of A & G, who made his appearance while the Union representatives were conferring among themselves. The longshoremen then left the ship, and worked neither that day nor the following day, July 1. After several conferences between officials of ILA, A & G, and PMTA, an employers’ association of which A & G was a member, an agreement was reached between Toner and J. T. Moock, a vice-president of ILA, whereby the men would start unloading with pallets and a changeover to slings would be made shortly thereafter.
“At 8 a. m. on July 2, the A &. G longshoremen began unloading with the use of pallets. It is clear, as the Trial Examiner found, that bags of sugar fell from the pallets during the unloading operation. And Toner admitted that even one falling bag was dangerous. When a shift to slings was not made by A & G during the morning despite the complaints of the longshoremen, they refused to return to work after lunch. The Respondents thereupon advised ILA by telegram that unless the A & G longshoremen resumed work on the Cai'ibe at 8 a. m. on July 3, all longshoremen represented by Local 1291 would be locked out throughout the entire Port of Philadelphia commencing July 6. At 8 a. m. on July 3, however, A & G still had not shifted to slings, and the Caribe longshoremen accordingly continued to refuse to work. At noon all the other longshoremen members of Local 1291 in the Port of Philadelphia area stopped work to meet at the union hall for a discussion of the lockout threatened by the Respondents. They were directed by ILA officials to report for work as usual on July 6. When they did, however, the Respondents carried out their threat and locked them out. Moreover, the Respondents insisted that the lockout would not be lifted until the A & G longshoremen resumed work under the unsafe conditions which had caused them to cease work in the first place. The Respondent further refused to consider the safety question under the grievance and arbitration provisions of the contract until the longshoremen resumed work on the Caribe. On July 21, however, the Respondents finally receded from their position, agreed to end the lockout, and likewise agreed to arbitrate the safety question. On the following day, the arbitrator observed the operation of unloading the bagged sugar from the Caribe with the use of pallets, and found it to be an unsafe operation. Thereupon, A & G substituted slings, and the A & G longshoremen completed their work of unloading the Cai'ibe, without further incident.”
The Board held that, as the longshoremen’s refusal to work resulted from an abnormally dangerous condition of work, this refusal did not constitute a strike under § 502 of the Act, even assuming the existence of a no-strike contract. Accordingly, this quitting of labor was held to be protected by the Act, and the lockout was found to be in violation of § 8(a) (3) and (1). Back pay was awarded to all longshoremen, including those who-had refused to work on the S.S. Caribe, from the date of the lockout on July 6, 1959, until July 22, 1959. However, the Board, reversing the trial examiner, concluded that, in the circumstances of this case, the employers did not discriminate against the members of sister unions who did not work during the period of the lockout and who were normally employed as maintenance men, timekeepers, checkers, or carloaders in the Port of Philadelphia.
The PMTA does , not seriously challenge the Board’s finding that the work stoppage was caused by an abnormally dangerous condition of work. See National Labor Relations Board v. Knight Morley Corp., 251 F.2d 753 (C.A. 6, 1957), cert. denied, 357 U.S. 927, 78 S.Ct. 1372, 2 L.Ed.2d 1370 (1958). The Association argues, however, that the lockout was justified because its purpose was to compel the union to abandon a “quickie strike,” and to compel the submission of the dispute to arbitration. The short answer to this is that because the union’s activity was found to come within the ambit of § 502, it was not a strike in violation of the contract but, on the contrary, was protected activity. In these circumstances, the Board properly concluded that the lockout by the PMTA in an attempt to compel the longshoremen to abandon this protected activity gave rise to a violation of § 8(a) (3) and (1). See, Utah Plumbing and Heating Contractors Assn. v. National Labor Relations Board, 294 F.2d 165 (C.A.10, 1961); Quaker State Oil Refining Corp. v. National Labor Relations Board, 270 F.2d 40 (C.A.3), cert. denied, 361 U.S. 317, 80 S.Ct. 261, 4 L.Ed.2d 185 (1959) ; National Labor Relations Board v. Knight Morley Corp., supra (discharge for refusal to work under abnormally dangerous conditions). Moreover, the Board, based upon substantial evidence, found that it was the PMTA and not fhe union which delayed arbitration by its insistence that the employees continue to work pending a resolution of the issue. Thus, to the extent that the challenge of the PMTA to the finding of an unfair labor practice constitutes an attack upon the Board’s findings of fact, including both the inferences it drew from the evidence presented as well as its resolution of issues of credibility, we have repeatedly stated that such factual .determinations will not be disturbed by this court unless not supported by substantial evidence in the record as a whole. National Labor Relations Board v. Chas. S. Wood & Co., 309 F.2d 140 (C.A.3, 1962); National Labor Relations Board v. Buitoni Foods Corp., 298 F.2d 169 (C.A.3, 1962); Quaker State Oil Refining Corp. v. National Labor Relations Board, supra. Here the findings of the Board are amply supported by the evidence.
The reliance by the PMTA upon the decision in National Labor Relations Board v. Truck Drivers’ Local Union No. 449 etc., 353 U.S. 87, 77 S.Ct. 643, 1 L.Ed.2d 676 (1957), as justification for the lockout is misplaced. The Supreme Court there held that a lockout by an association of employers is not unlawful when used as a defense to a union’s “whipsawing” strike tactic which threatens the destruction of the employers’ interest in bargaining on a group basis. See also New York Mailers’ Union Number Six, International Typographical Union, A.F.L.-C.I.O. v. National Labor Relations Board, 327 F.2d 292 (C.A.2, 1964). Here the lockout was a countermeasure not to a strike, but -to a refusal to work under abnormally dangerous conditions. Nor was this conduct of the longshoremen a threat to bargaining on a group basis.
Local 1332 of the International Longshoremen's Association has been granted leave to intervene in each of these petL tions for review. Both it and the other union parties to this proceeding vigorously attack the failure of the Board to find a violation with respect to employees other than longshoremen who were affected by the lockout. Because of its significance, we quote the holding of the Board on this score:
“We do not agree, however, with the Trial Examiner’s further conclusion that the lockout of the longshoremen also constituted unlawful discrimination against members ■ of sister locals normally employed by Respondents as maintenance men or timekeepers or checkers or carloaders. The complaint does not allege that members of these sister locals (specifically, Locals 1332, 1566 and 1242) were also locked out by Respondents, nor does the evidence adduced at the hearing lead us to this conclusion. Accordingly, we find, in the circumstances of this case, that the Respondents did not discriminate against the other categories of employees represented by Locals 1332, 1566, and 1242.”
The unions argue that this holding constitutes an unwarranted reversal by the Board of the factual finding of the trial examiner that these employees were deprived of an opportunity to work by the lockout. Further, the unions contend that the Board was compelled to find a violation as to these employees because their work “was interrelated with and wholly dependent upon the work performed by [the longshoremen].”
The Board concedes that these employees lost work as a consequence of the lockout. It urges that its reversal of the trial examiner on this point was not based on a contrary view of the facts, but upon its view of the legal effect of the facts he found. More particularly, the Board contends that the loss of work by employees other than longshoremen did not result from any discriminatory action by the PMTA against them, but was simply an incidental consequence of the discriminatory action taken against the longshoremen.
We think that the Board’s reversal of the trial examiner was based on an issue of law rather than a question of fact. Though at first glance the language in its decision appears to indicate a different view of the evidence, actually the Board was reversing the trial examiner’s legal conclusion that “the lockout of Local 1291 members resulted in equally unlawful discrimination against members of sister locals, since much of their employment depended upon longshoremen being employed.”
It is not controverted that the PMTA had no dispute with the members of the sister locals; its dispute was with the longshoremen because of their refusal to work under conditions found to be dangerous. To put the matter another way, there is no evidence of any discriminatory motivation toward employees other than longshoremen. As the Board aptly observes in its brief, the consequential injury to the other workers “occurred because of the nature of their work, not by virtue of their membership in any union.” In the absence of any evidence of discriminatory intent, the employers’ action was not unlawful as to these employees, unless it was “inherently discriminatory.” National Labor Relations Board v. Erie Resistor Corp., 373 U.S. 221, 83 S.Ct. 1139, 10 L.Ed.2d 308 (1963). We have already stated that the record does not reveal an intent to discriminate against the members of the sister locals, and we cannot say that the lockout was inherently discriminatory as to them in the circumstances of this case. In sum, the conduct of the employers was directed against the longshoremen, and only incidentally did it affect the other workers in the Port of Philadelphia.
Our recent decision in National Labor Relations Board v. Local 825, International Union of Operating Engineers, A.F.L.-C.I.O., 326 F.2d 218 (C.A.3, 1964), supports our conclusion on this point. We there ruled that union conduct which only incidentally affects a neutral employer cannot be held to violate the secondary boycott provisions of the Act.
Local 1291 asserts that the back pay award to the longshoremen who refused to work on the S.S. Caribe should run from the date of their refusal to work rather than from the date of the lockout. The Board contends that the award is proper since the unfair labor practice did not occur until the PMTA instituted the lockout. We think that the rationale of the Board is sound, for though the longshoremen were protected by the statute in refusing to work under abnormally dangerous conditions, no unfair labor practice arose until they were locked out by their employer. In any event, we cannot say that the Board abused the broad discretion vested in it to fashion remedial back pay orders to effectuate the policies of the Act.
The order of the Board will be enforced. A form of decree may be submitted.
. Ҥ 158. Unfair labor practices
“ (a) It shall be an unfair labor practice for an employer—
“(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 157 of this title;
* * * *
“ (3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization * * 29 U.S.C.A. § 158(a) (1) and (3).
. Ҥ 143. Saving provisions
“Nothing in this chapter shall be construed to require an individual employee to render labor or service without his consent, * * * nor shall the quitting of labor by an employee or employees in good faith because of abnormally dangerous conditions for work at the place of employment of such employee or employees be deemed a strike under this chapter.” 29 U.S.C.A. § 143.
. The same observations apply to the contention that the employers were not informed that the quitting of labor resulted from abnormally dangerous conditions of work, and that they were not given a reasonable opportunity to correct these conditions,
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
This case came on to be heard upon the briefs and record and the argument of counsel ; and the court being of opinion that the trial court did not err in finding that no evidence of negligence on the part of the appellee was presented in the record, it is ordered that the judgment appealed from be, and it hereby is, affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
FIELD, Senior Circuit Judge:
On June 1, 1976, an indictment was returned in the District of Maryland against The Society of Independent Gasoline Marketers of America (“SIGMA”), Amerada Hess Corporation (“Hess”), Ashland Oil, Inc. (“Ashland”), Continental Oil Company (“Continental”), Crown Central Petroleum (“Crown”), Kayo Oil Company (“Kayo”), The Meadville Corporation (“Meadville”), Petroleum Marketing Corporation (“PMC”), Robert R. Cavin (“Cavin”), Norman Goldberg (“Goldberg”), Charles J. Luellen (“Luellen”) and W. H. Burnap (“Burnap”). The indictment, drawn in one count, charged that the defendants had violated Section 1 of the Sherman Act, 15 U.S.C. § 1, prior to its 1974 amendments, by engaging in a conspiracy to fix prices for the retail sale of gasoline in unreasonable restraint of commerce.
After extensive pretrial proceedings, the trial commenced on May 2, 1977, and at the conclusion of the Government’s case the district court granted the motions of three of the individual defendants, Luellen, Goldberg and Burnap, for judgments of acquittal. The trial continued as to the remaining defendants, and on August 30, 1977, the jury returned verdicts of not guilty with respect to Crown and Continental and guilty as to SIGMA, Hess, Ashland, Kayo, Meadville, PMC and Cavin. Judgments of conviction were entered pursuant to the jury’s verdicts and the convicted defendants have appealed.
In an opinion filed December 26,1979, the panel unanimously affirmed the convictions of all of the defendants except Ashland. Similarly, the panel unanimously reversed the conviction of Cavin. With respect to Ashland, a majority of the panel affirmed the conviction, Judge Widener dissenting. Petitions for rehearing and rehearing en banc were filed, and upon the suggestion that the case be reheard en banc less than a majority of the judges in regular active service voted in favor thereof. Accordingly, rehearing en banc is denied. On the petitions for rehearing, however, a majority of the panel are now of the opinion that the conviction of Ashland must be reversed. Additionally, the panel is of the opinion that our disposition of Cavin’s appeal must be modified. To that effect, we withdraw our prior opinion and file the present opinion in lieu thereof.
I
During the period covered by the indictment, and for many years prior thereto, gasoline was sold to motorists through essentially two different types of retail service stations. “Major brand” stations sold the gasoline of major companies, e. g., Exxon, Texaco, Gulf, etc., and in many instances were operated by dealers who were not employees of the major companies. These stations bore brand names that were widely advertised and sold brand name products, including tires, batteries and parts. Many of them offered repair service and accepted recognized company credit cards. “Private brand” stations, on the other hand, offered gasoline under names which were not widely advertised, e. g., Redhead, Kayo, Scatt, etc., and were usually manned by individuals who worked directly for the company which owned the stations. Private brand stations ordinarily offered few products other than gasoline, and spent little money, if any, for media advertising.
With these differences in service, such stations competed with the major brands almost exclusively upon the basis of price. The private brand stations attracted customers from the majors by pricing their gasoline several cents a gallon below that of the major brand stations in the same locale, and as a result the price of major brand gasoline imposed a “ceiling” on private brand prices. In other words, to be competitive the private brand retailer was required to maintain a sufficiently attractive “differential” between his price and that of the majors. Because they were selling gasoline at less than that charged by the majors, the profit margin of the private brand stations was reduced to a marginal level, and the volume of a private brand’s sales was vitally important. In the highly competitive private brand market volume was, of course, significantly related to price. As a result, the private brand company, in the operation of a local station, took into account in pricing its gasoline from day-today not only the price charged in that locale by the major brand stations, but the prices charged by other independents in the same market.
During the period in question the companies which operated private brand stations had available a certain amount of current and accurate data relative to pricing patterns in the major brand gasoline market from a publication known as “Platt’s Oil-gram”. This established trade newspaper conducts price surveys of the majors and publishes such pricing data for major brand markets throughout the country, including advance announcements of upcoming wholesale price moves by the majors. Much information, however, which was vital to the private brand companies could not be gleaned from Oilgram. Oilgram carried little news of major brand retail price behavior on a station-by-station or “street-basis,” and such information was highly important to the private brand companies since their competitive vitality depended upon the ability of their individual retail outlets to undercut at all times the prices charged by neighboring major brand stations. More significantly, Oilgram carried practically no news concerning other private brand retailers’ price behavior, either present or future, nor any analysis of the potential impact of major brand.market behavior upon the private brand market.
In part to fill this void, the private brand retailers formed a trade association called The Society of Independent Gasoline Marketers of America (“SIGMA”). SIGMA’s members were firms and individuals operating private brand stations in various parts of the country. Its board of directors and officers were elected from the membership and its day-to-day operations were managed by a full-time salaried director and his supporting staff. Ordinarily the membership met in convention on a semi-annual basis. SIGMA was characterized at trial by the defendants as an “oral Platt’s Oilgram” for independents. It collected information from various sources (including telephone calls to and from private brand companies in which the companies would discuss upcoming market decisions), and it would relay such information to its members, usually by telephone. Information provided by SIGMA to its members included the behavior of independents and majors in adjoining markets, the impact of wholesale prices on retail price structures, upcoming price moves by other independents, opportunities for increased prices or the perceived need for decreases, and generally such other data which might be of assistance to the members in meeting their competition.
The indictment charged that the defendants, in effectuating the conspiracy to fix prices, “used SIGMA as a clearing house for gasoline pricing information in order to coordinate price increases and to eliminate discounting and settle pricing disputes,” and that they “met at the occasion of SIGMA meetings and discussed pricing strategy, including the coordinated increase of retail gasoline prices and the curtailment and elimination of price cutting and discount practices”. The indictment alleged that this use of SIGMA, supplemented by telephonic or other contact between the several defendants with respect to coordinated price increases and agreements, had resulted in the stabilization of artificial and noncompetitive prices of gasoline, the effect of which was to restrain competition among the defendants and their co-conspirators.
II
In their joint brief the defendants make the prefatory charge that they “were convicted of criminal price fixing for exchanging information on prices,” and assert that no conviction has ever been sustained on such evidence in a highly competitive market of which the participants had a relatively minimal share. In making this contention the defendants draw heavily upon the Supreme Court’s recent decision in United States v. U. S. Gypsum Co., 438 U.S. 422, 98 S.Ct. 2864, 57 L.Ed.2d 854 (1978). Gypsum involved the practice of inter-seller price verification, a practice which is not, in itself, unlawful per se. The Government contended that such an exchange of price information was violative of Section 1 of the Sherman Act if it had either the purpose or the effect of stabilizing prices. The Court held, however, that an effect on prices, without more, would not support a criminal conviction, and that it was necessary to show that such a consequence was intended by the alleged participants.
There is a marked difference between the case before us and the one considered by the Court in Gypsum. Here the indictment charged the defendants with a conspiracy to fix prices, and the “exchange of information” was merely one of the activities by which the alleged agreement was effectuated. “Under the Sherman Act a combination formed for the purpose and with the effect of raising, depressing, fixing, pegging, or stabilizing the price of a commodity in interstate or foreign commerce is illegal per se.” United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223, 60 S.Ct. 811, 844, 84 L.Ed. 1129 (1940). Since in a price-fixing conspiracy the conduct is illegal per se, further inquiry on the issues of intent or the anti-competitive effect is not required. The mere existence of a price-fixing agreement establishes the defendants’ illegal purpose since “[t]he aim and result of every price-fixing agreement, if effective, is the elimination of one form of competition.” United States v. Trenton Potteries, 273 U.S. 392, 397, 47 S.Ct. 377, 379, 71 L.Ed. 700 (1926).
Ill
The principal challenge of the defendants is that the Government failed to offer sufficient evidence to prove the conspiracy which was charged in the indictment. The indictment defined the geographical area of the conspiracy as the “Middle Atlantic states of New York, Pennsylvania, New Jersey, Delaware, Maryland and Virginia, as well as the District of Columbia. The defendants maintain that it was necessary for the Government to demonstrate a single continuing conspiracy to fix gasoline prices throughout the entire Middle Atlantic region, and contend that the only evidence of the area-wide coordination of price moves related to general increases in November, 1970, July, 1971, and August of 1972. The defendants acknowledge that there were area-wide increases on those occasions, but assert that the evidence failed to show that they were the result of any price-fixing agreement. On the contrary, they suggest that the evidence clearly showed that the price moves on these three occasions were the result of economic forces at work in the market place over which the defendants had no possible control.
The defendants argue that other than those three occasions, the Government’s evidence, at best, proved nothing but a series of “local and isolated incidents occurring within the Middle Atlantic states, involving some of the defendants and co-conspirators at different, and shorter, periods of time.” Even if we were to accept the defendants’ criticism of the probative quality of the evidence on the three area-wide increases, we think the Government’s evidence with respect to the various local markets was proper for the consideration of the jury. Under the indictment the conspiracy embraced an agreement not only to fix prices on an area-wide basis, but also to establish prices in local markets within the region and to effectuate price changes on a coordinated basis. The Government’s evidence of the single conspiracy implemented in this manner was not merely circumstantial in nature. The Government’s witnesses, many of whom were employed by the corporate appellants, testified concerning the nature and intent of their pricing communications, and their testimony was augmented in many respects by the contemporaneous records of the defendants. Our review of the record persuades us that the evidence was sufficient to support the conclusion of the jury that the defendants were working together for the accomplishment of their common purpose to fix prices within the geographical area described in the indictment.
We are further of the opinion that the court’s instructions to the jury were consistent with the indictment. The court instructed the jury that the defendants were charged with a “single, continuing conspiracy” to fix prices of gasoline in the Middle Atlantic states and, adverting to the evidence with respect to local pricing incidents, emphasized that “if you find that a defendant engaged in isolated incidents of gasoline price fixing, but was not a party to a single overall conspiracy covering the six-state area and the District of Columbia area, you must find that defendant not guilty of the matters charged in the indictment.” This language, we think, made it crystal clear to the jury that their consideration of the evidence should be addressed to the ultimate issue of a single overall conspiracy.
IV
Defendants also claim that there was a fatal variance of proof from the original indictment, the bill of particulars, and the pre-trial stipulation of the parties. Much of what we have said with respect to the sufficiency of the evidence applies equally to this contention of the defendants which, in a large degree, is predicated upon their argument that the indictment required a showing of continuous area-wide price manipulation. As we have noted, there was substantial evidence to support the jury’s finding of guilt and, assuredly, the defendants were not convicted upon a charge that was not specified in the indictment, nor were they uninformed of the charge against them. Additionally, the charges and specifications found within the four corners of the indictment, the bill of particulars, and the pre-trial stipulation not only informed the defendants of the charges against them, but are sufficiently clear to allow the defendants to assert double jeopardy in the event of any future prosecution for the same conduct.
V
We find no merit in the defendants’ charge that the trial court improperly denied their request for a more detailed bill of particulars. Pursuant to a stipulation entered into five months prior to trial, the Government supplied the defendants with copies of all grand jury testimony, access to all documents subpoenaed from non-defendants; all documents voluntarily submitted to the Government by third parties in the course of the investigation; and all available Brady material. In further compliance with the stipulation the defendants received copies of all trial exhibits thirty days prior to trial, as well as a list of intended witnesses and Jencks Act material fourteen days prior to trial. In the light of this extensive disclosure by the Government there was no abuse of discretion by the trial court in declining to require the Government to supply the further information requested by the defendants. See United States v. Schembari, 484 F.2d 931 (4 Cir. 1973).
VI
The Government’s case against the defendant, Ashland, was based primarily upon the theory that Ashland exercised direct control over the retail operations of five of its subsidiary corporations, including Payless Stations, Inc. (“Payless”). One of the Government’s principal witnesses on the question of Ashland’s control was a former vice-president of Payless, who was in charge of its pricing for the period from 1963 through 1973, and who was employed by the company from 1956 through December of 1973. This witness provided direct testimony of Ashland’s control over its subsidiaries. His testimony also included other information regarding the participation of Ashland and Payless in the conspiracy and the relationship of Payless with SIGMA.
This key witness had been hospitalized for psychiatric problems on two separate occasions in Our Lady of Peace Hospital in Louisville, Kentucky, and counsel for Ash-land subpoenaed the hospital records. They were produced by the hospital administrator who was directed to deliver them to the district judge. After examining the records in camera, the judge advised counsel that they reflected two periods of hospitalization, the first being from July 26 to August 29, 1966, and the second from November 20 until December 24,1968 and that the hospitalizations involved “a mental disorder or illness at that time.”
Concluding that the disclosure of the records was within his discretion, the district judge declined to deliver them to counsel for the reason, among others, that he did “not know to what extent the Government’s examination of the witness will include questioning during the relative period” (App.Vol. 3, at 777, 778). In making this ruling, however, the district judge stated that he was not foreclosing counsel for Ash-land from questioning the witness about the two periods of hospitalization, but that he would rule on the questions as the cross-examination of the witness developed.
The hospital records were sealed by the district judge and after this appeal was filed Ashland moved this court for leave to examine such records. The motion was denied with the provision that counsel for Ashland might renew the motion at the time of oral argument. Following oral argument we granted Ashland’s counsel access to the records and they were jointly examined by counsel for Ashland and the Government. Based on this examination of the hospital records, with leave of the court, both Ashland and the Government filed supplemental briefs on the issue of the relevancy of these records.
Counsel for Ashland contends that in denying access to the hospital records the trial court prejudicially impaired Ashland’s ability to effectively cross-examine the witness. Ashland argues, among other things, that the hospital records were significant for the purpose of evaluating the witness’ perceptive ability during the period in question and suggests, for instance, that if the witness were suffering from paranoia, he might have taken an irrational view of his communications with Ashland and interpreted simple inquiries as commands or binding directives.
As we have noted, the first period of the witness’ hospitalization was from July 26 to August 29 of 1966, which was prior to Ash-land’s acquisition of Payless and also prior to the alleged conspiracy. However, the second period of hospitalization from November 20, 1968, to December 21, 1968, fell within the period of the conspiracy which was alleged to have existed from at “at least as early as 1967 * * * and continuing thereafter until November 1974.”
The record discloses that the vice-president in question was admitted to the hospital on the first occasion because of work-related problems. Significantly, the 1966 records show that a “supervisor” at work brought him to the hospital, and that he believed that “people at work were plotting against him.” The official diagnosis indicated that his problems stemmed from his employment rather than being home-related. The 1968 records show that he was “manic depressed and admitted in psychotic state.” The records also state that he “still tends to push himself,” and contained observations that he was “delusional and hallucinatory with poor judgment and insight.” Although the 1968 records do not specifically state that this was a continuation of his work-related problems, the jury might reasonably have drawn such an inference had the contents of the records been disclosed to them during the cross-examination of the witness. The official record incident to the 1968 visit state the1 final diagnosis as “Schizophrenic Reaction, Schizo-affective Type.” On that occasion the “mental status examination” reflected that the patient was manic in behavior and quite talkative, and that he spoke of his experience with God.
It occurs to us that the hospital records should have indicated to the district court that the witness’ hospitalization in 1966 was work-related and that'it was quite probable that his 1968 illness was of a similar nature. The records should also have indicated to the court that the witness’ judgment during both periods of illness was seriously impaired, and that a jury could have concluded that his ability to make rational observations was highly questionable. The records would further indicate that the patient had not fully recovered when he was discharged from the hospital in 1968 since they point out that his condition required further psychiatric treatment and continued medication.
Bearing in mind that the case against Ashland was based upon its alleged direct control over the retail operations of its subsidiaries, including Payless, it is clear that the testimony of the former vice-president was vital to the Government’s case. Ash-land had acquired control of Payless in 1967 and the witness testified that “Ashland, from the time that they acquired the company [Payless] until the time that I left, assumed gradually more and more control.” At another point, in testifying concerning Ashland’s control of prices of Payless the witness stated “this was a growing thing that started in 1968, when Ashland bought it and extended up until at the end, when they were saying what and where and how to price, not just because of the shortage of gasoline, but because they were taking direct control from Ashland’s offices in Ash-land, Kentucky.” It should be noted that during at least a part of this period in 1968 about which the witness testified, he was experiencing acute mental problems with a hospital record which disclosed that he was “delusional and hallucinatory with poor judgment and insight,” and was “secluded for his own welfare.” Despite this fact, the court forbade Ashland from reviewing the hospital records or putting them to any effective use in the cross-examination of the witness.
Even if it is fair to assume that the hospital records had no direct bearing upon the witness’ mental capacity at the time he testified, they were unquestionably relevant in regard to his perception of the events involving his work at Payless during the time of his unfortunate illness, and had a significant bearing upon his ability to testify at trial concerning his recollection of those events. United States v. Partin, 493 F.2d 750 (5 Cir. 1974), is the leading case in this field, and is quite similar to the case before us. In that case, one Rogers was a key government witness, just as the former vice-president was here. Rogers had been admitted to a Veterans Administration Hospital for treatment for mental illness. The hospital record revealed that Rogers had stated he was having auditory hallucinations and at times he thought he was some other person. The trial court rejected the admission of the hospital record either as a predicate for cross-examination or as a basis upon which another psychiatrist could have given an opinion as to the mental state of the witness Rogers as that may have had an effect on Rogers’ ability to see and hear accurately during the period in which the events occurred about which he was testifying.
The court of appeals reversed the conviction because of the trial court’s error in failing to admit the hospital records, reasoning at page 762:
“It is just as reasonable that a jury be informed of a witness’ mental incapacity at a time about which he proposes to testify as it would be for the jury to know that he then suffered an impairment of sight or hearing. It all goes to the ability to comprehend, know, and correctly relate the truth.”
And again on page 763 appears the following:
“Partin [the defendant] had the right to attempt to challenge Rogers’ credibility with competent or relevant evidence of any mental defect or treatment at a time probatively related to the time period about which he was attempting to testify.”
To the same effect are United States v. Hiss, 88 F.Supp. 559 (S.D.N.Y.1950), and statements in United States v. Honneus, 508 F.2d 566, 573 (1 Cir. 1974), cert. denied, 421 U.S. 948, 95 S.Ct. 1677, 44 L.Ed.2d 101 (1975); Sinclair v. Turner, 447 F.2d 1158, 1163 (10 Cir. 1971), cert. denied, 405 U.S. 1048, 92 S.Ct. 1329, 31 L.Ed.2d 590 (1972); Ramseyer v. General Motors Corp., 417 F.2d 859, 863 (8 Cir. 1969); United States v. Allegretti, 340 F.2d 254, 257 (7 Cir. 1964), cert. denied, 381 U.S. 911, 85 S.Ct. 1531, 14 L.Ed.2d 433 (1965).
In United States v. Figurski, 545 F.2d 389 (4 Cir. 1976), we had occasion to determine whether the contents of a protected report about a key prosecution witness should have been disclosed to defense counsel, and stated:
“If the report contains only material impeaching the witness, disclosure is required only when there is a reasonable likelihood of affecting the trier of the fact. Whether there is such a likelihood depends upon a number of factors such as the importance of the witness to the government’s case, the extent to which the witness has already been impeached, and the significance of the new impeaching material on the witness’ credibility.”
Id., at 391-92. As discussed above, the former vice-president of Payless was the key government witness. Although the defense presented the testimony of two witnesses that contradicted his testimony regarding Ashland’s control over its subsidiaries, the ability of defense counsel to impeach him regarding his ability to properly perceive events about which he testified was severely limited by counsel’s inability to examine the hospital records. We can think of no more relevant or significant material than a hospital record indicating that a witness who is testifying against his former employer had been under treatment for mental illness which rendered him at that time delusional and hallucinatory with poor judgment and insight. Although a trial court should seek to prevent the disclosure of embarrassing, irrelevant information concerning a witness, it is an abuse of discretion to preclude defense counsel from obtaining relevant information, and the witness’ privacy must yield to the paramount right of the defense to cross-examine effectively the witness in a criminal case. See Davis v. Alaska, 415 U.S. 308, 319, 94 S.Ct. 1105, 1111-1112, 39 L.Ed.2d 347 (1974).
Upon careful consideration, we are of the opinion that the action of the district court in denying Ashland access to the hospital records for its use in cross-examination of the former vice-president was so prejudicial that Ashland is entitled to reversal and a new trial.
VII
With the exception of Ashland, we affirm the convictions of the other corporate appellants. We think, however, that assurances of immunity given to Robert Cavin during the grand jury’s investigation and upon which he relied require that his conviction be set aside.
The grand jury investigation was initiated about November 18, 1974, under the direction of Rodney A. Thorson of the Antitrust Division of the Department of Justice. On December 23, 1974, Cavin and Richard Reynolds, a fellow employee of SIGMA, were subpoenaed to testify before the grand jury and were jointly notified that they should appear in Baltimore on January 7, 1975. Reynolds and Cavin immediately contacted David A. Donohoe, who also represented SIGMA, and arranged to meet with him on January 2, 1975. Donohoe then called Thorson and inquired whether either Cavin or Reynolds were targets of the grand jury investigation. According to Donohoe, Thorson told him “not to worry” because Thorson “was obtaining immunity orders for both Mr. Cavin and Mr. Reynolds and that both would be testifying under a grant of immunity.” Based upon Thorson’s representation Donohoe concluded that he should suggest to Cavin and Reynolds that they obtain other counsel. In Thorson’s recollection of the conversation with Dono-hoe, he denied making any “promise” that Cavin and Reynolds would receive immunity but recalled stating that he would obtain immunity orders for both if they intended to claim the Fifth Amendment. Thorson also acknowledged that he had requested immunity authorization for both witnesses at about the time he issued subpoenas for their appearance. Thorson also discussed with Donohoe his possible conflict of interest since he was counsel for SIGMA and suggested that Donohoe secure other counsel for Cavin and Reynolds.
At their meeting on January 2, 1975, Do-nohoe told Cavin and Reynolds of Thorson’s assurance that they were to receive immunity, and advised them to obtain other counsel in order to avoid any possible conflict of interest. After some discussion, Do-nohoe recommended that Cavin and Reynolds consider retaining Donald T. Bucklin. Bucklin met with Cavin and Reynolds at Donohoe’s office on that same day and was retained by them. Donohoe repeated to Bucklin the representations concerning immunity that Thorson had made to him. In the light of this information Bucklin discussed with Cavin and Reynolds their rights under a grant of immunity and they were specifically advised of the importance of testifying fully and honestly in order to obtain the maximum protection under 18 U.S.C. § 6001, et seq.
Shortly after the start of a joint briefing session with Cavin and Reynolds on the afternoon of January 2nd, Bucklin called Thorson to advise him of his representation of the two witnesses and to set up a meeting on January 3rd. During this conversation Thorson confirmed the assurance that both Cavin and Reynolds would receive immunity, and was advised by Bucklin that based upon this assurance he perceived no conflict in his joint representation. Thor-son agreed that no conflict existed. While Thorson later denied discussing the question of conflict with Bucklin, he did acknowledge that he had repeated his earlier assurance that he would obtain immunity orders if the witnesses intended to claim the Fifth Amendment. On this point Thorson testified before the district court as follows:
THE COURT: Did you state that he would get immunity; he would testify pursuant to an immunity order?
MR. THORSON: Yes; yes, I did state that.
THE COURT: Can you restate that to me to the best of your recollection as to when it occurred and what was said and to whom.
MR. THORSON: I stated that initially in the telephone conversation preceding the January 3rd meeting in the context that if it is their intention to claim the Fifth Amendment I will obtain an immunity order. And I explained, expressly, that I had no intentions of having the Government go to the expense of having these people come to Baltimore from St. Louis, and then claim the Fifth Amendment and then I’d send them home. That’s why I wanted to know what their intention was, and I did not find that out until the meeting on Friday. [January 3],
(App.Vol. 18, at 15,225 and 15,226.)
During the initial joint interview with Bucklin on January 3rd Cavin and Reynolds refreshed each others recollections, supplemented their respective comments and responses, and corrected each others memory of events, dates and names of people with respect to incriminating evidence. On January 3,1975, Donohoe and Bucklin, together with another attorney, met with Thorson and other prosecutors in the Department of Justice. At this meeting Thorson agreed to obtain immunity orders prior to the grand jury appearances of Cavin and Reynolds based upon the representations that both witnesses would claim their Fifth Amendment privilege.
Subsequent to the meeting on January 3rd, a conflict developed in Bucklin’s schedule for January 7th, and Terry F. Lenzner was brought into the ease to represent Ca-vin and Reynolds. On January 6th Thorson called Lenzner and advised him that the appearance of the two witnesses was postponed until January 8th. During that conversation Thorson again confirmed that both witnesses would receive immunity, and it was agreed that the attorneys would meet on the morning of January 8th and proceed to the supervisory judge’s chambers for the signing of the immunity orders. At about 7:30 p. m. on that evening Thorson called Lenzner at his home and advised him that the subpoena for Cavin was being can-celled. The reason given by Thorson for the cancellation was a scheduling problem and Lenzner was told that he would be advised if and when Cavin’s appearance was rescheduled.
Under date of January 7, 1975, Lenzner advised Thorson by letter that his representation of Cavin and Reynolds was based upon Thorson’s assurance that both individuals were to testify under a grant of immunity on the same day, and that because of a possible conflict of interest resulting from the cancellation of Cavin’s subpoena, Lenz-ner was withdrawing from further representation of Cavin. Lenzner was unable to advise Cavin of these developments since both Cavin and Reynolds were en route to Washington. Cavin expressed some concern about the postponement but was assured by Lenzner that Thorson had indicated it was due only to a scheduling problem.
At the grand jury session on January 8th Thorson commenced his examination of Reynolds concerning SIGMA documents without an immunity order, whereupon Reynolds refused to answer “on the grounds that it violates the agreement between the Government and my counsel that I would be questioned only after receiving immunity and that I would be granted immunity today before testifying.” Thorson then called upon Donohoe to produce someone to identify the SIGMA records, and the following exchange took place:
MR. THORSON: Well, do I understand that you, as counsel for SIGMA are refusing on behalf of SIGMA to produce someone—
MR. DONOHOE: No, I’m not.
MR. THORSON: —from that association to come here and testify, take an oath and testify as to the document production?
MR. DONOHOE: I think you know perfectly well what I’m saying. I brought two people to this City pursuant to subpoenas that you had directed, so I had two people who could have testified with respect to these documents, but because the commitments that you had made to these two individuals have not been kept, I’m no longer able to go get a third or fourth or fifth person. That’s a situation which is not of my making.
MR. THORSON: Do I understand that you are refusing at this juncture to provide a person to make that production?
MR. DONOHOE: All I’m saying is that there are two people that have — that I have brought that are capable to do that, but I’m willing to assure you that it won’t do you any good because you failed to keep your commitment to obtain a proper order from the Court. You can take Mr. Reynolds or Mr. Cavin in here, but it’s not going to do any good.
MR. THORSON: Mr. Donohoe, I think you can take SIGMA’s documents with you now and would you so instruct, if he is your client, would you instruct Mr. Reynolds to appear before the Grand Jury now?
(App.Yoi. 8, at M86 and M87.)
Reynolds was formally granted immunity later that day and testified before the grand jury. In his affidavit, Reynolds stated that during his grand jury appearances he was questioned and testified about matters he had earlier discussed with Cavin and that his testimony, at least in part, was based upon information Cavin had given him after they were told that both would receive immunity. In the process of obtaining an immunity order for Reynolds, Thor-son showed Lenzner a document which reflected an authorization of immunity for both Cavin and Reynolds, and Lenzner concluded that Cavin was to be called later to testify under a grant of immunity. Under these circumstances, he perceived no conflict of interest, and debriefed Reynolds fully in the presence of Cavin. Some fourteen months later, in March of 1976, Reynolds was recalled as a witness before the grand jury and again discussed his testimony with Cavin, acting under the belief that neither he nor Cavin would be indicted. On June 1, 1976, Cavin was named as a defendant in the indictment.
These facts were largely undisputed and Cavin filed a motion in the district court alleging that the Government’s conduct warranted dismissal of the indictment as to him! The court denied this motion, and Cavin filed an appeal. We dismissed the appeal, holding that the denial of the dismissal motion was not an appealable final decision within the meaning of section 1291. United States v. Cavin, 553 F.2d 871 (1977).
Our review of the record persuades us that the conduct of the Government cannot withstand the scrutiny of Cooper v. United States, 594 F.2d 12 (4 Cir. 1979), and United States v. Carter, 454 F.2d 426 (4 Cir. 1972). In Carter, the defendant alleged that incident to a plea bargain with the United States Attorney’s office in the District of Columbia, involving certain stolen checks, he was promised that he would not be prosecuted elsewhere for anything having to do with the checks. We held that if such a promise was made as alleged and the defendant relied upon it, it was binding upon the Government and barred any subsequent prosecution for the stolen checks in the Eastern District of Virginia. We approved and applied the holding of United States v. Paiva, 294 F.Supp. 742 (D.D.C.1969), that
“if, after having utilized its discretion to strike bargains with potential defendants, the Government seeks to avoid those arrangements by using the courts, its decision so to do will come under scrutiny. If it further appears that the defendant, to his prejudice, performed his part of the agreement while the Government did not, the indictment may be dismissed,”
294 F.Supp. at 747.
In considering Cavin’s dismissal motion, the district judge recognized that the principles of Carter were controlling, but concluded there was no promise of immunity by the Government, and “that Cavin (1) did not rely on the alleged promise and (2) to the extent such reliance is claimed it was not reasonable.” In our opinion, the record does not support either of these conclusions. In reaching this conclusion, we hasten to point out that this is not a case of subjective wishful thinking on the part of either Cavin or his counsel. It is undisputed that the assurance of immunity was first given to Donohoe by Thorson in their telephone conversation on December 23,1974, and was communicated to Cavin and Reynolds at that time. In the light of such assurance, from that date on Cavin’s conduct and especially his interchange of information with Reynolds was influenced by the anticipated immunity. Donohoe recognized the validity of the promise when he resigned as counsel for Reynolds and Cavin due to the apparent conflict between them and SIGMA. As successor counsel for the witnesses, Bucklin had been advised of the immunity by Dono-hoe and received direct assurance to that effect from Thorson on the afternoon of January 2nd. Assuredly, Bucklin considered the promise to be viable when he conducted his joint conferences and briefings of Cavin and Reynolds in reliance thereon. Finally, on January 6th Thorson confirmed to Lenzner that both witnesses would receive immunity.
In giving these successive assurances to Cavin’s attorneys, Thorson knew or certainly should have known, that both Cavin and his counsel would rely upon them and govern their conduct accordingly. The constitutional overtones of such a situation were recognized by Judge Phillips in Cooper v. United States, supra;
“To the extent that the government attempts through defendant’s counsel to change or retract positions earlier communicated, a defendant’s confidence in his counsel’s capability
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WISDOM, Senior Circuit Judge:
This appeal raises questions involving an action by an employee against his employer under § 301 of the Labor Management Relations Act. The defendant contends that the district court erred in concluding that the plaintiff’s action was not barred by either the statute of limitations or an exhaustion of remedies requirement. The plaintiff asserts that the district court erred in refusing to reinstate him and award him back pay. We affirm.
FACTS
The plaintiff, Dr. Ricardo Cabarga Cruz, was hired as a teacher in 1976 by the defendant, Fundación Educativa Ana G. Mendez, Inc. Dr. Cabarga continued teaching until December 1978, at which time the Fundación terminated his employment. Dr. Cabarga believed that the Fundacion’s action was in violation of his employment agreement. As required by the existing collective bargaining agreement, Dr. Cabarga filed a complaint with the grievance and arbitration committee, which is composed of representatives of both the employer and the union, asserting that his dismissal was improper. The committee met in December 1978, but did not consider Dr. Cabarga’s grievance. Rather, consideration of that matter was scheduled for the committee’s next meeting, which was to be held on January 16, 1979. That meeting, however, did not take place. Apparently, the Fundacion’s representatives and one of the union’s representatives went to where they thought the meeting was to take place, the union’s offices, while the remainder of the union’s representatives went to a faculty room where they thought the meeting was to take place. Who was responsible for this mistake is not entirely clear. The committee did not subsequently meet, and Dr. Cabarga’s grievance was never considered.
In October 1979, Dr. Cabarga filed suit in the Puerto Rico Superior Court alleging that he had been wrongfully terminated. The action was removed to the United States District Court for the District of Puerto Rico. The Fundación moved for summary judgment and asserted that Dr. Cabarga’s action was barred both because it was untimely and because he had failed to exhaust the grievance and arbitration remedies in the collective bargaining agreement. In ruling on the Fundacion’s motion for summary judgment, the district court concluded that Dr. Cabarga’s action was not barred by the statute of limitations. The district court concluded, however, that it could not rule on the exhaustion issue until after a full hearing. This issue was therefore scheduled for trial along with the substantive issue: whether the Fundación had improperly terminated Dr. Cabarga’s employment.
Following trial, the district court concluded that Dr. Cabarga’s action was not barred as a result of his failure to exhaust the available grievance procedures. The district court also concluded that the Fundación had improperly terminated Dr. Cabarga. The district court held, however, that Dr. Cabarga was not entitled to reinstatement and back pay. Rather, the court awarded damages of $6,600. Both parties now appeal.
DISCUSSION
1. Statute of Limitations
The question whether Dr. Cabarga’s cause of action is barred by the statute of limitations turns upon whether the action is subject to the six month statute of limitations established by the United States Supreme Court in DelCostello v. International Brotherhood of Teamsters for hybrid § 301/fair representation claims. A hybrid claim is one in which the plaintiff has a cause of action against both the employer and the union. The typical hybrid action involves a claim that the employer violated the collective bargaining agreement and the union failed to handle properly the grievance of the plaintiff-employee who was injured as a result of the employer’s action. In DelCostello, the Supreme Court ruled that the applicable statute of limitations for such an action is six months, as provided in § 10(b) of the National Labor Relations Act. The six month statute of limitations applies to such a hybrid suit whether the employee sues the employer, the union, or both.
The DelCostello Court was, however, careful to point out that the six month limitations period established for hybrid claims should not be applied to all labor claims. Indeed, the Court made clear that borrowing state statutes of limitations would remain the norm for most labor actions when state law provides an apt analogy. If a claim represents, in essence, purely a breach of contract action against the employer, the proper limitations period is not the six month period established by DelCostello, but rather that provided by state law for breach of contract actions. The Fundación effectively concedes that Dr. Cabarga’s action was not time barred if the law of Puerto Rico provides the statute of limitations.
The statute of limitations question therefore turns upon whether Dr. Cabarga’s action is a hybrid claim or a straight breach of contract claim. The district court correctly concluded that Dr. Cabarga’s action was a simple breach of contract claim. The court found no evidence that the union was guilty of an unfair representation. Moreover, the Fundacion’s own actions refute its present contention that the union’s conduct amounted to an unfair representation. The record reveals that the Fundación withdrew its defense that the union was at least partially responsible for Dr. Cabarga’s injuries. Had the Fundación believed that the union was guilty of an unfair representation, it likely would not have withdrawn this defense, because the union, not the Fundación, would have been liable for the injuries to Dr. Cabarga that would not have occurred but for its unfair representation.
Because Dr. Cabarga’s action is essentially a breach of contract claim, the six month statute of limitations established in DelCostello does not apply and the action is not time barred.
2. Exhaustion of Remedies
It is undisputed that Dr. Cabarga did not exhaust the grievance remedies provided under the Fundacion’s collective bargaining agreement. Ordinarily, an employee must exhaust such remedies before instituting a civil action against his employer under § 301 of the Labor Relations Management Act. The courts have, however, recognized three exceptions to this rule. A plaintiff need not exhaust such remedies if: the union has the sole power to invoke the grievance procedures and the union wrongfully refuses to process or perfunctorily handles the grievance; resort to the grievance procedures would be futile; or the employer repudiates the grievance procedures.
The district court concluded that exhaustion was not required because Dr. Cabarga had proved repudiation. We agree. There is little question that Dr. Cabarga initiated the grievance procedures and did all that he was able to do insofar as exhausting the grievance and arbitration remedies is concerned. Through no fault of his own, the grievance was not processed. Although one could argue that the union was responsible for the stalled grievance procedures, the Fundación has, as noted above, specifically withdrawn its assertion that the union handled Dr. Cabarga’s grievance improperly. This leads to the conclusion that the responsibility for Dr. Cabarga’s failure to exhaust the grievance remedies rests with the Fundación. The conclusion that the Fundación repudiated the grievance and arbitration procedures is also supported by the Fundacion’s consistent position that Dr. Cabarga was not covered by the collective bargaining agreement. When an employer repudiates the entire contract or maintains that the contract is inapplicable, that action constitutes a repudiation of the grievance and arbitration procedures contained in that contract. Therefore, Dr. Cabarga was not required to exhaust the grievance remedies.
3. Reinstatement and Back Pay
The district court found that Dr. Cabarga started as a temporary employee but was subsequently given two consecutive twelve month appointments. Under the employment agreement between Dr. Cabarga and the Fundación, Dr. Cabarga was entitled after two years of consecutive employment to an evaluation to determine his future status with the Fundación. The Fundación terminated Dr. Cabarga’s employment without an evaluation or any other form of notice. The district court concluded that as a result of the failure to provide Dr. Cabarga an evaluation or notice, Dr. Cabarga “was left in limbo with no salary for a period of almost six months”. The district court therefore awarded Dr. Cabarga six months salary at the rate of $1,100 per month. Dr. Cabarga asserts that the district court erred in fashioning its remedy because it declined to award the “make-whole” remedy, reinstatement and back pay. Given the circumstances of this case, we must disagree with Dr. Cabarga.
It is undisputed that Dr. Cabarga was entitled to an evaluation that the Fundación failed to provide. Dr. Cabarga did not ask the district court to order the Fundación to provide such an evaluation. Rather, Dr. Cabarga asked the district court to place him in the position that he would have occupied had he passed the evaluation test. Under the employment agreement, if an instructor passes the evaluation test and thereby enters the tenure track, the Fundación is required to extend annual appointments for the next three years and any action taken by the Fundación that could affect that instructor’s employment status is subject to the grievance and arbitration process. As the district court noted, however, no evidence was submitted concerning the scope of or discretion involved in the evaluation process. The district court was therefore unable to determine whether Dr. Cabarga would have received a favorable evaluation. Unquestionably, the terms of the employment agreement did not guarantee that an instructor would enter the tenure track as a result of a mere lapse of time, nor was evidence presented to the effect that this was a common “shop practice” for the Fundación. As the district court noted:
Awarding reinstatement and back pay under such conditions would be tantamount to placing plaintiff in a position that he had no right to be under the terms of the collective bargaining agreement and the [Faculty] Handbooks. See Rivera-Morales v. Benitez-de-Rexach, 541 F.2d 882, 886 (1st Cir.1976); De Arroyo v. Sindicato de Trabajadores Packing, AFL-CIO, 425 F.2d 281, 291 (1st Cir.1970); cf. Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977) (civil rights constitutional due process violation did not justify placing plaintiff in a position she was not entitled to). In addition, reinstating plaintiff with back pay and accumulated seniority rights would amount to sidestepping the internal procedures of a college institution for the evaluation and promotion of its professors, an intrusion that is generally disfavored, see Gurma[n]kin v. Costanzo, 626 F.2d 1115, 1125-26 (3rd Cir. 1980) and gen. Regents of the Univ. of Michigan v. Ewing, [474 U.S. 214, 106 S.Ct. 507, 88 L.Ed.2d 523 (1985)], and uncalled for in the present case given the collective bargaining agreement’s exclusion of the two year evaluation results from the grievance and arbitration procedure, the only part of the collective bargaining agreement where remedies of back pay and reinstatement are allowed.
But for the Fundacion’s breach, Dr. Cabarga would have received an evaluation, not necessarily continued employment. Dr. Cabarga did not request that the district court order the Fundación to provide an evaluation, and the district court appropriately concluded that the reinstatement and back pay would be improper. Rather, the court awarded damages, and in calculating damages, the district court determined the loss to Dr. Cabarga caused by the Fundacion’s failure to provide an evaluation. Dr. Cabarga’s argument that the district court erred in remedying the Fundacion’s breach is therefore without merit.
CONCLUSION
The district court properly concluded that Dr. Cabarga’s action was not barred either by the DelCostello six month statute of limitations or by the requirement that an employee exhaust the grievance and arbitration remedies provided in a collective bargaining agreement before filing a civil suit. Finally, the district court did not err in declining to reinstate Dr. Cabarga and award him back pay. The decision of the district court is therefore affirmed.
. 29 U.S.C. § 185.
. Cabarga-Cruz v. Fundacion Educativa Ana G. Mendez, Inc., 609 F.Supp. 1207, 1214-16 (D.P.R.1985).
. Id. at 1213-14.
. 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983).
. 29 U.S.C. § 160(b). See 462 U.S. 151, 103 S.Ct. 2281.
. DelCostello, 462 U.S. at 165, 103 S.Ct. at 2291. Farr v. H.K. Porter Co., 727 F.2d 502, 504 (5th Cir.1984).
. DelCostello, 462 U.S. at 171-72, 103 S.Ct. at 2294-95.
. Garcia v. Eidal Int'l Corp., 808 F.2d 717 (10th Cir. 1986); O’Hare v. General Marine Transp. Corp., 740 F.2d 160, 167-68 (2d Cir.1984), cert. denied, 469 U.S. 1212, 105 S.Ct. 1181, 84 L.Ed.2d 329 (1985); Farr, 727 F.2d at 505; Erkins v. United Steelworkers of America, 723 F.2d 837, 839 (11th Cir.), cert. denied, 467 U.S. 1243, 104 S.Ct. 3517, 82 L.Ed.2d 825 (1984); cf. UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966); DelCostello, 462 U.S. at 162-63 & 171-72, 103 S.Ct. at 2289-90, 2294-95.
. Cabarga-Cruz, 609 F.Supp. at 1210-11 & 1215-16.
. Vaca v. Sipes, 386 U.S. 171, 187-88, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967); De Arroyo v. Sindicato de Trabajadores Packing, 425 F.2d 281, 289-90 (1st Cir.), cert. denied, 400 U.S. 877, 91 S.Ct. 121, 27 L.Ed.2d 115 (1970).
. Vaca, 386 U.S. at 184, 87 S.Ct. at 913.
. Id. at 185-86, 87 S.Ct. at 914-15. DelCostello, 462 U.S. at 164, 103 S.Ct. at 2291.
. Glover v. St. Louis-San Francisco R. Co., 393 U.S. 324, 89 S.Ct. 548, 21 L.Ed.2d 519 (1969); Smith v. Pittsburgh Gage and Supply Co., 464 F.2d 870, 875 (3d Cir.1972).
. Vaca, 386 U.S. at 185, 87 S.Ct. at 914; Smith, 464 F.2d at 875.
. Although the record is not entirely clear, it appears that one of the Fundacion’s representatives to the grievance and arbitration committee was the president of the committee and that it was he who was responsible for calling meetings and properly summoning members to those meetings. One of the union representatives testified that he did not receive proper notice of the January meeting of the committee and went to the wrong place as a result. Because of this mix-up, the meeting was not held and Dr. Cabarga’s grievance was not considered. There is no question that no subsequent meeting of the committee was ever called or held.
. Garcia, 808 F.2d at 721-22, Smith, 464 F.2d at 875-76. The Fundacion’s failure to attempt to resolve Dr. Cabarga's grievance through the grievance and arbitration committee is consistent with the view that the Fundación never considered his grievance to be one under the collective bargaining agreement.
. For this reason, De Arroyo v. Sindicato de Trabajadores Packing, 425 F.2d 281 (1st Cir.), cert. denied, 400 U.S. 877, 91 S.Ct. 121, 27 L.Ed.2d 115 (1970), does not support Dr. Cabarga’s position. In De Arroyo, the employees would have remained employed but for the employer’s breach.. Therefore, reinstatement and backpay was an appropriate remedy in that case.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MANTON, Circuit Judge.
In November, 1910, one Allen was duly elected treasurer of the state of Idaho. The plaintiff below (hereinafter called National) executed and delivered Allen’s official bond in the penal sum of $200,000, payable to the state of Idaho, the condition of the bond being, inter alia, that Allen should “pay over in accordance with the requirements of the statutes of the state of Idaho all moneys that may come into his hands by virtue of said office, and shall deliver to his successor in said office all writs, papers, books, records and other things pertaining to his said office which may be by law required to be so turned over.”
Allen assumed office in January, 1911, and in. the following month the defendant below (hereinafter called Massachusetts) executed and delivered to National what is called an “agreement” of reinsurance, wherein for a consideration named and paid it agreed “to pay to [National] upon demand the proportion of the whole loss sustained by [National] that the amount of the reinsurance applied for and granted bears to the total amount of the bond executed by the [National in respect of Allen], including any sum or sums which [National] shall beeome liable to pay, 1 s * and also a like proportion of all expenses, costs, and counsel fees incurred by [National] in investigating, settling, or resisting any claim made and in defending, or attempting to defend any action brought against [National], * * * and whenever [National] shall receive information of a derogatory nature affecting the risk insured or of a possible claim or claims prompting a special investigation, [Massachusetts] shall upon demand pay a like proportion of whatever costs or expenses shall be incurred by [National] in making such investigation and taking such steps as it may deem necessary to secure information or to prevent or check a loss or losses under said bond” respecting Allen as treasurer.
This agreement provided that Massachusetts should be “entitled to share with [National] in the proportion which the amount of the reinsurance bears to the amount of the bond and any and all rights, recourses, and benefits both as against the obligee [Idaho] in whose favor said bond was executed by the [National] and principal in behalf of whom said bond was executed, and any other person or persons, corporation or corpora^ tions, arising by operation of law or out of the provisions, reservation, and conditions of the said bond.”
The agreement also provided that it was “understood that [Massachusetts] shall be liable in every detail that [National] is liable.”
Allen served his two-year term of office as treasurer, and was re-elected in the fall of 1912, and in December of that year National again became surety on Allen’s official bond, which was similar in language and amount to the instrument of 1910.
Allen had appointed as deputy state treasurer one Coleman, and shortly after National gave its bond in favor of Allen it executed, and delivered in December, 1912, to the state of Idaho, another and different bond in the penal sum of $25,000, whereby it became surety for Coleman’s good conduct as deputy treasurer in the same words as had been used in respect of Allen as treasurer. No reinsurance was ever procured in respect of this bond for Coleman.
National’s second bond in favor of Allen became effective in January, 1913, when he took office for his second term, but not until June 4, 1913, did Massachusetts execute and deliver a second reinsurance agreement.
The language of this agreement is not identical with that of the earlier reinsurance agreement, but it was a part of the agreement “that [Massachusetts] shall be entitled to share with [National] in the proportion which the amount of the reinsurance bears to the amount of the bond in any and all collateral or indemnity held by [National] in connection with said bond and in any and all rights, recourses and benefits accruing to [National] in connection with the said bond.”
It was also, provided “that if [National] can procure a valid release from said bond either under the terms and conditions thereof or under the law, then [National] shall upon receipt of written notice from [Massa-ehusetts] proceed to procure its release from said bond, and in tbe event of tbe failure or refusal of [National] so to do within fifteen days after the receipt of such notice, then the liability of [Massachusetts] hereunder shall immediately cease as to any and all future liability accruing to [National].”
The delay in executing the second reinsurance agreement was due to correspondence between the parties to this suit regarding what was called in Idaho “depository liability.” This meant that the state’s money was deposited in divers state banks, but each bank having such deposits was required to give bond to the state securing the same. Massachusetts desired assurances from National that this “depository liability” was “satisfactorily covered,” and on May 21, 1913, National wrote that it was so advised, but was not “as yet in a position to furnish. * * * documentary evidence to that effect.”
In May, 1913, one Ensign was an official of National resident in Idaho, and he,-on May 20,1913, furnished information in writing to National as to the nature of the depository liability of the Idaho banks. This information of Ensign was subsequently proven to be erroneous; that is, some of the bonds of chartered companies were in process' of cancellation, and the personal sureties were not, as Ensign said they were “O. K.” But there is no proof nor finding to the effect that Ensign was not furnishing the best information he could get, or that he was in any way faithless as an employee or officer of National.
This report of Ensign was sent to Massachusetts by National on November 3, 1913, but in the meantime, and on or about June 2d of that year, Massachusetts had written to National that it was “agreeable to us to execute the reinsurance agreement on your assurance that the depository feature is properly covered, and we will receive detailed information to that effect as soon as you are in a position to furnish it.”
Apparently by the same mail the second reinsurance agreement went forward. In March, 1914, a representative of National went to Idaho, investigated the treasurer’s office as best he could, and reported in substance that Allen was looked upon as honest, but that Coleman was probably thoroughly bad, but of such political influence that it was “dangerous to leave him in, and it is dangerous to put him out, and the danger of one offsets the danger of the other. I am inclined to think that he is too smart to actually steal.” This report, or the substance of it, was not communicated to Massachusetts by National.
The crash came in October, 1914. Allen resigned as state treasurer, was indicted for peculation, pleaded guilty, and was duly sentenced. Coleman seems to have admitted peculations of his own to the extent of $22,-000, and also seems to have escaped prosecution.
Among the methods of covering up the wrongdoing of Allen was that of maintaining in the Idaho Trust & Savings Bank what was called by some of the witnesses a “bogus deposit,” whieh at periods of examination could be and was made to serve as representing cash on deposit with that bank and belonging to the state. Shortly after Allen had been indicted, it was shown that in the opinion of National’s assistant general solicitor this bank was legally liable to the state treasurer, and therefore to the state, to the extent of the alleged “bogus deposit,” viz. $62,000..
The state of Idaho, however, did not, so far as this record shows, pursue anybody except National as surety on Allen’s bond. It brought no suit on Coleman’s bond, but on the Allen bond recovered judgment against National in 1916, whieh judgment, for $147,361.02, National paid in September, 1916.
But before this, and in December, 1914, National had substantially admitted its liability on Allen’s bond, and had accepted from the Idaho Trust & Savings Bank the sum of $22,00.0 in settlement and satisfaction of any claim whieh it, as a paying surety, might ultimately have against this bank.
After having paid .the Idaho judgment, the National demanded payment from its re-insurer in the amount agreed on, viz. one-eighth of what National had been obliged to pay. Payment was refused, and this action brought, in whieh National agreed that it must account for the $22,000 obtained from the Idaho Trust So Savings Bank.
The court below held in substance that National was entitled to recover along the lines of its demand, but that it must also make contribution to or for its reinsurer on account of the Coleman bond, and as if a third party had been surety upon that bond, and National by subrogation had recovered $22,000, upon it.
We now consider the defenses; By paying the judgment obtained against it by the state, the National became subrogated to any cause of action existing in behalf of the state against the Idaho Trust So Savings Bank. The Massachusetts argues that, because a settlement was made with the Idaho for a sum less than the amount that might have been recovered against it (Idaho), the National is accountable for the utmost amount that might have been recovered, but for such settlement.
The action is upon two reinsurance agreements. In the second, the Massachusetts agreed to pay immediately to the reinsured one-eighth of any sum or sums which the insured became liable to pay under the bond for defaults occurring during the terms mentioned therein, and it contained the same provisions as to reimbursement of expenses incurred by the reinsured in investigating, settling, or resisting any claim made, and further, “in defending or attempting to defend any action in connection with or brought upon said bond, .and in pros.eeuting or attempting to prosecute the defaulter, and in obtaining or attempting to obtain reimbursement from the principal or from others.” The reinsurer was entitled to share with the reinsured in all rights, benefits, and re-courses occurring to the reinsured in connection with the bonds. While these reinsurance agreements did not in express terms authorize the settlement made with the Idaho by the National, they did vest the power with the National to settle in good faith all claims which inured to its benefit and to that of its reinsurers, and the settlement made for $22,-000 was for the benefit of both parties; the Massachusetts being entitled to credit for its one-eighth share. Nor was it essential or necessary for the ■ reinsured to consult its reinsurers before settling such claims. In the first reinsurance agreement sued on, the re-insurer agreed to pay forthwith to the rein-sured the amount of the reinsurance and expenses, if any, whenever the reinsured after investigation determined its liability and notified the reinsurer by letter to that effect; such payment to be made, whether or not the reinsured shall have paid any sum in discharge of its liability upon the bond.
Under the division of this insurance, the National had an interest four times the extent of the Massachusetts. The claim against the Idaho, which the National endeavored to collect and finally adjusted before trial, was fraught with some dangers. The National was a foreign corporation suing in Idaho; the officers of the trust company (Idaho) were influential in the community. Matters of proof were difficult. These matters must have been weighed in determining whether the National, with the larger interest at stake, in good faith adjusted the claim. Under the circumstances, the compromise was made in good faith and in the exercise of its best judgment.
In Hicks v. Poe, 269 U. S. 118, 46 S. Ct. 29, 70 L. Ed. 187, a reinsurance company entered into a participation contract with a surety company which was engaged in the business of writing surety, fidelity, and burglary insurance. It assumed one-third of the liabilities on the risks undertaken by the surety company during a period of five years, and upon annual accountings was to receive one-third of the profits and pay one-third of the losses, leaving the management of the business to the surety company without restriction. The surety company being unsuccessful, its receivers, after a five-year period in winding up the business, canceled the outstanding risks by returning unearned premiums to policy holders. It was held that this was not a breach of the contract, and did not relieve the reinsurance company of its liability to pay to the surety company one-third of the losses occurring after the five-year period on business written within it. The court said: “The participation contract did not restrict the discretion to be exercised by the United, and its receivers, in the conduct of the business or in winding it up after the termination of the agreement.”
There the reinsurance company was to receive one-third of the profits and, as here, no restriction was placed by the reinsurance company upon the discretion of the reinsured upon the conduct of its business. Here the National settled a contestable claim, while in the Hicks Case the reinsured returned premiums on good risks, which premiums would otherwise have applied to reducing the losses under the agreement. Under the contracts here considered, the Massachusetts was not entitled to subrogation to claims against the Idaho, but only to share with the reinsured in all rights, recourses, and benefits accruing to. the reinsured. Consideration of such claims and the prosecution and adjustment thereof was solely within the control and direction of the National, for the benefit of itself and its reinsurers. The evidence as to the investigation of the claims, the institution of the action and the prosecution thereof, together with the communications ultimately resulting in settlement, satisfactorily establish that the National acted in good faith. It sought in every way to do as well as could reasonably be expected the. work it had undertaken. It retained local counsel and handled a difficult litigation in a foreign jurisdiction with due regard for the rights of the Massachusetts, as well as its other eoinsurers.
It is argued that the second agreement of reinsurance was entered into by reason of misrepresentations on the part of the National. This relates to the bonding of the bank of Nampa as a depository of state funds. As to this defense, the court below found that the National committed no fraud, nor did it misrepresent with respect to the execution of either agreement of reinsurance. As a finding of fact, the court held there was no intention to defraud the Massachusetts, and it committed no fraud in obtaining the second reinsurance agreement, and, further, that it did not make any representations 'to the ef-' feet that the National Bank of Nampa was solvent, nor that deposits made therein by the state treasurer of funds of the state of Idaho were made in accordance with the statutes of the state; that the National had no knowledge of the amount of deposits of the state funds, or the amount or nature of the security given by the bank to the state of Idaho at the time the Massachusetts executed the second reinsurance agreement; nor did the National represent that it had knowledge of such facts or that the situation with respect to the bank was satisfactory or that no illegal acts had been committed with respect to the deposit of the state funds in the bank, nor did the National conceal from the Massachusetts any facts relating to the bank of Nampa. These findings of fact, supported by evidence, are binding upon us. David Lupton’s Sons v. Automobile Club of America, 225 U. S. 494, 32 S. Ct. 711, 56 L. Ed. 1177, Ann. Cas. 1914A, 699; Fleischmann Co. v. U. S., 270 U. S. 355, 46 S. Ct. 284, 70 L. Ed. 624; Aronstam v. All-Russian Central Union, etc. (C. C. A.) 270 F. 460. The conclusion of law was properly reached.
The National, in response to rumors of dishonesty on the part of Allen and Coleman, caused an investigation to be made by one of its employes, and he rendered a report on March 14, 1914, 10 months after the Massachusetts executed the second reinsurance' agreement. It is argued that 'the contents of this report should have been called to the attention of the Massachusetts, and that for failure so to do it is relieved of liability. The court below found that the National was under no duty to communicate this report to the Massachusetts, and that it acted in good faith toward the Massachusetts with respect to it.
The contents of the report have been referred .to above. It recommended against canceling his bond, and stated that Coleman was the dangerous man in the ease, and finally that it was dangerous to leave him in and dangerous to put him out, and the danger of one about offset the danger of the other. And, it continued: “I am inclined to think he is too smart to actually steal. If Allen is required to watch him closely he may not be able to ‘graft.’” Although suspicious of irregularities, the National was not bound to act until they had acquired knowledge of some specific fraudulent or dishonest act that might involve the Massachusetts in liability for misconduct. American Surety Co. v. Pauly, 170 U. S. 133,18 S. Ct. 552, 42 L. Ed. 977; Natl. Surety Co. v. Western Pac. Ry. Co. (C. C. A.) 200 F. 675; Ætna Indemnity Co. v. J. R. Crowe, etc., Co. (C. C. A.) 154 F. 545; Ætna Indemnity Co. v. Farmers’ Nat. Bank (C. C. A.) 169 F. 737. It had at least the right to wait' until it had discovered facts sufficiently strong to justify careful and prudent men in charging the state officers with fraud or culpable negligence. Such evidence was not found in the report. What was stated in the report might easily have become libelous as against Allen and Coleman, if published and found to be untrue. Such a risk the National was not obliged to assume. Again, the report would not have justified the cancellation of the bond by either the National or the Massachusetts. The other errors referred to in the Massachusetts writ need not be considered; they present no error.
In the National’s writ of error, we are asked to-review the decision below in allowing the Massachusetts, as a set-off, one-sixteenth of the sum which was misappropriated by Coleman with the connivance of Allen. The National had executed, a bond for Allen as state treasurer to the extent of $200,000, one-half of its liability being the subject of reinsurance. It also executed a bond for Coleman as deputy state treasurer to the extent of $25,000, as to which there was no reinsurance. As the court below found, the bonds executed by the National for Allen and Coleman, respectively, were different and distinct; also that among the items carried as cash in the office of the state treasurer of Idaho, at the time Allen resigned as treasurer, was a cheek for $22,000, signed by Coleman. The latter shared in and received part of the moneys for which Allen failed to account, and Coleman has never accounted therefor. It was found that Coleman and Allen connived and acted together in at least a part of the transaction which formed the basis of the judgment obtained by the state of Idaho against the National, and Coleman has never accounted for his participation therein. The amount involved in the connivance, other than the $22,000, was not proven. No action was ever brought against the National on the surety bond of Coleman.
It was provided in the second insurance agreement that the Massachusetts should be entitled to share with the National in proportion which the amount of reinsurance bore to the amount of Allen’s bond “in any and all .collateral or indemnity held by the reinsured in connection with the said bond, and in any and all rights, recourses, and benefits accruing to the reinsured in connection with the said bond arising out of the law or any provision, reservation, or condition in said bond.” The Massachusetts contends that the bond executed by the National on behalf of Coleman as deputy state treasurer is to be treated as a recourse and benefit accruing to the Massachusetts. Approving this, the court below also found that the Coleman bond was neither collateral nor indemnity. It was found that any diversion of state funds on the part of Coleman had been made with the connivance of Allen, or that they had acted in concert. Allen was actually and not merely constructively a party to the tort. The state might have proceeded against the bondsmen of either Coleman or Allen. But the bondsman for Allen paid the full claim. One tort-feasor, upon paying the full damages caused by his wrongful act, is not subrogated to any recourse or benefit against his fellow tort-feasor . which the injured party might have had.
As a prerequisite to enforcing contribution between insurers, it is essential that the same risk has been insured. Here one bond against the dishonesty and neglect of the state treasurer included neglect in supervising the aets of his deputies and dishonesty on his part in conjunction with them. The other bond insured against the dishonesty and neglect of the deputy state treasurer. The Coleman bond was not surety for the honesty of Allen, nor was the Allen bond security for the honesty of or diligent performance by Coleman or his deputies. Whether or not Coleman and his associates might have been held liable for a part of the same sums for which Allen and his associates were chargeable is not important. They were independent obligations relating to the obligations of two distinct individuals. Before different policies can be held to contribute to the same loss, insurance must have been upon the same interest and the same property or similar part thereof. Eddy v. London Assurance Corp., 143 N. Y. 311, 38 N. E. 307, 25 L. R. A. 686; Lowell Mfg. Co. v. Safeguard Fire Ins. Co., 88 N. Y. 597.
Because the National was a surety for Coleman, and also for.Allen, it was not bound to take recourse against itself on the Coleman bond, in order to apply the amount recovered for the benefit of itself and its reinsurers on the Allen bond as a recourse and benefit accruing to it in connection with the bond. In Globe & Rutgers Fire Ins. Co. v. Hines (C. C. A.) 273 F. 774, we held that there ean be no right of subrogation in favor of a marine insurance underwriter for loss paid on a ship injured by collision, if the ship which was injured and that which committed the injury are owned by the same party. See, also, Phœnix Ins. Co. v. Erie Transp. Co., 117 U. S. 312, 6 S. Ct. 750, 29 L. Ed. 873.
Again, it appears that, when the second insurance agreement was executed, the Coleman bond was already in force. What the National did in procuring a reinsurance of the risk which it had assumed on the Allen bond was a diminution of that risk, so far as it was concerned. It did not consider or contemplate reducing the risk of the Coleman bond. It could not have been the intention, at the time they executed the second reinsurance agreement, for the parties to have regarded the Coleman bond, on which the National was the sole surety, as a right, benefit, or recourse subject to contribution in favor of the reinsurers. It did not guarantee the reinsurers against loss, nor did the National agree to contribute from one pocket to lessen the deficit which might be incurred in another pocket.
The judgment will be reversed on the plaintiff’s writ of error, and affirmed, after reducing the amount of the defendant’s set-off, on defendant’s writ.
Reversed in part, and affirmed in part.
HOUGH, Circuit Judge, concurred in the result, but, owing to his absence, has not read this opinion.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
FAHY, Circuit Judge.
These three consolidated cases bring under review a decision and order of the National Labor Relations Board. The relevant events appear in considerable elaboration in the report of the case at 119 N.L.R.B. 1026 (1957).
The Associated General Contractors of America, Inc., referred to as AGC, was the prime contractor on a construction project at Travis Air Force Base in California. The Operating Engineers, Local Union No. 3 of the International Union of Operating Engineers, AFL-CIO, referred to as Local 3, represented the AGC employees under two collective bargaining agreements with AGC, one referred to as the 1954 Agreement and the other as the 1955 Agreement.
Case No. 14298 involves the 1954 Agreement, containing the following clause:
“The terms and conditions of this agreement * * * shall apply equally to any sub-contractor under the control of, or working under contract with [the] employer on any work covered by this agreement, and said sub-contractor with respect to such work shall be considered the same as an individual employer covered hereby.”
AGC subcontracted some of the work to St. Maurice, Helmkamp and Musser, a California partnership, referred to as Musser. Musser is a member of the Western Association of Engineers, Architects and Surveyors, called Western Association, which represents its members in labor relations matters. In 1952 the San Francisco Area Group of Professional Employees, referred to as Professional Employees, was certified as the representative of the employees working for members of the Western Association. Musser employed on the Travis project four members of Professional Employees who had a collective bargaining agreement with Musser, via Western Association.
At the instance of Local 3 a work stoppage occurred at the Travis project. The Board found it to be due to the employment by Musser of the four employees who would not come under Local 3’s agreement with AGC. The Board also found that in the effort to bring them within the agreement pressure through the work stoppage was put upon AGC and, through AGC, upon Musser and the four employees. AGC in fact brought about the suspension of the four employees and replaced them with its own, who were covered by its collective bargaining agreement with Local 3. The Board found that in this manner (a) AGC violated sections 8(a) (1) (2) and (3) of the Labor Management Relations Act and that Local 3 violated sections 8 (b) (1) (A) and (2) by causing the removal of Musser’s employees and (b) that Local 3 also violated sections 8(b) (1) (A) and (2) by attempting to cause Musser, through the AGC, to violate section 8(a) (3).
In ease No. 14466 the 1955 Agreement was in effect. The agreement contained a provision for union security and a subcontractor’s clause which reads as follows:
“The terms and conditions of this Agreement insofar as it affects Employer and the individual employer shall apply equally to any sub-contractor under the control of, or working under contract with such employer on any work covered by this Agreement, and said sub-contractor with respect to such work shall be considered the same as an individual employer covered hereby.
“That if an individual employer shall sub-contract work as herein defined, provision shall be made in such sub-contract for the observance by said sub-contractor of the terms of this Agreement.” [Emphasis supplied.]
Moreover, AGC this time refused to aubeontract to Musser, because Musser would not conform with this provision. Musser’s reason was, as previously, that it had a collective bargaining agreement with the Professional Employees as the certified representative of its employees, and, therefore, it could not lawfully compel them to join Local 3. In this instance the Board, by a divided vote as in the other case, held that AGC had not violated the Act, reasoning that the preclusion of future work to a prospective subcontractor in the circumstances did not justify the Board in holding that the rights of unidentified employees of such prospective employer were adversely affected.
In case No. 14298 we see no reason to disturb the findings of the Board hinging upon the pressures exerted by the work stoppage, or the Board’s judgment that the impact upon the four employees flowed naturally from the stoppage. Moreover, we find no reason to disagree with the legal conclusion of the Board that the specified violations occurred as a result. Accordingly the Board’s request for enforcement of that portion of its order running against Local 3 will be granted. Case No. 14406 must necessarily stand or fall along with case No. 14298 because of the interrelationship of the activities carried on between Local 3 and AGC against Musser’s employees. It follows from our conclusion to enforce the Board’s order against Local 3 in No. 14298 that the Board’s petition for enforcement of that portion of the order directed against AGC, the subject matter of case No. 14406, must also be granted.
AGC contends the Board should have recognized that when Musser’s employees came onto the Travis job they came into a collective bargaining unit, by reason of the subcontractor’s clause, covered by the 1954 Agreement of Local 3 with AGC, and were subject to its terms. In support of this contention it says that the conditions existing among building and construction contractors in the area, their employees, and the unions, required this in order to promote stability and industrial peace, the fundamental purposes of the Act. It may well be that the industrial and labor conditions in the locality warrant a new approach by the Board in formulating bargaining units in the building and construction industry there, and that the last word has not been said in an evolving situation. But be that as it may we take this case in its present posture. A bargaining unit which would release the Musser employees from the unit fixed for them by the Board had not been established. Local 3’s bargaining agreement, moreover, was not with Musser; it was with AGC. When the latter failed to comply it was within the competence of the Board to hold that Local 3, by striking against AGC, brought pressure to bear which carried through as discrimination against Musser’s employees due to their membership in another labor organization, and that AGC, by succumbing to Local 3’s pressure, discriminated against these same employees when it caused them to be suspended from the Travis project for not belonging to Local 3. No party to the proceedings contends that the strike was protected by section 13 of the Act, 29 U.S.C.A. § 613, if it amounted to discrimination prohibited by section 8.
It is also contended that no unfair labor practice can be found where the discriminatory action is against employees other than those of the direct employer; specifically, that AGC could not be found to have violated section 8(a) (3) by terminating the employment of Musser’s employees, nor could Local 3 have been found to have violated section 8(b) (2) by causing that action, since there was no direct employer-employee relationship between AGC and Musser’s employees. This position had the support of two members of the Board, relying upon previous Board decisions, The Great Atlantic and Pacific Tea Co., 116 N.L.R.B. 943 (1956); United Association of Journeymen of the Plumbing and Pipefitting Industry, 116 N.L.R.B. 119 (1956), and language in N.L.R.B. v. Denver Bldg. & Const. Trades Council, 341 U.S. 675, 71 S.Ct. 943, 95 L.Ed. 1284. The provisions of the Act here involved, see footnote 2, supra, do not read as this contention would construe them, in contrast with language in other provisions. The terms used in the applicable provision bear an interpretation which reaches discrimination as to employees of another employer. We must guard against giving this broad language a scope which includes employees whose relationship to the controversy is so attenuated as to cause their inclusion to defeat a sound administration of the Act; yet the closeness of Musser to the dispute leads us to defer to the Board’s interpretation which brings its four employees within the questioned protection. This is an area of interpretation into which we should follow the Board. N.L.R.B. v. Hearst Publications, Inc., 322 U.S. 111, 128-129, 64 S.Ct. 851, 88 L.Ed. 1170; N.L.R.B. v. Gluek Brewing Co., 8 Cir., 1944, 144 F.2d 847, 855.
This brings us to case No. 14466, where the 1955 Agreement governed the relations between AGC and Local 3. In compliance with the subcontractor clause, AGC, in contrast with its previous conduct, declined this time to subcontract to Musser except in accordance with the agreement with Local 3. The Board, again dividing, held that the actions of AGC and Local 3, in executing, maintaining, and implementing the 1955 Agreement, did not add up to violations by AGC of sections 8(a) (1), (2) and (3) or by Local 3 of sections 8(b) (1) (A) and (2). This is heavily attacked as inconsistent with the ruling under the 1954 Agreement; but there are factual differences, and we are constrained to support the decision of the Board that these permit a different legal conclusion. Here AGC abided by its agreement with Local 3. While the result might well have been that employees of Musser were denied employment on AGC projects due to their affiliation with a union other than Local 3, this did not come about as a result of strike action by Local 3, as found in the other case, or by pressure exerted through AGC, as also there found, but by a decision on the part of AGC itself to comply with its agreement with Local 3. Though, as the Board suggests in this court, there was discrimination by one employer, AGC, against another, Musser, the Act stands aside in respect of such action, forbidding discrimination only against employees.
We would not be well advised to substitute a judgment different from that of the Board. It could lawfully conclude, as it did, that the relationships between AGC and prospective employees of a prospective subcontractor were so attenuated that the refusal of AGC to award a subcontract to Musser, and the existence, maintenance and implementation of AGC’s agreement with Local 3, did not constitute discrimination by either AGC or Local 3 against employees.
The order of the Board will be enforced.
. In No. 14298 petitioner, Local 3, seeks :, review of a decision and order which found that it and AGO had committed unfair labor practices. The Board seeks enforcement against Local 3. In No. 14406 the Board as petitioner seeks enforcement of that portion of its order directed against AGO. Musser, petitioner in No. 14466, seeks to review and set aside that portion of the order which dismisses allegations in the complaint that Local 3 and AGO committed unfair labor practices other than those found by the Board
. The pertinent provisions of the Act, 61 Stat. 140 — 41 (1947), 29 U.S.C. § 158 (1952), 29 U.S.C.A. § 158, are:
“Sec. 8(a) It shall be an unfair labor practice for an employer—
“(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7;
“(2) to dominate or interfere with the formation or administration of any labor organization or contribute financial or other support to it * * *
“ (8) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization * * ® ”
“(b) It shall be an unfair labor practice for a labor organization or its agents—
“(1) to restrain or coerce (A) employees in the exercise of the rights guaranteed in section 7 * * *
“(2) to cause or attempt to cause an employer to discriminate against an employee in violation of subsection (a) (3) or to discriminate against an employee with respect to whom membership in such organization has been denied or terminated on some ground other than his failure to tender the periodic duos and the initiation fees uniformly required as a condition of acquiring or retaining-membership.”
. In both cases the actual terms of the orders of the Board are not challenged.
. Local 3 complained to AGO that certain sections of the 1954 Agreement relating to wage payments and payments into an employee pension fund were not being observed with respect to Musser’s employees on the Travis project. Local 3 sought a “grievance procedure” and when no action was taken it notified AGO that it was “withdrawing” all employees represented by it on the project. Subsequently Local 3 and AGO established a Board of Adjustment to investigate Local 3’s complaints. The Board ruled that AGO had to take the necessary means to insure that work on the project would be in compliance with the 1954 Agreement since it contained a provision that every subcontractor would abide by the terms and conditions of that agreement.
. Section 8(a) (5) states that the employer will commit an unfair labor practice if he refuses to bargain collectively with respresentatives of Ms employees, and section 8(b) (4) (B) prohibits a labor organization from striking to force or require any other employer to recognize the labor organization “as the representative of his employees. * * * ” (Emphasis supplied.) See, also, Austin Company, 101 N.L.R.B. 1257 (1952).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MUECKE, District Judge:
On September 28, 1974, plaintiff Eric A. Lindgren was water skiing on a section of the Colorado River, south of Parker Dam. While making a run, plaintiff’s ski struck the river bottom, throwing plaintiff forward and causing him serious physical injury-
Plaintiffs filed their First Amended Complaint on February 26, 1979. The complaint named the United States as defendant and sought damages pursuant to the Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b) and 2671 et seq., for personal injury, negligent infliction of emotional distress and loss of consortium. Plaintiff’s complaint alleged that the U.S. Bureau of Reclamation, the agency in control at Parker Dam, had artificially altered the flow, the water level and the riverbed configuration of the Colorado River, and had thereby created a dangerous condition for users of the river. Plaintiffs further alleged that the Bureau had knowledge of the recreational use of the river and of the hazards posed to such users by the Bureau’s alteration; it was alleged that despite this knowledge, the Bureau had failed to post any warnings as to the dangerous condition of the river.
On May 25, 1979, the United States moved for summary judgment. The Government’s motion was based, in part, on the discretionary function exemption to the FTCA, 28 U.S.C. § 2680(a), which provides in pertinent part:
The provisions of this Chapter and Section 1346(b) of this title shall not apply to — (a) Any claim . .. based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.
On August 9,1979, the trial court entered summary judgment in the Government’s favor. In so doing, the Court held that the operation of Parker Dam constituted a discretionary activity within the meaning of the above statute and cited Spillway Marina, Inc. v. United States, 445 F.2d 876 (10th Cir. 1971).
Plaintiffs do not contest the trial court’s conclusion as to the discretionary character of dam operations. Their sole contention is that the Government’s failure to warn was not such an activity, and therefore that the trial court erred in entering summary judgment in the Government’s favor.
It may well be that the trial court’s ultimate conclusion as to the discretionary character of the Government’s failure-to-warn was correct. It may also be that even if the Government’s failure is found non-discretionary, the trial court will conclude that under the present circumstances, the Government was under no duty to warn. The problem with the Court’s ruling was its assumption that simply because the hazard which allegedly caused plaintiff’s injury was created through the exercise of a discretionary function, the Government’s failure-to-warn of the hazard was also discretionary. The trial court’s per-se approach to the issue was in error.
The leading decision interpreting the discretionary function exemption is Daleh- ite v. United States, 346 U.S. 15, 73 S.Ct. 956, 97 L.Ed. 1427 (1953). In that case, the Court established that the purpose of the exemption was to permit the Government to make planning-level decisions without fear of suit. Id. at 32, 73 S.Ct. at 966. According to the Court,
one only need read § 2680 in its entirety to conclude that the Congress exercised care to protect the Government from claims, however negligently caused, that affected the governmental functions.
Id. at 32, 73 S.Ct. at 966. Although the Daiehite Court declined to define the outer limits of “discretion”, it did go so far as to hold that discretion
includes more than the initiation of programs and activities. It also includes determinations made by executives or administrators in establishing plans, specifications or schedules of operations. Where there is room for policy judgment and decision there is discretion. It necessarily follows that acts of subordinates carrying out the operations of government in accordance with official directions cannot be actionable. If it were not so, the protection of § 2680(a) would fail at the time it would be needed, that is, when a subordinate performs or fails, to perform a causal step, each action or non action being directed by the superior, exercising, perhaps abusing, discretion.
Id. at 35-36, 73 S.Ct. 968. (Footnote omitted.)
Although Daiehite remains an important statement of the policy behind the discretionary function exemption, subsequent decisions by the Supreme Court and various circuit courts have operated to narrow Da-iehite ’s definition of the term “discretion.” See e.g., Payton v. United States, 636 F.2d 132, 137-38 (5th Cir. 1981); Aretz v. United States, 604 F.2d 417, 427 (5th Cir. 1979); Bernitsky v. United States, 620 F.2d 948, 951 (3d Cir. 1980).
The prevailing test in the Ninth Circuit asks whether the act or omission occurred on the “planning level” of governmental activity or on the “operational level:”
Not every discretionary act is exempt. Obviously, attending to many day-to-day details of management involves decisions and thus some element of discretion. The exercise of this kind of discretion does not fall within the discretionary function exemption. The distinction generally made in the application of the discretionary function exemption is between those decisions which are made on a policy or planning level, as opposed to those made on an operational level.
Thompson v. United States, 592 F.2d 1104, 1111 (9th Cir. 1979). See also Driscoll v. United States, 525 F.2d 136, 138 (9th Cir. 1975). In addition to examining the level at which the act/omission occurred, this Court has also considered the ability of the judiciary to evaluate the agencies’ act/omission and whether judicial evaluation would impair the effective administration of the Government. See Driscoll v. United States, supra, at 138.
Plaintiffs cite several cases for the proposition that if the. exercise of a discretionary function creates or facilitates a hazard, the Government’s duty to warn can be actionable — notwithstanding the discretionary character of the hazard-causing act/omission. See e.g., Smith v. United States, 546 F.2d 872 (10th Cir. 1976) (Yellowstone Park visitor falls into thermal pool: decision to open park and decision whether to leave an area of park undeveloped were discretionary, but “the decision as to the posting of warning signs in the area must be judged separately .... ”); United States v. State of Washington, 351 F.2d 913 (9th Cir. 1965) (Aircraft hits unmarked electrical power line: even assuming location and erection of line was discretionary function, failure to provide suitable warning device was actionable); United Air Lines, Inc. v. Wiener, 335 F.2d 379 (9th Cir. 1964), cert. dism. sub nom. United Air Lines, Inc. v. United States, 379 U.S. 951, 85 S.Ct. 452, 13 L.Ed.2d 549 (1964) (Air Force jet hits commercial airliner: under circumstances, failure to warn airliner of hazards created by instrument landing procedure being used by jet was actionable); United States v. White, 211 F.2d 79 (9th Cir. 1954) (Business invitee injured by unexploded shell while collecting scrap metal on Army firing range: assuming that decision not to undertake removal of hidden dangers was discretionary, the Government’s failure to warn of the known danger the invitee was likely to encounter was not); Everitt v. United States, 204 F.Supp. 20 (S.D.Tex.1962) (Boat accident: placement of log piles in bay for surveying purpose was discretionary, but failure to discover submerged pilings and warn thereof was not); Hernandez v. United States, 112 F.Supp. 369 (D.Hawaii 1953) (Vehicle accident: Government’s decision to erect road block was discretionary, but failure to adequately warn travellers was not); Worley v. United States, 119 F.Supp. 719 (D.Ore.1952) (Injury to hunter: Government’s decision to use coyote traps was discretionary, but failure to warn humans of danger was not).
The Government would distinguish plaintiffs’ cases on the basis that they did not involve dam operations. Under the Government’s theory, pursuant to the FTCA, Congress intended to place dam operations on a higher level than other “discretionary functions.” Failure to warn of hazards created by dam operations would never be actionable; it would always assume the discretionary character of the hazard-causing activity.
In support of its contentions, the Government relies on the following portion of the House Report of the Committee that adopted § 2680(a):
This is a highly important exception, intended to preclude any possibility that the bill might be construed to authorize suit for damages against the Government growing out of an authorized activity such as a flood-control or irrigation project, where no negligence on the part of any Government agent is shown, and the only ground for suit is the contention that the same conduct by a private individual would be tortious, or that the statute or regulation authorizing the project was invalid.
H.R.Rep.No. 2245, 77th Cong., 2d Sess., p. 10, quoted in Dalehite v. United States, 346 U.S. at 29 n. 21, 73 S.Ct. at 964. (Emphasis added). The Government also relies on several water cases which refer to the above language. See Wright v. United States, 568 F.2d 153 (10th Cir. 1978) (No liability to plaintiffs whose car crashed into creek: Government’s act of assisting state with planning and construction of bridge was discretionary, insulating it from claim that negligent design, construction and placement caused bridge to wash out); Konecny v. United States, 388 F.2d 59 (8th Cir. 1967) (Government not liable for “taking” plaintiff’s shoreline property by raising the water level of lake); Coates v. United States, 181 F.2d 816 (8th Cir. 1950) (Government not liable for damage to farmer’s land by changing flow of river to improve transportation waterway).
While it is clear from the above history that Congress intended dam operations to fall within the scope of the discretionary function exception, we find no indication that dam operations are elevated to a position different from any other discretionary function.
The cases cited by the Government suggest nothing to the contrary. None involved allegations of failure to warn. They simply establish what plaintiffs have already conceded — that the Government’s regulation of the river was a discretionary function.
The Government’s most persuasive case is Spillway Marina, Inc. v. United States, 330 F.Supp. 611 (D.Kan.1970), aff’d, 445 F.2d 876 (10th Cir. 1971). But that case too is distinguishable.
Plaintiff in Spillway had a state concession to operate a marina on the banks of a federal reservoir. In the fall of 1966, it became necessary for the Corps of Engineers to lower the water level of the reservoir to maintain the navigational quality of the Missouri River and to accomplish some construction and repair work. The marina’s complaint alleged that this drawdown damaged its dock facilities and that it was done without authority, without warning, and in violation of the marina’s concession agreement.
The district court held that the Government’s decision to lower the water level was clearly a discretionary function. 330 F.Supp. at 612-13. In response to plaintiff’s argument that it was lack of notice, rather than the actual lowering of the water level, that caused the damage, the court stressed that notice would be highly impractical:
This position is untenable. The decision of when to lower the reservoir, and how much to lower it, is one which depends upon a great number of variable factors, such as navigation conditions and needs, irrigation requirements, rainfall, etc. This decision must be made and altered from day to day, if not oftener. It would be inaccurate, if not impossible, to predict what action might be taken at some future date. Likewise, it would be equally difficult to predict the water level of the reservoir at some future date. Further to argue whether the act of the lowering of the water level, or the failure of specific notice thereof, is the negligent act, is an exercise in semantics, since both are a part of the total conduct within the statutory connotation of a discretionary function.
Id. at 613.
On appeal to the Tenth Circuit, plaintiff withdrew his argument that the drawdown was unauthorized and placed sole reliance on his argument that the Government was negligent for failing to warn that the draw-down would occur. The Tenth Circuit affirmed, emphasizing that the decision when to release and store water required discretion, and reasoning that “the argument of Spillway goes to the manner of exercise of a discretionary function.” 445 F.2d at 878.
This Court rejects the Government’s reading of Spillway as standing for the proposition that, in the dam context, all failure to warn assumes the discretionary cloak of the operation itself. While it is indeed possible that a particular failure to warn might be discretionary, each failure must be analyzed separately.
In Spillway, the exercise of discretion (i.e., the lowering of the water level) was primarily responsible for the damage for which plaintiff brought suit. In the case before this Court, the discretionary act did not produce any direct damage — it produced a hazard. The damage required an act on plaintiff’s part (water skiing). In this respect, the Spillway case is more aligned with the cases cited by the Government that did not involve failure to warn. This case, however, is more analogous to the authority relied on by plaintiff. E.g., White v. United States, supra.
To permit recovery in a Spillway situation would require the Government to analyze each act of discretion to determine (1) whether it would damage anyone, (2) whether a warning would reduce that damage, and (3) whether warnings would be feasible under the circumstances. To oblige the Government to ask these questions before each discretionary act would seem to constitute a great interference with Governmental administration. Under the facts of Spillway, for example, the Government would have had to warn the marina, and all other persons who would suffer damage from a lowering of the water level, each time the water level was lowered.
In contrast, the “hazard” cases often require only one-time warnings, and are therefore not as administratively burdensome. See e.g., Smith v. United States, supra; United States v. State of Washington, supra. In the present case, for example, plaintiff would have the Government post signs informing the public that the Government is causing the water level to fluctuate without notice, and that the public should beware of dangers that might be caused thereby. The Government is not, as in Spillway, being asked to notify the public each time it changes the water level in a manner so as to threaten damage.
Conclusion
This matter should be remanded to the trial court for its consideration whether, under the prevailing test in this Circuit, the Government’s failure to warn was discretionary. See Thompson v. United States, supra; Driscoll v. United States, supra.
It must be remembered that the question whether the discretionary function exemption applies is simply one of subject matter jurisdiction. See Smith v. United States, supra, at 875-76; United States v. White, supra, at 82, note 3. A finding that the Government cannot use the exemption in no way affects the questions (1) whether the Government’s failure to post signs constituted negligence, see Payton v. United States, supra, at 144, or (2) whether the Government’s failure is actionable under state law, as required by the FTCA. See e.g., United Scottish Ins. Co. v. United States, supra; Phillips v. United States, 590 F.2d 297 (9th Cir. 1979).
REMANDED for further consideration in accordance with the views expressed in this Opinion.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WILLIAM E. DOYLE, Circuit Judge.
The cause was argued and submitted to this court on September 13, 1979, on the petition of U.S. Soil Conditioning seeking a reversal of the decision of the NLRB entered on April 7, 1978. There is a cross-appeal on behalf of the NLRB seeking enforcement of its order. The original complaint alleged violations of § 8(a)(3) and (1) of the Act.
The complaint alleged that on June 2, 1976, the U.S. Soil Conditioning Company discharged one Joseph Dugan because of his membership and activities on behalf of the International Union of Operating Engineers, Local No. 9, AFL-CIO. An election was conducted on July 16, 1976, following a stipulation which was approved by the Regional Director, on June 28,1976. The tally of ballots showed that of the 18 votes which were cast, there was an even division; nine were for and nine were against the certification. The tie breaking vote was that of Joseph Dugan, the man who was discharged.
The respondent company, which is owned by Joseph H. Lionelle, is a sole proprietorship engaged in the production and sale of trace material and other fertilizer products in Salida, Colorado. It denied the charge, but did admit that the company sold goods and shipped them in interstate commerce.
The voluminous record reflects the length, extent and extreme adversarial character of the hearing. The administrative law judge found the facts in favor of the respondent company. The Board, on the other hand, disagreed with this determination. Its view was that Dugan was discharged because of his union activity. Relief appropriate to this determination was granted in the Board’s decree.
PRELIMINARY STATEMENT
The NLRB general counsel called five witnesses: Joseph H. Lionelle; Joseph N. Dugan; Irene F. Dugan, Joe Dugan’s wife; Clayton Ogden, a U.S. Soil quarry employee; and Clifton Ogden, another quarry employee and Clayton’s brother. The witnesses for U.S. Soil were Marion Burr, a U.S. Soil secretary and accounting clerk; Harold L. Lewis, U.S. Soil controller; Joe Tancik, general overseer of plant and quarry operations and plant superintendent; Raymond Smith, quarry superintendent; Donald Lee Ackels, a U.S. Soil electrician; and Cecil Gehring, a quarry employee.
The crucial finding of the administrative law judge was that neither Lionelle, the owner of the plant, nor any of his agents apart from the employees participating, knew of the Union’s efforts to organize the plant until June 10, 1976, when the notice of unfair labor practice charges and the formal representation petition were received at U.S. Soil, eight days after Dugan was discharged. As a consequence, the administrative law judge found that the discharge of Dugan was the result of his having overstayed his authorized vacation by one week and that it was not on account of his union activities. On this account, the judge sustained the challenge to Dugan’s ballot and exonerated U.S. Soil, holding that they had not engaged in any unfair practice.
The Board’s evaluation was the opposite. It held that there existed ample circumstantial evidence that Lionelle and his agents were aware of his employees’ organizational activities prior to the firing and that it was this factor and not the late return of Dugan from his vacation which caused the firing. The Board found, in addition, that Lionelle had an anti-union viewpoint and that the discharge of Dugan, occurring — as the Board determined — immediately after the presentation of the petition seeking representation, was explainable only as having been prompted by Dugan’s union organizational activities.
The Board’s legal view was that the company had violated § 8(a)(3) and (1) of the Act. It ordered the reinstatement of Dugan with back pay and ordered as well that the election which had been thrown out by the administrative law judge should be reinstated and that Dugan’s ballot be counted. This court is called upon to decide whether there is substantial evidence from a consideration of the record as a whole to support the findings and conclusions of the Board.
The respondent, U.S. Soil, here maintains that there is not substantial evidence in the record as a whole. It claims that the Board erred by ignoring the credibility findings of the administrative law judge. It should be pointed out that the fact that the Board reached different factual conclusions that the administrative law judge is not as diabolic as respondent suggests. It does not bespeak per se invalidity. The issue, as noted above, is whether the Board’s decision is based on substantial evidence.
SUMMARY OF THE TESTIMONY FOR THE COMPANY
Much of the testimony on behalf of the respondent, U.S. Soil, centers on the shortcomings of Dugan. Indeed, it is much like a prosecution or at least a discrediting process. Joe H. Lionelle, the owner of the plant, was the principal witness. He testified that his first knowledge that the Union was attempting to organize the U.S. Soil Conditioning Company was when he received the notice from the Union. He denied that he had had any prior conversations with employees regarding the Union. He said that Joe Tancik, who was the superintendent of the plant, was responsible for hiring and firing. Lionelle did fire Dugan. The ultimate question is whether he fired him as a result of Dugan’s taking an extra week of vacation allegedly without obtaining permission to do so. Lionelle called during the latter part of May, talked to Tancik, and asked him if Dugan had returned. He was told that he had not. Finally, on June 2, Tancik was told, according to this testimony, to fire Dugan. Whether Dugan had at least partial permission to take extra vacation was a disputed question.
There was a good deal of testimony from not only Tancik but also Ray Smith, who was the superintendent at the quarry, as to the competency of Dugan as an employee. Both Tancik and Smith said that Dugan was not a competent truck driver in that he mishandled the trucks. Also, Dugan was terminated once for having liquor on his breath during working hours. This was in February 1975, one and one-half years before this incident. Lionelle did testify that Dugan had somewhat of a liquor problem. However, this was not shown to have been a persistent problem which entered into the firing. But the testimony sought to establish that there were other problems such as the truck driving, which was just mentioned. From a review of the administrative law judge’s findings, together with the evidence, Dugan did not appear to have a single redeeming quality.
Union activity had been going on for some period of time prior to the time of the firing, and the employees, those who desired the Union at least, had met on many occasions. There is considerable conflict as to whether these meetings were secretly carried on so as to escape the attention of management. There was evidence that at the quarry where Dugan worked, there was regular discussion during the noon hour of the union question. Some of this conversation was said to have taken place in the presence of Mr. Ray Smith, who was the superintendent of the quarry. He, however, claimed that he had not heard such discussions. Also, Ray Smith’s son, Jerry, was an employee of the company who attended all of the organization meetings, and there were several, and it is, of course, argued that since he was close to his father there was some communication of the union activity to Ray Smith. However, the administrative law judge rejected all of this evidence and this conclusion.
Lionelle and Tancik, who was the general superintendent of the company, asserted that their first knowledge of the union activity came when the formal petition was presented June 10, eight days after Dugan was fired. There is no dispute, however, that the just-mentioned petition was presented to the employees for their signatures, including Dugan, on the very day that he was fired.
It will not help in this present effort to detail many scraps and bits of testimony that were considered by both the administrative law judge and the Board in reaching their respective conclusions. It will, however, be of some value to briefly consider the findings and conclusions of both.
THE APPLICABLE LAW
We have referred to the substantial evidence test governing agency review in a court. We note that it admonishes the reviewing court to regard the findings of the Board as to questions of fact supported by substantial evidence on the record considered as a whole to be conclusive. 29 U.S.C. § 160(e) (1976). See also 29 U.S.C. § 160(f). This standard was enacted by Congress in the Taft-Hartley Act in 1947, and is in accordance with the Administrative Procedure Act.
In the year 1951, the Supreme Court decided Universal Camera Corp. v. NLRB, 340 U.S. 474, 477-486, 71 S.Ct. 456, 95 L.Ed. 456 (1951). In a very lucid opinion authored by Mr. Justice Frankfurter, the Court interpreted the above-cited statute. Its pronouncements continue to be regarded as authoritative and no effort has been made to improve upon them. The Supreme Court in this important decision said that:
“ [substantial evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consolidated Edison Co. v. National Labor Relations Board, 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126. Accordingly, it “must do more than create a suspicion of the existence of the fact to be established. * * * it must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury.” National Labor Relations Board v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 505, 83 L.Ed. 660.
340 U.S. at 477, 71 S.Ct. at 459.
The Supreme Court was dealing with a case in which there was a conflict such as the present one. The trial examiner had reached one conclusion and the Board had reached the opposite result. The court of appeals had, however, gone further than it needed to go. It had ruled that it was barred from taking into account the examiner’s findings insofar as they had been rejected by the Board. The Supreme Court said that such findings were not unassailable and could be reversed by the Board even when they were not clearly erroneous. But the Court also said that “[w]e do not require that the examiner’s findings be given more weight than in reason and in the light of judicial experience they deserve. The ‘substantial evidence’ standard is not modified in any way when the Board and its examiner disagree. * * * The findings of the examiner are to be considered along with the consistency and inherent probability of testimony.” 340 U.S. at 496, 71 S.Ct. at 469.
Although the Board reversed the case, it also held evidence which was not dissimilar to the evidence in this case to be legally sufficient. It said in part:
* * * it is clear from the court’s opinion in this case that it in fact did consider the “record as a whole,” and did not deem itself merely the judicial echo of the Board’s conclusion. The testimony of the company’s witnesses was inconsistent, and there was clear evidence that the complaining employee had been discharged by an officer who was at one time influenced against him because of his appearance at the Board hearing. On such a record we could not say that it would be error to grant enforcement.
340 U.S. at 491-492, 71 S.Ct. at 466.
The Supreme Court remanded the case to the court of appeals for further consideration in the light of its opinion. It gave the court freedom to grant or deny enforcement “as it thinks the principles expressed in this opinion dictate.” 340 U.S. at 497, 71 S.Ct. at 469. The opinion also required the appellate court to weigh the findings of the administrative law judge (who, at the time of the decision, was called an examiner), considering whether the conclusion of the examiner detracts from the substantiality of the evidence in support of the Board’s opposite conclusion.
The decision had another effect. It dispelled the notion that the NLRB occupied a preferential role among administrative tribunals. No longer could its decision overcome the findings of the examiner by simply adopting a contrary viewpoint.
Still a further result of Universal Camera was its withdrawal of the court of appeal’s position as a third fact finder. See NLRB v. Enterprise Ass’n of Pipefitters Local 638, 429 U.S. 507, 531-32, 97 S.Ct. 891, 51 L.Ed.2d 1 (1977). Courts of appeals do not have unlimited authority or discretion to set aside NLRB orders by making contrary alternative inferences from the record evidence. This doctrine has been adhered to in the Tenth Circuit. See, e. g., Head Div., AMF, Inc. v. NLRB, 593 F.2d 972, 982 (10th Cir. 1979); Kustom Electronics, Inc. v. NLRB, 590 F.2d 817, 821 (10th Cir. 1978); Burns International Security Services, Inc. v. NLRB, 567 F.2d 1015, 1019 (10th Cir. 1977); NLRB v. Montgomery Ward & Co., 554 F.2d 996, 999 (10th Cir. 1977). “Our review is limited to searching the record to see if there is substantial evidence to support the fact findings . . . We do not sit as a super trial examiner, and do not weigh the credibility of one witness against another nor do we search for contradictory inferences. . . . N. L. R. B. v. Central Machine & Tool Co., 429 F.2d 1127, 1129 (10th Cir. 1970), cert. denied, 401 U.S. 909,91 S.Ct. 870,27 L.Ed.2d 807 (1971).
We are not in a position to sit as trier of fact . . . reweighing the evidence and making credibility determinations of our own, nor is it our function to search for possible inferences contrary to those drawn by the NLRB from a particular fact. . . . That an inference other than the one drawn by an agency might also be drawn from a particular fact or set of facts does not mean the agency’s conclusion is not supported by substantial evidence. .
Head Div., AMF, Inc. v. NLRB, supra, 593 F.2d at 982 n.20. In effect, in reviewing questions of fact, a court of appeals has less discretion to overturn an NLRB determination than the NLRB has to reject conclusions of its administrative law judge. “[T]he Board is not bound by findings and conclusions of an administrative law judge and is free to draw its own inferences as well as conclusions when its broader experience and expertise is applicable.” Burns International Security Services, Inc. v. NLRB, supra, 567 F.2d at 948, citing Ann Lee Sportswear, Inc. v. NLRB, 543 F.2d 739 (10th Cir. 1976). On the other hand, a reviewing court is bound to uphold the Board’s factual findings so long as they are supported by substantial evidence on the record in its entirety. See 29 U.S.C. § 160(e) (1976).
Finally, the standard of judicial review in NLRB cases is not altered merely because the administrative law judge and the Board have reached contrary conclusions. The substantial evidence test is not modified. Universal Camera Corp. v. NLRB, supra, 340 U.S. at 496, 71 S.Ct. 456. Universal Camera contemplates that the court will scrutinize the record as a whole and fully consider the strength of the findings of the administrative law judge and those of the NLRB as well with a view toward ascertaining whether the administrative law judge’s findings detract from the substantiality of the evidence relied on by the NLRB. Id. at 496, 71 S.Ct. 456. See Cartwright Hardware Co. v. NLRB, 600 F.2d 268, 270 (10th Cir. 1979). Cf. Penasquitos Village, Inc. v. NLRB, 565 F.2d 1074, 1078 (9th Cir. 1977).
Universal Camera and its progeny then can be summed up as calling for a detached and careful examination of the findings of the administrative law judge as well as the NLRB in the light of the evidence offered by the adversaries. There must, of course, be a painstaking consideration of the record as a whole.
THE FINDINGS AND CONCLUSIONS OF THE ADMINISTRATIVE LAW JUDGE
The fact that the administrative law judge was very positive and was confident in his findings certainly gives us pause. These findings were extensive and somewhat detailed. The judge gave full acceptance to the testimony favorable to the respondent company and completely rejected the witnesses called by the general counsel.
Some excerpts from the administrative law judge’s findings illustrate the tendency of the judge to “credit” certain witnesses, for example, Lionelle, and to “discredit” the witnesses who testified contrary to this personal standard: “According to Tancik, whom I credit, in about February 1975, Tancik smelled liquor on Dugan’s breath and terminated him.” Following this, Linoelle, the owner, told Dugan to talk to Tancik again and see if he would put him back to work.
In passing, the judge said that “Further, Tancik made a favorable impression as a witness, and his version of the foregoing events is consistent in material respects with the witness of Lionelle and Ray Smith, whereas Dugan was contradictory and confusing. Accordingly, I credit Tancik and find that Dugan was first terminated by him in about February, 1975, for drinking on the job.”
The judge’s evaluations had a tendency to be based on personalities of the witnesses. He referred, for example, to Clifton and Clayton Ogden, brothers, who testified against the company as follows: “Throughout their testimony, the Ogden brothers impressed me that they were trying to make a case for Dugan, regardless of the truth. Hence, where their testimony conflicts, as above, with any of the other witnesses, I credit the testimony of the other witnesses.”
The judge went on to consider the testimony of Gehring and Ackels, who testified on behalf of the company, and said: “The testimony of Ackels and Gehring corroborates in substance Lionelle’s version of the meeting. In these circumstances, their testimony regarding what transpired at the February, 1976 meeting is credited over that of the Ogdens.”
The judge referred once to the testimony of Dugan as being “vague and in generalities,” and was limited to one particular occasion “when the wind was blowing and everyone was disgusted.”
One of the foremen, Ray Smith, had a son, Jerry, who took part in the effort to organize the Union. There was some testimony that Ray Smith heard conversations which took place in the quarry. However, the judge refused to accept testimony regarding circumstances which might point to the communication of knowledge to Ray Smith, who was in close touch with Lionelle. The judge accepted the testimony of Ackels, saying “Further, Ackels credibly testified to specific instances when employees had either ‘hushed up’ or changed the subject when Ray Smith came into view.” Further, the judge found “Gehring, who also works at the quarry and who ate lunch with the other employees, impressed me as an honest witness when he testified, in confirming Ray Smith and refuting Dugan and the Ogden brothers that the subject of the Union was never brought up during lunch conversations at the quarry. Accordingly, I conclude and find that Ray Smith was not knowledgeable of the Union organizing efforts of the employees until a copy of the Petition filed with the Board was received by Respondent on June 10.”
On the question whether Dugan had taken an extra week’s vacation without leave, so to speak, the administrative law judge said: “In making my determination of credibility over this issue, I note there is no corroboration for Dugan’s testimony that all of the employees in the quarry talked to Smith in April about arranging vacation dates and that Smith authorized him to take two weeks.” (Dugan maintained that he had obtained permission from Lionelle to have three or four extra days.) In connection with this, the judge said: “Lionelle, Tancik and Ray Smith all impressed me as open and forthright witnesses who were telling the truth, whereas Dugan seemed disposed to shade his testimony as did both of the Ogden brothers, to vent a bias against Smith and Lionelle. * * *. I credit the testimony of Smith, Tancik and Lionelle over that of Dugan, and find that he was authorized to take a one-week vacation * *
In dealing with the question as to when Dugan signed the petition, the judge stated that: Dugan said he signed it at 1:00 p. m. on June 2. Dugan signed as the eighth name. Ackels was the seventh signer. According to Dugan, he was terminated after he had signed it. The judge said, in support of the contention of the company that Dugan did not sign the petition until after his termination, that “Ackels testified that the first knowledge he had of the Union was when Parkhill asked him to sign the petition about 4:00 p. m. on June 2 because ‘they wanted to get as many names on it as possible before they had the Union representative come down and talk with us.’” Ackels, according to further statement of the judge, said that when he signed it Dugan’s signature was not on it. “I credit Ackels, whom I previously found to be a creditable witness, over Dugan, and find that Dugan didn’t sign the petition until after he had been advised of his termination by Tancik.”
Mrs. Dugan testified that Mr. Lionelle’s personal secretary, Marion Burr, telephoned her on June 1 asking her where her husband was. Mrs. Dugan testified to a lengthy, somewhat involved conversation in the course of which Marion Burr asked her whether Joe Dugan was mixed up in anything at the plant and said “there is something going on down there.” According to Mrs. Dugan, Marion Burr also said: “Joe [Lionelle] is in an uproar, something about the Union . . .” Marion Burr added
“Are you sure Joe is not mixed up in this?” She said further, according to the testimony of Mrs. Dugan, “Well, you know, Irene, if he is, there is going to be hell to pay . . ” The judge said, regarding the conversation, “I have carefully reviewed the testimony and considered the demeanor of the witnesses and credit the testimony of Mrs. Burr over that of Mrs. Dugan.” He further said “Accordingly, I find that Mrs. Burr, who is a totally disinterested witness, was not aware of the Union until mid-June and that the statements attributed to her by Mrs. Dugan on June 1, were never made.”
The judge finally found that neither Lionelle nor any of the respondent’s agents were aware of the Union’s organizing efforts until June 10, eight days after Dugan was terminated, and that the general counsel had failed to prove that the respondent’s reasons for terminating Dugan were pretextual.
We are not saying that the administrative law judge did not make a conscientious effort in the premises. He lived with the case for a considerable period of time, and the conclusive approach which he used was in all likelihood influenced by his firsthand knowledge of the evidence together with
what would appear to have been subjective conclusions. In other words, we do not see him as applying objective tests of credibility. All in all, we do not regard his conclusions to be so well-reasoned and objective as to require this court to deduct from the substantiality of the findings and conclusions of the Board.
THE OPINION OF THE LABOR BOARD
The Board’s opinion did not directly challenge the findings of the administrative law judge. The Board did, however, issue some independent findings. The focus of its opinion was on the question whether Dugan’s late return from vacation was the real reason for his termination as the administrative law judge had found. The opinion calls attention to the testimony of Lionelle that he had actually made the decision to discharge Dugan before Dugan’s return from vacation:
“I made up my mind quite a while before that. But then things come up that I asked by foreman down there to discharge him.”
On being further cross-examined by attorneys for the general counsel, Lionelle said:
“I will try to simplify it as much as I can. I found him dishonorable, and Joe [Dugan] had a little drinking problem, and he has a habit of causing disturbances. In other words, he is not a man that I want to work around my crew.”
In further response to the examination by his own counsel, Lionelle stated:
“I mean, this week here [the second week of Dugan’s vacation] he missed doesn’t have anything to do with me firing him because I was going to do it anyway and it has nothing to do with me firing him.”
The administrative law judge overlooked this testimony altogether in the process leading to his conclusion that the late return from vacation was the cause of Dugan’s termination.
The general counsel argues also that if Dugan had been authorized only a week’s vacation and had taken extra leave without permission and this caused the decision to terminate him, why was he not terminated at once, that is, when he returned from work June 1, instead of waiting until the following day, which coincided with the initial circulation of the Union petition. The opinion of the Board also quotes the statement of Lionelle regarding the hiring and firing power in which he said that Tancik did all of the hiring. “After this damn Union thing started now, excuse me Judge, after this here, I want to hire all of them.”
The Board’s opinion, as noted, avoided line-by-line challenge of the very broad and general credibility determinations of the administrative law judge. However, it concluded that:
1. U.S. Soil was aware of the employees’ union activity.
2. That U.S. Soil was motivated against the Union, as straightforwardly set out in Lionelle’s testimony to the effect that “after this damn Union thing” arose, all hiring matters were to be addressed to him.
3. That Dugan’s discharge, in view of its timing, nature and the departure from past practice it evinced, could only be explained as motivated by his organizational activity on behalf of the union and not the numerous and shifting considerations raised by U.S. Soil.
Footnote 10 of the Board’s opinion reads as follows:
Respondent contends that to find a violation of Sec. 8(a)(3) in this proceeding requires reversal of the Administrative Law Judge’s credibility resolutions. What we hold, however, is that, even accepting those credibility resolutions, a violation of Sec. 8(a)(3) and (1) has been established. The ultimate question presented is not one of credibility: it is of fact and we do reverse the Administrative Law Judge’s ultimate finding of fact that Dugan was not discriminatorily terminated. As the court stated in Shattuck Denn Mining Corporation (Iron King Branch) v. N. L. R. B., 362 F.2d 466, 470 (C.A. 9, 1966):
Actual motive, a state of mind, being the question, it is seldom that direct evidence will be available that is not also self-serving. In such cases, the self-serving declaration is not conclusive; the trier of fact may infer motive from the total circumstances proved. Otherwise no person accused of unlawful motive who took the stand and testified to a lawful motive could be brought to book.
COMMENTS ON THE RECORD AS A WHOLE
As we indicated earlier, the respondent would have us pursue a detailed study of the record, which we have done, and make a choice between the determinations of the administrative law judge and the Board on the ground that the manifest weight of the evidence favors the determination by the administrative law judge. Obviously, we cannot proceed in this way, either directly or indirectly, and in view of the state of the record, we find it impossible to set aside the decision of the Board in favor of the findings and determinations of the administrative law judge, because we determine that there is substantial evidence in the record as a whole which supports the position adopted by the Board, which is that the firing was the result of the union activity of Dugan.
Possibly, there were incidents in Dugan’s two-year employment with U.S. Soil Conditioning Company which would have justified his being fired, and it would have constituted a nondiscriminatory termination. The Board, however, concluded that the immediate or proximate cause of the firing was Dugan’s participation in the effort to organize a union.
We have to recognize, of course, that the Board has expertise in this area and that it is accustomed to evaluating the traumatic effect on a company of a campaign such as this to establish a union. This is one of the weaknesses of the administrative law judge’s determination. He had no difficulty whatsoever discounting entirely the possibility that the union activity came to the attention of the company and that it was a factor in the firing. The inferences to be drawn from the nature of the organizational activity certainly permitted the drawing of the conclusion that it came to the attention of the company. A background factor is that this was a very small enterprise having a limited number of employees and supervisors, and they worked in close quarters. Salida is also a relatively small city. The activity would not be unimportant news. The exclamations of Mr. Lionelle show that he had strong feelings on this subject, and it is understandable why, because it would bring about a highly significant change in the organization.
It is also to be remembered that Dugan’s deficiencies had not previously caused major concern. The incident when Tancik had detected liquor on Dugan’s breath during working hours caused the major concern because he was terminated, but Dugan was reinstated, after he pledged to renounce this. The only other time that he was perceived to be under the influence was at the Lionelle ranch on a nonworking day — a Sunday. No consequence flowed from this.
No doubt his driving might have been hard on the equipment, but this did not cause his firing. So, it comes down to whether he failed to return on time or, on the other hand, whether he was known to have participated in the union activity. The union question was a grave one, and so it surely does not come as a surprise that the Board would adopt the decision that it reached.
In summary, the Board’s reasoning was based on the substantial evidence from the record considered as a whole, including the decision of the administrative law judge.
It follows that the order should be and the same is hereby directed to be enforced.
. The essence of these findings is summarized as follows: (The Board’s opinion does not list them in this order or in this form.)
1. That Lionelle’s testimony was to the effect that Dugan’s vacation was not the actual cause for his discharge (this was at variance with the finding of the administrative law judge. However, he did not mention this evidence.)
2. Lionelle did not give Tancik or Smith reasons for Dugan’s termination nor was Dugan ever given these reasons. The Board said that this constituted a departure from past U.S. Soil practices.
3. That Lionelle departed from past practices by personally firing Dugan rather than having Tancik do it.
4. Dugan’s termination was on June 2, the day after he returned from vacation. This was the same day that an informal petition for union representation was being circulated among the men.
5. That a remark made by Lionelle during his testimony constituted an admission of anti-union motivation.
6. That the reasons Lionelle offered to justify Dugan’s termination (Dugan’s incompetence, his drinking problem, and his dishonorable character) were of a “shifting nature” and were based on incidents remote in time from the date of his termination.
7. That the son of one of Lionelle’s supervisors was deeply involved in the union organizational drive, and his father must have known of the union efforts.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
LUMBARD, Circuit Judge:
Malden Mills appeals from the denial by the District Court for the Southern District of New York, Brieant, J., of a permanent injunction against Regency Mills based on Regency’s alleged infringement of a copyrighted textile design. Judge Brieant found that all the requirements for such an injunction, except that of substantial similarity of the two designs, had been met. In our view it is apparent that the two designs are in fact substantially similar and, accordingly, we reverse and remand to the district court with instructions to enter a permanent injunction.
In 1977, Malden hired a design firm to create a textile design consisting of a tree scene with flowers. Malden, by its officer Sanford Levine, accepted the design, designated it as Style No. 818N and registered its copyright as No. VA 42-277. Style No. 818N has been one of Malden’s most successful fabrics. Since its introduction in 1978, approximately 1,700,000 yards of Style No. 818N, nearly all of it destined for furniture upholstery, have been sold. The pattern is available in four color mixes, of which one, in which brown predominates, known as No. 637, accounted for 98% of Style No. 818N’s sales.
In the summer 1979, Sanford Levine left Malden, along with his brothers, also Malden employees, to found Regency Mills. Soon afterwards, Regency introduced a fabric called “Rustic Road,” available in two color mixes, rust and brown. There was no testimony at trial as to how Rustic Road was designed, although Sanford Levine did testify that he had told his brother Ronald that he “wanted a tree-type pattern.” The district court found that the principals of Regency knew of the design of Style No. 818N and of its success.
The sole substantial issue on this appeal is whether or not the trial court erred in holding that the two designs were not substantially similar. It is settled in this circuit that an appellate court will exercise powers of de novo review in deciding such an appeal. As we stated in Concord Fabrics, Inc. v. Marcus Brothers Textile Corp., 409 F.2d 1315, 1317 (2d Cir. 1969): “As we have before us the same record, and as no part of the decision below turned on credibility, we are in as good a position to determine the question as is the district court.”
The standard of substantial similarity as perceived by the ordinary observer is well-settled in this circuit. Ideal Toy Corp. v. Fab-Lu Ltd., 360 F.2d 1021 (2d Cir. 1966); Peter Pan Fabrics, Inc. v. Martin Weiner Corp., 274 F.2d 487 (2d Cir. 1960). Noting that two fabric designs were “not identical” in Peter Pan, Judge Learned Hand pointed out that “the ordinary observer, unless he set out to detect the disparities, would be disposed to overlook them.” Peter Pan, supra, at 489. In Ideal Toy we said that “the appropriate test for determining whether substantial similarity is present is whether an average lay observer would recognize the alleged copy as having been appropriated from the copyrighted work.” Supra at 1022.
We have examined the two fabrics and are convinced that an ordinary observer would not notice the disparities unless he set out to find them, and that he would recognize the alleged copy as an appropriation. The two designs are of such likeness with regard to subject matter, style of representation, shading, composition, relative size and placement of components, and mood as to obviously substantially similar.
Malden’s fabric comprises a central scene of a large tree leaning at a 45° angle over a body of water. In the background, on the far shore of the river or lake, are other, smaller trees. In the foreground, below and to the left of the tree, is a clump of large flowers. The Regency design also consists of a tree leaning at a 45° degree angle over a body of water. Smaller trees — though these appear to be evergreens rather than deciduous trees, as in Malden’s picture — border the body of water. Also in the lower left foreground of the central part of the Regency design is a clump of large flowers, though the mix of species among the flowers differs. The size of the central tree and flowerbed is the same in both designs. In the Malden design, a Japanese bridge spans the water; no such bridge appears in the Regency design. But in that same area of the Regency design, an overarching curve of tall grass simulates the missing bridge.
The differences between the two designs enumerated by the district court are not enough to support its conclusion of dissimilarity. In denying an injunction in Concord Fabrics, supra, the district court had commented that plaintiff’s pattern contained 25 daisies in each handkerchief and no kidney-shaped elements, while defendant’s design contained 32 kidney-shaped elements and no daisies. We rejected such a daisy-counting approach on appeal, emphasizing instead the similarity of the primary elements of the design and of the two fabrics; the similarity of colors; and the same general impression given by both samples. We noted that the differences cited by the district court only “emphasize the extent to which the defendant has deliberately copied from the plaintiff.”
The case at bar presents the same situation. For example, although the flowers used in Rustic Road are not botanically the same as those in Style No. 818N, the position of the flowers, the technique used to represent them, the relative color weight accorded them, and the use of blank space revealing the underlying fabric color to give the appearance of light and shade is very similar. Detailed visual comparison of different elements in the fabrics — trees, flowers and other scenic features — underscores our conviction that “defendant copied plaintiff’s basic design, making only minor changes in an effort to avoid the appearance of infringement.” Concord Fabrics, supra, at 1316. The similarity of color tones, color placement and relative color intensities in the brown version of Rustic Road bolsters this belief.
Given our view of the fabrics, Regency’s contention that its design represents a road while Malden’s represents a river is irrelevant. Both represent scenes of trees, grass, and flowers in the countryside, and the presence of a road or bridge is not controlling when the similarities are as substantial as they are in this case.
Reversed and remanded to the district court with instructions to enter a permanent injunction against defendants and for further proceedings to determine damages and attorneys fees.
. The district court found that all of the elements needed for a permanent injunction in an infringement case had been proved except for substantial similarity, and these findings are not challenged, except to the extent that Regency cross-appeals from the district court’s finding that Malden had a valid copyright in its Style No. 818N. Regency bases this argument on the contention that the design of Style No. 818N is a “merely trivial,” see Alfred Bell & Co., Ltd. v. Catalda Fine Arts, 191 F.2d 99, 103 (2d Cir. 1951), variation on an illustration in an English book and a fabric known as Fragonard by Kandell. We find Regency’s cross-appeal to be without merit. The English book referred to was not in evidence in the district court, and our comparison of Style No. 818N to the Fragonard design reveals more than “merely trivial” differences. In the absence of any evidence that Malden merely copied another design, the district court’s finding that the copyright possessed by Malden was valid must be affirmed. Alfred Bell & Co., Ltd. v. Catalda Fine Arts, supra.
. We do not view the expert testimony in this case, which merely amounted to opinions regarding matters within the knowledge of the lay observer, to preclude de novo review.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BUFFINGTON, Circuit Judge.
In the court below American Safety Razor Corporation (hereafter called plaintiff), owner of two patents, charged Frings Brothers ' Company (hereafter called defendant) with infringement thereof. One patent, No. 1,739,280, was granted December 10, 1929, to M. B. Behrman for “Razor and blade therefor”; the other, No. 1,773,614, was granted August 19,1930, to G. Dalkowitz for a “Safety Razor.” On final hearing the court below dismissed the bill, entering a decree that the Behrman patent was void by reason of anticipation and by reason of want of patentable novelty over the prior art and that defendant, in making and furnishing blades to legitimate owners of plaintiff’s razors made by plaintiff under said patents, was not contributory infringer. From such deeree plaintiff appealed.
We avoid much needless repetition by referring to the illuminating opinion of the trial judge reported at 56 F.(2d) 449, 450. Therefrom it appears plaintiff makes and sells what it calls the “Gem Micromatic” razor, which consists of two distinct, separable, individual parts, namely, A, a frame adapted to hold a removable blade, and, B, a shaving blade adapted for use in such razor frame. With plaintiff’s alleged, exclusive right to make and sell such frame we are not here concerned, for the defendant does not make or sell such a frame. But it appears that when plaintiff’s customer, who bought and paid for the frame, later uses in the frame a blade made by a third party, such owner becomes an infringer and the defendant who furnishes the blade, knowing it is to bo so used, is a contributory infnnger. For on analysis it will be seen that in order to convict the defendant of contributory or secondary infringement, we must first be satisfied the user thereof would have been an original or primary infringer. It follows, therefore, that while this case is against the defendant blade maker, the underlying question is the right of the frame buyer- from plaintiff to unrestricted blade replacement. Such being the situation, the questions involved are twofold.
First. Is the defendant’s replacement blade an infringement of plaintiff’s patent, for, if it is, its use in plaintiffs razor frame or in any other type of frame is unlawful. Second. If the defendant’s blade is not an infringement, because unpatented, is its use by the owner of plaintiff’s patented frame unlawful? To those questions we address ourselves.
Turning then to the question whether the supply blade of defendant infringes plaintiff’s patent rights, we note that the safety razor art is a thoroughly occupied: field. Originally novel and radical in character and for years the subject of patentable novelty and the source of large profits, the field has been thoroughly developed, and as a result thereof and the employment of skilled engineering in its progress, improvement and development are naturally to be looked for. Moreover, courts in dealing with an art, originally pioneer in origin, must carefully scrutinize the constant efforts of those who have enjoyed a profitable patent monopoly to lengthen such monopoly by patents for non-inventive changes. Bearing this in mind, we inquire whether the blade of Behrman was really inventive in character or such an adaption or minor change as would naturally follow in the wake of such a threshed out field as the successful safety razor one had enjoyed. In that respect the record shows that Behrman’s razor was never commercially made and therefore it has in no way brought about any advance in the art, and the trial judge found as a fact that: “The following prior patents disclose structures substantially the same as the blade described in claims 5-, 10, 11, and 12 of the Behrman patent; Sharpnack, No. 1,089,726; Sharpnaek, No. 1,089,-727; Smith, No. 841,729; Brunaeci, No. 933,4-15; Hygonnet, No. 950,820; Shure, No. 1,124,668.”
Wo here note that the fact that Sharpnaek’s blade was used in a' different way and with a different motion than Bejirman’s, in no way detracts from the1 fact that in his blade and contour Behrman’s shows no inventive difference. Agreeing as we do with the finding of fact of the trial judge, the decree that “the.blade claims (Nos. 5, 10, 11, and 12 of the Behrman patent [No. 1,739,-280]) are void by reason of anticipation * * * and by reason of want of patentable novelty over the prior art,” is affirmed.
Such being the case, we turn to the second question, namely, does the use of this unpatented supply blade by the owner of razor frame, bought from the plaintiff, make him an infringer and the blade maker who sold it to him for such use a contributory infringer? This depends on whether the principle of Wilson v. Simpson, 9 How. 109, 13 L. Ed. 66, applies to the present ease. In that regard the trial judge said: “The law governing contributory infringement by renewal of parts in a patented machine stated in Wilson v. Simpson, 9 How. 109, 126, 13 L. Ed. 66, has not been departed from or modified in any essential particular.” That case held: “But if another constituent part of the combination is meant to be only temporary in the use of the whole, and to be frequently replaced, because., it will not last as long as the other parts of the combination, its inventor cannot complain, if he sells the use of his machine, that the purchaser uses it in the way the inventor meant it to be used, and in the only way in which the machine can be used.”
Applying that principle to the replacement blade of a safety razor, the trial judge further said: “In the case at bar the machine is not one which delivers a perishable article consumed in the using, nor are the renewed parts destroyed, nor do they actually wear out in the sense that they cannot by repair (sharpening) be restored to an'indefinite period of usefulness. The need for new parts arises from the fact that it is much more convenient to buy them than to have the old ones restored or repaired, and the further fact that the small cost of the parts allows most users to consult their convenience in this respect. This is just what the plaintiff expects them to do and in fact much of its profit arises from their so doing; Discarding for the moment forms of words and what in some eases appear to be arbitrary tests adopted by the courts, and returning to the fundamental, principle involved it will readily be seen that here is a piece of mechanism in which both the patentee and the public expect that parts, costing a small fraction of the whole price, will in ordinary practice be thrown away after being used a very few times, and new ones purchased to take their place. That being the usual way in which the article is maintained in use, it follows that, in ordinary justice, one who purchases it has ‘a right to suppose that he was free to maintain it in use, without the further consent of the seller.’ ”
Agreeing thereto, the decree below is affirmed.
DAVIS, Circuit Judge, dissents.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SOPER, Circuit Judge.
Pennsylvania Threshermen & Farmers’ Mutual Casualty Insurance Company seeks a declaratory judgment that it has no liability under an automobile insurance policy on a 1947 Dodge Coupé issued by it to Emily Messer Robertson on account of serious permanent injuries suffered by her mother, Ruth D. Messer, when the daughter was driving a Chevrolet car belonging to her husband, David L. Robertson, and it skidded and ran off the road and collided with a tree. The mother secured a judgment in a state court of North Carolina for $43,000 against her daughter for negligence and it is now claimed, and the District Judge held, that the Insurance Company is bound to pay on account of the judgment the sum of $25,000, the limit of its liability under the policy, because of provisions therein whereby coverage is extended to an automobile temporarily used by the insured as a substitute for the automobile described in the contract. Insuring agreement IV(3) of the policy is as follows:
“Temporary Substitute Automobile — under coverages A, B and C, an automobile now owned by the named insured while temporarily used as the substitute for the described automobile while withdrawn from normal use because of its breakdown, repair, servicing, loss or destruction;”
An additional contention of the policyholder is that the insurance company is liable under insuring agreement V of the policy relating to the use of other automobiles, which is as follows:
“V. Use of Other Automobiles
“If the named insured is an individual who owns the automobile classified as ‘pleasure and business’ or husband and wife either or both of whom own said automobile, such insurance as is afforded by this policy for bodily injury liability, for property damage liability and for medical payments with respect to said automobile applies with respect to any other automobile, subject to the following provisions: * *
The accident happened on July 21, 1953. The mother’s suit against the daughter was brought nearly three years later, on June 13, 1956. The Insurance Company was notified of the suit and offered to undertake the defense with the understanding that it did not waive any of its rights to claim non-coverage or forfeiture of the policy. Mrs. Robertson refused this offer and thereupon the company declined to defend the suit. No answer was filed by Mrs. Robertson and a default judgment for $43,000 was entered against her on October 26, 1956. Meanwhile, the pending suit for a declaratory judgment was filed.
In order to determine whether the insured was covered by the provisions of agreement IV(3) of the policy in respect to a temporary substitute automobile, we first set out the circumstances which led her to make use of her husband’s car on the date of the accident. Before her marriage Mrs. Robertson lived with her mother and was employed at Bassett, Virginia. She had been accustomed to drive her Dodge Coupé, the car described in the policy, to and from her place of employment. On June 27, 1953, she married David L. Robertson, who worked for a plumbing and heating contractor at Winston-Salem, North Carolina. He owned a 1951 Chevrolet automobile. After the marriage the couple went on a wedding trip and returned on Sunday, July 12, to the bride’s home in Bassett. They planned for her to remain in Bassett until she could give her employer thirty days’ notice and train her successor and that her husband should return to Winston-Salem and find a place where they could establish a home. Prior to the marriage Mrs. Robertson’s car had been giving trouble due to overheating and excessive smoking of the exhaust and on the return from the wedding trip it was found that the battery was dead and the car could not be started. It was then arranged that Mr. Robertson should leave his car at Bassett for his wife’s use during the following week and that he should take her car to Winston-Salem and repair it, after starting it with a hot shot battery. Although Mr. Robertson was not in the automobile business he had worked in a garage and had considerable mechanical skill.
This plan was not carried out. Mrs. Robertson used his car during the ensuing week just as she had used her own before her marriage. He drove her car to Winston-Salem on Sunday afternoon and experienced no difficulty on the way except the overheating of the water in the radiator. During the next two days he was able to correct the overheating of the car by making certain mechanical changes. He did not attempt to remedy the trouble with the exhaust, not having sufficient mechanical ability for this purpose, but he used the car throughout the week to drive to and from his work. Once or twice the car had to be pushed off because the battery was weak but the battery was gradually built up by the generator in driving and by the end of the week the car was in normal use.
It had been arranged by the couple that Mr. Robertson would return the cai-to his wife on Saturday, July 18, and resume the use of his own car, but the plan fell through because her father, who was a patient in the Veterans’ Hospital at Hampton, Virginia, three hundred miles distant from Bassett, took a serious turn for the worse and his wife and daughter went to visit him. It was therefore agreed that the couple would continue to use each other’s car until the following Saturday, July 25. Meanwhile, word was received that Mrs. Robertson’s father was dying and on July 21, a second trip to the hospital was undertaken in the husband’s car, during which the accident happened and the husband’s car was destroyed. The injured women were taken to the hospital at South Boston, Virginia. Mr. Robertson was notified of the accident on the night of July 21, and immediately drove his wife’s car from Winston-Salem to South Boston. During the trip the car operated satisfactorily and thereafter it was continuously and regularly used by the husband and wife until it was disposed of in the following November.
To establish coverage under agreement IV(3) of the policy there must be a temporary use by the insured of an automobile now owned by him in place of the car described in the policy, while it is “withdrawn from normal use because of its breakdown, repair service, loss or destruction.”
Whether Mrs. Robertson’s car was so withdrawn from normal use at the time of the accident is of course a question of fact; and this fact is not open to doubt in this case. The evidence shows, and the District Judge found, [157 F.Supp. 408] that during the week of July 12, the husband built up the battery in his wife’s car by using it and also corrected the overheating by removing the thermostat. “Indeed,” said the judge, “he made all the necessary repairs and would have returned it [the car] to her on the weekend except for the intervening unforeseen circumstances above set forth.” The accident to the car did not happen until the following Tuesday, July 21, and in the meantime the car was not withdrawn from normal use, as defined in the policy, but was being used daily by her husband in going to and from his work. It was also used by him in driving from Winston-Salem, North Carolina, to South Boston, Virginia, after he was notified of the accident.
It follows that the terms of agreement IV (3) of the policy were not met. The temporary use of the husband’s car by the wife at the time of the accident was proved, but it was not shown that the use took place while her car was withdrawn from normal use because it was not usable or was being repaired. On the contrary, her car was actually being used by her husband at the time and the only reason it was not being used by her was because it was not convenient for her to do so. There is no substance in the contention of the insured that the Insurance Company is liable because the car was withdrawn from her normal use at the time of the accident. Clause IV(3) does not provide merely that the car be withdrawn from normal use, but that it be withdrawn for the specific reason of physical unfitness. We cannot omit that requirement or substitute for it the convenience of the policyholder.
The judge based his conclusion of liability on the decision of this court in American Employers’ Insurance Co. v. Maryland Casualty Co., 4 Cir., 218 F.2d 335, in which a similar clause in the policy was given effect. In that case, however, it was clearly shown that the insured car was in such bad condition that it was not capable of normal use. Indeed, it was in such a deplorable state that efforts to repair it up to the time of the accident to the substituted car had been unsuccessful, and the contention was earnestly pressed that it was not susceptible of normal use and had been given up or abandoned. The crucial question was not whether the insured car was withdrawn from normal use because of its condition, but whether it was nonexistent and therefore could not serve as a basis for a substitution.
It is well established not only by our decision in American Employers’ Insurance Co. v. Maryland Casualty Co., supra, but also by the authorities generally that a vehicle is not being used as a temporary substitute automobile within the meaning of the provision of the policy under consideration unless the vehicle described in the policy is withdrawn from normal use on the date of the accident. Service Mutual Ins. Co. of Tex. v. Chambers, Tex.Civ.App., 1956, 289 S.W.2d 949; Erickson v. Genisot, 322 Mich. 303, 33 N.W.2d 803; Allstate Ins. Co. v. Roberts, 156 C.A.2d 755, 320 P.2d 90, 92; Iowa Mutual Ins. Co. v. Addy, 1955, 132 Colo. 202, 286 P.2d 622; State Farm Mut. Auto. Ins. Co. v. Bass, 1922, 192 Tenn. 558, 241 S.W.2d 568; Western Casualty & Surety Co. v. Norman, 5 Cir., 1952, 197 F.2d 67; 34 A. L.R.2d 936, 947-951; 5A Am.Jur. (Automobile Insurance), at page 85, § 87.
The insured also insists on the right to recover under insuring agreement V of the policy relating to the use of an automobile other than that described in the policy. Under its terms, if the automobile described in the policy is classified as “pleasure and business,” the liability insurance afforded by the policy with respect to any other automobile used by the insured subject to the provision, inter alia, that the agreement does not apply to any automobile “furnished for regular use to the named insured.” The District Judge did not find it necessary to pass on this question since he found for the insured under the provisions of insuring agreement IV above considered. We hold under the evidence that the husband’s car, which was not covered by an insurance policy, was furnished to his wife for her regular use. Her own testimony clearly demonstrates this fact. She testified explicitly that her use of her husband’s car, during the ten-day period that it was in her possession, was exactly the same as her use of her own car before her marriage. It follows that the husband’s car was not covered by the policy in suit at the time of the accident. We adhere to the view we expressed in Campbell v. Aetna Casualty & Surety Co., 4 Cir., 211 F.2d 732, where we quoted the following passage from the opinion of Judge Chesnut in Aler v. Travelers Indemnity Co., D.C.Md., 92 F.Supp. 620, 623:
“This case involves the construction and application of the so-called ‘drive other automobiles’ clause of the present standard automobile liability policy. The general purpose and effect of this provision of the policy is to give coverage to the insured while engaged in the only infrequent or merely casual use of an automobile other than the one described in the policy, but not to cover him against personal liability with respect to his use of another automobile which he frequently uses or has the opportunity to do so. More specifically the evident intention of the limitation with respect to other automobiles is to prevent a situation in which the members of one family or household may have two or more automobiles actually or potentially used interchangeably but with only one particular automobile insured. That this is the general purpose of the provision is well and clearly stated in the annotation on the subject in 173 A.L.R. 901. And see Lumbermens Mutual Cas. Co. v. Pulsifer, D.C.Me., 41 F.Supp. 249; Rodenkirk [for use of Deitenbach] v. State Farm Mut. Auto. Ins. Co., 325 Ill.App. 421, 60 N.E.2d 269.”
See also Rodenkirk v. State Farm Mutual Automobile Ins. Co., 325 Ill.App. 421, 60 N.E.2d 269; Vern v. Merchants Mut. Cas. Co., Sup., 118 N.Y.S.2d 672; Wyatt v. Cimarron Ins. Co., 10 Cir., 235 F.2d 243; Farm Bureau Mutual Automobile Ins. Co. v. Marr, D.C.N.J., 128 F.Supp, 67.
The judgment of the District Court will be reversed and the case remanded with directions to enter judgment in favor of the Insurance Company declaring that it has no liability under its policy for the injuries suffered by Ruth Dalton Messer in the accident of July 21, 1953, while riding in the car of David L. Robertson.
Reversed and remanded.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Careful consideration of this petition for review of a decision of the Tax Court of the United States brings us to the conviction that the Tax Court correctly found that the contested tax deficiencies had been properly assessed by the Commissioner. The decision of the Tax Court is affirmed for the reasons stated in its memorandum opinion filed November 28, 1962.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
JERRE S. WILLIAMS, CIRCUIT JUDGE:
Pease claims that his employers (collec-tivély “Pakhoed”), fired him because he refused to engage in fraudulent activities. The district court dismissed with prejudice Pease’s action because Pease failed to comply with the court’s order for a more definite statement. In No. 91-2798, Pease appeals from the district court’s order denying Pease’s Rule 60(b) Motion for Relief From Judgment. In No. 91-6046, Pakhoed appeals from the district court’s order denying Pakhoed’s Motion for Sanctions. Because these two cases arise out of the same lawsuit and involve related facts and circumstances, the parties agreed to consolidate for purposes of appeal. We agree with the district court that Pease’s claim of wrongful discharge is defective because his pleadings continually fail to reference the specific criminal laws that he alleges Pak-hoed directed him to violate. His Rule 60(b) motion fails to cure this defect. We also conclude that the district court’s denial of sanctions was within its considerable discretion. We affirm.
I. FACTS AND PRIOR PROCEEDINGS
The parties quarrel over the specifics of “who did and knew what when,” but the underlying facts that inform our decision are relatively straightforward. Pease was hired by Pakhoed in 1975 and, through a series of promotions, ultimately secured a managerial position. According to Pease, he was demoted in September 1988 because he refused to participate in a fraudulent scheme proposed by his superiors.
In early 1989, Pease consulted with Mr. David Garner, an attorney in Galveston, Texas. Garner addressed correspondence to Pakhoed and later transferred the case to Mr; Stephen Williams, a solo practitioner who had an office sharing and sublease association with Garner’s law firm. Negotiations between Williams and Pakhoed’s. in-house counsel failed to resolve Pease’s complaints, and Pease was terminated on May 12, 1989. Pease eventually filed suit in Texas state court in October 1989, alleging wrongful discharge and age discrimination. Pakhoed removed the case to federal district court.
In November 1989, shortly after removal, Pakhoed filed a Motion for a More Definite Statement. Specifically, Pakhoed requested the court to require Pease to plead his allegations with greater precision:
Plaintiff does not specifically identify the alleged conduct which he refused to take part in which allegedly resulted in his termination. While the complaint alleges that Plaintiff was terminated because of his failure to cover up, conceal or falsify material facts[,] the pleading is too vague to allow Defendants [to] file a responsive pleading.... In order for Defendants to file a responsive pleading it is necessary that Plaintiff more definitely state his grounds for estopping application of [the “employment at will”] doctrine_ Defendants are clearly entitled to know the alleged criminal act which Plaintiff was asked to. perform, (footnote omitted)
Williams failed to respond to the motion, and in April 1990 the district court, reciting Williams’s failure to respond, entered an order requiring Pease to submit an amended complaint containing a more definite statement within thirty days. Again, Williams did not respond. Pakhoed immediately filed a Motion to Dismiss. In December 1990, following a hearing that Williams failed to attend, the district court dismissed Pease’s complaint with prejudice for failure to (1) comply with the court’s earlier order requiring a more definite statement, (2) respond to the Motion to. Dismiss, and (3) appear at the- hearing. Three months later, Pease, who was unaware of the dismissal, grew dissatisfied with Williams’s representation (or lack thereof) and engaged different counsel, who informed Pease in April 1991 that his suit had been dismissed the previous December.
In May 1991, Pease’s new attorneys, Messrs. Jack Ewing and Thomas McQuage, filed a Rule 60(b) Motion for Relief from Judgment along-with supporting affidavits, a proposed amended complaint that was asserted to be in compliance with the More Definite Statement Order, and a supporting memorandum of law. The district court denied the motion. Two months later, Pakhoed moved for sanctions, claiming Pease’s unsuccessful Rule 60(b) motion violated Fed.R.Civ.P. 11 and 28 U.S.C. § 1927, The district court denied this motion also. Both Pease and Pakhoed timely appeal the denial of their respective motions.
II. DISCUSSION
A. The District Court’s Denial of Pease’s Rule 60(b) Motion
As we recently stated in Bertrand v. Sullivan, the decision to grant or deny a Rule 60(b) motion is committed to the sound discretion of the district court and is accorded deferential review. 976 F.2d 977, 979 (5th Cir.1992). Courts are disinclined to disturb judgments under the aegis of Rule 60(b). “To overturn the district court’s denial of this 60(b) motion, it is not enough that a grant of the motion might have been permissible or warranted; rather, the decision to deny the motion must have been sufficiently unwarranted as to amount to an abuse of discretion.” Fackelman v. Bell, 564 F.2d 734, 736 (5th Cir.1977) (emphasis .added). We discern no abuse on the record before us.
The crux of Pease’s Rule 60(b) motion is. that his former attorney, Williams, essentially abandoned him once the case was transferred to federal court. Despite close monitoring by Pease and abundant assurances from Williams that the case was proceeding in the typical fashion, Pease contends that Williams actually ignored the case. This neglect, he avers, resulted in its ultimate dismissal and justifies relief under the Rule. We need not reach, however, the sharply contested issue of Williams’s deleterious conduct, although it occupies the vast portion of the parties’ briefs before this Court. A crucial threshold matter renders Pease’s plea for Rule 60(b)- relief fatally defective: neither Pease’s original complaint nor his Rule 60(b) documents assert a meritorious cause of action because they fail to reference specific criminal laws that Pease was told to violate. The district court’s Order remains unheeded.
It is well established that Rule 60(b)-requires the movant to demonstrate that he possesses a meritorious cause of action. See, e.g., Lepkowski v. United States Dep’t of Treasury, 804 F.2d 1310, 1314 (D.C.Cir.1986) (“motions for relief under Rule 60(b) are not to be granted unless the movant can demonstrate a meritorious claim or defense’’); United States v. Parcel of Land, Etc. (Woburn City Athletic Club, Inc.), 928 F.2d 1, 5 (1st Cir.1991) (“In exercising its discretion under Rule 60(b), the district court must look, inter alia, to whether the party seeking relief has a potentially meritorious claim or defense.”). The record before us demonstrates that Pease has failed to satisfy this seminal requirement.
Pease’s original complaint makes several bare and conclusory allegations regarding:
Plaintiff’s failure to and refusal to enter into or continue a conspiracy or to otherwise participate in a scheme to cover up or conceal material facts, or his refusal to falsify, conceal or cover up material facts, or his failure or refusal to make false, .fictitious or fraudulent statements or representations, or his failure and refusal to make or use a false writing or document containing a false, fictitious or fraudulent statement or entry to another by the use of the United States Postal Service' or by telephone, telegraph or other governmentally regulated means of communication.
Understandably, Pakhoed argued that Pease’s complaint was too vague to allow Pakhoed to file an adequate, responsive pleading. The trial court agreed and ordered Pease to serve an amended and more precise complaint. Particularly, the court ordered Pease to “identify specifically the alleged conduct which Plaintiff refused to take part in ... [and] any criminal law, if any, which Plaintiff refused to violate.” As previously stated, Williams never responded to the court’s Order. But of greater import here, Pease’s new counsel likewise failed to satisfy the court’s demands via their Rule 60(b) motion, as the following colloquy from oral argument illustrates:
COURT: In order to get 60(b) relief in this kind of a situation, one of the things you’re going to need to show is that you potentially have a meritorious cause of action. What kind of a showing have you made on that? There’s no point in worrying about this case unless your client is [asserting a meritorious claim].
COUNSEL: I understand. And the Defendants made a point about that in their Appellees’ brief on our appeal. The answer is this: the showing in the context of the dismissal was failure to replead by an amended complaint that showed his wrongful discharge claim. Mr. Ewing, along with his affidavit in our 60(b) motion, presented his amended complaint that he told the district court, “Here’s what I’ll file if you give me the chance, with particularized allegations of what Mr. Pease is talking about.” (Counsel proceeded to cite various provisions of the Texas Penal Code that were never mentioned in the proffered complaint)
COURT: Now did you tell the district judge this in your 60(b) motion?
COUNSEL: We sure didn’t explain the criminal statutes to him. What we did in the 60(b) motion was file or present under Mr. Ewing’s affidavit the amended complaint that set out these allegations, that Mr. Pease was being asked to participate in a scam to defraud customers.
COURT: Was there a sworn affidavit by Mr. Pease in this paper anywhere?
COUNSEL: There’s an affidavit attached to the Rule 60(b) motion. I can’t really tell you that it goes into the merits of the discharge and why it was wrongful and what he was asked to do. The affidavit relates to his explanation of why he didn’t know what was going on in this case, the Rule 60(b) issues of whether or not he had excusable neglect or mistake or inadvertence in the dismissal of the case. He didn’t make an affidavit outlining [the precise facts surrounding his discharge].
COURT: So we have no affidavit by the Plaintiff on the facts that gave rise to his discharge and thereby the Defendants’ liability?
COUNSEL: Well, I’d like to say “Yes, we do.” But .1 don’t think his affidavit goes to those issues. No, your honor. I don’t think it does.
COURT: Does [Ewing] say anywhere in his affidavit that he’s made an investigation into the facts here, and he’s persuaded that they’re well founded.
COUNSEL: Yes, your honor, he does that. My recollection of his language is “I’ve looked into this case. I’ve talked to the Plaintiff. I think it’s meritorious. I represent to the court I’ll pursue it, and here’s the complaint I’ll file if the court lets me.” So there is that much factual basis, I think, for the allegations in the complaint, that he’s examined the factual basis, at least by talking to Mr. Pease.
COURT: Why don’t you look for the material in there, because I think right now the key issue is what kind of showing is there in this record [that demonstrates Mr. Pease presents a meritorious claim].
COUNSEL (on rebuttal):' I’m afraid I’d have to admit [Pease] just does not personally allege the elements of his cause of action of wrongful discharge. He doesn’t set out the factual elements that are in the amended complaint.
As Pease’s counsel concedes, the district court’s order remains unsatisfied, and the record before us fails to demonstrate that Pease has asserted a meritorious claim of wrongful discharge. In Texas,- the employment-at-will doctrine is well settled and mandates that a worker may be terminated without cause and at the will of either party. Hancock, 800 S.W.2d at 636; Guthrie, 941 F.2d at 379. An exception to this doctrine exists for employees discharged “for the sole reason that the employee refused to perform an illegal act." Sabine Pilot, 687 S.W.2d at 735. Further, as we recently noted in Guthrie, “this narrow exception applies only to employees discharged for refusing to perform acts that carry criminal penalties.” 941 F.2d at 379 (citing generally Hancock, 800 S.W.2d 634). In Guthrie, Plaintiff claimed he was ordered to violate unspecified customs regulations, but he failed to allege that the regulations carried criminal penalties. “Consequently, he could not establish that he was discharged for refusing to perform an illegal act.” Id. at 379-80.
Our holding in Guthrie is dispositive of the instant case. As the above exchange from oral argument establishes, Pease has likewise failed to contend before the district court, either in his original complaint (that Williams filed) or in his Rule 60(b) documents (that his new counsel filed), that the activities bore criminal penalties. And contrary to Pease’s argument to this. Court, the proffered Amended Complaint fails to comport with the district court’s earlier demand for a more definite statement, particularly the plain requirement that Pease plead the specific criminal statute or statutes that Pakhoed ordered him to violate. The Amended Complaint asserts that Pease was asked to participate in a conspiracy to defraud Pakhoed’s customers and clients, but it fails to satisfy the court’s request for precise reference to criminal laws.
Moreover, Ewing’s bare assertion in his affidavit that, “this cause of action is with merit” is insufficient, absent a recitation of specific facts underlying the claim that satisfies the district court’s demands. The Tenth Circuit’s decision in Gomes v. Williams, 420 F.2d 1364, 1366 (10th Cir.1970), is analogous. In Gomes, Appellant attempted to set aside a default judgment entered against him on fraud charges by contending that he possessed a meritorious defense to the allegations: “We do have a good defense to the claim itself, but especially we have a good defense to any allegation of fraud.” The Tenth Circuit presents an instructive analysis which we apply with equal force to claims. It held:
Such a bald allegation, without the support of facts underlying the defense, will not sustain the burden of the defaulting party under Rule 60(b). [footnote omitted] In an attempt to determine the meritorious nature of a defense, the trial court must have before it more than mere allegations that a defense exists. This alone was sufficient basis to deny Rule 60(b) relief.
Id. at 1366
Similarly, Ewing’s unsubstantiated declaration that a meritorious claim exists is insufficient as a matter of law to sustain his burden under Rule 60(b).
On the record before us, we cannot hold that the district court abused its discretion in denying Pease’s Rule 60(b) Motion for Relief. Far from abusive, unwarranted, or even questionable, the district court’s order of dismissal seems wholly appropriate.
B. The District Court’s Denial of Pak-hoed’s Motion for Sanctions
In No. 91-6046, Pakhoed argues. that Pease’s Rule 60(b) motion was baseless and vexatiously multiplied- the proceedings in the case. It urges that sanctions are merited under both Rule 11 and § 1927. We do not agree.
The Supreme Court has held, “an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court’s Rule 11 determination.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2461, 110 L.Ed.2d 359 (1990). We review the district court’s § 1927 determination under the same deferential standard. Browning v. Kramer, 931 F.2d 340, 344 (5th Cir.1991).
In essence, Pakhoed contends that Pease’s counsel failed to make sufficient pre-filing inquiries to support the allegations contained within Pease’s Rule 60(b) Motion for Relief. The motion, argues Pakhoed, was both factually and legally untenable and simply served to prop up a meritless claim. Although we agree with the district court that Pease’s Rule 60(b) claims are unavailing, we conclude that his contentions are not so abusive or frivolous as to violate Rule 11. At the very least, Pease’s arguments fall within the protective ambit of Rule ll’s “good faith argument” provision, mentioned earlier in note 4.
We likewise refuse to usurp the district court’s singular perspective and endorse sanctions under § 1927, a statute we have characterized as involving sanctions which are “penal in nature.” Monk v. Roadway Express, Inc., 599 F.2d 1378, 1382 (5th Cir.1979), aff'd in relevant part sub nom. Roadway Express, Inc. v. Piper, 447 U.S. 752, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980). Under § 1927, the fees, expenses, and costs associated with “the persistent prosecution of a meritless claim” may be awarded. Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 875 (5th Cir.1988) (en banc). We reject the arguments advanced by Pease’s counsel as unpersuasive, but the arguments are not so untenable as to be “vexatious” or “unreasonable.” Under turbulent circumstances and difficult time pressures, Pease’s new counsel came aboard and pursued Pease’s claim in an earnest, albeit unsuccessful, fashion. As we have stated: “Strict construction of this statute is necessary so that the legitimate zeal of an attorney in representing her [or his] client is not dampened.” Browning, 931 F.2d at 344; see also H.R.Conf.Rep.No. 96-1234, 96th Cong., 2d Sess., reprinted in 1980 U.S.Code Cong. & Admin. News 2716, 2781, 2782-83.
We conclude that the district court acted within its broad discretion in denying sanctions under both Rule 11 and § 1927. We perceive no compelling reason to disturb its decision. Pakhoed’s request for legal fees and expenses related to the combined appeals is denied, as is Pease’s request for costs against Pakhoed in appealing the district court’s sanction decision.
III. CONCLUSION
The district court acted properly in denying the Rule 60(b) motion and in denying sanctions against plaintiff for pursuing the Rule 60(b) motion.
AFFIRMED.
.The age discrimination claim is the subject of a cursory allegation in Pease’s original complaint. It is not raised on appeal and apparently was dropped in the district court. Under Texas law, an employee who alleges wrongful discharge for refusing to perform a criminal act cannot advance additional claims. See, e.g., Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex.1985); Hancock v. Express One Intern., Inc., 800 S.W.2d 634, 636 (Tex.App.—Dallas 1990, writ denied (Nov. 11, 1992)). Our recent decision in Guthrie v. Tifco Industries, 941 F.2d 374, 379 (5th Cir.1991) is determinative: "Because the refusal to perform an illegal act must be the sole reason for the plaintiffs discharge, Guthrie's claims of age discrimination and wrongful discharge are mutually exclusive.”
The district court retained federal jurisdiction. The vague allegations concerning activities in connection with the use of the U.S. mails and other means of communication such as the telephone and telegraph could have resulted in asserting in more specific allegations that federal criminal statutes regulating these activities possibly would have been involved.
. Pease presents a persuasive litany of Williams’s dilatory representation. In essence, Pease grew weary of Williams’s alleged failures to respond to Pease’s communications and produce requested work on Pease’s lawsuit.
. Fed.R.Civ.P. 60(b), styled "Relief From Judgment or Order,” states in pertinent part:
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect....
. Rule 11 allows a court to impose sanctions upon an attorney or litigant who files a baseless pleading or motion, one that is not "well grounded in fact and ... warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law[.]" Section 1927 permits a court to assess excess costs, expenses, and attorney’s fees against an attorney who "multiplies the proceedings in any case unreasonably and vexatiously(.]"
. The court enumerated seven items that required more precise pleading. Of particular emphasis here, though, is the court’s plain request that Pease identify the specific criminal laws that Pakhoed ordered him to violate. Because this issue is singularly dispositive, we need not address the effect of counsel's failure to satisfy other components of the court’s Order.
. In the interest of clarity, all ellipses have been omitted.
.Counsel's loose paraphrase is largely correct. What Ewing actually stated in his affidavit is this: "I am of the belief and opinion after a thorough investigation of these documents and a lengthy conference with Mr. Pease that this cause of action is with merit and that as such, I would be willing to assume the handling of this case if it should be reinstated by the Court.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WIDENER, Circuit Judge:
In this federal habeas corpus proceeding, petitioner John Calvin Johnson challenges the validity of a 1957 armed robbery conviction upon which a current three-year recidivist sentence is partially based. The district court denied relief, and we affirm.
Johnson directs four assignments of error at his 1957 conviction: (1) The systematic exclusion of black people from the grand jury that indicted him; (2) denial of his right of appeal; (3) ineffective assistance of counsel at the appellate stage of the proceedings; and (4) the use of an impermissibly suggestive identification procedure consisting of a pre-trial showup.
I
Grand Jury Selection
Petitioner is precluded from raising the issue of the exclusion of black people from the grand jury that indicted him in 1957. Under State law, such an issue must be raised at a preliminary stage of the original State court proceeding, prior to the time a plea is entered on the merits, or else the objection is waived. Bailey v. Commonwealth, 193 Va. 814, 71 S.E.2d 368 (1952). Petitioner having raised this issue for the first time 17 years after his trial and conviction, his objection was waived under State law, and cannot, under the facts before us, be asserted now in a federal habeas corpus proceeding. Francis v. Henderson, 425 U.S. 536, 96 S.Ct. 1708, 48 L.Ed.2d 149 (1976). Neither cause for the failure to raise the point at the time nor actual prejudice has been shown here. Francis, p. 542, 96 S.Ct. 1708.
II
Right to Appeal and Ineffective Assistance of Counsel
Although petitioner’s brief phrases this aspect of the case in terms of denial of a right to appeal and ineffective assistance of counsel, both of these claims share the same factual basis, that petitioner told his appointed counsel that he wished to appeal his 1957 conviction but that counsel failed to follow through on the request.
Petitioner chose to raise these claims for the first time seventeen years after his trial and conviction, although nothing prevented him from doing so at a time when the State might have had a chance of reconstructing the record and surrounding events in an effort to explain why an appeal was never filed. We agree with the district court that petitioner’s contention is raised too late to avail him. See Lunnermon v. Peyton, 310 F.Supp. 323 (W.D.Va.1970), aff’d per curiam in 440 F.2d 774 (4th Cir. 1971).
While in other contexts substantial delays in seeking habeas corpus relief have not precluded consideration of the points raised, see, e.g., Garland v. Cox, 472 F.2d 875 (4th Cir. 1973); Hairston v. Cox, 459 F.2d 1382 (4th Cir. 1972), in neither case cited was there so great, and so unjustified, a potential for prejudice to the Commonwealth. In Garland, for example, it was undisputed that petitioner’s counsel had first been appointed the day of the trial, raising a strong presumption of ineffective assistance. And in Hairston, a case arising prior to Francis v. Henderson, supra, there was ample opportunity to gather evidence pertaining to the long standing practice of unconstitutionally excluding black people from grand jury service.
In the present case, in contrast, we have only petitioner’s allegation that he requested an appeal, and that counsel failed to perfect one. Based on this allegation, easily made after 17 years of silence but obviously difficult to disprove, petitioner would have us remand for an evidentiary hearing, where, presumably, the State should be required to rebut what, on its face, is a claim that might entitle petitioner to the relief he seeks. If the State were shown to have a reasonable opportunity to make the kind of factual reconstruction necessary to such a task, that might be another case, but nothing in the record suggests the opportunity exists after a lapse of 17 years.
In arriving at our decision, we also give weight to the fact that petitioner makes no effort to explain or to justify the delay. Indeed, he did not even challenge the conviction now before us at the recidivist proceeding itself in 1971, where, generally, the only defense is the invalidity of a previous conviction. Smith v. Superintendent, 214 Ya. 359, 200 S.E.2d 523 (1973). This failure is given added significance in this case because, in response to the State’s contention that he still has available a State habeas corpus remedy by asserting the ineffective assistance of counsel at the 1971 recidivist proceeding, the petitioner here denies that he was ineffectively represented in the recidivist proceeding in 1971, thus admitting effective representation in the very proceeding from which came the sentence he is attacking. Because his admittedly effective counsel did not assert the invalidity of the 1957 conviction, we may only assume that in 1971 the petitioner did not have reason to believe his 1957 conviction was invalid because of any denied right to appeal, and, in the context we find the omission here, it must weigh heavily against the petitioner’s position. It would be strange indeed that an admittedly effective attorney did not assert a good defense, and no explanation for this omission is offered by petitioner. His argument, in explanation, that at that time (1971) he might have proceeded to review this matter either by habeas corpus or by appeal, see Smith, 200 S.E.2d at 524, is belied by the fact that he did not file his State petition for habeas corpus until 1974, some three years after the conviction. And this although he was admittedly represented by a competent attorney. We also note that petitioner is now on parole, thus negating any potential practical disability which might be attached to confinement.
We do not downgrade the difficulties these allegations present. But we also cannot ignore the fact that they were largely engendered by the petitioner himself in waiting so long to raise his claims, in circumstances where a detailed factual reconstruction necessary to test the validity of those claims would be most difficult, if not possible. In these circumstances, we hold that petitioner’s objections must be deemed waived.
Ill
The Show-Up
Petitioner claims that a pre-trial identification procedure, at which he was identified as the perpetrator of the robbery, was so unduly suggestive as to create a substantial likelihood of misidentification. Neil v. Biggers, 409 U.S. 188, 93 S.Ct. 375, 34 L.Ed.2d 401 (1972). The facts cited in support of this claim were that petitioner was shown singly to the victim of the crime, rather than as part of a line-up, and that several police officers were present as well.
To be sure, the show-up may not be a favored procedure. See Stovall v. Denno, 388 U.S. 293, 87 S.Ct. 1967, 18 L.Ed.2d 1199 (1967). But it is equally clear that the use of such a procedure does not necessarily violate due process; such a determination can only be made by reference to the totality of circumstances. Stovall, supra, at 302, 87 S.Ct. 1967.
The general allegation advanced by petitioner that the show-up was impermissibly suggestive derives factual support only from the mere fact of the use of the show-up itself. No supporting facts relating to the totality of circumstances are brought to our attention. Surely the fact that police officers were present is insufficient, when the identification occurred in a police station and petitioner was being held on an unrelated charge.
We therefore hold that petitioner’s general, unsupported allegations are insufficient to make out a prima facie case of unconstitutional identification.
The judgment of the district court denying the writ of habeas corpus is
AFFIRMED.
. The Virginia recidivist statute is Va.Code Ann. § 53-296. Petitioner has been discharged from his 1957 conviction, and is presently serving sentences for a 1970 conviction for possession and sale of narcotics, and a 1971 conviction for possession of a controlled drug. Although the recidivist statute requires a total of only two convictions to be applicable, we consider the validity of the 1957 conviction to be in issue since it was included in the recidivist information, and could have played a part in the sentence imposed for recidivism. The petitioner is presently on parole.
. The Twenty-Fourth Annual Report of the Virginia State Bar For the Year Ending June 30, 1962 shows that Philip Whitfield, the attorney in the 1957 conviction, died during that fiscal year.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
The Commissioner of Internal Revenue disallowed the business bad debt deductions claimed by the law partnership of Pachella and Chary on their law partnership’s income tax returns for the years 1950 to 1955, inclusive, “for monies paid as guarantors of corporate indebtedness of Town and Country Cleaners”, on the Commissioner’s theory that Pachella and Chary were merely accommodation makers on the notes and that the subsequent payment of the notes by the law partnership merely gave rise to non-business debts which did not become totally worthless until 1955 and then became deductible only under Section 23 (k) of the Internal Revenue Code of 1939. The Tax Court rejected the taxpayers’ contention that they were not accommodation makers on the notes but were primarily liable thereon and that accordingly the payments made by the law partnership were, in the alternative, deductible either under Section 23(e) (1) — losses, by individual, incurred in a trade or business — , Section 23(e) (2) — losses incurred in any transaction entered into for profit though not connected with a trade or business — ■, Section 23(a) (1) (A)— trade or business expenses — , or Section 23(a) (2) — nontrade or nonbusiness expenses paid or incurred for production or collection of income or for the management, conservation or maintenance of property held for the production of income — , of the Internal Revenue Code of 1939. The Tax Court further held that when the law partnership paid the notes as guarantor it obtained a claim against the corporation and that the nonpayment of this claim by the corporation gave rise to a non-business debt which was deductible under Section 23 (k) of the 1939 Code in the year 1955 when it became worthless.
The Tax Court also denied the claim of the petitioners that the partnership was entitled to deduct approximately a total of $40,000 in the years 1950, 1951, 1952 and 1953 for advances made to the corporation over a period of five years, holding that such deductions also only gave rise to a non-business debt deductible under Section 23 (k) of the 1939 Code when it became worthless in the year 1955.
It would serve no useful purpose to here dwell on the contentions of the petitioners in view of their adequate disposition by the Tax Court in its Opinion reported at 37 T.C. 347.
On review of the record we can find no error in the Tax Court’s Decision and it will be affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
NATHANIEL R. JONES, Circuit Judge.
Samuel Riddle appeals from the district court’s denial of attorney’s fees under the Equal Access to Justice Act (“EAJA”), 5 U.S.C. § 504 (1982 & Supp. Ill 1985); 28 U.S.C. § 2412 (1982 & Supp. Ill 1985). The district court based the denial upon its determination that the position of the United States was “reasonable,” and so was substantially justified. This presents us with the question whether the legislative history of the 1985 reenactment of the EAJA obliges us to change our definition of substantially justified to something more than merely “reasonable.” We conclude that a revised definition is called for, and reverse the district court’s order denying attorney’s fees.
I.
The claimant, Samuel Riddle, was born December 22, 1942. He worked as a self-employed farmer until December 1981, when he was injured in a serious automobile accident. Since the accident, Mr. Riddle has suffered from double vision due to a traumatic bilateral sixth cranial nerve paralysis, a ventilatory impairment due to orthopedic problems, neck pain and limited neck flexibility due to a fractured neck,, and residual pulmonary problems.
Mr. Riddle applied for disability benefits on May 6, 1982. The application was denied initially and again on reconsideration. After conducting a hearing and reviewing the evidence, the administrative law judge concluded that the plaintiff could perform sedentary work and, therefore, was not disabled. This determination became the final decision of the Secretary when the Appeals Council denied review on July 1, 1983.
Mr. Riddle appealed this final decision of the Secretary to the district court, and the district court granted summary judgment in claimant’s favor. The district court pointed out that all of Mr. Riddle’s treating physicians documented organic causes for his alleged disability. Dr. O’Bryan, his pulmonary specialist, opined that claimant was severely disabled and without possibility of returning to work within one year. He felt that Mr. Riddle was orthopedically disabled, with a permanent ventilatory impairment of a severe nature. Dr. Binegar, who had performed a muscle transplant on claimant’s right eye, noted that Mr. Riddle could only be comfortable when wearing an eyepatch. He therefore advised claimant not to work around heavy equipment or to perform tasks requiring binocular vision. Another treating physician, Dr. Riherd, recommended that claimant begin range of motion therapy, but said that claimant no longer needed to wear a neck brace. This doctor expressed no opinion regarding Mr. Riddle’s ability to return to work.
The Secretary conceded that claimant could no longer perform his previous work. The Secretary contended that Mr. Riddle nevertheless had the residual functional capacity for sedentary work. The district court rejected this contention as unsupported by substantial evidence:
The record contains only three pieces of evidence favorable to the Secretary, none of which demonstrates the residual functional capacity to perform sedentary work. Those three pieces of evidence are: (1) the examination of Dr. R. Taylor (Tr. 216-217); (2) the examination of Dr. Samuel Weeks (Tr. 226); and (3) the finding of the Administrative Law Judge whereas [sic] plaintiff’s complaints of pain were found not credible (Tr. 75 Finding No. 4).
As previously mentioned the notes of Dr. Taylor are in large part not legible. Plaintiff's various ailments are scribbled on a report, and as far as can be determined there was no medical evidence demonstrating plaintiff’s ability to engage in sedentary employment nor was there a statement by Dr. Taylor that plaintiff possessed the residual functional capacity to engage in sedentary employment. As such this report (the record is unclear as to whether Dr. Taylor actually examined plaintiff) cannot constitute substantial evidence for finding plaintiff able to perform sedentary labor.
The consultative examination rendered by Dr. Weeks without benefit of a personal examination consists of a one sentence report: “Severe now but should not last for 12 months.” The report is not accompanied by medical findings. This statement conflicts with the Secretary’s findings as the Administrative Law Judge concedes plaintiff has a severe impairment which precludes a return to his former employment.
Lastly is the conclusion of the Administrative Law Judge that plaintiff’s pain is not credible. Although the Administrative Law Judge’s conclusions are to be given deference whereas plaintiff’s credibility is concerned, Beavers v. Secretary of Health, Education and Welfare, 577 F.2d 383 (6th Cir.1978), this finding must be supported by some evidence. Weaver v. Secretary of Health and Human Services, 722 F.2d 310 (6th Cir.1983). Here there is no evidence of record which conflicts with plaintiff's complaints of pain. Conversely, the evidence overwhelmingly documents their organic source.
As such the Secretary has failed to establish by substantial evidence that plaintiff has the residual functional capacity to engage in sedentary employment.
Riddle v. Heckler, No. C83-0238-O(B), slip op. at 8-10 (W.D. Ky. Oct. 23, 1985).
Following this reversal of the Secretary's denial of benefits, claimant petitioned for an award of $1,350 in attorney’s fees under the EAJA. The district court denied the petition, briefly stating that although the Secretary’s decision was not supported by substantial evidence, the Secretary’s position was reasonable and, therefore, substantially justified. Claimant appeals, arguing in part that subsequent to the 1985 reenactment of the EAJA the Secretary’s position should not be deemed substantially justified merely because it is reasonable.
II.
Congress, recognizing the economic deterrents to contesting governmental action, passed in 1980 the Equal Access to Justice Act. See 28 U.S.C. § 2412(d). The EAJA specifically provides that a court “shall award” to a prevailing party in a civil suit (other than a tort action) brought by or against the United States the fees and other expenses incurred by that party unless the court finds “that the position of the United States was substantially justified or that special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).
Had this statute not yet been interpreted, we would begin our interpretation of the 1980 statute by following the canons of statutory construction and reading the plain language while ignoring momentarily the legislative history of the statute. See, e.g., United States v. Apfelbaum, 445 U.S. 115, 121-23, 100 S.Ct. 948, 952-53, 63 L.Ed.2d 250 (1980). Applying this hypothetical de novo construction, we note at the outset that the syntax of the statute suggests that the presumption is that a prevailing party will receive attorney’s fees unless and until the government demonstrates that it falls within the exception set forth — that its position was substantially justified or special circumstances exist. This leads to the question of what the term “substantially justified” would mean if unexplicated by legislative history. The adjective “substantial,” while connoting various meanings, generally indicates something that is “sturdy,” “solid,” or “firm,” something that is not “imaginary” or “illusive.” 2 Webster’s Third New International Dictionary Unabridged 2280 (1965). Thus, if we were to read the term “substantially justified” outside of any context, we might assume that it indicated something firmly grounded or solidly based.
The courts, however, were not faced with the task of defining “substantially justified” in a vacuum. The legislative history behind the 1980 enactment of the EAJA suggested how that term might be interpreted — albeit the history pointed to two different interpretations. The House Report proposed that:
The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in law and fact, no award will be made.
H.R.Rep. No. 96-1418, 96th Cong., 2nd Sess. 10, reprinted in 1980 U.S. Code Cong. & Admin. News 4984, 4989. This legislative history appears to have been the basis for this circuit’s current definition of “substantially justified.” See Trident Marine Const., Inc. v. District Engineer, 766 F.2d 974, 980 (6th Cir.1985) (“Whether or not the government’s position is substantially justified is basically a question of reasonableness.”). However, the Court of Appeals for the District of Columbia held that another aspect of the legislative history called for a “test ... more stringent than ‘one of reasonableness.’ ” Spencer v. NLRB, 712 F.2d 539, 558 (D.C.Cir.1983) (citation omitted). This legislative history consisted of the Senate Judiciary Committee’s rejection of an amendment that would have changed the pertinent language from “substantially justified” to “reasonably justified,” S.Rep. No. 253, 96th Cong., 1st Sess. 1, 4 (1979). In light of the ambiguous legislative history, both the Sixth Circuit’s test and the D.C. Circuit’s test were supportable, although the D.C. Circuit’s standard might have comported more with the plain language of the statute.
Section 2412(d) as passed in 1980, however, was avowedly experimental. It was subject to a sunset provision; unless it was reenacted before October 1, 1984, it would be repealed. See Pub.L. No. 96-481, tit. II, § 204(c), 94 Stat. 2329 (1980). An amended and permanent version of the Act was passed by both the House and the Senate on October 11, 1984, but it was vetoed by President Reagan in November of 1984 (on grounds not relevant here). Eventually, a permanent version of the Act was passed in 1985. The House Report on this present Act states that it:
extends and improves the Equal Access to Justice Act, which expands the liability of the United States for attorneys fees and other expenses to certain parties who prevail against the United States in certain administrative and court proceedings. Portions of the Act expired on October 1, 1984. H.R. 2378 covers the period between that date and enactment and makes the law permanent.
H.R.Rep. No. 99-120, 99th Cong., 1st Sess. 8, reprinted in 1985 U.S. Code Cong. & Admin. News 132, 136.
The significance of the separate passages of the Act in 1980 and in 1985 is that the legislative history contemporaneous to the 1985 passage indicates that our circuit, as well as other circuits, has incorrectly interpreted the language of section 2412(d). The House Report for the 1985 Act notes that only $3.0 million was awarded under the Act between 1981 and 1984, whereas Congress had expected at least $100 million per year to be awarded. The report then declares that, “[p]art of the problem in implementing the Act has been that agencies and courts are misconstruing the Act. Some courts have construed the ‘position of the United States’ which must be ‘substantially justified’ in a narrow fashion which has helped the Federal Government escape liability for awards.” Id. at 9, 1985 U.S. Code Cong. & Admin.News at 137. Accordingly, the report set forth Congress’ intended definitions of the “position of the United States” and “substantially justified.” The report explicitly approves of the decisions of those courts, such as the D.C. Circuit, which have held that “substantial justification” requires more than mere reasonableness. It then states that:
Because in 1980 Congress rejected a standard of “reasonably justified,” in favor of “substantially justified,” the test must be more than mere reasonableness.
Especially puzzling, however, have been statements by some courts that an administrative decision may be substantially justified under the Act even if it must be reversed because it was arbitrary and capricious or was not supported by substantial evidence. Agency action found to be arbitrary and capricious or unsupported by substantial evidence is virtually certain not to have been substantially justified under the Act. Only the most extraordinary special circumstances could permit such an action to be found to be substantially justified under the Act.
Id. at 9-10, 1985 U.S.Code Cong. & Admin. News at 138 (emphasis added and footnote omitted).
At first glance, this language in the legislative history would seem to preclude any further discussion as to whether Congress desired a reasonableness standard. But three congressmen expressed on the floor varying degrees of dissatisfaction with a small part of the House Report. Congressman Kindness quoted the portion italicized supra as a “gratuitously authoritarian overstatement [which] appears to be the only error ... in the report.” 131 Cong. Rec. H4763 (daily ed. June 24, 1985). He explained that he disagreed with the quoted statement’s implication that “a finding of an agency action that was not supported by substantial evidence would automatically entitle a prevailing party to fees or would establish a presumption of entitlement to fees.” Id. He nonetheless conceded that:
The committee recognizes the close relationship between the concepts, and the fact that a finding by the Government was not supported by substantial evidence should be accorded careful scrutiny. But indeed the quoted two sentences from the bottom of page 9 and the top of page 10 of the report do not represent a clear or a [sic] appropriately explanatory statement of the intent of the committee in the reporting of H.R. 2378.
Id. (emphasis added). Congressman Moorehead indicated his agreement that there were different standards for substantial evidence and substantial justification. Id. Congressman Kastenmeier followed up these comments with his assurance that the committee report was not intended to suggest that the “Government may only avoid fees by prevailing in litigation.” Id.
When questioned in the Senate about the same two sentences, Senator Grassley explained:
I want to make it clear that the EAJA case over the fees issue is a separate and distinct inquiry. Just because an agency loses on the merits of the case doesn’t mean that it is automatically going to be liable for a fee award. The EAJA does not provide for automatic fee shifting. However, I would say that where the agency action is found by a court to be arbitrary and capricious or where there is little or no factual support for the agency action, the Government — as a practical matter — has its work cut out for it to prove substantial justification. Indeed, in the case of an arbitrary and capricious finding, I believe the plain meaning of the words strongly suggest [sic] that the Government was not substantially justified. I believe that this view is consistent with the committee report on S. 919, a bill we passed unanimously in the closing days of the 98th Congress.
131 Cong.Rec. S9993 (daily éd. July 24, 1985) (emphasis added). Senator Thurmond expressed his agreement with Senator Grassley, although he differed on the effect of an “arbitrary and capricious” finding. Id.
We have detailed these comments on the 1985 legislative history because they demonstrate that no official in Congress expressed displeasure with the House Report’s rejection of the reasonableness standard. Instead, the congressmen and senators rather carefully limited their criticism to the part of the House Report suggesting that “agency action found to be ... unsupported by substantial evidence is virtually certain not to have been substantially justified under the Act.”
The courts which have taken into account this 1985 legislative history have not equated the term “substantially justified” with the term “substantial evidence;” but neither have most courts ignored Congress’ rejection of the reasonableness standard. The Eighth Circuit, in United States v. 1,378.65 Acres of Land, 794 F.2d 1318 (8th Cir.1986), reconciled the 1980 legislative history with the 1985 legislative history by requiring the government now to show “not merely that its position was marginally reasonable; its position must be clearly reasonable, well founded in law and fact, solid though not necessarily correct.” Id. at 1318. The Federal Circuit, in Gavette v. Office of Personnel Management, 785 F.2d 1568 (Fed.Cir.1986) (en banc), declared that “it is clear that substantial justification is not simply equivalent to reasonableness.” Id. at 1579. The court went on to hold that the government must show that it was clearly reasonable:
The Government must show that it has not “persisted in pressing a tenuous factual or legal position, albeit one not wholly without foundation.”
Id. (quoting Gava v. United States, 699 F.2d 1367, 1375 (Fed.Cir.1983) (Baldwin, J., dissenting)). See also Lee v. Johnson, 799 F.2d 31, 38 & n. 7 (3rd Cir.1986) (recognizing 1985 Congress’ requirement of a test more stringent than reasonableness, but asserting that Third Circuit already has a more stringent test). Cf. Federal Election Commission v. Rose, 806 F.2d 1081 (D.C.Cir.1986) (refusing to equate “arbitrary and capricious” or "lack of substantial evidence” with “lack of substantial justification,” but continuing to use a “slightly more than reasonable” standard rather than a mere “reasonableness” standard). But see Russell v. National Mediation Board 775 F.2d 1284, 1289 (5th Cir.1985) (finding 1985 legislative history conflicting and inconclusive and so adhering to standard of reasonableness); Phil Smidt & Son, Inc. v. NLRB, 810 F.2d 638, 642 n. 5 (7th Cir.1987) (agreeing with Fifth Circuit that floor comments conflicted with the House Report).
Unlike the Fifth and Seventh Circuits, we do not consider the 1985 legislative history to be inherently conflicting. In toto, the report and the statements on the floor indicate that in 1985 Congress was merely attempting to achieve the “middle ground” it had hoped to delineate in 1980. It did not want fees to be awarded each time a party prevailed against the government; nor did it want fees to be awarded only when the government’s position was frivolous. See H.R.Rep. No. 96-1418 at 13-14, 1980 U.S. Code Cong. & Admin. News at 4953, 4992-93. The problem with a reasonableness test is that it may lead to awards being given only when the government’s position is frivolous, for “reasonable” simply means “not absurd,” “not ridiculous,” “not conflicting with reason.” 2 Webster’s Third New International Dictionary Unabridged 1892 (1965).
Accordingly, we see no reason to ignore the clear legislative intent to reject the reasonableness test. To construct the standard most likely to accord with Congress’ intentions, we return to the plain language of the statute — language which requires not that the government’s position be reasonably justified, but that it be sub stantially justified. We hold that in order to be substantially justified, the government’s position must have more than a “reasonable basis” in law and fact. Instead, the government’s position must be firmly grounded or solidly based in law and fact. Such a standard in no way equates the “substantial evidence” test with the “substantially justified” test, but at the same time it does require government agencies to have more than a modicum of support for the positions they take against private individuals. We believe this is what Congress intended.
At last returning to the case before us, we note that the district court found that none of the evidence contributed to the Secretary's burden of proving that Mr. Riddle was capable of performing sedentary work. Given that the Secretary had conceded that Mr. Riddle could not return to his previous work, the absence of any evidence demonstrating the claimant’s ability to perform other work leads us to conclude that there was not a solid factual basis for the Secretary’s position.
We therefore REVERSE the district court’s order and REMAND for the award of attorney’s fees.
. I would note that the legislative history discussed here was indeed contemporaneous to the 1985 enactment of the EAJA, and so the.dissent’s criticism of reliance on "legislative observations’’ of a "subsequent Congress” do not render this 1985 legislative history irrelevant. Not even those courts, discussed infra, which chose to retain their former reasonableness standard considered the 1985 legislative history to be irrelevant.
. Contrary to the dissent’s apparent belief, an analysis of both the House Report and' comments on the floor is a somewhat standard means of interpreting legislative history. See e.g., Train v. Colorado Pub. Int. Research Group, 426 U.S. 1, 9-23, 96 S.Ct. 1938, 1942-48, 48 L.Ed.2d 434 (1976); Mills v. United States, 713 F.2d 1249, 1252-53 (7th Cir.1983), cert. denied, 464 U.S. 1069, 104 S.Ct. 974, 79 L.Ed.2d 212 (1984).
. I do not consider persuasive the other circuit decisions cited by the dissent since none of those opinions indicated even an awareness of the 1985 legislative history at issue here. The decisions in United States v. Yoffe, 775 F.2d 447, 450 (1st Cir.1985) (reasonableness standard); Weakley v. Bowen, 803 F.2d 575, 577 (10th Cir.1986) (reasonableness standard); and Haitian Refugee Center v. Meese, 791 F.2d 1489, 1497 (11th Cir.) (more than reasonableness standard), rev’d in part on other grounds, 804 F.2d 1573 (1986), all indicated an awareness that the EAJA had been reenacted in 1985, but none gave any indication that the decision-makers were aware of the relevant 1985 legislative history. Therefore, rather than analyze in any depth the test for “substantially justified,” those courts simply continued to use the definitions formulated under the 1980 EAJA. The decisions in Sierra Club v. United States Army Corps of Engineers, 776 F.2d 383, 393 (2d Cir.1985), cert. denied, _ U.S. _, 106 S.Ct. 1464, 89 L.Ed.2d 720 (1986), and League of Women Voters v. FCC, 798 F.2d 1255, 1257 (9th Cir.1986), gave no indication that those courts were even aware that the EAJA had been reenacted in 1985. Similarly, the "intra-circuit conflicts" in the Third, Eighth and D.C. Circuits, pointed out by the dissent, arise not from differing interpretations of the 1985 legislative history, but from one panel’s consideration of that history while another panel appeared to be unaware of that history’s existence. In such circumstances, the decisions of the panels which failed to note the 1985 reenactment should not diminish the persuasiveness of the opinions taking into account the 1985 legislative history.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GILBERT, Circuit Judge.
The plaintiffs in error were defendants in an indictment, the first count of which charged them with violation of the provisions of the Harrison Narcotic Act (Comp. St. §§ 6287g-6287q) by selling 150 grains of opium, and the second count charged that on the same day they violated the Jones-Miller Narcotie Aet (42 Stat. 596) by willfully, etc., receiving, concealing, buying, selling, and facilitating the transportation and concealment after importation of two packages of morphine and three packages and two capsules of cocaine which they knew had been imported into the United States contrary to law. The defendant Hooper was found guilty on both counts. Haanstra was found guilty only on the first count.
The defendant Hooper presents to this court the single contention that section 2 of Aet Feb. 9, 1909, as amended by section 1, subdivision (f), of the Jones-Miller Act (Comp. St. § 8801) was insufficient to contain all the elements of the crime charged, and that it was necessary to prove affirmatively that the narcotics had been unlawfully imported and adduce evidence that the drug was in fact imported. The constitutionality of that provision of the law was sustained in Yee Hem v. United States, 268 U. S. 178, 45 S. Ct. 470, 69 L. Ed. 904. It is argued that the decision in that ease is not controlling here, for the reason that the court held only that the possession of smoking opium might lawfully sustain a presumption of unlawful importation, and it is contended that the section has no application to a case such as this which involves narcotic drugs other than smoking opium for the reason that morphine and cocaine may lawfully be imported under certain regulations, whereas the importation of smoking opium is absolutely prohibited. We find no ground for the alleged distinction. The presumption of unlawful importation may attach in either ease, for it is a prima facie presumption only, leaving with the accused the burden of proving lawful possession. Ng Sing v. United States (C. C. A.) 8 F.(2d) 919; Rosenberg v. United States (C. C. A.) 13 F.(2d) 369.
The defendant Haanstra contends that the Harrison Anti-Narcotic Aet is unconstitutional, and he relies upon the fact that, while in United States v. Doremus, 249 U. S. 86, 39 S. Ct. 214, 63 L. Ed. 493, the majority of the court held the aet constitutional, the finality of that decision was questioned in United States v. Daugherty, 269 U. S. 360, 46 S. Ct. 156, 70 L. Ed. 309, where it was intimated that more recent decisions of the court might thereafter necessitate a review of that question. But as yet there has been no such review, and we are bound by the decision in the Doremus Case. Its conclusiveness was recognized in Teter v. United States (C. C. A.) 12 F.(2d) 224, of which decision it is to be noted that the Supreme Court has denied eertiorari.
Haanstra moved.the-court for an instructed verdict of acquittal, and he now insists that there was no evidence to sustain his complicity in the offense charged. Jourdin, a narcotic agent of the Revenue Service, testified that at an agreed time and place he and an informant were present to purchase morphine from Hooper; that the two defendants drove by, turned the corner and stopped, and Hooper got out of the machine and had a conversation with the informant after which the defendants drove away; that on the following evening, the witness having gone to a certain designated comer, Hooper drove up and said to him, “What do you want?” to which he answered, “Half an ounce of morphine;” that Hooper said, “All right, stay here;” that Hooper drove away, and shortly thereafter came back and took the witness into his auto, and drove around one or two blocks; that the witness gave Hooper $32.50 for the morphine; that they came to a point where Hooper parked his machine right behind the machine of Haanstra; that Hooper walked over to tlie latter and had some conversation, with him, and then returned to his own machine and drove around a few more blocks, finally returning to the point where Haanstra’s machine was parked; that Hooper told the witness, “Go over and get in that machine;” that the witness went to Haanstra’s machine, the door of which Haanstra opened for him to enter; that there was another man in the machine with Haanstra; that, while driving around, Haanstra appeared very nervous; that at one time Haanstra said, “That looks like Mr. Elliott and his wife; she usually goes with him,' ■ sometimes to make cases” (it was in the. evidence that Elliott was an inspector and that his wife did at times accompany him in his investigations); that at one time Haanstra turned the lights on the witness, observing, “I didn’t get a very good look at you,” and then said, “Oh, yes,‘you used to buy from Curley;” that Haanstra, when he stopped his machine, kept the motor running;' that he became impatient at Hooper’s ‘delay; that Haanstra said, “Well, he must h'ave blew a tire or something; of course, the first thing you think of is a knock-over” (a phrase which meant an arrest); that the other man in the ear said to Haanstra, “I think I will go home and you bring it up to me;”, that Haanstra said, “No; if he don’t cbme, pretty soon, I will go and weigh it up myself;” that shortly thereafter Hooper appeared and blew his horn, to which Haanstra answered with his horn; that Hooper left a clearance of some feet between his machine and Haanstra’s, and Haanstra said to the witness,. “All right, get out;” that tlie witness got out, and Hooper walked up, placed his hands in his overcoat pocket, and, delivering the package of narcotics, said, “Here;: get out; <beat it;” that, as Hooper started to enter his machine, the witness attempted to arrest him, but that Hooper broke away; that the witness shouted to Haanstra to stop, declaring that he was a federal officer, but that Haanstra made a rapid flight down the street. As indicating Haanstra’s participation in the offense charged, the testimony amounted to more than suspicious circumstances. If credited by- the jury, as it evidently was, it was sufficient to sustain the charge; and it was doubtless, strengthened rather than weakened by Haanstra’s denial of the incriminating portions thereof. ,
We find no error. The judgment is affirmed. ■ ...
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
TRASK, Circuit Judge:
Dennis Erickson appeals from a conviction in a jury trial of a violation of 18 U.S.C. § 2113(b). (Theft of money from a federally insured bank.)
On May 2, 1969, appellant was an employee of the Loomis Armored Car Service and delivered a shipment of currency from one branch of the National Bank of Alaska to another branch. The $20,000 shipment was made up of two bundles of 500 twenty-dollar bills. He signed a receipt for the shipment when he took possession of it and was given a receipt for its delivery to the branch bank employee in the cash vault of the branch. He made a second delivery to the same branch bank cash vault later the same day. There was minutely detailed testimony about what took place when the two deliveries were made. The testimony was not conclusive. In addition, there was a great deal of testimony about appellant’s economic situation. It tended to show that he was a man with a family, living upon a modest income, having no significant savings, a diversity of installment payments and he was a regular borrower from the bank. In the spring of 1969 his fortunes seemed to turn rather dramatically for the better. He gave up some extra income producing jobs for Loomis. He had slacked off his airplane flying after his marriage in 1967 but took it up again in May of 1969. A loan for payment of a motorcycle in installments of $70.24 was liquidated by a payment of $669.65 on June 30. The Ford Motor Credit Corporation was paid $790.44 in seven $100 money orders and one for $90.44 on June 25. An installment loan from Household Finance Corporation payable at $58.28 per month was paid in full in June 1969 by a payment of $740.68 in cash. In June 1969, he purchased an $11,646.25 Winnebago Mobile Home making the $2,000 down payment with 100 twenty-dollar bills. In July he paid Montgomery Ward $673.48 to satisfy his installment account there. Appellant added to the list of expenditures developed by the government when he told of having sent his parents $200 on each of two occasions,' that he bought a car paying $825 or $850 in cash and that he bought $300 worth of building materials for cash after May 1969.
In his own behalf appellant testified that during four years in the Air Force as an enlisted man his salary range was from $89 to $198 per month. He said that he supplemented this by various moonlighting jobs, but did not declare this for income tax purposes. He told about making payments on a car during this period but left the service with over $2,000 in cash savings which he kept in a tool box in the trunk of his car. At the time of his marriage in March of 1967 he was four or five thousand dollars in debt, but claimed to have accumulated $5,500 in cash which he kept in a paper bag in the attic of his house. Although he acknowledged that after his marriage, with a wife and growing family of three children, he could not save much, he testified that by May 1969 his cash increased to $6,700. His wife knew nothing about this money until he handed 100 twenty-dollar bills to the Winnebago dealer.
The defense developed evidence which it argued clearly showed the opportunities of others to have taken the money including a bank official. It appears to have been clearly established that appellant had an excellent reputation and credit rating with no prior record of any kind.
The case on this and other evidence was submitted to the jury which heard it and a verdict of guilty was returned. The court denied a motion for acquittal made at the end of the government’s case and again at the end of the entire case. Its Memorandum of Decision and Order is reported in United States v. Erickson, 325 F.Supp. 712 (D.Alaska 1971).
The appellant brings to us a number of assignments of error, none of which we find of sufficient consequence to justify the invalidating of the jury verdict and the reversal of the judgment. The first of these is that appellant was denied due process because of a prejudi-
cial pre-indictment delay. The right to a speedy trial guaranteed by the Sixth Amendment does not arise until a formal complaint is lodged. United States v. Halley, 431 F.2d 1180 (9th Cir. 1970), cert. denied, 401 U.S. 916, 91 S.Ct. 896, 27 L.Ed.2d 816 (1971); United States v. Snyder, 429 F.2d 1242 (9th Cir. 1970). No claim is made that the government did not proceed diligently after the indictment was returned. But there was a delay from the date of the loss on May 2, 1969, to the date of the indictment on May 22, 1970. It was this preindictment delay along with claimed prejudice to the appellant’s rights, which Erickson argues violated his Fifth Amendment rights. In order to constitute a violation of due process, there must be such a delay as will result in actual prejudice to the conduct of the defense or it must appear that the delay was an intentional one for the purpose of gaining a tactical advantage over the defendant or to harass him. United States v. Marion, 404 U.S. 307, 325, 92 S.Ct. 455, 30 L.Ed.2d 468 (1971); United States v. Bray, 442 F.2d 1064 (9th Cir. 1971); United States v. Golden, 436 F.2d 941 (8th Cir.), cert. denied, 404 U.S. 910, 92 S.Ct. 236, 30 L.Ed.2d 183 (1971). No reliable evidence is pointed to in this record which would match that test. He contends that he had negotiated with one Ken Vogel, an airplane salesman, in 1968, to purchase a plane. At that time appellant states he offered a substantial amount of cash as a down payment. Vogel was contacted as a possible witness for appellant, but was unable to recollect the transaction. There was no assurance that he would have been any better able to recollect it six months or a year prior to the date of contact. The probative value of this rather tangential transaction on the fact sought to be proved makes its admissibility doubtful. Thus, the offer to make a cash down payment does not establish the source of the funds. Nor does the evidence show that the government intentionally or negligently delayed in their efforts to investigate. The trial court found that the FBI conducted interviews and in some cases re-interviews of approximately 52 persons located in some five states. Erickson was interviewed on May 6, 1969, and after additional evidence was accumulated, he was again interviewed on September 25, 1969. On this occasion he was advised that he was a suspect and given the proper warnings. We do not find the delay unusual or unnecessary in view of the problems involved, nor for harassment purposes or to obtain a tactical advantage. United States v. Marion, supra. Appellant, when notified he was a suspect on September 25, some four and one-half months after the theft, could have immediately taken steps for his own protection in obtaining and preserving evidence. The trial court found that it was about eleven months after being notified that he was a suspect before he employed his first investigator.
The rulings on evidentiary matters raised by appellant have been reviewed. We find no clear errors and certainly none of any substance. At appellant’s urging, the cross-examination of the government witness, DeMerrell, was read word for word. There was nothing “overly protective” of this witness by the court. Few objections were made by the government and counsel for the accused was given wide latitude in his examination. We find no error in the court’s exercise of its discretion in rulings during cross-examination of this or other witnesses. Harries v. United States, 350 F.2d 231, 236 (9th Cir. 1965). The instructions were full and fair, and appellant’s objections upon this ground are not well taken.
Objection was also made because the court conducted the voir dire examination of prospective jurors. Appellant does not complain that the court refused to make any particular inquiry that he proposed. Counsel reaches into an empty barrel. As he acknowledges, the development of the law in this regard has passed him by. Rule 24(a), Fed.R.Crim.P., permits the court to conduct this examination. Many districts expressly so provide. We have so held. Rodgers v. United States, 402 F.2d 830 (9th Cir. 1968); Hamer v. United States, 259 F.2d 274 (9th Cir. 1958), cert. denied, 359 U.S. 916, 79 S.Ct. 592, 3 L.Ed. 2d 577 (1959).
An incidental point of “aggravation” mentioned by appellant is that the government did not comply with the trial court’s directive to disclose exculpatory evidence as fully as it should have. Specifically, no disclosure was made that Mr. DeMerrell, a bank officer, had been observed carrying a “suspicious” box out of the vault at a crucial time of day on May 2. The box contained recently arrived fishing tackle which DeMerrell had purchased. The incident sniffs of considerable remoteness to be classified as exculpatory evidence. The box was examined. The witness who made the examination testified and counsel for appellant cross-examined on the point. The contention lacks merit.
Finally, complaint is made of the sufficiency of the evidence because it was in fact circumstantial. In any such case there must inevitably be a lurking concern that justice has found the right defendant. Much of the evidence has been detailed to illustrate those circumstances of guilt which pointed so strongly toward appellant. The jury heard it and more, too. The court carefully tried the case and weighed the evidence on the motions presented. We find that the standards of United States v. Nelson, 419 F.2d 1237 (9th Cir. 1969), have been met and that the judgment must be affirmed.
Judgment affirmed.
. See also, United States v. Anderson, 433 F.2d 856, 858 (8th Cir. 1970) ; American Bar Association Project on Minimum Standards for Criminal Justice, Standards B.elating to Trial By Jury, Section 2.4.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BEAM, Circuit Judge.
Wayne Eugene Dumond appeals a United States Magistrate’s dismissal of his habeas corpus petition, brought under 28 U.S.C. § 2254 (1988). In 1985, Dumond was convicted by an Arkansas jury of kidnapping and raping a seventeen-year-old high school girl, and sentenced to eonsecu-tive terms of life imprisonment and twenty years. The Arkansas Supreme Court affirmed Dumond’s conviction, Dumond v. State, 290 Ark. 595, 721 S.W.2d 663 (Ark.1986) (Dumond I), and denied his application for post-conviction relief. Dumond v. State, 294 Ark. 379, 743 S.W.2d 779 (Ark.1988) (Dumond II). Dumond filed a petition in district court seeking habeas corpus relief, which relief the court denied. Du-mond filed his first appeal from the district court’s denial of his petition, and we reversed and remanded for a further hearing. We based this remand on newly discovered scientific evidence involving genetic testing. Dumond v. Lockhart, 885 F.2d 419 (8th Cir.1989). Following a hearing before the magistrate in which the victim testified about facts relevant to the results of the genetic testing, the magistrate held that Dumond “failed to present sufficient evidence to substantiate his newly discovered evidence claim” and dismissed Dumond’s petition. Dumond v. Lockhart, No. PB-C-88-631, slip op. at 4 (E.D.Ark. Dec. 15, 1989). We affirm.
On September 11, 1984, Ashley Stevens was abducted from her home in Forrest City, Arkansas. A man entered Stevens’s home and forced her at gunpoint to follow him. The two drove in her automobile to a secluded area. The man forced Stevens to remove her jeans and underpants and he positioned them beneath her. Stevens testified that the rapist then forced her to engage in vaginal intercourse. The assailant used a prophylactic, but he did not ejaculate. The rapist withdrew from Stevens, pulled off the prophylactic, and forced her to perform oral sex. Stevens testified that the rapist ejaculated in her mouth but she spit it out on the ground. The assailant again forced Stevens to engage in vaginal intercourse but he purportedly did not ejaculate. Thus, Stevens testified that the rapist ejaculated only during oral sex.
As indicated, Dumond was convicted of kidnapping and raping Stevens. After his appeal was denied by the Arkansas Supreme Court in Dumond I, Dumond obtained new counsel and submitted Stevens’s clothing to Dr. Moses Schanfield, an expert in genetic testing. Dr. Schanfield conducted an immunoglobulin allotype test on semen located on Stevens’s pant leg. Dr. Schanfield concluded that if the semen was “pure” and not mixed with vaginal fluids, there was a greater than ninety-nine percent probability that Du-mond was not the rapist because the semen lacked a genetic marker which Dumond possesses. Thus, if the rapist ejaculated only during oral sex, as Stevens testified, the semen on the pant leg was “pure” because saliva does not alter the immuno-globulin allotype test. If vaginal fluids were mixed with the semen, however, Dr. Schanfield reported that the results would be inconclusive.
In Dumond II, the Arkansas Supreme Court denied Dumond’s petition for post-conviction relief under Ark.R.Crim.P. 37.1. Dumond asserted that because of the newly discovered evidence of this genetic test, due process dictated that he was entitled to a new trial. The court found that Du-mond’s claim regarding the newly discovered evidence was a direct, rather than a collateral attack on the judgment. Accordingly, Dumond’s claim was not within the purview of Rule 37.1. Dumond II, 743 S.W.2d at 782.
In his writ of habeas corpus petition to the federal district court, Dumond presented his newly discovered evidence claim and attempted to compel Stevens’s testimony at the habeas hearing. As stated, Stevens had testified at trial that the rapist ejaculated only during oral sex. Accordingly, Dumond asserted that the semen was not mixed with vaginal fluids and, thus, was “pure” semen. Therefore, Dumond argued, he could not be the rapist because the semen lacked his genetic marker. The United States Magistrate quashed Du-mond’s subpoena and found that the record did not support Dumond’s assertion that the semen on Stevens’s pant leg was “pure” semen. Dr. Schanfield had tested Stevens’s jeans and underclothing and had found large amounts of semen, some of which was deposited vaginally. Thus, there was no strong evidence that the semen on the pant leg was “pure.”
As indicated, pursuant to Dumond’s first appeal, we reversed and remanded for a further hearing based on purported inconsistencies in the evidence concerning the location and the number of ejaculations. We stated that relief could be granted to Dumond only if his newly discovered evidence “would probably produce an acquittal on retrial.” Dumond, 885 F.2d at 421 (quoting Mastrian v. McManus, 554 F.2d 813, 823 (8th Cir.) (citations omitted), cert. denied, 433 U.S. 913, 97 S.Ct. 2985, 53 L.Ed.2d 1099 (1977)). Without offering Du-mond the opportunity to question Stevens concerning the specific details of the location and the number of ejaculations, we believed that we were incapable of determining whether the evidence probably would produce an acquittal.
On December 13, 1989, Stevens testified at the hearing on remand. Stevens offered the same facts concerning the rapist’s actions as she had testified to at trial, and she stated that she did not know how semen got on her pant leg. See Hearing Transcript at 11. In addition, Stevens testified that she could not explain why the amount of semen on her clothing was equal to approximately three ejaculations when she could remember her assailant ejaculating only once. The magistrate found that Stevens’s testimony did not aid Dumond because her testimony actually tended to cast further doubt on the theory that the semen on the pant leg was “pure” semen. Stevens stated that after her assailant ejaculated during oral sex, she turned her head and spit out the ejaculate onto the grass by her head. This ejaculate was the only possible source of “pure” semen. Stevens also testified that her jeans were underneath her and not by her head. Thus, the magistrate stated that it was “highly unlikely that the oral ejaculate would have come in contact with the pants.” Dumond, No. PB-C-88-631, slip op. at 2. Accordingly, the magistrate concluded that without proof that the semen on the pant leg was “pure,” the genetic testing and Dr. Schanfield’s opinion concerning whether Dumond was the assailant were inconclusive. Further, the magistrate determined that Dumond was actually raising an insufficiency of the evidence claim because he argued that Stevens’s confusion on the location and number of ejaculations compelled a total rejection of the evidence identifying him as the rapist. The magistrate, however, determined that Stevens’s identification testimony was very strong and there was sufficient evidence on which the jury could base its guilty verdict. The magistrate dismissed Dumond’s petition.
As we previously stated, the standard in this case is whether the newly discovered evidence “would probably produce an acquittal on retrial.” Dumond, 885 F.2d at 421. As earlier indicated, at the hearing on remand, Stevens responded to questions concerning her rapist’s ejaculations. Even with her testimony, Dumond, who had the burden of proof, was not able to establish that the semen was “pure.” After examining Stevens’s testimony at the hearing on remand and the strong evidence against Dumond which was presented at trial, we hold that the newly discovered evidence would not “probably produce an acquittal on retrial.” Id. Thus, we affirm the magistrate’s denial of Dumond’s petition for writ of habeas corpus.
. The Honorable H. David Young, United States Magistrate, United States District Court for the Eastern District of Arkansas.
. As this court in Dumond, 885 F.2d at 420 n. 1, explained:
Immunoglobulins are antibody molecules which are found in the blood and other body fluids and which carry genetic markers known as allotypes. A genetic marker is simply an inherited trait. Thus, the immunoglo-bulins are tested to detect the presence of genetic markers. For instance, if an individual is known to have a certain genetic marker and the allotyping test reveals that the marker is missing in the fluid being tested, then the fluid could not have come from that individual.
. The parties consented to the United States Magistrate’s jurisdiction under 28 U.S.C. § 636(c)(1) (1988).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GOODRICH, Circuit Judge.
This is an appeal from an order appointing receivers for the Enterprise Wall Paper Mfg. Co. Plaintiff is a minority shareholder of the company. The complaint was filed on September 10, 1942. Application for the appointment of a receiver accompanied it and receivers were appointed by the District Court on the same day without notice to any of the defendants. While the defendants’ argument in this Court has raised a number of issues, we think the controlling question is whether the facts alleged in the verified complaint and supporting affidavit justified the exercise of discretion by the trial court in the appointment of the receivers. Defendants have filed no answer or other pleading which, by introducing questions of fact, has lost them their right to raise the question of the sufficiency of the plaintiff’s complaint and affidavit to support the appointment.
A preliminary point which we must consider, although not raised by either party, is whether the Court may entertain this appeal. Appellate jurisdiction in such cases is governed by § 129 of the Judicial Code, 2which provides that “Where, upon a hearing in a district court, * * * an interlocutory order or decree is made appointing a receiver, * * * an appeal may be taken from such interlocutory order or decree to the circuit court of appeals;”. Is an interlocutory order appointing a receiver one made “upon a hearing” within the meaning of § 129 when it is issued upon the complaint, affidavit, and argument of counsel for the plaintiff, without notice to his opponents? The authorities are sharply divided upon this question. Some maintain that the statute contemplates a hearing wherein both sides are present to plead, argue and present evidence upon the relief sought. The first and fifth circuits have held that less than this may constitute a hearing for the purposes of -appellate jurisdiction. The manifest purpose of the statute is to enable a litigant to seek prompt review in an appellate court from an order or decree which in most instances is effective upon its rendition and is drastic and far reaching in effect. With this as its basis, it is unlikely that Congress meant to exclude hearings where the order is granted by a court after reading the papers and listening to the arguments of the complainant. Although one-sided, we think that such proceedings are nevertheless a hearing within the meaning of § 129 for the purposes of appellate jurisdiction.
A second preliminary point, also not raised by the parties, is whether state or federal law governs their rights herein. The corporate defendant is a Pennsylvania corporation and the rights and duties of the shareholders among themselves and the corporation are measured by Pennsylvania law. Restatement, Conflict of Laws (1934) § 199, comment a; see also §§ 192-202. There is no suggestion that the acts which the defendants are alleged to have done would not, if proved, entitle plaintiff to relief. What form of equitable relief a plaintiff is to be given by a federal court for infringement of his rights, we have held to be a matter to be determined by federal law, not state decisions. Black & Yates, Inc., v. Mahogany Ass’n, Inc., 3 Cir., 1942, 129 F.2d 227, certiorari denied 1942, 63 S.Ct. 76, 87 L.Ed. -. In this case, however, we do not think that there is any difference between the principles determining the appointment of receivers as enunciated by Pennsylvania courts 5**and those found in the federal decisions cited below.
We start with the undisputed premise that the granting or refusal 'of the appointment of a receiver is, in the first instance, a matter of discretion for the lower court and that we are not to substitute our discretion for that of the trial judge. Equally undisputed, however, is the limitation that discretion is governed by legal principles applicable to the situation and if we deem them to have been departed from, it is our duty to correct the error. Likewise, it has been judicially noted almost innumerable times that the appointment of a receiver is an extraordinary, a drastic and, in the words of the Pennsylvania Court, an “heroic” remedy. It is not to be resorted to if milder measures will give the plaintiff, whether creditor or shareholder, adequate protection for his rights.
The caution which should surround the appointment of a receiver is heightened when such appointment is sought peremptorily in a proceeding in which the opposition has neither notice nor opportunity to be heard. In the case of “actual emergency” it may be done. Tennessee Pub. Co. v. Carpenter, 6 Cir., 1938, 100 F.2d 728, 732. It is to be “exercised sparingly and with great caution, and only under extreme and exceptional circumstances.” Central West Public Service Company v. Craig, 8 Cir., 1934, 70 F.2d 427, 429, 430. The courts speak of it as proper only in a case of “imperious necessity, when the right of the complainant, on the showing made by him, is undoubted, and when such relief and protection can be given in no other way.” Cabaniss v. Reco Min. Co., 5 Cir., 1902, 116 F. 318, 324; Joseph Dry Goods Co. v. Ilecht, S Cir., 1903, 120 F. 760; Mann v. Gaddie, 5 Cir., 1907, 158 F. 42. Similar language is found in Kolb Coal Co. v. Sauter, 7 Cir., 1924, 295 F. 690. Language to this general effect is found in the decisions of many courts, both state and federal. The phraseology may vary, but the enunciation of the general point of view is clear enough. Our immediate question is whether that point of view which may accurately be described as a controlling principle of law was observed in the instant case.
The plaintiff is a minority shareholder of the Enterprise Wall Paper Mfg. Co. He complains of mismanagement of the corporation by one of the individual defendants in ways to be noted presently. He does not allege that because of this mismanagement or otherwise the corporation is insolvent or is in danger of becoming so. Indeed, by the report of accountants, subsequently brought into the record by stipulation between the parties, it appears that far from being in danger of insolvency, the principal corporate defendant is a successful business enterprise and in a very sound financial position. This is not alone a conclusive ground for negativing a receivership for a receiver may, in an appropriate case, be appointed for a solvent concern. But certainly it is an item to be considered in determining the appropriateness of a receivership appointment. Major operations are seldom indicated for healthy patients.
The plaintiff in argument to this Court has summarized 'what he believes are the allegations in his complaint which entitle him to the relief granted. They are as follows:
1. Complete domination of the corporation by the defendant, Philip Isaacs, as a result of majority stock ownership and by the method in which he conducted its affairs. 2. The employment' by the .defendant, Philip Isaacs, of relatives at exorbitant salaries and the payment of salaries to other relatives who performed no services. 3. The use of fictitious expense accounts for non-existent employees in order that the defendants, Philip Isaacs and Julius Isaacs, might fraudulently appropriate the amount of such accounts. 4. The exploration of the New England field of business at the expense of the Enterprise Corporation for three years through the establishment there of a branch and, it having proved successful, the incorporation of a new 'company in which the individual defendants own practically all of the stock with the resultant profits to them and loss to the Enterprise Corporation. 5. The sale to certain corporations wholly owned by the individual defendants of merchandise at prices greatly reduced and below the normal market. 6. The unlawful diversion by the defendants, Philip Isaacs and Julius Isaacs, of money belonging to the Enterprise Corporation. 7. A loan by defendants, Philip Isaacs and Julius Isaacs, to the Enterprise Corporation of money which, in fact, belonged to the corporation by the representation that it was individual property and the repayment thereof by the Enterprise Corporation to the individual lenders. 8. The destruction of records and accounts by Philip Isaacs and Julius Isaacs with a fraudulent intent of hindering and defeating an accounting. 9. Allegations showing the necessity of an accounting.
Plaintiff contends that grounds 2, 4, 5 and 8 allege continuing acts by the defendants. We do not get this from the allegations found in the complaint. With regard to point 8, if the records are in fact destroyed they are gone and neither a receiver nor anyone else can get them back. The allegations of wrongful diversion of corporate funds are alleged to have occurred in 1936, 1937, and 1938. The date of the improper loan (point 7) is not specified. These allegations, while they state past misconduct, do not bring the case within the imperious necessity rule enunciated above.
We think that the'plaintiff’s complaint states a satisfactory reason why the action was brought in the name of an individual minority shareholder without an endeavor to get corporate action against individual defendants. We also think that it states facts which, if they are proved, call for an accounting. It also states facts which may call for ancillary protection by way of injunction, impounding of records or otherwise, if there appears danger that books or documents of the corporation are in danger of being mutilated or destroyed. Further protective measures may be availed of if the necessity arises. We do not find in the allegations, however, any such grounds of immediate emergency that call for the appointment of a receiver, characterized in the decisions as one of last resort, to the exclusion of other remedies. There is nothing to make it appear that the business is not being competently run; attention has already been called to the fact that it appears to be in a sound and prosperous condition. There are charges which, if substantiated, indicate that minority shareholders have not been receiving their share of the benefits of the enterprise. And if this appears to be the case, they are, of course, entitled to court help to secure them. But the help required falls far short in our judgment of the drastic remedy of receivership, certainly at this stage of the litigation. We conclude, therefore, that the appointment of the receivers in this case was beyond the discretion to be exercised by the trial judge. The order is, therefore, reversed and the case remanded to the District Court with directions to vacate the order appointing the receivers, and to retain the case for further proceedings not inconsistent with this opinion.
28 U.S.C.A. § 227.
Dreutzer v. Frankfort Land Co., 6 Cir., 1895, 65 F. 642, 646; Root v. Mills, 7 Cir., 1909, 168 F. 688, 690; Pacific Northwest Packing Co. v. Allen, 9 Cir., 1901, 109 F. 515,' 516.
Haight & Freese Co. v. Weiss, 1 Cir., 1907, 156 F. 328, 334, certiorari denied, 1907, 207 U.S. 594, 28 S.Ct. 260, 52 L. Ed. 356; Joseph Dry Goods Co. v. Hecht, 5 Cir., 1903, 120 F. 760. Two later cases in Üie Fifth Circuit have modified this ease, by deciding that whether an “ex parte” hearing is a hearing under § 129 depends upon the term of the receiver appointed, the sweeping effect of the order, and whether a hearing for the opponent within a reasonably short time is provided. In the absence of such ameliorating conditions the court has held the order appealable under § 129. Marion Mortgage Co. v. Edmunds, 5 Cir., 1933, 64 F.2d 248; Williams Holding Co. v. Pen-nell, 5 Cir., 1936, 86 F.2d 230. It seems doubtful to us that the order resulting from the purported “hearing” should determine whether it was a hearing under § 129 in the first instance. Be that as it may, the order issued in the case at bar is, in its terms, a general one appointing a receiver for the defendant com- ' pany without limitation as to time, and not providing for any hearing.
There is a comprehensive discussion of the law of receivers by the Supreme Court of Pennsylvania in McDougall v. Huntingdon & Broad Top R. & C. Co., 1928, 294 Pa. 108, 143 A. 574. Although, mismanagement, fraud, or misappropriation by the directors and officers of a corporation are recognized as grounds for the appointment of a receiver, the Court also states other controlling factors which are to be considered. Thus it states that “ * * * the conditions that call it into action should be such as would, if persisted in, ordinarily be fatal to corporate life. * * * The court, before any appointment is made, will act with the utmost caution. Receivers will not be appointed unless the chancellor is convinced the right is free from doubt, * * * the loss irreparable, with no adequate legal remedy, and the relief sought is necessary.” Page 117 of 294 Pa., page 577 of 143 A. * * * “As to the limitation on the exercise of the power in cases where there is any other adequate remedy, * * * the rule, while stated in general terms and never directly denied, is often disregarded, and this tendency is growing in some jurisdictions: * * Page 119 of 294 Pa., page 578 of 143 A. Prior to this, the Court noted that the courts have been liberal in appointing receivers to protect the interests of minority shareholders and that although this is “desirable, * * * there is danger of going too far.” Page 119 of 294 Pa., page 578 of 143 A.
While the Court did not discuss ex parte appointments of receivers, it seems unlikely that the Pennsylvania rule in this respect is any different from that prevailing in tlie overwhelming majority of jurisdictions. As evidence of this see Pennsylvania Rules of Equity Practice, Rule 41 (“Whenever the exigency of a case requires it, a temporary receiver may bo appointed, without notice to the parties interested, * * *. The appointment shall continue until a hearing can be had, which shall be fixed at as early a date as possible, * * ®.” See f. n. 3, supra, as to the terms of tlie order in the case at bar.) and ITagerman v. Street Ry. Co., 1906, 10 Northam.Law Rep., Pa., 243 (requiring, for an ex parte appointment of a receiver, a showing of the “gravest emergency and of peril immediately threatening the security and safety of property * * * ”). (Italics added.)
Milwaukee & Minnesota R. Co. v. Soutter, 3864, 154 U.S. 540, 14 S.Ct. 1158, 17 L.Ed. 604; Fosdick v. Schall, 1878, 99 U.S. 235, 253, 25 L.Ed. 339; Kingsport Press, Inc., v. Brief English Systems, Inc., 2 Cir., 1931, 54 F.2d 497, certiorari denied, Owen v. Kingsport Press, 1932, 286 U.S. 545, 52 S.Ct. 497, 76 L.Ed. 1282.
McDougall v. Huntingdon & Broad Top R. & C. Co., supra, 294 Pa. at page-117, 143 A. at page 577.
Collins v. Williamson, 6 Cir., 1915, 229 F. 59, 67; Smith v. Chase & Baker Piano Mfg. Co., D.C.E.D.Mich.1912, 397 F. 466, 472; Lowe v. Pioneer Threshing Co., C.C.D.Miim.lS95, 70 F. 646; United Electric Securities Co. v. Louisiana Electric Light Co., C.C.E.D.La.3.895, 68 F„ 673.
A. G. Col Co. v. Superior Court in and for Santa Clara County, 1925, 196. Cal. 604, 238 P. 926, 930; Simpson v. Adkins, 1941, 311 Ill.App. 543, 37 N.E. 2d 355, 358; Kent Avenue Grocery Co. v. George Hite & Co., 3918, 187 Ind. 606, 120 N.E. 659, 660; State Founders, Ine., v. Oliver, 1933, 165 Md. 360, 169 A. 59, 67; State ex rel. Claude v. District Court for Fourth Judicial Dist., 3939, 204 Minn. 415, 283 N.W. 738, 740; State ex rel. Thornton-Thomas Mercantile Co. v. Second Judicial District Court of Silver Bow County, 1897, 20 Mont. 284, 50 P. 852, 854; State ex rel. Schoenfelder v. Owen, 3941, 347 Mo. 3131, 152 S.W.2d 60, 65; Gossett v. First-Trust Joint Stock Land Bank of Chicago, Tex.Civ. App.1940, 138 S.W.2d 904, 906.
As to Pennsylvania, see f. n. 4, supra.
Annotations : 1926, 43 A.L.R. 242; 1929, 61 A.L.R. 1212; 1934, 91 A.L.R. 665.
A.L.R. annotations cited in the previous footnote.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BIGGS, Circuit Judge.
On September 4, 1947, the plaintiff, Kupperman, brought suit in the court below to recover from his employer, the defendant, M. & J. Becker, Inc., a New York City manufacturer of hats and caps, overtime wages alleged to be due him and an additional equal amount by way of liquidated damages, pursuant to Section 16(b) of the Fair Labor Standards Act, 29 U.S.C.A. § 216. Jurisdiction was founded on Section 16(b) of the Act and on 28 U.S.C. § 1337. The defendant interposed as its principal defense the contention that Kupperman fell within the exemptions of Section 13 of the Act, 29 U.S.C.A. § 213, which provide that “(a) The provisions of sections 206 and 207 of this title shall not apply with respect to (1) any employee employed in a bona fide executive, administrative, professional, or local retailing capacity, or in the capacity of outside salesman (as such terms are defined and delimited by regulations of the Administrator)”. The defendant’s position was and is that Kupperman at all times was employed by it in a bona fide executive capacity within the meaning of the exemption provided by Congress in the statute and as defined by the Administrator.
The complaint sought recovery fo the whole period of the plaintiff’s employment by the defendant, commencing in the third week of April 1939 and ending in August 1947. The court below restricted recovery, if there should be any, to the period commencing September 4, 1941, the earliest effective date within New York’s six-year statute of limitations. See N. Y. Civil Practice Act, Section 48. A further restriction on the period involved was imposed when it appeared from the evidence that in May 1945 Kupperman had become a union employee and had renounced all claim to unpaid overtime wages earned thereafter.
The court below, as the trier of the facts, concluded that the defendant had met the burden imposed on it to prove that the plaintiff was employed in a bona fide executive capacity as defined by the Administrator, Wages and Hours Division, United States Department of Labor, during the period September 4, 1941 to May 1945. The court took the position that the defendant had the obligation to, and did, prove that the plaintiff’s employment fell within each and every requirement of an “executive” as required by the Administrator’s Regulations, Section 541.1, 29 U.S.C.A. Appendix, § 541.1. See Fanelli v. United States Gypsum Co., 2 Cir., 141 F.2d 216; Stanger v. Vocafilm Corp., 2 Cir., 151 F.2d 894, 162 A.L.R. 216; McComb v. Utica Knitting Co., 2 Cir., 164 F.2d 670. We set forth the requirements of the pertinent Regulations in the margin. The court below entered judgment in favor of the defendant, and the appeal at bar followed. The only substantial question before us is whether the court below has made the necessary findings of fact and whether any finding of fact was clearly erroneous. See Rule 52(a), Fed.Rules Civ.Proc. 28 U.S. C.A., and McComb v. Utica Knitting Co., supra.
The plaintiff testified that in April 1939 he was unemployed and on relief; that in the latter part of April he commenced work at the defendant’s place of business at 2961 Atlantic Avenue, Brooklyn; and that he continued there throughout the period here in question. Kupperman further stated that in 1941 he was employed by the defendant in its “Parkahood” department, existing on the lower warehouse floor of the building occupied in part by the defendant, and that he was subsequently moved upstairs to its principal “Cap-making” department late in 1942 when the defendant stopped making parkahoods. The plaintiff said that he was a cutter of caps by trade, and testified to long hours of weekday and weekend overtime employment as a cutter. He admitted, however, that on the lower warehouse floor he handed out work to women there employed as cutters and kept the records of their employment; that the defendant was organized as a union shop and that its employees were required to punch time cards; that he, Kupperman, did not join a union until May 1945, when, for the first time, he was issued a time card; and that he was on such terms with Jacob Becker, the president of defendant, that he received several Christmas bonuses and rode home from work each day in President Becker’s automobile.
Kupperman also asserted that the records of the defendant surely had been falsified since he was listed therein as a foreman and shown to have worked only a 40 hour week. On cross-examination the plaintiff admitted that he had received a sum of money in settlement of a suit he had brought in the Municipal Court of New York against Bushwick Mills, Inc. for wages for August through October 1942. He explained that he was promised compensation by Bush-wick Mills to speed performance by the defendant of a contract to make army caps. The plaintiff testified that he had brought suit against Bushwick Mills, Inc. because “Mr. Becker said to me, ‘I am on the outs with [Bushwick Mills, Inc.] and I would like to get even with Margolin.’ ” and because “At the time I was really mad. I was not getting the money.”
Licato, an operator of a sewing machine on the defendant’s lower floor, testified that Kupperman was employed on that floor to “ * * * take care of the girls, and he used to cut out work once in a while.” Licato also said that the plaintiff assigned work to the women employees, kept records, gave out payroll envelopes, was consulted about complaints, and that she was in fact hired by him.
President Becker testified that he had hired Kupperman “to be a foreman,” that “He came up to manage the place,” and that a cutter was not in fact needed. Becker stated that the plaintiff hired and fired the “Parkahood” girls, and fixed their wages; that Kupperman rarely worked after the usual quitting time of 5:00 P.M. and then came upstairs to wait for his ride home; and that he received pay for his occasional weekend work at Ozone Park where Becker had another place of business, or was paid by Bushwick Mills, Inc., and for his Sunday work at 2961 Atlantic Avenue during August through October 1942. Becker testified that the plaintiff also received pay for periods when he was sick and did not work, which would not have been the case had he been employed by the hour; that throughout the period in question Kupperman remained free of the union because he was a foreman; and that it was for this reason that the plaintiff was entitled to bonuses. Becker explained that when the plaintiff moved upstairs from the “Parkahood” department he “helped the foreman,” “[gave out] the goods to cut,” “walked around the floor,” “watch[ed] * * * the packing,” and only worked at cutting “a couple of times a week, a couple of .hours a day.” Becker also stated that when the plaintiff moved upstairs he served as co-foreman with Steinberg, conceded by all to have been a foreman..
Steinberg testified that the plaintiff “prepared the material for the cutters” and that he did not remember seeing the plaintiff himself employed in cutting at any time. This testimony was corroborated by Brown, a cutter, who indicated that the plaintiff was not needed as a cutter, for he, Brown, by operating a “clicker” machine was, together with other cutters, able to supply sufficient cut goods for the sewers. Schurman, bookkeeper and sister-in-law to Becker, stated in further corroboration that Kupperman was a foreman and not a cutter and that her records were correct in showing that he had not earned compensable overtime.
The foregoing is ample to support the following findings of fact made by the court below:
“9. Plaintiff in many instances remained after working hours for the sole purpose of obtaining a ride home in the automobile of Becker, his employer.
“10. Plaintiff never spent any considerable time at defendant’s establishment on Saturdays or Sundays or before office hours, except possibly to lay out work for the other employees to do.
Plaintiff’s primary duty consisted in the management at first of the so-called Parka hood department on the first floor, and afterwards as foreman on the upper floor. 11.
“12. As part of his duties plaintiff customarily and regularly directed the work of several employees. Plaintiff also had the right to hire and fire employees and he customarily and regularly exercised discretionary power.
“14. Plaintiff did some cutting from time to time but the time spent on such activity amounted to only a very small fraction (less than 20 per cent) of the time spent on other duties.”
It will be observed, therefore, that the court below, item by item, has made all necessary findings, save one, as to the qualifications of an executive as required by the Regulations, paragraphs (a) through (f), Section 541.1, 29 U.S.C.A. See footnote 7, supra. There was ample evidence to support the findings made. Indeed, the weight of the evidence appears to favor the defendant’s contentions for, as noted by the court below, the fact that the plaintiff did not join the union until 1945, a date lying outside the period with which we are concerned, is very persuasive. It was indeed unlikely that Kupperman’s tasks became less managerial in character when he was moved to the defendant’s principal manufacturing floor for his salary continued to rise steadily.
But one essential finding was not made by the court below, viz., that relating to the plaintiff’s salary rates throughout the whole of the critical period. If the plaintiff received less than $30 a week he would not fall within the purview of earlier subpara-graph “(f),” applicable during the period with which we are concerned. See 5 F.R. 4077. The change in the regulation was effected December 24, 1949 and therefore is not pertinent here. See note 7, supra. It is abundantly clear from the testimony on these points, however, that the plaintiff’s salary rates were at all times within the required limitations of earlier subparagraph “(f).” We set them forth in the margin. To sum this point up we state that there would seem to be no doubt that the plaintiff received at least no less than the amount specified by subparagraph (f). We cannot, however, make the necessary finding since as an appellate tribunal we are without the power to do so.
Accordingly the judgment of the court below is vacated and the cause remanded. If the court below shall find that the evidence is sufficient to support the finding which we have indicated should be made, the trial judge will possess the authority to make such a finding and re-enter judgment in favor of the defendant.
. It was stipulated by the parties that M. & J. Becker, Inc. was a corporation engaged in interstate commerce.
. Relating to maximum hours and overtime.
. Administrator, Wages and Hours Division, United States Department of Labor.
. The two year statute of limitations of the Portal-to-Portal Act does not apply. See 29 U.S.O.A. § 255(c). There is no issue as to any statute of limitations.
. Trial was had to the court.
. No opinion for publication.
. Regulations, Section 541(1), 29 U.S.C.A. Appendix, provides and provided (with the exception of subparagraph (f)) as follows:
“The term ‘employee employed in a bona fide executive * * * capacity’ in section 13(a) (1) of the act shall mean any employee:
“(a) Whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof; and
“(b) Who customarily and regularly directs the work of two or more other employees therein; and .
“(c) Who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight; and
“(d) Who customarily and regularly exercises discretionary powers; and
“(e) Who does not devote more than 20 percent of his hours worked in the workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (a) through (d) of this section: Provided, That this paragraph shall not apply in the case of an employee who is in sole charge of an independent establishment or a physically separated branch establishment, or who owns at least a 20-pereent interest in the enterprise in which he is employed; and
“(f) Who is compensated for his services on a salary basis at a rate of not less than $55 per week (or $30 per week if employed in Puerto Rico or the Virgin Islands) exclusive of board, lodging, or other facilities:
“Provided, That an employee who is compensated on a salary basis at a rate of not less than $100 per week (exclusive of board, lodging, or other facilities), and whose primary duty consists of the management of the enterprise in which he is employed or of a customarily recognized department or subdivision thereof, and includes the customary and regular direction of the work of two or more other employees therein, shall be deemed to meet all of the requirements of this section.”
It will be noted that the provision of subparagraph “(f),” supra, quoted supra, states that the salary of one who is to be considered an “executive" must amount to not less than “$55. per week.” At the time the suit was filed and the plaintiff was first employed the amount required was $30. a week. The increase in the amount was effected December 24, 1949. See 14 F.R. 7705-6.
. Bushwick Mills, Inc. was the prime Government contractor under contract for the manufacture of caps for the United States Army. The defendant was a subcontractor thereunder.
. Margolin apparently was employee! in some executive capacity at Bushwick Mills, Inc. He is not otherwise identified in the record.
. Becker stated that Kupperman worked an extra half-hour “maybe once a year.”
. According to the payroll records of Becker, Inc., Defendant’s Exhibit C, Steinberg’s salary was at all times less than Kupperman’s. For example, for the week ending September 4,1943, Steinberg earned $50 as compared to Kupperman’s $65.
. We are not unmindful of the fact that Hershkovitz, Manager, Capmakers’ Union, Local No. 2, which local had jurisdiction at the defendant’s shop between 1941 and 1946, stated that he found the plaintiff employed in cutting on one occasion in 1943 and had told both Becker and the plaintiff that the latter “ * * * would have to join the union.” Hersh-kovitz testified to the response to this demand as follows: “And both told me— both Kupperman and Becker told me: Well, he was a foreman. And so did Kupperman.”
. The pertinent portion of Plaintiff’s Exhibit 1 in the court below shows the following:
“Weekly Earnings of George Kupperman:
* * *
Nov. 22 1940 to March 7 1942 ...........................40 00
March 14 1942 to July 4 1942 ............................ 415 00
July 11 1942 to March 27 1943 ........................... 55 00 — and collecting money from Bushwick Mills
April 3 1943 to July 10 1943 ............................. 60 00
July 17 1943 to May 12 1945 ............................. 65 00
Left our employ May 12 1945, demanding a $375.00 bond for bonus. Re-hired May 26 on Union insistence that he become a Union cutter.
* * *
Extras:
Dec. 22 1942 50 00 Bonus
Sept. 23 1943 , 50 00 “
Dec. 23 1943 63 13 “
June 23 1944 100 00) to be deducted
June 2 19441 100 00) out from June 3 to June 30 1944
Dec. 22 1944 ............................. 86 20 Bonus
Dec. 24 1945 .............................100 00 Loan not repaid
Jan. 23 1045 to May 1st 1945 — $10.00 weekly.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CORNELIA G. KENNEDY, Circuit Judge.
Defendants appeal and plaintiffs cross-appeal the summary judgment for plaintiffs in this action involving pension liability under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq. We hold that the “arbitrary and capricious” standard of review applies to decisions by plan administrators to deny benefits to particular claimants. Because we find that there are factual issues which need to be resolved, we remand this case to the District Court for determination as to whether the plan administrator in this case acted arbitrarily and capriciously in denying “shutdown pensions” to plaintiffs. We affirm the District Court’s rulings that there is no evidence that defendants engaged in unlawful discrimination in violation of 29 U.S.C. § 1140 and that plaintiffs are not entitled to punitive or compensatory damages. We express no opinion on the other issues raised by the parties, but rather remand those issues to the District Court for further proceedings.
I.
Cyclops Corporation (“Cyclops”) is engaged, among other things, in the production of steel. Before November 22, 1980, Cyclops owned and operated steel-making and related production facilities near Portsmouth, Ohio (“the Portsmouth facility”). This facility included an operating coke plant, blast furnace, and open hearth furnaces. The twelve plaintiffs in this case were salaried employees of Cyclops and worked at the Portsmouth facility.
In early 1980, Cyclops decided to close down its operations at the Portsmouth facility. After failing to sell the entire facility as a “going concern,” it shut down the blast furnace and open hearth furnaces completely, but continued the coke plant operations until August while attempting to find a buyer for the coke plant as a “going concern.” On August 25, 1980, the coke ovens were put into a “hot idle” condition, which means that production was stopped but that the temperature of the ovens , was maintained, since cooling would damage the refractory lining of the ovens. Although Cyclops ceased producing coke at the coke plant on this date, plaintiffs’ employment with Cyclops was not interrupted. On November 21, 1980, Cyclops sold the coke plant assets to New Boston Coke Corporation (“New Boston”), which was then a wholly-owned subsidiary of McLouth Steel Corporation. (The remaining land and buildings at the Portsmouth facility were sold to an unrelated purchaser.) All of the stock of New Boston is now held by a Trustee in Bankruptcy appointed by the United States Bankruptcy Court for the Eastern District of Michigan.
Cyclops had a pension plan in effect for its salaried employees as of November, 1980 (“the Salaried Plan”). Among the special retirement benefits were the “70/80 Retirement” and the “Rule of 65 Retirement” provisions, which provide accelerated pension benefits to participants whose continuous service is broken because of certain events, including “a permanent shutdown of a division, plant, office or department, or subdivision of any of them,” provided that their years of service and age meet the requirements of the Plan (“shutdown pensions”). These provisions allow an eligible participant to receive a full retirement benefit, payable immediately upon the shutdown. The parties do not dispute that each of the twelve plaintiffs would qualify for one of the two retirement plans if his continuous service had been broken by a permanent shutdown of a division, plant, office, or department. Eligible Cyclops employees whose employment with Cyclops was terminated because of the shutdown of the open hearth and the blast furnace operations were granted plant shutdown pensions.
However, New Boston wanted experienced workers to run the coke operations. Cyclops provided it with a list of twenty-eight salaried employees, who were designated to work for New Boston following the sale. Each of the plaintiffs was on this list. Plaintiffs were told that if they refused to work for New Boston they would not receive shutdown pensions, but would be eligible only for deferred vested pensions upon reaching normal retirement age. Each of the plaintiffs went to work for New Boston.
As part of the sales agreement, New Boston agreed to assume all accrued (vested and unvested) pension liabilities of the twenty-eight employees, and Cyclops agreed to transfer $60,521 in trust assets from the Salaried Plan to the trustee of the plan which New Boston agreed to develop.
After the Pension Board denied plaintiffs’ applications for shutdown pensions, plaintiffs filed suit in the United States District Court for the Southern District of Ohio, alleging sixteen counts in their Amended Complaint. Five counts were dismissed by a Joint Stipulation of the parties on July 29, 1985. The remaining eleven counts were submitted to the court below on cross-motions for summary judgment after the parties entered into a Fact Stipulation and separate Document Stipulations. The District Court issued an Order on November 26, 1985, granting plaintiffs’ motion with respect to Count Two (entitlement to shutdown pensions) and Count Ten (entitlement to participation in the Medical Program coinciding with the Count Two pension benefits). The Order granted defendants summary judgment on all remaining counts.
Defendants appeal the District Court’s Order with respect to Counts Two and Ten. Defendants concede that the result in Count Ten follows necessarily from the result in Count Two, and so present only Count Two for review. Plaintiffs cross-appeal from the District Court’s judgment for defendants on the remaining nine counts.
II.
The first issue raised by the parties on appeal is a procedural one: what is the standard of review applicable under ERISA to decisions by plan administrators to deny benefits to particular claimants? Defendants argue that the court can look only to see whether the administrator’s decision was “arbitrary and capricious.” Plaintiffs contend that a stricter standard of review should be applied. They argue that it is inconsistent to apply the arbitrary and capricious standard when ERISA specifically imposes upon plan administrators a fiduciary duty to act “solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits” to such parties “in accordance with the documents and instruments governing the plan....” 29 U.S.C. § 1104(1)(A) and (D). Plaintiffs contend that where, as here, they are essentially suing on a contract they should not have to overcome the heavy burden imposed upon them by the use of such a deferential standard. Further, they argue, the arbitrary and capricious standard is particularly inappropriate to the Salaried Plan because the plan administrator — the Pension Board — consists of three Cyclops executives. Plaintiffs assert that Cyclops will benefit from the denial of retirement benefits to plaintiffs, and that the Board thus suffers from an inherent conflict of interest.
This Court has in the past applied an “arbitrary and capricious” standard to the review of decisions by plan administrators under ERISA to deny benefits to particular claimants. See Moore v. Reynolds Metals Co. Retirement Program for Salaried Employees, 740 F.2d 454, 457 (6th Cir.1984), cert. denied, 469 U.S. 1109, 105 S.Ct. 786, 83 L.Ed.2d 780 (1985) (“[R]eview ... is limited to a determination of whether the trustees’ actions in administering or interpreting a plan’s provisions are arbitrary and capricious.”); Van Gunten v. Central States, Southeast & Southwest Areas Pension Fund, 672 F.2d 586, 587 (6th Cir.1982). In fact, this Court has already applied this standard of review to this very Plan. See Cook v. Pension Plan for Salaried Employees of Cyclops Corp., 801 F.2d 865, 869-870 (6th Cir.1986).
Plaintiffs argue that In re White Farm Equip. Co., 788 F.2d 1186 (6th Cir.1986), overruled sub silencio earlier cases employing the arbitrary and capricious standard. This assertion is incorrect. White Farm involved an employer in bankruptcy who, under the process of reorganization in bankruptcy, attempted to terminate certain insurance benefits under a welfare benefit plan for retired employees. The issue presented on appeal was “whether under ERISA an employer may lawfully exercise a reserved power to terminate an employee welfare benefit plan for retired nonunion employees.” 788 F.2d at 1190. The Court looked to rules of contract construction in resolving this issue. It did not decide what standard of review would apply to a decision by a plan administrator to deny benefits to employees who allegedly were qualified.
Thus, our earlier decisions establishing the arbitrary and capricious standard still control. This standard derives from the standard of review applied to union-negotiated pension trusts under section 302(c)(5) of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 186(c)(5).
That section imposes a duty of loyalty on section 302 trustees by permitting employer contributions to a welfare trust fund only if the contributions are used “for the sole and exclusive benefit of the employees____” Section 1104 of ERISA imposes a similar duty of loyalty and not surprisingly the courts have applied the “arbitrary and capricious” standard under ERISA as well.
Struble v. New Jersey Brewery Employees’ Welfare Trust Fund, 732 F.2d 325, 333 (3d Cir.1984) (citation omitted).
Unlike ERISA, however, section 302 mandates that the pension fund be administered jointly by an equal number of employer- and employee-appointed trustees. See 29 U.S.C. § 186(c)(5)(B). Were we writing on a clean slate, we might well be persuaded that stricter standard of review should apply to decisions by plan administrators of employer-controlled plans established under ERISA to deny benefits to particular claimants than to similar decisions by administrators of pension funds under section 302 of the LMRA. However, despite the many arguments that can be made about the inappropriateness of applying the arbitrary and capricious standard to ERISA plans, the law is well-settled. We can find no law to support the distinction plaintiffs urge upon us. Thus, we hold that the arbitrary and capricious standard applies to decisions by plan administrators under ERISA to deny benefits to particular claimants.
III.
On the merits, defendants contend that the District Court erred in finding that plaintiffs were entitled to shutdown pensions as a result of a “permanent shutdown” of the coke plant. We find that although the District Court articulated the correct standard of review, it applied the standard incorrectly. Because there are factual issues unsuitable for summary judgment involved, we remand this issue to the District Court for further proceedings.
Sections 4.7 and 4.8 of the Salaried Plan provide for accelerated retirement benefits to employees whose continuous service is broken by reason of a permanent shutdown. Section 10.1 of the Plan provides that: “The term ‘continuous service’ as used in the Plan means service with the Company ..., whether on a salaried or hourly basis____” Joint Appendix at 139. As defined in section 10.1(e), “[a]n Employee shall incur a break in continuous service upon: ... (4) termination due to permanent shutdown of a division, plant, office or department, or subdivision of any of them____” Joint Appendix at 139. “Company” is defined in section 1.1(f) of the Plan as “Cyclops Corporation, a Pennsylvania corporation, and any successor to it in ownership of substantially all its assets____” Joint Appendix at 119. (New Boston was not a “successor” to Cyclops within the meaning of the Plan, since it purchased only the coke ovens, not “substantially all” of Cyclops’ assets.)
None of the parties dispute that the plaintiffs have suffered a break in continuous employment. Rather, they are arguing over whether this break resulted from a “permanent shutdown” of the coke plant so as to trigger the accelerated benefit provisions.
The District Court began by articulating the correct standard of review. Rather than examining the administrator’s interpretation of the Plan provisions to see whether that interpretation was arbitrary and capricious, however, the District Court interpreted the provisions itself:
The Court finds that the pension board’s interpretation of the plan was arbitrary and capricious in finding that plaintiffs were not entitled to “shutdown benefits.” The Salaried Pension Plan is clear and unambiguous. The plain and unambiguous language of the plan results in a mandated determination that the plaintiffs have met the conditions of eligibility to retire under Section 4.7 and/or 4.8 of the Plan.
The stipulated facts disclose that plaintiffs have the requisite ages and years of service with Cyclops, and that the coke works was permanently shutdown by Cyclops. It is the opinion of this Court that by the sale of the coke works to a stranger who is not a successor corporation under the terms of Sec. 1.1(f), Cyclops permanently shutdown the coke works as contemplated in the Salaried pension plan, particularly, as plaintiffs were not offered a transfer to another location owned and operated by Cyclops or its wholly-owned subsidiary or were not given the opportunity to consent to the new plan with the stranger employer. The plaintiffs have thus met the qualifications necessary to retire under the plan.
The unambiguous terms of the Salaried Plan provide that any participant is entitled to retire if there is a permanent shutdown by Cyclops, and the participant meets the other requirements of the Plan. Here, there was a permanent shutdown of the coke works by Cyclops. Cyclops, from its point of view, permanently shutdown the coke plant by selling the plant. Cyclops no longer owns the plant, and therefore it can no longer operate or run the plant. Additionally, plaintiffs were not offered a transfer to another location within Cyclops. Finally, no attempt was made to secure the voluntary agreement of the plaintiffs to transfer to the stranger company. Rather, they were forced to transfer or face economic disaster. The plan paragraphs in issue only involve the relationship of Cyclops to its salaried employees, and when Cyclops permanently shutdown its facility, the clauses protected the plaintiffs.
Joint Appendix at 402-03 (emphasis in original).
The parties present numerous arguments to us as to whether or not the sale of the coke ovens to New Boston constituted a “permanent shutdown” so as to trigger the provisions in the Salaried Plan for shutdown pensions. Defendants argue that while part of the Portsmouth facility (the blast furnace and open hearth furnaces) was shut down, the coke ovens were not, and that plaintiffs therefore were not entitled to shutdown pensions. They contend that “shutdown” must be given its literal, dictionary definition, and so must refer to an absolute “closing” of the plant, and not to a “sale.” Plaintiffs, on the other hand, contend that the plant cannot be “shut down” as to some employees, but not as to others. They assert that the District Court was correct in finding that “permanent shutdown” must be defined in terms of Cyclops’ operation of the coke works, rather than in terms of the physical operation of the works.
This Court’s duty is not to evaluate the merits of the parties’ opposing interpretations of the Salaried Plan’s provisions. Rather, we must determine whether the plan administrator acted arbitrarily and capriciously in denying plaintiffs shutdown pensions. We find, however, that the record is virtually silent as to the plan administrator’s reasons for denying plaintiffs these benefits. We have no evidence of any formal decision reached by the Pension Board regarding this matter or the interpretation it applied in making its decision. We cannot tell whether the Board’s determination resulted from a deliberate, principled reasoning process on its part, or whether the denial of shutdown pensions to plaintiffs resulted from the Board’s inaction or failure to expressly consider whether plaintiffs’ status was different from that of other Portsmouth employees granted such pensions. Therefore, we have no basis for determining whether the Board acted arbitrarily and capriciously in denying plaintiffs shutdown pensions.
In seeking summary judgment, defendants argued that the Pension Board’s decision to deny shutdown pensions to plaintiffs “reflected a deliberative process” which led to a determination “that the sale of the Portsmouth coke plant and concomitant transfer of the Plaintiffs to New Boston without interruption of their performance of work duties did not constitute a break in continuous service by reason of a permanent shutdown.” Brief in Support of Defendants’ Motion for Summary Judgment at 14. Defendants cited three documents in support of this assertion. The first, Document No. 633, is a September 29, 1982 letter from the personnel manager, Doyle E. Mutti, to plaintiff Darnell. Leaving aside the question of the relevancy of the statements of a non-member of the Board on the issue at hand, Mutti’s letter does not reveal the Board’s thinking on the matter, but simply states that because the New Boston plan was considered to be a successor to the Salaried Plan, Darnell’s “continuous service with Cyclops was not deemed to be broken upon [his] transfer.” Joint Appendix at 293. Defendants have since conceded that the termination of plaintiffs’ employment with Cyclops did constitute a break in continuous service, however. Defendants’ Memorandum Contra Plaintiffs’ Cross-Motion for Summary Judgment at 9. Document No. 636 is a letter from Cyclops’ attorney to Robert Kushner, a member of the Pension Board, dated December 20, 1982. This letter does interpret the Salaried Plan’s shutdown provisions, and concludes that plaintiffs are not entitled to shutdown benefits. We do not know whether the Board adopted the interpretation set forth in this letter. Moreover, it appears that the Board received this letter after it made its original decision to deny shutdown pensions to plaintiffs. Document No. 635 is a letter from Kushner to plaintiffs’ attorney, dated December 21, 1982. This letter contains only the curt statement that plaintiffs were denied shutdown pensions because the coke battery was not shut down, citing sections 4.7(a) and 4.8(a) of the Plan. Joint Appendix at 297.
The question of the Board’s interpretation of the shutdown provisions of the Salaried Plan is made even more cogent by plaintiffs’ allegation that they were treated differently than other similarly-situated workers. According to the parties’ stipulations, plaintiffs Sexton, Elrod, and Maynard were employed by Cyclops as Superintendent, Assistant Superintendent, and Mobile Equipment Repair Foreman, respectively, in the Yard and Transportation Department. Plaintiff Price was a Maintenance Foreman and plaintiff Varhola was Manager of Industrial Relations. Joint Appendix at 61. Thus, these plaintiffs were not formally assigned to the coke ovens, although they apparently performed most, if not all, of their duties there. Plaintiff Varhola alleged in an affidavit that three other employees who performed functions similar to those of plaintiffs were granted shutdown pensions. Two of these employees — Allard Lawson, who had been a Turn Foreman in the Maintenance Department, and John R. Dalton, who had been a General Foreman in the Maintenance Department — allegedly performed all of their duties solely in the coke plant. The third, Donald Pitts, had been a Foreman over Fuel and Utilities in the Maintenance Department, and allegedly worked solely in the steam plant, which was sold with the coke plant to New Boston. Joint Appendix at 75.
We cannot determine from the record whether these three employees were indeed similarly-situated to at least some of the plaintiffs. If they were, however, absent some reasonable explanation for the differing treatment, we believe that it would be arbitrary and capricious to grant these workers shutdown pensions, but not grant plaintiffs the same.
Because we are uncertain as to what the Board actually decided, what the Board’s motivation for its decision was, and why it granted some workers shutdown pensions while denying others similarly-situated the same benefits, we cannot tell whether the Board’s decision was arbitrary and capricious. Therefore, we remand this issue to the District Court for further proceedings.
IV.
Plaintiffs raise several issues on cross-appeal, which we now address.
First, plaintiffs alleged in their Amended Complaint that defendants were guilty of discrimination and interference with rights protected under ERISA, in violation of 29 U.S.C. § 1140, because they denied pensions to plaintiffs, but granted them to other workers similarly-situated. The District Court granted summary judgment to defendants on this issue, stating: “The record contains no material facts to support a finding that any unlawful discrimination took place.” Joint Appendix at 404.
Plaintiffs offer little support for their contention that the District Court erred. They argue solely that while other Portsmouth employees, including coke oven employees, were allowed to retire with shutdown pensions, plaintiffs were required to work for New Boston and were denied such benefits. While that may not be fair we do not believe that it constitutes a discriminatory action under section 1140. This Court discussed the meaning and legislative history of the prohibitions in section 1140 in West v. Butler, 621 F.2d 240, 245 (6th Cir.1980), noting that: “The legislative history reveals that the prohibitions were aimed primarily at preventing unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights.” Plaintiffs can point to no evidence that Cyclops deliberately discriminated against these employees for the purpose of interfering with their rights under the Salaried Plan. Thus, we affirm the District Court’s judgment on this issue.
Second, plaintiffs argue that the District Court erroneously granted summary judgment to defendants with regard to plaintiffs’ request for punitive and compensatory damages. The District Court stated: “Plaintiffs’ request for compensatory damages and punitive damages is not supported. The record reveals that plaintiffs are entitled to ‘shutdown’ pensions and medical benefits flowing therefrom. Plaintiffs are not otherwise damaged.” Joint Appendix at 404-05. The District Court further found that “[njowhere in the record is there any evidence which could reasonably be found to be outrageous conduct on the part of defendants,” Joint Appendix at 405, so as to warrant imposition of punitive damages.
Although on remand plaintiffs might show that they are entitled to shutdown pensions, they have not alleged any fact which would entitle them to other compensatory damages. We need not address the District Court’s finding that defendants’ conduct did not warrant imposition of punitive damages, since we find that, as a legal matter, punitive damages are unavailable to plaintiffs.
To the extent, if any, that plaintiffs base their claim on state law, they clearly are not entitled to such damages. The Supreme Court recently held in Pilot Life Ins. Co. v. Dedeaux, — U.S. -, 107 S.Ct. 1549, 1555, 95 L.Ed.2d 39 (1987), that ERISA’s civil enforcement remedies are exclusive and so preempt state law remedies.
Nor are plaintiffs entitled to punitive damages under ERISA. In Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985), the Supreme Court held that section 409(a) of ERISA, 29 U.S.C. § 1109(a) (establishing liability for breach of fiduciary duty by plan administrators), does not permit recovery of extra-contractual damages by a beneficiary of a plan. Although the Court specifically declined to decide whether punitive damages are recoverable under section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3) (permitting a plaintiff to obtain “other appropriate equitable relief”), see 473 U.S. at 139 n. 5, 105 S.Ct. at 3089 n. 5, its statements in Pilot Life persuade us that it will hold they are not. It treats the statutory scheme of ERISA as one which does not intend to provide for punitive damages.
This Circuit has not yet addressed this issue. However, the Courts of Appeals which have passed on it have concluded that the statutory language and legislative history of section 502(a)(3) of ERISA prohibit recovery of punitive damages. See Kleinhans v. Lisle Sav. Profit Sharing Trust, 810 F.2d 618 (7th Cir.1987); Sommers Drug Stores Co. Employees Profit Sharing Trust v. Corrigan Enterprises, Inc., 793 F.2d 1456, 1464-65 (5th Cir.1986), cert. denied, — U.S.-, 107 S.Ct. 884, 93 L.Ed.2d 837, and — U.S.-, 107 S.Ct. 1298, 94 L.Ed.2d 154 (1987); Powell v. Chesapeake & Potomac Tele. Co., 780 F.2d 419, 424 (4th Cir.1985), cert. denied, — U.S.-, 106 S.Ct. 2892, 90 L.Ed.2d 980 (1986), Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1216 (8th Cir.) (dictum), cert. denied, 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384, and 454 U.S. 1084, 102 S.Ct. 641, 70 L.Ed.2d 619 (1981). As the Sommers court noted, punitive damages ordinarily are not available under trust law in an action for a breach of a trustee’s fiduciary duty. Sommers, 793 F.2d at 1463. “Because Congress intended the interpretation of ERISA to be guided by principles developed under the law of trusts, absent express language to the contrary in the statute, we will not interpret ERISA to provide punitive damages for breach of a trustee’s fiduciary obligations where such damages are not generally available under the law of trusts.” Kleinhans, 810 F.2d at 627. We agree with the Fourth, Fifth, Seventh, and Eighth Circuits, and hold that punitive damages are not recoverable under section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3).
Third, plaintiffs contend that the District Court erred in finding that defendants did not violate 29 U.S.C. § 1106 when they transferred trust assets from the Salaried Plan to New Boston’s plan. Section 1106(a)(1)(D) prohibits a plan fiduciary from causing the plan to engage in a transaction which he knows or should know constitutes a direct or indirect use of the plan assets for the benefit of a party in interest. If on remand the District Court determines that plaintiffs were entitled to shutdown pensions, this issue will be resolved. If the Court finds that plaintiffs were not entitled to such pensions, however, then defendants’ transfer of the assets was a purely ministerial act which would not give rise to liability under this section.
In view of our remand for factual determinations, we express no opinion on plaintiffs’ two remaining allegations of error. The District Court granted summary judgment to defendants on plaintiffs’ request for severance pay, noting that “plaintiffs admit in their Brief in Opposition to Defendants’ Motion for Summary Judgment at 26, that if they prevail on their claims for Rule of 65 and 70/80 benefits, they are not entitled to severance pay.” Joint Appendix at 404. It thus did not pass on whether plaintiffs were entitled to severance pay if they did not receive shutdown pensions. If it is determined on remand that plaintiffs are entitled to plan shutdown pensions, the District Court will not need to address this issue. If plaintiffs are not entitled to such benefits, however, the District Court should pass on this issue in the first instance.
Plaintiffs also alleged that Cyclops’ Director of Corporate Insurance represented to them that if McLouth went bankrupt within five years after the sale, all of them would revert to the Salaried Plan. The District Court granted summary judgment to defendants on this issue, noting:
Cyclops is obligated under the Salaried Plan to plaintiffs for full immediate pension benefits on a plant shutdown basis as of November 21, 1980, which includes medical insurance benefits. Consequently, defendants will have discharged their duties under ERISA. Cyclops’ guarantee of benefits is therefore fulfilled by payment of the pension.
Joint Appendix at 406. If on remand it is decided that plaintiffs are not entitled to shutdown pensions, this factual dispute will have to be resolved.
V.
Accordingly, we AFFIRM the District Court’s judgment in part, and REMAND the case for further proceedings consistent with this opinion.
. The defendants in the court below were the Pension Plan for Salaried Employees of Cyclops Corporation, the three individual members of the Plan’s Pension Board, which is the "plan administrator” under ERISA, the Program of Hospital-Medical Benefits for Eligible Pensioners and Surviving Spouses of Cyclops Corporation, and Cyclops Corporation. All but Cyclops Corporation are appellants in this matter. Cyclops Corporation is the cross-appellee in the cross-appeal.
. These provisions provide, in pertinent part:
4.7 70/80 Retirement
Any Participant who has at least 15 years of continuous service and has not attained age 62 but (i) has attained age 55 and whose combined age and years of continuous service equal 70 or more, or (ii) whose combined age and years of continuous service equal 80 or more, and
(a) whose continuous service is broken by reason of a permanent shutdown of a division, plant, office or department, or subdivision of any of them ...
shall be eligible to retire on or after the Effective Date [January 1, 1976] and shall upon his retirement ... be eligible for a pension.
Joint Appendix at 122-23.
4.8 Rule of 65 Retirement
Any participant (i) who has at least 20 years of continuous service as of his last day worked (provided said last day worked is on or after January 1,1978), (ii) whose combined age and years of continuous service equal 65 or more, and (iii) whose continuous service is broken because of
(a) a permanent shutdown of a division, plant, office or department, or subdivision of any of them,
and who has not been offered a transfer to another location, shall be eligible to retire on or after January 1, 1978, and shall upon his retirement ... be eligible for a pension.
Joint Appendix at 123.
. See generally Note, Judicial Review of Fiduciary Claim Denials Under ERISA: An Alternative to the Arbitrary and Capricious Test, 71 Cornell L.Rev. 986 (1986).
. In reaching our decision, we disregard the extensive discussion by Amicus Curiae United Steelworkers of America, AFL-CIO: CLC, of the bargaining history of the "permanent shutdown" provision in its union contracts. This theory was not presented to the District Court and so is not properly made to this Court on appeal. Cf. Wright v. Holbrook, 794 F.2d 1152, 1157 (6th Cir.1986) (citation omitted) ("It is fundamental that 'parties cannot ... advance new theories or raise new issues in order to secure a reversal of the lower court’s grant of summary judgment."); Russ’ Kwik Car Wash, Inc. v. Marathon Petroleum Co., 772 F.2d 214, 217 (6th Cir.1985) (citation omitted) ("The rule that this Court will not consider questions not presented below ‘applies with particular force when the new issue requires development of additional facts.’ ”).
. This section provides in pertinent part:
It shall be unlawful for any person to ... discriminate against a participant or a beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan____
29 U.S.C. § 1140.
. Under Cyclops’ severance pay policy:
1.2 An employee is not eligible for a severance allowance if he is terminated under any of the following conditions:
1.2.3 Retirement under company plan other than a deferred vested pension.
Joint Appendix at 155.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
J. SKELLY WRIGHT, Circuit Judge:
This appeal from a jury conviction of federal narcotics offenses raises questions under the Fourth Amendment, as difficult as they are important, concerning the permissible scope of a search of the person incident to a lawful arrest for violation of a District of Columbia motor vehicle regulation. The ease was heard initially by a division of this court which reversed the conviction, one judge dissenting, on the ground that the search of appellant’s person violated the commands of the Fourth Amendment. Upon rehearing en banc, however, the court vacated the opinion and judgment of the division and held that since the taking of evidence in the District Court had not focused upon the scope issue relied upon by the division, a remand was necessary in order that “an authentic version of what actually happened” might be presented. This supplemental evidentiary hearing having now been completed, we find the search of appellant to be unconstitutional and therefore reverse the conviction.
I
On April 19, 1968, Officer Richard Jenks of the Metropolitan Police Department stopped a 1965 Cadillac at the intersection of Ninth and U Streets, N.W., for a “routine spot check.” At the time of this stop, Officer Jenks examined not only appellant’s temporary operator’s permit and automobile registration card, but also his selective service classification card. Officer Jenks permitted appellant to continue about his business, but only after making notes of the three items. His note taking alerted him to a discrepancy between the “1938” date of birth listed on the temporary operator’s permit and the “1927” date of birth listed on the selective service classification card. Officer Jenks then went to police traffic records and discovered that the operator’s permit issued to “Willie Robinson, Jr.,” born in 1927, had been revoked, and that a temporary permit had been issued to a “Willie Robinson,” born in 1938. The pictures on the revoked permit and on the application for the temporary permit were of the same person; both were likenesses of the man he had stopped for the routine check on April 19.
On April 23, 1968, while on duty, Officer Jenks observed appellant operating the same vehicle. He stopped appellant, asked him for his permit and registration card and, upon being shown the same permit appellant had exhibited four days earlier, placed'appellant under arrest for operating a motor vehicle after revocation of his operator’s permit and for obtaining a permit by misrepresentation. According to his testimony at the remand hearing, Officer Jenks then advised appellant of his rights and proceeded to search him. Since the arrest was one which involved taking appellant to the station house, under Police Department instructions Officer Jenks was required to make a full field search as an incident to the arrest. A full field search “is a thorough search of the individual.” Remand transcript at 99. “He examines the contents of all of the pockets in a field type search and in-custody arrest at all times.” Id. at 120. In conducting a full field search, “even though [the officer] may feel something that he believes is not a weapon, he is instructed to take it out.” Id. at 100. The officer is taught “to examine everything he has on him at the field search. Everything that we find in his pockets is examined to find out what exactly it is.” Id. at 104.
Officer Jenks’ search complied with Police Department instructions. He was unable to recall the precise sequence in which he searched appellant. His best recollection was that in placing his right hand on appellant’s left breast he felt an object. Although Officer Jenks could not ascertain the precise size or consistency of this object, there was no suggestion that he believed it to be a weapon or believed himself to be in danger. On the contrary, he admitted that he did not have any specific purpose in mind when he searched appellant: “I just searched him. I didn’t think about what I was looking for. I just searched him.” Remand transcript at 32. Officer Jenks proceeded to extract the object — which turned out to be a wadded up cigarette package — from appellant’s pocket. He then opened the package and found it to contain 14 gelatin capsules of heroin. Officer Jenks then placed appellant under arrest for possession of narcotics, and continued his search without finding any weapons or any additional narcotics.
Throughout the proceedings in this case, the Government has consistently conceded, and indeed there can be no doubt, that in extracting the cigarette package from appellant’s pocket and opening the package so as to examine its contents, Officer Jenks exceeded the permissible scope of a limited frisk for weapons. Moreover, as Officer Jenks’ testimony at the remand makes clear, the full search of appellant’s person that actually occurred in this case cannot be justified on a theory that the narcotics were “in plain view.” Thus the question is now squarely presented whether, and under what circumstances, an arresting officer may conduct a full search of the person incident to a lawful arrest for violation of a mere motor vehicle regulation.
II
Ordinarily, a warrant must be obtained by a police officer before he may make a search. Searches of both person and place incident to lawful arrest, however, have traditionally been exceptions to this rule and have been held constitutional even though they have been made without prior approval by a neutral magistrate. Nevertheless, “the bare fact that a person is validly arrested does not mean that he is subject to any and all searches that the arresting officer may wish to conduct.” United States v. Mills, 153 U.S.App.D.C. -, -, 472 F.2d 1231, 1234 (decided May 10, 1972) (en banc). Rather, the validity of searches and seizures under the Fourth Amendment turns upon their reasonableness, and since a warrant will not be available to insure that arrest based searches are reasonable both at their inception and in their execution, courts must review the constitutionality of such searches with special care. See, e. g., Schmerber v. California, 384 U.S. 757, 766-772, 86 S.Ct. 1826, 16 L.Ed.2d 908 (1966); United States v. Ventresca, 380 U.S. 102, 106, 85 S.Ct. 741, 13 L.Ed.2d 684 (1965).
In exercising this power of review, courts must give particularly careful weight to the fundamental Fourth Amendment principle which has been given renewed emphasis in the housing inspection and stop-and-frisk cases: a search will comply with the requirements of the Fourth Amendment only if its scope is no broader than necessary to accomplish legitimate governmental objectives. This principle is stated most clearly in Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968), in which the Supreme Court upheld an on-the-street detention and search for weapons of three suspects. The Court found that the police officer in Terry had “adequate constitutional ground,” but not probable cause, to believe that the men'he detained and searched were going to commit a crime. In its opinion the Court stressed that the Fourth Amendment governs all intrusions by agents of the public upon personal security, 392 U.S. at 18 n. 15, 88 S.Ct. 1868, and that the manner in which the search and seizure are conducted is as much the test of their reasonableness as whether they were warranted at all. Id. at 28, 88 S.Ct. 1868. Citing a number of earlier cases, many of which involved searches initiated upon probable cause, the Court in Terry stated that “[t]his Court has held in the past that a search which is reasonable at its inception may violate the Fourth Amendment by virtue of its intolerable intensity and scope,” and that “[t]he scope of the search must be ‘strictly tied to and justified by’ the circumstances which rendered its initiation permissible.” Id. at 17-19, 88 S.Ct. at 1878. Thus the Court made absolutely clear that the underlying rationale of Terry was a restatement of, rather than a departure from, existing case law, and that, although Terry itself involved a search upon less than probable cause, the scope limitation principle was to apply to all searches no matter what thp evidentiary basis for their initiation.
If Terry left any doubt at all that the scope limitation principle was intended by the Supreme Court to apply to arrest based searches, that doubt was expressly foreclosed by the last of the cases in the Terry-Sibron-Peters trilogy. In Peter's v. New York, which is consolidated with Sibron v. New York, 392 U.S. 40, 88 S.Ct. 1889, 20 L.Ed.2d 917 (1968), Officer Lasky of the New York City Police Department was off duty at his apartment when he heard a noise at the door. Looking through the peephole into the hall, he saw two men he did not believe to be fellow tenants tip-toeing out of the alcove toward the stairway. Officer Lasky called police headquarters, put on civilian clothes, and armed himself with his service revolver. Believing he had happened upon the two men in the course of an attempted burglary, Officer Lasky opened his door, entered the hallway, and slammed the door loudly behind him. When the door slammed the two men fled down the stairs and Officer Lasky gave chase. When he caught up with Peters on the stairs and questioned him, Peters explained his presence in the building by saying he was visiting a girl friend whose name he chivalrously declined to reveal on the ground that she was a married woman. Officer Lasky then patted Peters down for weapons and discovered a hard object in his pocket. The object did not feel like a gun, but he thought it might be a knife. Officer Lasky removed this object from Peters’ pocket and found it was an opaque envelope containing burglar’s tools.
Given this factual situation, the Supreme Court held that Officer Lasky legally arrested Peters when he collared him on the stairway and curtailed his freedom of movement. This arrest was found to be valid because made on the basis of probable cause to believe Peters was engaged in criminal activity. At this point, according to the Supreme Court,
“[Officer Lasky] had the authority to search Peters, and the incident search was obviously justified ‘by the need to seize weapons and other things which might be used to assault an officer or effect an escape, as well as by the need to prevent the destruction of evidence of the crime.’ * * * Moreover, it was reasonably limited in scope by these purposes. Officer Lasky did not engage in an unrestrained and thoroughgoing examination of Peters and his personal effects. •X* * -X- ”
392 U.S. at 67, 88 S.Ct. at 1905. (Emphasis added.) In Peters, then, the Supreme Court applied the scope limitation principle to an arrest based search and found that the search — which took the form of a frisk followed by a further intrusion into the arrestee’s pockets only after an object possibly a weapon had been felt — was “reasonably limited in scope by [its] purposes” and was not so “unrestrained and thoroughgoing” as to violate the Constitution.
Similarly, in Chimel v. California, 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685 (1969), the Court used its scope limitation principle to measure the constitutionality of a far-ranging search of a house incident to a lawful arrest for larceny. Terry was specifically referred to, and the Chimel search, in which police discovered coins appellant was accused of stealing, was found to be unconstitutional because it was not “ ‘strictly tied to and justified by’ the circumstances which rendered its initiation permissible.” 395 U.S. at 762, 89 S.Ct. at 2039. Chimel holds that incident to a lawful arrest for a crime such as theft, which requires instrumentalities and bears fruits, there is ample justification for a warrantless search of “the arrestee’s person and the area ‘within his immediate control’ — construing that phrase to mean the area from within which he might gain possession of a weapon or destructible evidence.” Id. at 763, 89 S.Ct. at 2040.
Thus although the consequences of application of the scope limitation principle may differ under varying circumstances, it is clear that all searches, whether or not based upon probable cause, are governed by the rule, and that in determining the constitutionality of any particular search “our inquiry is a dual one — whether the officer’s action was justified at its inception, and whether it was reasonably related in scope to the circumstances which justified the interference in the first place.” Terry v. Ohio, supra, 392 U.S. at 19-20, 88 S.Ct. at 1879.
III
What then are the legitimate objectives of an arrest based search of the person? What is it that renders such searches permissible at their inception, and to which the scope of such searches must be tied, if their reasonableness is to be maintained? Though they receive slightly different formulation in various cases, the legitimate objectives of warrantless searches of the person incident to arrest seem to be (1) seizure of fruits, instrumentalities and other evidence of the crime for which the arrest is made in order to prevent its destruction or concealment; and (2) removal of any weapons that the arrestee might seek to use to resist arrest or effect his escape. The question presented, then, is whether either of these objectives justifies a full search of the person incident to a lawful arrest for violation of a mere motor vehicle regulation.
Since fruits, instrumentalities or other evidence of crime concealed on the person of the arrestee may be easily disposed of or destroyed, the arresting officer will often be justified in searching for such evidence without delay. But the scope limitation principle requires that when police search a person incident to arrest, the search must be directed toward finding evidence which the arresting officer has probable cause to believe will be found on the person, and that the search be no more intrusive than necessary to recover such evidence. For most crimes, of course, it is clearly reasonable to assume that the arrestee will be in possession of the fruits, instrumentalities or other evidence of the crime for which the person was arrested. Thus in such situations “the circumstances justifying the arrest are also those furnishing probable cause for the search.” Chambers v. Maroney, 399 U.S. 42, 47 n. 6, 90 S.Ct. 1975, 1979 n. 6, 26 L.Ed.2d 419 (1970). For other crimes, however, and more particularly for most traffic offenses, no search of the person for evidence may be allowed at all because no evidence exists to be found. Admittedly, appellant’s offenses in this case — driving after his operator’s permit had been revoked and obtaining a new permit by misrepresentation — are relatively serious ones on the continuum of traffic infractions. Nonetheless, upon stopping Willie Robinson for the second time and upon receiving for the second time Robinson’s fraudulently obtained temporary operator’s permit, Officer Jenks had secured the only evidence of the crime for which the arrest was made which he could possibly have had probable cause to believe was in the arrestee’s possession. No further arrest based search for evidence was therefore reasonable or constitutional.
There is, of course, a second, very important, justification for searches incident to arrest — the interest of government in the safety of its police officers. In Terry v. Ohio, supra, the Supreme Court recognized that when a police officer stops a citizen on the street in the course of a legitimate investigation “there must be a narrowly drawn authority to permit a reasonable search for weapons for the protection of the police officer * * 392 U.S. at 27, 88 S.Ct. at 1883. The Court made clear, however, that the right to exercise that authority was not automatic. Rather, such intrusions are permissible only if the officer is “able to point to specific and articulable facts which, taken together with rational inferences from those facts, reasonably warrant” the officer’s belief that the person with whom he is dealing is both armed and presently dangerous. Id. at 21, 88 S.Ct. at 1880. Moreover, since the sole basis for such a search is the protection of the officer, the Court held that even when the officer reasonably believes himself to be in danger, the search actually conducted “must be limited to that which is necessary for the discovery of weapons which might be used to harm the officer * * * ” Id. at 26, 88 S.Ct. at 1882. Thus the Court in Terry approved a pat-down or “frisk” of the appellant’s outer clothing for weapons, with a further intrusion only after finding a weapon, precisely because such an intrusion was adequate to protect the officer and was confined “strictly to what was minimally necessary to learn whether the men were armed and to disarm them once he discovered the weapons.” Id. at 30, 88 S.Ct. at 1884.
Similarly, in Sibron v. New York, supra, another stop-and-frisk case, the Court held that a direct intrusion into the pockets of a narcotics suspect was unreasonable at its inception because the mere association of the suspect with other known narcotics offenders was held not to have given the officer justification for any search whatever. Before conducting a self-protective search for weapons, the Court held, the officer “must be able to point to particular facts from which he reasonably inferred that the individual was armed and dangerous.” 392 U.S. at 64, 88 S.Ct. at 1903. Moreover, the Court in Sibron went further and held that, assuming arguendo that the officer had reason to suspect Sibron was armed, the actual search — a direct intrusion into the suspect’s pockets rather than a frisk— would still have been constitutionally invalid because “not reasonably limited in scope to the accomplishment of the only goal which might conceivably have justified its inception — the protection of the officer * * * ” Id. at 65, 88 S.Ct. at 1904.
Thus Terry and Sibron, when read together, stand for the proposition that in the stop-and-frisk situation where, as in the routine traffic arrest, there can be no evidentiary basis for a search, the most intrusive search the Constitution will allow is a limited frisk for weapons, and even then only when the officer reasonably believes himself to be in danger. The Government contends, however, that the standards enunciated in Terry and Sibron are inapplicable to the instant case because the “stops” and “frisks” involved in those decisions were predicated only upon “reasonable suspicion” whereas here, since appellant was arrested on probable cause, a full search was justified. But in focusing on the different quanta of evidence required to justify different degrees of seizures or searches of the person, the Government loses sight of the even more telling distinction between the evidentiary and protective purposes of searches. It is upon this latter distinction that our case hinges.
Because the arrest based searches reviewed and validated by the courts have usually had both evidentiary and protective functions, the casual reader may be given the false impression that these cases stand for the proposition that a lawful arrest will always support a full search of the person. Obviously, when the arrest is made for a crime for which evidence exists, a warrantless intrusion into the pockets of the arrestee to discover such evidence is reasonable under the “search incident” exception. The officer may, of course, also use this reasonable intrusion to look simultaneously for weapons. But in a fact situation such as ours, where the search can have no evidentiary function, a more careful analysis of proper scope limitations is called for. When the sole legitimate goal of the search is the protection of the officer, the paramount factor in determining the reasonableness of the intrusion is the danger actually presented, and it is of no moment whether the protective search for weapons is incident to an “arrest” based on probable cause or incident to a “stop” based only upon reasonable suspicion. “In short, the physical risk to the officer is created by the circumstances of the confrontation taken as a whole, not by the technical niceties of the law of arrest.” People v. Superior Court of Los Angeles County [Simon], 7 Cal.3d 186, 101 Cal.Rptr. 837, 850, 496 P.2d 1205, 1218 (1972) (en banc).
IV
In determining the extent to which the legitimate governmental interest in insuring the safety of law enforcement officers justifies a search of the person incident to a lawful arrest, a distinction must be drawn between the “routine” traffic arrest — where the officer simply issues a notice of violation and allows the offender to proceed — and the more serious cases in which the officer effects an “in-custody” arrest in order to transport the traffic offender to the stationhouse for booking. Turning first to the “routine” traffic arrest, it seems evident that the dangers presented in that situation are to some extent similar to, and certainly no greater than, those presented in the stop-and-frisk situations involved in Terry and Sibron. Like the investigatory stop, the routine traffic arrest is merely a brief on-the-street encounter. Moreover, the vast majority of traffic violators are law-abiding citizens. Indeed, “[v]ery few drivers can traverse any appreciable distance without violating some traffic regulation.” and as Chief Judge Fuld of the New York Court of Appeals has noted, “A motorist, who exceeds the speed limit does not thereby indicate any propensity for violence or iniquity, and the officer who stops the speeder has not even the slightest cause for thinking that he is in danger of being assaulted.” People v. Marsh, 20 N.Y.2d 98, 101, 281 N.Y.S.2d 789, 792, 228 N.E.2d 783, 786 (1967).
This is not to say, of course, that a minor traffic stop can never erupt into violence. On the contrary, whenever a police officer confronts a citizen on the street an element of danger is present. But as the stop-and-frisk cases make clear, the mere possibility of danger cannot justify any and all searches the officer may wish to conduct. The touchstone of the Fourth Amendment is reasonableness, and the possibility that a routine traffic stop might result in injury to the officer, although unquestionably real, is so remote that “[t]o allow the police to routinely search for weapons in all such instances would * * * constitute an ‘intolerable and unreasonable’ intrusion into the privacy of the vast majority of peaceable citizens who travel by automobile.” People v. Superior Court of Yolo County [Kiefer], 3 Cal.3d 807, 91 Cal.Rptr. 729, 744, 478 P.2d 449, 464 (1970) (en banc).
We therefore conclude that the permissible scope of searches incident to routine traffic arrests, where there is no evidentiary basis for a search and where the officer intends simply to issue a notice of violation and to allow the offender to proceed, must be governed by the teaching of the Supreme Court as set forth in Terry and Sibron. Thus the most intrusive search the Constitution will allow in such situations is a limited patdown for weapons, and then only when there exist special facts or circumstances which give the officer reasonable grounds to believe that the person with whom he is dealing is armed and presently dangerous.
As the Government points out, however, the instant case involves not a “routine” traffic arrest, but rather a situation in which the arresting officer was required to take appellant into custody. According to applicable Metropolitan Police Department regulations, “[t]he use of Traffic Violation Notices is a courtesy of long standing and shall be employed whenever possible, consistent with the overall safety of the public.” Nevertheless, for certain of the “more serious or aggravated types of traffic violations,” issuance of a notice of violation is prohibited, and the officer is required to make an in-custody arrest. Among these is the offense of “Operating After Suspension or Revocation of Operator’s Permit,” one of the two offenses for which appellant was lawfully arrested. Thus the Government asserts that, even though a police officer may not conduct a full search of the person incident to a lawful traffic arrest involving mere issuance of a notice of violation, such a search should be permitted where, as here, the officer is required to take the offender into custody.
As noted earlier in this opinion, the scope limitation principle of the Fourth Amendment is essentially “functional” in nature — that is, the consequences of its application will vary according to the particular circumstances in which it is applied. Thus in determining the permissible scope of searches incident to in-custody arrests for mere traffic violations, we cannot ignore the fact that, unlike the momentary and relatively minor dangers presented in the stop-and-frisk situation or in the routine traffic stop, the dangers to which the police are exposed in the circumstances of a custodial arrest are sharply accentuated by the prolonged proximity of the accused to police personnel following the arrest. As Chief Justice Wright of the California Supreme Court has noted, the crucial distinguishing feature of the in-custody arrest “is not the greater likelihood that a person taken into custody is armed, but rather the increased likelihood of danger to the officer if in fact the person is armed.” People v. Superior Court of Los Angeles County [Simon], supra, 101 Cal.Rptr. at 857, 496 P.2d at 1225 (concurring opinion). (Emphasis in original.) With this increased danger in mind, it would seem clearly unreasonable to expect a police officer to place a suspect in his squad car for transportation to the station-house without first taking reasonable measures to insure that the suspect is unarmed. We therefore conclude that whenever a police.officer, acting within the bounds of his authority, makes an in-custody arrest, he may also conduct a limited frisk of the suspect’s outer clothing in order to remove any weapons the suspect may have in his possession. There are circumstances in which the element of danger may require a full search even as to persons arrested for relatively minor traffic-type offenses, as where the frisk causes the officer’s suspicion to be reasonably aroused as to weapons (see note 9 supra). But no such predicate was advanced for the search at bar. The record clearly establishes Jenks searched appellant without any purpose in mind — “I just searched him”- — -because this was standard police instruction.
The Government contends still further, however, that a frisk does not provide reasonable protection to the officer in the circumstances of an in-custody arrest. We cannot agree. Under the scope limitation principle of the Fourth Amendment, “[a] search for weapons * * * must, like any other search, be strictly circumscribed by the exigencies which justify its initiation.” Terry v. Ohio, supra, 392 U.S. at 25-26, 88 S.Ct. at 1882. And in evaluating the reasonableness of a search, it is necessary “first to focus upon the governmental interest which allegedly justifies official intrusion upon the constitutionally protected interests of the private citizen,” for there is “no ready test for determining reasonableness other than by balancing the need to search against the invasion which the search entails.” Camara v. Municipal Court of City and County of San Francisco, 387 U.S. 523, 534-535, 536-537, 87 S.Ct. 1727, 1734, 1735, 18 L.Ed.2d 930 (1967).
Turning first to the interests of the individual, we must recognize that the properly conducted frisk which we would permit with any in-custody arrest is far more than a “petty indignity.” On the contrary, “[e]ven a limited search of the outer clothing for weapons constitutes a severe, though brief, intrusion upon cherished personal security, and it must surely be an annoying, frightening, and perhaps humiliating experience.” Terry v. Ohio, supra, 392 U.S. at 24-25, 88 S.Ct. at 1882. Thus if we are to strike a reasonable balance under the Fourth Amendment, any further intrusion upon the individual’s privacy should be permitted only if necessary to achieve substantial governmental interests. And this is all the more true where, as here, the officer may not even have reasonable grounds to believe that the individual, who has been arrested for a mere traffic violation, is either armed or dangerous.
Moreover, when viewed from the reverse side of the equation, we are firmly convinced that a carefully conducted frisk offers substantial protection to the officer. In Terry v. Ohip, supra, the Supreme.Court adopted the following definition of a frisk:
“ ‘[T]he officer must feel with sensitive fingers every portion of the prisoner’s body. A thorough search must be made of the prisoner’s arms and armpits, waistline and back, the groin and area about the testicles, and the entire surface of the legs down to the feet.’ ”
392 U.S. at 17 n. 13, 88 S.Ct. at 1877 n. 13, quoting Priar & Martin, Searching and Disarming Criminals, 45 J.Crim.L.C. & P.S. 481 (1954). Such a frisk, the Court concluded, is “reasonably designed to discover guns, knives, clubs, or other hidden instruments for the assault of the police officer.” 392 U.S. at 29, 88 S.Ct. at 1884.
The evidence presented at the remand hearing in this case clearly supports this conclusion. Police Sergeant Dennis Donaldson, an instructor at the District of Columbia Police Training Division, testified that in order to protect the arresting officer the standard police practice in the District of Columbia is to conduct a full search of the person whenever an in-custody arrest is made. On cross-examination, however, Sergeant Donaldson admitted that, although the effectiveness of a patdown may vary according to the circumstances, a properly conducted Terry type frisk could uncover virtually every weapon he had ever encountered in the course of in-custody searches. Mr. Ronald Newhouser, a recognized expert in clandestine weaponry, also testified for the Government. During the course of his testimony Mr. Newhouser removed from his person 25 concealed weapons that could kill or incapacitate. Like Sergeant Donaldson, however, Mr. Newhouser conceded that virtually all of these weapons could be detected in the course of a properly conducted frisk.
We do not mean to suggest, of course, that a protective frisk removes all conceivable dangers to the officer. There will always be the long shot case in the which the arrestee has concealed a novel weapon — perhaps a razor blade shaped like a coin — which a frisk will fail to reveal. But the kind of thoroughgoing search which would offer total protection to the officer could only be accomplished at a complete sacrifice of the arrestee’s right to privacy. Indeed, as Mr. Newhouser admitted, the only means of eliminating all possible risk to the officer is to allow him to spread-eagle the arrestee, strip him of his clothing, and feel into his body cavities for weapons. Deciding what is a reasonable intrusion, given the legitimate objective of protecting the arresting officer, calls for a careful balancing of competing interests. Our position reflects this balancing.
V
Pressing its argument still further, however, the Government suggests an alternative theory in support of its contention that a full search of the person should be allowed whenever an in-custody arrest is made. When a suspect has been lawfully arrested and “booked” on a criminal charge and is to be placed in stationhouse detention, it is ordinarily reasonable to conduct a search of his person in order to prevent introduction of weapons or contraband into the jail facility. From this premise the Government argues that, since the suspect will eventually be searched at the stationhouse anyway, a search of this kind might “just as well” be conducted'in the field at the time of arrest. Whatever the merits of this argument generally, this court’s recent en banc decision in United States v. Mills, supra, makes clear that it is inapplicable to the ease at hand.
In Mills the defendant was arrested for the petty offense of driving with a learner’s permit while unaccompanied by a licensed driver. Rather than simply issue a notice of violation, the arresting officer elected to make an in-custody arrest. The officer then frisked the defendant and, finding no weapons, called a scout car to transport the defendant to the stationhouse. After arriving at the stationhouse, the defendant was brought to the booking desk. At that point the defendant clearly had the right to post $50 collateral for his offense and, upon doing so, tó i be released immediately, without any detention or search of his person. Instead of informing him of his right, however, the officers ordered the defendant to remove everything from his pockets. Among his possessions the police discovered 22 capsules of heroin and 33 capsules of cocaine. Under these circumstances, the court held the stationhouse search unconstitutional and therefore reversed the defendant’s conviction of violations of the federal narcotics laws.
Initially the court noted that there could be no evidentiary basis for this search since the defendant’s offense was proved completely at the time of arrest. Moreover, the search could not be justified on the basis of protective considerations because the arresting officer had already frisked the defendant for weapons. Thus “[t]he validity of the search,” the court concluded, “must stand or fall on the premise that it was a predetention inventory, undertaken to hold and account for valuable or poten-, tially dangerous personal property — such as rings, belts, watches or jewelry — during the detention of the person arrested.” 153 U.S.App.D.C. at-, 472 F.2d at 1234.
Emphasizing the defendant’s right to post collateral, the court then stated that, although a search of the person incident to stationhouse detention may be reasonable, “it would be entirely unreasonable to hold that policemen have discretion to detain and therefore thoroughly search petty offenders * * * who may avoid stationhouse detention altogether by posting collateral.” 153 U.S.App.D.C. at -, 472 F.2d at 1240.
The court therefore held :
“When a person is charged with a collateral-type petty offense, under which he rightfully has the opportunity to post collateral and avoid further detention, and there is no probable cause to believe he committed a more serious crime, the police may not engage in an inventory search of the offender, or an equivalent direction that he empty his pockets, and seek to support it on the ground of holding him in further confinement, unless at a minimum he was timely notified of his opportunity to post collateral (and thus avoid further detention) and refused or was unable to do so. * * »
As in Mills, we “do not here consider the proper scope of a search that is supported by the premise of forthcoming confinement.” 153 U.S.App.D.C. at-, 472 F.2d at 1234. Although appellant Robinson had no right to post collateral for his offenses, he ‘#as clearly entitled to post either cash or bail bond and, upon doing so, to be released immediately, without any stationhouse confinement or incident search of his person. Moreover, even if appellant was unable to post, such bond, he might still have been eligible for pre-detention release under the recently enacted citation release program. Officer Jenks had no way of knowing, one way or the other, whether appellant was eventually to be incarcerated at the stationhouse. He therefore had no tenable basis for making a search on the assumption that there would be incarceration. The official who is called upon to make the determinations involved in the decision on incarceration — the arrangements for bail, the possibility of a citation issued at the stationhouse — must make that decision before it may be used to justify an intrusion on privacy as one permissible under the Fourth Amendment. The mere possibility that such a search might later be justified obviously cannot serve to eliminate appellant’s rights under.the Fourth Amendment at the time of arrest. See, e. g., United States v. Mills, supra; People v. Superior Court of Los Angeles County [Simon], supra; People v. Overlee, Colo., 483 P.2d 222 (1971) (en banc).
VI
The result we reach today, it should be noted, is by no means unique. On the contrary, the vast majority of courts — both state and federal — which have considered the problem hold specifically that, absent “special circumstances,” a police officer has no right to search either the person or the vehicle incident to a lawful arrest for violation of a mere motor vehicle regulation. In Grundstrom v. Beto, N.D.Tex., 273 F.Supp. 912, 916 (1967), for example, the court, noting that the only legitimate objective of most searches incident to arrests for traffic offenses will be protection of the arresting officer, concluded that “[t]o permit all searches incidental to an arrest to be justified on the theory that the officer is searching for weapons would be to allow wholesale fishing expeditions whenever a legal arrest is made.”
Perhaps the most forceful statement of the principle applicable here, however, comes from a decision of the United States Court of Appeals for the Tenth Circuit. In United States v. Humphrey,. 10 Cir., 409 F.2d 1055, 1057-1058 (1969), then Chief Judge Murrah wrote for a unanimous panel;
“By its own terms the Fourth Amendment protects people ‘against unreasonable searches and seizures.’ Thus not all searches run afoul of the constitutional sanction but only those unreasonable in origin or scope. While the evolution of this constitutional standard of reasonableness has varied with our sense of justice, it is certain today that warrantless searches on probable cause are reasonable only when it is unfeasible to obtain a search warrant on proper affidavit * * *. Unless, of course, it is reasonably ‘incident’ to a legal arrest * * *,for can be said to be a mere ‘stop and frisk’ as in Terry v. Ohio, supra and Sibron v. New York * * *. Notably, these exceptions are not based on anything inherent in the exception itself but result from the inductive case by case application of the constitutional standard of reasonableness. Thus these exceptions are traditionally justified by the need to protect the arresting officers, prevent escape, collect instrumentalities or fruits of the crime (and
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
FAIRCHILD, Chief Judge.
These appeals deal with an alleged racial discrimination in the sale of real estate. The plaintiff-buyers brought this action in the district court November 2,1973 alleging that the defendant-sellers refused to perform their contract to sell their house to the buyers because of their race, in violation of the Civil Rights Act, 42 U.S.C. § 1982, and the Fair Housing Act, 42 U.S.C. § 3604. Jurisdiction was alleged under 28 U.S.C. §§ 1343(3), (4) and 2201 and 42 U.S.C. § 3612. The buyers moved for a preliminary injunction and for a consolidation of the trial on the merits with the preliminary injunction hearing.
On November 16, 1973, following an evidentiary hearing, the court granted the buyers’ motion for a preliminary injunction, enjoining “. . . the defendants and their agents . . . from refusing to sell the premises at 3816 Florence Avenue, Downers Grove, Illinois, in accordance with the terms of the contract for sale of real estate previously entered into by the parties. . . . ” The closing was subsequently carried out.
On November 21, defendant-sellers filed their answer and counterclaim. The answer alleged that defendants had terminated their contract because of dishonor of plaintiffs’ earnest money check; that notwithstanding the termination, defendants had been willing to sell, and executed an escrow agreement for such purpose, which plaintiffs refused to execute. The counterclaim sought damages and other relief because of the breach by plaintiffs.
On November 29, Thorsen and Marquardt-Robnett moved for leave to intervene as plaintiffs. They are real estate brokers and in the contract for sale to plaintiffs, defendant-sellers had promised to pay them a commission. Intervenors asserted that sellers’ refusal to pay the commission punished intervenors for securing housing for plaintiffs. The court denied intervention.
On January 18, 1974, the court held an evidentiary hearing on the question of damages, granted plaintiff-buyers’ motion for consolidation of the trial on the merits with the preliminary injunction hearing, and offered to hear additional evidence on the merits. The court granted judgment for the buyers for their actual loss in the amount of $322.00. The court denied, however, the buyers’ claim for punitive damages and attorneys’ fees.
The buyers then appealed from that order. We dismissed the appeal for lack of jurisdiction because the order appealed from was not final. The defendant-sellers’ counterclaim was still pending and the trial court had not made the express determination required under Rule 54(b) of the Federal Rules of Civil Procedure. This court also dismissed an appeal from the denial of intervention. Following the dismissal of the appeal, arguments were heard and evidence taken in the district court concerning the defendants’ counterclaim, and on April 7, 1975 the court denied the counterclaim. The court again refused leave for the brokers to intervene.
The buyers then appealed challenging the order denying their claim for punitive damages and attorneys’ fees, and the brokers appeal from denial of leave to intervene. The sellers cross-appeal challenging the orders granting the injunction, awarding the buyers actual damages, and denying their counterclaim.
I
Plaintiff-buyers, who are black, were shown the defendant-sellers’ house by an employee of one of the brokers. After an initial draft of August 13, 1973, the parties executed a contract, as modified, September 6, 1973, and an earnest money check was delivered to sellers’ attorney. The check, dated September 6, was signed by plaintiff Doris Crumble, in the amount of $6,700, drawn on the Continental Bank, and payable to sellers’ attorney as eserowee. On September 7, sellers’ attorney wrote buyers’ attorney terminating the contract and stating that the check “has been returned NSF.” He had asked his bank, the Northern Trust, to obtain certification, and had received word that the check was NSF.
In fact, Mrs. Crumble had made an adequate transfer of funds from her savings account, and the NSF report arose either from a delay in recording the transfer at Continental or from a misunderstanding at Northern Trust of the reason for Continental’s refusal to certify.
The buyers’ attorney advised the sellers’ attorney that the check was covered at all times, and there were further negotiations. Buyers tendered a certified check. An escrow agreement was prepared and signed on behalf of sellers on October 1. The sellers, however, were unwilling to have the amount of the commission disbursed to the brokers, and their attorney withdrew the escrow agreement. This action was brought several weeks later.
II
HOUSING DISCRIMINATION
On cross-appeal the sellers argue that the evidence is insufficient to demonstrate that they refused to sell their house because of a racial animus. They contend that the failure of the buyers’ bank to certify the earnest money check was a breach which permitted them to terminate the contract and caused them to have misgivings about the buyers’ ability to complete the sale. Up to and after the time of this alleged breach, the sellers claim that they did not know the buyers were black. They argue that there was no contract thereafter, that they were willing, however, to carry out the deal, but that buyers failed to execute the escrow agreement for closing. Although the sellers argue that the district court erred in compelling them to sell their house, they now appear willing to abide by the “forced sale”; but they seek damages for the cost of additional attorneys’ fees, the maintenance of their house, and the loss of equity, all of which occurred as a result of the buyers’ alleged breach of contract. Therefore, as we understand it, the sellers urge us to find that the court erred in finding them liable and awarding damages to the buyers, and in addition they ask us to grant their counterclaim making them whole for financial losses suffered as a result of the buyers’ breach.
At the outset we must consider the consequence of the consolidation of the preliminary injunction hearing with the trial on the merits. See Fed.R.Civ.P. Rule 65(a)(2), 28 U.S.C. We are convinced that the district court acted within its discretion in granting plaintiffs’ motion to consolidate. See Singleton v. Anson County Board of Education, 387 F.2d 349, 351 (4th Cir. 1967). Even though the motion was granted after the preliminary injunction hearing was completed, both parties had the opportunity to introduce new evidence and present additional arguments on the merits in the subsequent hearing. At the close of that hearing the record appeared to be sufficiently complete to have warranted a judgment on the merits. See Pughsley v. 3750 Lake Shore Drive Cooperative Bldg., 463 F.2d 1055, 1057 (7th Cir. 1972). The parties were made aware early in the second hearing that the court intended to reach a final judgment and therefore they understood that this hearing was meant to be their “final day in court.” The situation differed significantly from Puerto Rican Farm Workers v. Eatmon, 427 F.2d 210, 211 (5th Cir. 1970).
The pertinent findings were dictated on the record, in substance, as follows.
The court found that the September 6 check was a sufficient tender of the earnest money and that it was covered by sufficient funds. The transfer of the check to Northern Trust for certification by Continental was not negotiation through normal banking channels. Sellers, however, were in good faith in relying on the information received from the Northern Trust, but the refusal by Continental to certify the check did not result in the violation of buyers’ contractual obligation. The stumbling block was the refusal of the sellers to authorize the payment of the commission to the broker, and it was the knowledge of the sellers that the buyers were black which precipitated the intransigent attitude of the sellers concerning the refusal to see the commission go to the broker. Thus the breakdown of the deal had its roots in racial discrimination involving the buyers.
Although the only direct evidence as to sellers’ learning the race of the buyers was testimony that in a conversation on October 4, the husband asked if they were black, and was told they were, the court considered “that was the first confirmation Mr. Blumthal had of what he had for some unascertained time prior to that learned to suspect.”
In our view, the findings were not clearly erroneous. Under the circumstances it is reasonable to find that the sellers’ decision not to pay the real estate commission to the brokers, as provided in both the real estate sales contract and the escrow agreement, caused the transaction to be terminated. There was testimony that aj; the time when the house was first listed for sale the sellers indicated that they preferred not to sell to black buyers. Still later, the sellers again voiced displeasure at the conduct of the brokers in securing black buyers. Finally, it was after the problem of the earnest money check had been resolved and negotiations between the attorneys were reopened, that the sellers must have instructed their attorney to remove the escrow agreement and terminate the transaction. As analyzed by the district court, the sellers, who were in Florida, had begun to suspect that the buyers were black before they first raised objections to paying the commission as required by the contract, and they had admittedly learned the race of the buyers before the escrow was withdrawn.
Sellers’ counterclaim was based on the theory that the delivery of the September 6 check was a breach of the real estate sales contract which caused them damage including additional expense of maintenance, attorneys’ fees, and the like. In briefly considering the sellers’ counterclaim the district court found that the . . evidence is not conclusive on the issue whether the dishonoring by the bank of the buyers’ earnest money check was the cause of any significant amount of the counterclaimant sellers’ aggravation or pecuniary loss.” That finding is not clearly erroneous, and in any event we are not persuaded that the delivery of the September 6 check was a breach of the real estate sales contract.
Ill
DAMAGES AND ATTORNEYS’ FEES
The buyers argue on appeal that the district court erred in its assessment of compensatory damages suffered as a result of the sellers’ refusal to sell. In addition, they contend that the court should have levied punitive damages against the sellers and awarded the buyers their attorneys’ fees. The court did find that the buyers had suffered damages in the amount of $322.00. Based on the evidence in the record, we find that this award is reasonable as to out-of-pocket expense.
The buyers also claim damages due to the humiliation and mental anguish they suffered as a result of the violation of their civil rights. Mr. Crumble testified that he was humiliated and embarrassed by the sellers’ conduct. The district court did not specifically address this claim. Relief for such injury is contemplated by the Fair Housing Act, 42 U.S.C. § 3612(c), and our court, as well as others, has allowed recovery when it has been warranted. Seaton v. Sky Realty Company, Inc., 491 F.2d 634, 636—37 (7th Cir. 1974); Steele v. Title Realty Company, 478 F.2d 380, 384 (10th Cir. 1973). The claim that plaintiff suffered humiliation and loss of personal esteem as a result of this type of violation of his rights is entitled to consideration and a reasonable compensation. We remand this claim to the district court for appropriate attention.
Punitive damages may also be awarded under the Act. Rogers v. Loether, 467 F.2d 1110, 1112 (7th Cir. 1972), aff’d sub nom., Curtis v. Loether, 415 U.S. 189, 94 S.Ct. 1005, 39 L.Ed.2d 260 (1974). The district court, without much comment, denied the buyers’ petition for punitive damages. Although sellers were found to have intended to discriminate, the fact that a wrong is an intentional act does not compel an award of punitive damages as a matter of law. For various descriptions of the degree of malevolence warranting punitive damages, see Seaton v. Sky Realty Company, Inc., 491 F.2d 634, 638 (7th Cir. 1974); Jeanty v. McKey & Poague, Inc., 496 F.2d 1119, 1121 (7th Cir. 1974); Marr v. Rife, 503 F.2d 735, 744 (6th Cir. 1974). We do not find that the district court abused its broad discretion in denying the buyers’ request for punitive damages.
The buyers also urge us to reverse the district court’s order denying them attorneys’ fees for work done by their private counsel, Mr. Zells, and by the staff attorney of the Leadership Council, Mr. Caruso. Attorneys’ fees are recoverable by a successful plaintiff under both § 1982 and § 3612(c). Marr, supra, at 743. Section 3612(c) provides that a successful plaintiff may be awarded attorneys’ fees if the “. plaintiff in the opinion of the court is not financially able to assume said attorney’s fees.” The trial court determined that the plaintiffs were “persons of better than average financial means” and therefore could not be reimbursed for attorneys’ fees. A calculation of the plaintiffs’ ability to pay attorneys’ fees is apparently the only factor to be considered by the court. Hairston v. R & R Apartment, 510 F.2d 1090, 1092 (7th Cir. 1975); Williams v. Mathews Company, 499 F.2d 819, 829 (8th Cir. 1974), cert. denied, 419 U.S. 1027, 95 S.Ct. 507, 42 L.Ed.2d 302 (1974).
Section 1982 does not provide specific guidelines for the recovery of attorneys’ fees, and our court has not formed a standard for recovery, particularly in cases in which" plaintiffs seek relief under both § 1982 and § 3612(c). Hairston, supra, at fn. 1. Where both statutes cover the situation, we see no reason for making an award under § 1982 on a more liberal basis than under § 3612(c). Cf. Lee v. Southern Home Sites Corp., 444 F.2d 143, 148 (5th Cir. 1971). Therefore, since the plaintiffs have not demonstrated an inability to assume the expense of attorneys’ fees, we find that the district court did not abuse its discretion in denying the award.
IV
LEAVE TO INTERVENE
The real estate brokers moved the district court for leave to intervene, claiming that under the Fair Housing Act, 42 U.S.C. § 3617, they have a cause of action against the sellers for damages. The district court denied the motion, and the brokers have appealed.
Intervention in an action may be permitted “. . . when an applicant’s claim or defense and the main action have a question of law or fact in common.” Fed.R. Civ.P. Rule 24(b)(2), 28 U.S.C. In deciding whether to allow intervention the “. court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.” Id. The district court did not state its reasons for denying the motion for leave to intervene, rendering a review of the court’s exercise of discretion more difficult.
The brokers’ claim is based on the allegations that the seller had refused to pay the real estate commission, as required in the real estate sales contract, because the brokers aided the plaintiff-buyers in the exercise of their right to buy real estate. The Fair Housing Act, 42 U.S.C. § 3617, makes it unlawful for anyone to “. . . coerce, intimidate, threaten, or interfere with any person . . . [who] . . . encourage[s] any other person in the exercise or enjoyment of, any right granted or protected by section 3604, . . . .” The Act provides that this section may be enforced by “appropriate civil action.” Section 3617 apparently provides the brokers with a cause of action if they are “intimidated or interfered with” when aiding a buyer in the exercise of his right to buy or sell a house. Cf. Smith v. Stechel, 510 F.2d 1162, 1164 (9th Cir. 1975). This section seems clearly to include within its coverage the kind of retaliatory conduct that the sellers are accused of.
In addition, the brokers’ claim seems appropriate for resolution with the buyers’ cause of action. The common questions of law and fact in both actions relate to the sellers’ refusal to sell their house in violation of the Fair Housing Act. Both the brokers and the buyers trace the cause of their injury to the sellers’ illegal conduct. See Romasanta v. United Airlines, Inc., 537 F.2d 915, 919 (7th Cir. 1975), cert. granted sub nom., United Airlines v. McDonald, —U.S. —, 97 S.Ct. 523, 50 L.Ed.2d 608 (1976). The general purpose of the Act, to encourage the transfer of real estate regardless of race, is well served by allowing brokers who follow the law to join aggrieved buyers in enforcing their rights.
The other requirements of permissive intervention have also been met. The brokers filed their motion for leave to intervene shortly after the buyers brought their action, thereby satisfying any objections that they had not acted in a timely manner or had caused undue delay. They took an appeal which was dismissed, perhaps improvidently. They renewed their motion and appealed again.
Finally, we can find no evidence that permitting the brokers to intervene will prejudice the rights of any of the parties. Much of the relevant evidence is already before the court. Of course, intervenors and defendant-sellers are free to offer additional evidence, but it seems probable that it will not be extensive, nor that intervention at this stage will visit a burden on the district court sufficient to be a reason in itself for affirming the denial of intervention. The fact that the substance of intervenors’ federal court cause of action may in some respects parallel their cause of action on contract does not detract from the appropriateness of intervention in these circumstances.
Therefore, we find that the district court abused its discretion, and that the brokers’ motion for leave to intervene should now be granted.
Insofar as the judgment appealed from failed to award plaintiffs compensatory damages for humiliation and mental anguish, it is reversed. The order denying intervention is reversed. The cause is remanded for further proceedings consistent with this opinion. In all other respects, the judgment is affirmed. Costs on appeal are allowed to plaintiffs and proposed intervenors.
. The Civil Rights Act of 1866, 42 U.S.C. § 1982, guarantees the following:
All citizens of the United States shall have the same right, in every State and Territory, as is enjoyed by white citizens thereof to inherit, purchase, lease, sell, hold, and convey real and personal property.
. The Fair Housing Act of 1968, 42 U.S.C. § 3604, in pertinent part provides the following:
As made applicable by section 3603 of this title and except as exempted by sections 3603(b) and 3607 of this title, i( shall be unlawful—
(a) To refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, or national origin.
. The district court incorrectly implied that since Mr. Caruso was employed on a salaried basis for the Leadership Council he could not, under § 3612(c), receive on behalf of the Council an award for attorneys’ fees. We recently held in Hairston v. R & R Apartments, infra, at 1092, that a charitable organization may receive attorneys’ fees. The factors to be considered in making such an award are the plaintiffs’ ability to pay the fee and the existence of a lawyer-client relationship. Tillman v. Wheaton-Haven Recreation Ass’n, Inc., 517 F.2d 1141, 1148 (4th Cir. 1975).
. Section 810(a) of the Act, 42 U.S.C. § 3610(a), has also been interpreted to provide a remedy for a broad class of people injured because of housing discrimination. Trafficante v. Metropolitan Life Ins., 409 U.S. 205, 212, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SNEED, Circuit Judge:
Appellees, Seattle First National Bank (Seafirst) and Peoples National Bank of Washington, are engaged in the leasing of motor vehicles and other personal property. Appellants, M & M Leasing Corporation, Goodway Leasing, Inc., Bill Pierre Leasing, Inc., and Budget Rent-a-Car of Washington-Oregon, Inc., are independent corporations engaged principally in motor vehicle leasing. Defendant-cross-appellant is the Comptroller of Currency of the United States.
Appellants, plaintiffs in the trial court, sought a declaration that the appellees’ leasing of motor vehicles and other personal property was not authorized by 12 U.S.C. § 24 (Seventh), despite the fact that it is sanctioned by the Comptroller of the Currency. Appellants also requested an injunction barring appellees and their subsidiaries from further motor vehicle leasing activities. Moreover, appellants asserted that, even if the Comptroller’s rulings relied upon to sanction appellees’ activities are valid, such activities exceeded the authorization the rulings provided and should be enjoined to that extent.
The trial court in an able opinion distinguished between motor vehicle lease transactions in which the banks do not assume the risk of residual value fluctuation upon termination of the lease (so-called “open end” leases) and those in which the banks do assume such risk (so-called “closed end” leases). In its initial judgment the trial court enjoined the appellees “from engaging in motor vehicle lease transactions in which the banks assume the risk of residual value fluctuation upon termination of the lease” (II C.R. 575) and declared the Comptroller’s interpretive rulings, 12 C.F.R. §§ 7.3400 and 7.7376, invalid to the extent they authorized such leases.
None of the parties was entirely satisfied by this disposition of their dispute. The appellee banks moved to clarify the opinion and judgment to remove “closed end” leases in which there is to be a “full payout” prior to termination of the lease from the scope of the trial court’s injunction and to delete the words “motor vehicle” from the language of the injunction. The appellants thought the court’s injunction should embrace all leasing and the Comptroller of Currency indicated displeasure with the restrictiveness of the trial court’s opinion and injunction.
The trial court in due course amended its injunction to delete the words “motor vehicle” so that it currently reads “from engaging in lease transactions in which the banks assume the risk of residual value fluctuation upon termination of the lease.” (II C.R. 598). Also, by order, the trial court construed its opinion and judgment as follows:
“Lease transactions in which the lessor bank, during the initial lease term, is repaid the cost of the property leased, plus the cost of financing the transaction, in the form of rentals, tax benefits and/or the guarantee of a financially responsible guarantor, are neither disapproved in the Court’s opinion nor enjoined by the judgment entered herein.” (II C.R. 596).
These modifications satisfied the appel-lees but, of course, neither the appellants nor the Comptroller. Hence, this appeal was taken by them. We affirm in part and reverse in part.
In essence, we view the trial court’s holding as correct, so far as it goes, but somewhat more restrictive than the law requires. As we see it, the “business of banking,” which 12 U.S.C. § 24 (Seventh), authorizes the appellees to conduct, includes leases of personal property when, in the light of all relevant circumstances, the transactions constitute the loan of money secured by the properties leased. A transaction may be so characterized, in our opinion, even if it is designed so that the lessor bank does not recover during the initial lease term every penny of the cost of the leased property plus its financing costs. A lease ceases to be a secured loan when the lessor assumes material burdens other than those of a lender of money and is subject to significant risks not ordinarily incident to a secured loan. The bright line traced by the trial court provides a sound guide by which leases can be kept within the scope of the “business of banking.” We are not, however, prepared to say that the trial court’s bright line constitutes the precise outer limit of the “business of banking.”
To support our holding, we first will describe the nature and scope of national banks’ involvement in the leasing of personal property, we will next analyze the term “business of banking” and apply the analysis to such leasing, and, finally, we will identify some of the characteristics of leases which lie beyond the outer limits of the “business of banking.”
I
Leasing By National Banks.
The record of this case indicates that the role of national banks, such as Seafirst and Peoples, in personal property leasing generally is essentially that of a financing agency. To illustrate this it is useful to divide personal property leases into motor vehicle leases and leases of aircraft, ships and other so-called “big ticket” items.
Motor vehicle leases usually, but not invariably, are generated by automobile dealers. Particular dealers will enter into an agreement with a bank under which dealers will lease automobiles to their customers. The major terms of a lease, i. e., make, model, accessories, term, and payment schedule, are fashioned by the dealer in a manner that fits his and the customer’s interests and conforms to the lease design envisioned by the dealer’s arrangement with the bank. To protect itself against improvident leases the bank possesses the right to review both the substantive terms of a lease and the credit-worthiness of the lessee before accepting the lease. The crucial items reviewed are the credit rating of the customer and the vehicle’s residual value. Upon accepting the lease the lessee-customer is notified and instructed to make lease payments to the bank. The title of the vehicle shows the bank as the legal owner, while the customer is listed as registered owner and lessee. Customers who approach the bank initially are usually referred to dealers with whom the bank has leasing arrangements.
The bank functions somewhat differently with respect to “big ticket” items. With respect to them, generally the customer calls the bank directly and expresses an interest in leasing particular personal property. This contact essentially is to inquire about the availability of credit. The bank performs no procurement function. The customer chooses the property he wishes to lease, selects a vendor and negotiates with him the terms of the purchase. Assuming the bank finds the customer an acceptable credit risk, it then purchases the property and leases it to the customer. Delivery by the seller is made directly to the customer-lessee who makes the lease payments to the bank.
Both motor vehicle leases and “big ticket” leases provide that the burdens of operating costs and risks are borne by the lessee. Thus, the lessee agrees to purchase insurance sufficient to cover the bank’s interest, to pay all repairs and maintenance, and to assume the risk of loss or damage.
Motor vehicle leases and “big ticket” leases frequently differ, however, in certain important respects. Foremost is the difference in the lessee’s responsibility at the expiration of the initial term of the lease. Motor vehicle leases, for example, include a guarantee by the lessee that the vehicle will have a certain residual value at the expiration of the usual two or three year term.
This residual value is simply the anticipated resale value of the vehicle at the lease’s termination. Should resale value in fact be less than the guaranteed residual value, the lessee must pay the difference. Should it be more, the excess when realized is refunded to the lessee. “Big ticket” item leases, on the other hand, normally impose no residual value guarantee on the lessees. The need for such guarantees is reduced, if not eliminated, by the fact that such leases typically are for a term which approximates the economic life of the properties. Leases in which there is a residual value guarantee are designated, in the language of commerce, as “open end” leases, while those in which no such guarantee exists are designated “closed end” leases.
Closed end leases, therefore, do impose on the lessor bank a risk not borne in the case of open end leases. In the former the lessor bank must absorb any difference between the estimated residual value at the end of the lease and a lesser actual resale price. In the open end lease, on the other hand, any such difference is guaranteed by the lessee. It is this distinction between the two types of lease that, as already noted, strongly influenced the trial court’s disposition of this case.
Notwithstanding this difference between open end and closed end leases, the lessor bank under each type of lease realizes on the property at the expiration of the lease in a substantially similar manner. Thus, at the lease’s end the lessor bank will dispose of the property in the simplest possible manner. Should the lessee not purchase the item, either for the estimated residual value or for a mutually agreeable price, the lessor bank will dispose of it by sale or by way of a new léase. Motor vehicles not sold to the lessee, for example, are either resold to the dealer, sold in the wholesale market, or leased to another customer. Moreover, the record of this case does not reveal that closed end leases as a class impose significantly more onerous economic burdens on banks than do open end leases. This is not surprising because leases of “big ticket” items, leased under closed end terms, generally provide for the bank’s investment plus interest to be returned by way of lease payments prior to the expiration of the lease.
From the standpoint of a bank the advantages of leasing, as opposed to traditional lending on chattel security, are said to be numerous. Certain tax benefits pertaining to depreciation and the investment tax credit are said to be available under leasing but not under lending. Leasing, it is pointed out in the record of this case, permits the avoidance of usury laws and increases the demand for credit by eliminating the need for down payments by the customer.
Lessees also may derive advantages from leasing not available when conventional borrowing is employed. A lease obligation may be reflected on the balance sheet more favorably than an indebtedness, and leasing may permit avoidance of limitations on the lessee’s ability to borrow. See Stiles & Walker, Leveraged Lease Financing of Capital Equipment, 28 Bus. Lawyer 161 (1972).
In any event, leasing yields to the banks a rate of return that compares favorably to that of lending. A portfolio of prudently-arranged leases imposes no greater risks than one of equally prudently-arranged loans. It is small wonder, therefore, that today over 1000 national banks are engaged in the leasing of personal property which has an aggregate value in excess of $2 billion. Thus, although much of this growth has occurred in the 1970’s and resulted from the entrance of national banks into the field of motor vehicle leasing, it is clear that leasing at present is a significant part of the business of national banks.
II.
The “Business of Banking.”
While the importance of leasing to the business of national banks is relevant to determining the extent to which such activity is useful and convenient, it does not alone establish that leasing is within the “business of banking” as authorized by 12 U.S.C. § 24 (Seventh). In construing the scope of the authority established by this statutory provision, we adopt the approach employed by the First Circuit in Arnold Tours, Inc. v. Camp, 472 F.2d 427, 431-32 (1st Cir. 1972). That is, for an activity to be pursuant to an incidental power “necessary to carry on the business of banking” it must be “convenient or useful in connection with the performance of one of the bank’s established activities pursuant to its express powers under the National Bank Act.” Id. at 432. Thus, leasing must be convenient or useful to business expressly authorized by 12 U.S.C. § 24 (Seventh). As indicated above, we hold that leasing, when in the light of all relevant circumstances the transaction constitutes a loan of money secured by the leased property, see p. 1379, is incidental to the “loan of money on personal security,” an activity expressly authorized by the National Bank Act.
In reaching this conclusion we draw comfort from the fact that commentators uniformly have recognized that the National Bank Act did not freeze the practices of national banks in their nineteenth century forms. Indeed, many contend that the powers of national banks “are not confined to the powers specified in the National Bank Act and those necessary to carry out those specific powers.” Trimble, The Implied Power of National Banks to Issue Letters of Credit and Accept Bills, 58 Yale L.J. 713, 721 (1949). See Huck, What Is the Banking Business? 21 Bus. Lawyer 537, 541 (1966); Note, Diversification by National Banks, 21 Stan.L.Rev. 650, 651-53 (1969). We prefer, however, the Arnold Tours, Inc. formulation of the scope of “incidental” powers; but, whatever the scope of such powers may be, we believe the powers of national banks must be construed so as to permit the use of new ways of conducting the very old business of banking. Those who would reject such new ways should recall that Chief Justice Holt’s efforts in Clerke v. Martin, 2 Ld.Raym. 757 (1702) to deny the negotiability of promissory notes payable to a named payee or order was overturned by statute several years later. 3,4 Anne c. 9 (1704). As Holdsworth put it, Chief Justice Holt’s mistake was to believe that “the most correct technical reasoning could stop the development of the new machinery rendered necessary by the new needs of an expanding trade.” Holdsworth, History of the English Law VIII, 175-76 (1926). Unless compelled by higher authority, which we would then believe to be misguided, we do not wish in the context of this case to repeat Chief Justice Holt’s mistake.
Appellants would have us follow in Holt’s footsteps by emphasizing that secured lending to permit the acquisition of property (can be accomplished through traditional forms. A loan secured by a chattel mortgage or a conditional sales contract provides the proper means, they insist, by which a “loan of money on personal security” ought to be accomplished. A lease which serves the same purpose is impermissible. Particularly is this true, they assert, when both the lessor bank and the lessee customer distinguish the lease from a loan, and third parties, including various government agencies, treat the two quite differently.
Appellants are correct in stating that functionally interchangeable leases and secured loans are regarded as distinct in both the rhetoric and regulation of this form of commerce. However, it is their functional interchangeability that is the touchstone of our decision. To ignore that in the interpretation of 12 U.S.C. § 24 (Seventh), is figuratively to reject, as did Chief Justice Holt, something “invented in Lombard Street.” Clerke v. Martin, supra. Whether third parties in other contexts should treat leases that are equivalent to loans as nonetheless distinct and separate is not at present before us. Whatever might be the proper dispositions of such issues, they should not influence our opinion in this case.
III.
The Limits of the “Business of Banking.”
It should be clear that our holding is not without limits. It does not embrace the^ view that national banks may compete with i appellants in the daily or short-term cari rental business. Nor does it permit nation-} al banks to become self-financing automobile dealers, utilizing their unique position to acquire an inventory of automobiles at advantageous prices to lease at going market rates to customers. Neither activity is a means by which a bank makes a “loan of money on personal security.” Each is a business distinct from banking.
A national bank also leaves the business of banking when it undertakes, as a “service” to its customers, to pass on to them any price reductions which its marketing power can extract from sellers of automobiles or other personal property. There may be a place for a “buyer’s cooperative” in automobile marketing, but that place is not in a national bank. Such a cooperative, whether in substance or in form, is not the business of banking.
It is also clear that national banks cannot provide operational services such as repairs, maintenance, spare parts, insurance coverage, license renewals, etc. Such services are not those of a bank. This proscription shapes the duration of a lease that a national bank properly can employ. Short term leases which inescapably thrust upon the bank significant service responsibilities impose non-banking responsibilities. As previously indicated, leases of automobiles for two or three years do not necessarily entail nonbanking responsibilities; and, of course, a lease for the economic life of the property also does not.
Proscribed operational services, also, do not include the functions incident to the disposal of the property at the expiration of the lease as described at p. 1381 of this opinion. So long as these activities constitute only the orderly liquidation of the bank’s security they remain within the business of banking.
Finally, our holding manifestly is not intended to authorize leases which impose significant financial risks on national banks more onerous than those incident to loans. Therefore, it is necessary that the lessor bank look primarily to the obligations of the lessee for the entire return of its advances. It is the lessee’s credit worthiness, not primarily the market value of the leased property, to which the bank must look for its return. No banker, however, ignores the borrower’s collateral; nor must he when the loan is cast in lease form. Our point, put differently, is that a lease, which from its inception inevitably must be repeated or extended to enable the bank to recover its advances plus profit, is not a of money on personal security.” Such leases indicate a rental business, not the business of banking. To engage in the business of renting personal property would permit the assumption of risks not permitted national banks. An impermissible assumption of risks is not indicated, however, either by an open end lease, in which the bank’s entire advance is guaranteed by the lessee, or a closed end lease, in which the residual value of the leased property at the expiration of the lease contributes insubstantially to the bank’s recovery of its advances plus interest.
IV.
Role of the Comptrollers.
We recognize our observations do not provide a comprehensive charter by which the appellee banks may guide their steps. For example, we have not dealt with the type of advertising that is compatible with leasing activities of national banks that are within their statutory authority. Nor do we comment on the appropriateness of a subsidiary of a national bank acquiring a dealer’s license from the state and maintaining a garage for storing previously leased automobiles.
Preparation of a comprehensive charter is a function that belongs to the Comptroller. It is his duty to promulgate reasonably detailed regulations which will confine leasing within the channels of the “business of banking.” We do not believe that 12 C.F.R. §§ 7.3400 and 7.7376 adequately perform this duty.
Our present contribution merely sketches the boundaries of the business of banking and resolves the particular controversy before us.
We affirm in part and reverse in part and remand for such modifications of the trial court’s judgment as is required by this opinion.
Costs shall be borne by the appellants.
Affirmed in part, Reversed in part.
. The pertinent portion of 12 U.S.C. § 24 (Seventh) is as follows:
“To exercise by its board of directors or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, bills of exchange, and other evidence of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal property; and by obtaining, issuing, and circulating notes according to the provisions of this chapter.
. The authorization appears in 12 C.F.R. § 7.3400 and is as follows:
“A national bank may become the owner or lessor of personal property acquired upon the specific request and for the use of a customer and may incur such additional obligations as may be incident to becoming an owner and lessor of such property. Lease transactions do not result in obligations for the purpose of 12 U.S.C. 84. Since the lease payments are in the nature of rent rather than interest, 12 U.S.C. 85 and 86 are not applicable.”
12 C.F.R. § 7.7376 authorizes an operating subsidiary of a national bank to “lease property.”
. These figures appear in the appellee banks’ brief p. 46 and are derived from a survey introduced at the trial made by the Comptroller of Currency.
. See, Automobile Leasing as an Activity for Bank Holding Companies, Fed. Reserve Bull., Nov. 1976, 930, 935.
. In describing leases which are equivalent to secured loans, it has been said:
In each case there is a sum certain in amount. This sum includes the acquisition cost of the vehicle and the cost of financing and is recovered through a series of noncan-cellable deferred payments. The term of the payment period in both cases is 24 to 36, or recently to 48 months. The vehicle serves as a type of collateral to guarantee payment on both the installment loan and the lease. Both forms of financing are applied to a specific automobile that is chosen prior to preparation of the document . . . . All attributes of ownership pass to the lessee who is responsible for servicing, insurance, and depreciation.
[The banks] use the same skills in leasing a vehicle as they do in financing it through an installment loan.
Automobile Leasing as an Activity for Bank Holding Companies, supra n. 4.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
GRANT, Senior District Judge.
The primary issue raised by this appeal is whether an environmental impact statement prepared by the Corps of Engineers concerning a flood control dam project on the Kickapoo River, Wisconsin, complied with the mandates of the National Environmental Policy Act of 1969 (hereinafter NEPA). A secondary question is whether the failure of the Corps of Engineers to request and obtain local assurances of participation from two downstream^ communities voided the project. The district court answered the former question in the affirmative and the latter in the negative. We affirm.
In 1962 Congress authorized the construction of a flood control dam on the Kickapoo River, a free-flowing river with a history of annual destructive floods, located in the southwestern section of Wisconsin. The final design for the dam specified a height of 103 feet with an over-all length of 3,960 feet. The dam would create a reservoir covering 1,780 acres and result in the inundation of approximately 12 miles of the river between the communities of La-Farge and Ontario. This section of the river is popular with canoeists and noted for its picturesque bluffs and sandstone ledges containing rare floral plants. The project also involved supplemental flood protection levees at two small downstream communities, for which both communities were required to make cost-sharing commitments.
The Corps had initially prepared a draft environmental impact statement in November of 1970. After publication of the statement and review by state and local agencies, environmental groups, etc., a final environmental impact statement was prepared and forwarded to the Council on Environmental Quality on April 18, 1972. As correctly noted by the Court below, the statement
is a voluminous document, consisting of 78 pages of text and 400-500 pages of plates and appendices. The EIS is organized under eight headings which correspond closely to the subject matter required under § 4332(2) (C), NEPA: Project Description; Environmental Setting without the Project; Environmental Impact of the Proposed Action; Adverse Environmental Effects which Cannot be Avoided Should the Project be Implemented; Alternatives to the Proposed Action; Short-Term Uses of Man’s Environment. as Compared to Maintenance and Enhancement of Long-Term Productivity; Irreversible or Irretrievable Commitments; Coordination with other Agencies; and Conclusion. Each of the above subjects is divided into numerous subdivisions. All told, fourteen alternatives for flood control, fish and wildlife management, and recreation are considered in the report. Comments on the final draft were requested from 20 federal and state agencies and officials and private organizations and individuals (including plaintiff herein, Sierra Club, John Muir Chapter). Comments were received and incorporated in the EIS from fifteen persons and organizations who responded. Sierra Club v. Froehlke, 345 F.Supp. 440, 443 (W.D.Wis.1972).
Plaintiffs filed suit in the district court with four counts of their complaint alleging, in effect, that the Corps’ environmental impact statement was inadequate in violation of § 102 of the National Environmental Policy Act and, therefore, that continuation of the project was enjoinable under the Administrative Procedure Act. A fifth claim alleged that the project was enjoinable under the Administrative Procedure Act because the requests for local assurances of participation on the project had not been made and received as required by law. Plaintiffs filed a motion for a preliminary injunction with supporting affidavits and legal memoranda. Defendants and intervenors filed counter-affidavits and memoranda of law. The motion was denied by the trial court on 2 June 1972. Ibid. Defendants and inter-venors then filed a motion for summary judgment which was granted by the court on 24 July 1972, the court finding thát the “environmental statement provided adequate notice to all. concerned persons, agencies, and organizations, of the probable environmental consequences of the proposed project.” App. at 50a.
Plaintiffs argue that the statement is inadequate in that the Corps failed to consider useful existing studies, misstated water quality problems, failed to conduct vegetation studies with particular reference to the unique flora of the river’s cliffs which would be inundated by the dam-lake, overstated the beneficial effects of the project, understated the detrimental effects and failed to give proper consideration to available alternatives. Plaintiffs further argue that the district court utilized the wrong test or standard in determining the sufficiency of the statement. They contend that the court’s “notice of problems” test is improper.
The Corps argues that the impact statement objectively meets the requirements of NEPA noting that the statement treats the five specific subject areas set forth in § 4332(2) (C), NEPA. They contend that plaintiffs’ real point is that the agency decision-makers did not accord some factors the weight which plaintiffs would assign them. In response to plaintiffs’ contention that the' statement demonstrates bias and partiality by the Corps rather than objectivity, the Corps argues that it “is obviously not required to give the same weight to plaintiffs’ concern as plaintiffs do,” Hanly v. Mitchell, 460 F. 2d 640, 648 (2nd Cir. 1972), cert, denied, 409 U.S. 990, 93 S.Ct. 313, 34 L. Ed.2d 256, and that some bias is even to be expected, citing Environmental Defense Fund v. Corps of Eng., U.S. Army, 470 F.2d 289 (8th Cir. 1972), cert, denied, 412 U.S. 931, 93 S.Ct. 2749, 37 L.Ed.2d 160 (1973). The Eighth Circuit Court of Appeals stated in that case as follows:
. NEPA assumes as inevitable an institutional bias within an agency proposing a project and erects the procedural requirements of § 102 to insure that “there is no way [the decision-maker] can fail to note the facts and understand the very serious arguments advanced by the plaintiffs if he carefully reviews the entire environmental impact statement.” [Environmental Defense Fund v. Corps of Eng., U. S. Army,] 342 F.Supp. [1211] at 1218. An institutional bias will most often be found when the project has been partially completed. Id. at 295.
The court concluded that “[T]he test of compliance with § 102, then, is one of good faith objectivity rather than subjective impartiality.” Id. at 296.
Federal agencies are required to demonstrate objectivity in the treatment and consideration of the environmental consequences of a particular project, Environmental Defense Fund, supra, 470 F.2d at 295; Environmental Defense Fund v. Corps of Eng., U. S. Army, 348 F.Supp. 916, 927 (N.D.Miss. 1972). The detailed statement of the environmental consequences required by § 102 “must be sufficiently detailed to allow a responsible executive to arrive at a reasonably accurate decision regarding the environmental benefits and detriments to be expected from program implementation.” Environmental Defense Fund v. Hardin, 325 F.Supp. 1401, 1403-1404 (D.D.C.1971). Stated slightly differently, the statement must provide “a record upon which a decision-maker could arrive at an informed decision.” Environmental Defense Fund v. Corps of Eng., U. S. Army, 342 F.Supp. 1211, 1217 (E.D.Ark.1972), aff’d (8th Cir.), 470 F.2d 289.
In the instant case, plaintiffs argue that Judge Doyle’s finding “that the agency at least recognizes and puts interested persons on notice of problems which exist in these areas [of siltation, water quality, vegetation and identification and discussion of alternatives],” 345 F.Supp. at 444, constitutes a “notice of problems” test which is less demanding than a requirement that the environmental impact statement “be a record upon which a decision-maker could arrive at an informed decision.” 342 F. Supp. at 1217. If this were the only finding made by the district court, we might be inclined to agree with plaintiffs’ argument. However, the court also found that plaintiffs had not shown a sufficient probability of success on the merits as to their “contention that the statement in its present form does not constitute ‘full disclosure’ ” of the environmental consequences of the project “as required by NEPA.” 345 F.Supp. at 444. The court also concluded that plaintiffs had “failed to show a sufficient chance of success on the merits of a contention that the present statement is not a record upon which a decision-maker could make an informed decision.” Id. at 445. These contentions were later decided adversely to the plaintiffs upon the basis of the entire record. App. at 50a. With reference to plaintiffs’ contention that the Corps failed to conduct certain studies in addition to those which were conducted, the district court correctly noted that NEPA
does not require that every conceivable study be performed and that each problem be documented from every angle to explore its every potential for good or ill. Rather, what is required is that officials and agencies take a “hard look” at environmental consequences. Id. at 444.
Or as observed in Environmental Defense Fund, supra, 342 F.Supp. at 1217:
It is doubtful that any agency, however objective, however sincere, however well-staffed, and however well-financed, could come up with a perfect environmental impact statement in connection with any major project. Further studies, evaluations and analyses by experts are almost certain to reveal inadequacies or deficiencies.
We concede that a requirement that the agency take a “hard look” at the environmental consequences, like the “notice of problems” test, might be, in and of itself, “a singularly inappropriate test for reviewing the adequacy of an impact statement,” as suggested by the plaintiffs. Nevertheless, the various statements and findings made by the district court in the case at bar demonstrate an awareness by the court of several standards of review utilized by other courts. We are inclined to agree with the intervenors that any differences in the prescribed tests and standards are semantic and that each of them serves as a means of ensuring that an agency’s impact statement will “alert the public, other interested agencies, the Council on Environmental Quality, the President, and the Congress of possible environmental consequences of proposed agency action.” In any event, we interpret the district court’s opinions as a finding that the Corps objectively and comprehensively considered the environmental consequences of the proposed project.
A second, and perhaps more important, test or standard of review contended for by the plaintiffs is that the district courts have an obligation to review substantive agency decisions on the merits to determine if they are in accord with NEPA. Several courts have recently held that such an obligation exists. As stated by the Eighth Circuit Court of Appeals,
The unequivocal intent of NEPA is to require agencies to consider and give effect to the environmental goals set forth in the Act, not just to file detailed impact studies which will fill governmental archives.
The application of the substantive principles of NEPA is to be made by the agency through a “careful and informed decisionmaking process.” Calvert Cliffs’ Coordinating Committee v. U. S. Atomic Energy Commission, supra [146 U.S.App.D.C. 33] 449 F.2d [1109] at 1115. The agency must give environmental factors consideration along with economic and technical factors. “To ‘consider’ the former ‘along with’ the latter must involve a balancing process.” Id. at 1113.
Given an agency obligation to carry out the substantive requirements of the Act, we believe that courts have an obligation to review substantive agency decisions on the merits. Whether we look to common law or the Administrative Procedure Act, absent “legislative guidance as to re-viewability, an administrative determination affecting legal rights is reviewable unless some special reason appears for not reviewing.” K. Davis, 4 Administrative Law Treatise 18, 25 (1958). Here, important legal rights are affected. NEPA is silent as to judicial review, and no special reasons appear for not reviewing the decision of the agency. To the contrary, the prospect of substantive review should improve the quality of agency decisions and should make it more likely that the broad purposes of NEPA will be realized.
Environmental Defense Fund, supra, 470 F.2d at 298-299.
As to the specific standard of review to be applied, the Court held that
The standard of review to be applied here and in other similar cases is set forth in Citizens to Preserve Overton Park v. Volpe, supra, 401 U. S. [402] at 416, 91 S.Ct. [814] at 824, [28 L.Ed.2d 77]. The reviewing court must first determine whether the agency acted within the scope of its authority, and next whether the decision reached was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. In making the latter determination, the court must decide if the agency failed to consider all relevant factors in reaching its decision, or if the decision itself represented a clear error in judgment.
Where NEPA is involved, the reviewing court must first determine if the agency reached its decision after a full, good faith consideration and balancing of environmental factors. The court must then determine, according to the standards set forth in §§ 101(b) and 102(1) of the Act, whether “the actual balance of costs and benefits that was struck was arbitrary or clearly gave insufficient weight to environmental values.” Calvert Cliffs’ Coordinating Committee v. U.S. Atomic Energy Commission, supra, 449 F.2d at 1115.
Id. at 300.
The Fourth Circuit has expressly adopted the holding of the Eighth Circuit. Conservation Council of North Carolina v. Froehlke, 473 F.2d 664, 665 (4th Cir. 1973). The Fifth Circuit and the District of Columbia Circuit appear to be in accord. Save Our Ten Acres v. Kreger, 472 F.2d 463, 466 (5th Cir. 1973); Calvert Cliffs’ Coordinating Committee v. U. S. Atomic Energy Commission, 146 U.S.App.D.C. 33, 449 F.2d 1109, 1115 (1971).
While this court has never considered the test or standard to be utilized in determining whether an environmental impact statement complies with NEPA and whether district courts have an obligation to review substantive agency decisions on the merits, the court has had an opportunity to discuss the importance of the National Environmental Policy Act, in particular, the requirements of Sections 101 and 102:
Through the enactment of these procedural requirements the Congress has not only permitted but has compelled the responsible federal agencies to take environmental values into account. . . . Not only must the environmental consequences of a particular action be considered, but Section 102 requires also that these consequences be weighed and balanced against other considerations, such as financial or social, which may be involved.
The environmental impact statement required by Section 102 is designed to insure that this balancing analysis is given its fullest effect. Pro forma compliance with the substantive guidelines of Section 101 simply will not suffice. Section 102 of NEPA provides that its procedures be implemented and carried out “to the fullest extent possible.” Scherr v. Volpe, 466 F.2d 1027, 1031 (7th Cir. 1972).
In light of these statements, we feel compelled to hold that an agency’s decision should be subjected to a review on the merits to determine if it is in accord with the substantive requirements of NEPA. The review should be limited to determining whether the agency’s decision is arbitrary or capricious. “The court is not empowered to substitute its judgment for that of the agency.” Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 824, 28 L.Ed.2d 77 (1971).
In the instant case, the district court did not conduct a review on the merits. Although a remand would be the normal procedure, we do not believe a remand is required. After reviewing the environmental impact statement prepared by the Corps, we are convinced that the Corps “reached its decision after a fair, good faith consideration and balancing of environmental factors,” and that its decision is neither arbitrary nor capricious.
Plaintiffs also claim that continuation with the Kickapoo project is unlawful under the Flood Control Act of 1962 which initially authorized the project. Section 201 of that Act provides that “the authorization for any flood control project herein adopted requiring local cooperation shall expire five years from the date on which local interests are notified in writing ... of the requirements of local cooperation, unless said interests shall within said time furnish assurances satisfactory to the Secretary of the Army that the required cooperation will be furnished.” Section 203 authorizes a number of projects, one of which is “[T]he project for the Kickapoo River . . . substantially as recommended by the Chief of Engineers in House Document Numbered 557, Eighty-seventh Congress. . . .” Plaintiffs specifically argue that the failure of the Corps to request and obtain local assurances of participation, in the form of cost-sharing commitments, voids the project and renders it enjoinable under the Administrative Procedure Act as not “in accordance with law” [5 U.S.C. § 706(2)(A)], “in excess of statutory . . . authority” [Section 706(2)(C)], and “without observation of procedure required by law” [Section 706(2)(D)].
During oral arguments this Court raised the question as to whether plaintiffs had standing to raise the issues presented by this claim for relief. Plaintiffs and intervenors were permitted to file supplemental briefs on the standing issue.
Both parties agree that the two-pronged test enunciated by the Supreme Court in Data Processing Service v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L. Ed.2d 184 (1970), is controlling:
The first question is whether the plaintiff alleges that the challenged action has caused him injury in fact, economic or otherwise.
* * * * * *
The question of standing concerns . . . the question whether the interest sought to be protected by the complainant is arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question. Id. at 152-153, 90 S.Ct. at 829-830.
Plaintiffs argue that they satisfy both requirements. They note that their interests are two-fold: some of the individual plaintiffs, and members of the plaintiff associations, canoe on a portion of the Kickapoo River which would be inundated if the proposed project is completed; others own land which will be condemned if the project continues. Thus, they suggest the injury in fact requirement is clearly satisfied. See Sierra Club v. Morton, 405 U.S. 727, 735, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972). Plaintiffs stress, however, that it is the continuation and completion of the project without obtaining the necessary local assurances which is causing them injury in fact and not the per se failure of the Corps to obtain local assurances as required by statute.
With reference to the zone of interests test, plaintiffs argue that their interests, though reflecting “aesthetic, con-servational, and recreational” values, are definitely within the zone of interests to be protected or regulated by the statute in question. In fact, they contend that the regulation of their interests is total since implementation of the project terminates their use of the inundated part of the river and will result in the condemnation of their land.
At a minimum, we cannot accept plaintiffs’ analysis of the zone of interests test. While we recognize that “[W]here statutes are concerned, the trend is toward enlargement of the class of people who may protest administrative action,” we fail to understand how plaintiffs’ interests constitute interests protected or regulated by the statutory proviso requiring local assurances of participation for the construction of the downstream levees. The obvious interest sought to be protected or regulated by the proviso is a Congressional interest in ensuring that local communities who are to receive a direct benefit from the local protection levees, share in the cost of such works. As noted by the interve-nors, the interests of neither group of plaintiffs coincide, geographically or otherwise, with the local protection levees and the interest expressed in the statutory proviso. Both the interests of the canoeing plaintiffs and the property-owning plaintiffs arose because of the proposed construction of the dam rather than the downstream local protection levees.
Nor does the fact that plaintiffs have standing to raise the NEPA claims obviate any standing requirement for their “local assurances” claim under § 201 of the Flood Control Act of 1962. Plaintiffs interpret the following statement in Sierra Club v. Morton, supra, 405 U. S. at 737, 92 S.Ct. at 1367, as dispensing with the necessity of demonstrating standing as to the additional issue:
[T]he fact of economic injury is what gives a person standing to seek judicial review under the statute, but once review is properly invoked, that person may argue the public interest in support of his claim that the agency has failed to comply with its statutory mandate.
Although we- believe that plaintiffs are misinterpreting the statement, suffice to say that it is clear that they cannot establish any economic injury attributable to the construction of the local protection levees, with or without the required local assurances. Plaintiffs’ injury in fact, like the interests they seek to protect, relates to the construction of the dam and not to the local protection levees.
We realize that by our treatment of the standing issue, we have inadvertently decided, adversely to plaintiffs’ claim that the failure of the Corps to obtain the local assurances voids the entire project. Indeed, even if we were to assume plaintiffs had standing to assert the claim, we are convinced that the receipt of the local assurances from the communities of Gays Mills and Soldiers Grove to participate in the cost of construction and operation of the local protection levees was not intended by Congress as a condition precedent to the construction of the dam and reservoir.
The judgment of the district court is affirmed.
. 42 U.S.C. § 4321 et seq.
. 76 Stat. 1180, 1190 (1962).
. The basic policies and goals of NEPA are contained in Section 101. (42 U.S.C. § 4331). Section 102 (42 U.S.C. § 4332) provides the methods by which the environmental goals -will hopefully be achieved. The latter section provides, in pertinent part, as follows:
The Congress authorizes and directs that, to the fullest extent possible: ... (2) all agencies of the Federal Government shall
(C) include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on—
(i) the environmental impact of the proposed action,
(ii) any adverse environmental effects which cannot be avoided should the proposal be implemented,
(iii) alternatives to the proposed action,
(iv) the relationship between local short-term uses of man’s environment and the maintenance and enhancement of long-term productivity, and
(v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.
Prior to making any detailed statement, the responsible Federal official shall consult with and obtain the comments of any Federal agency which has jurisdiction by law or special expertise with respect to any environmental impact involved. Copies of such statement and the comments and views of the appropriate Federal, State, and local agencies, which are authorized to develop and enforce environmental standards, shall be made available to the President, the Council on Environmental Quality and to the public as provided by section 552 of Title 5, [United States Code] and shall accompany the proposal through the existing agency review processes;
. Natural Resources Defense Council, Inc. v. Morton, 148 U.S.App.D.C. 5, 458 F.2d 827, 838 (1972).
. Sierra Club, supra, 345 F.Supp. 444.
. Environmental Defense Fund, supra, 470 F.2d at 301.
. Id. at 300.
. The interest protected or regulated by the statute “at times, may reflect ‘aesthetic, conservational and recreational’ as well as economic values.” Data Processing Service, supra, 397 U.S. at 154, 90 S.Ct. at 830.
. Iiid.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
These are appeals and cross-appeals from decisions of the District Court of Maryland in which it was concluded that the conditions in two penal institutions in Maryland were in violation of the Eighth Amendment’s command against cruel and unusual punishment. Johnson v. Levine, 450 F.Supp. 648 (D.Md.1978); Nelson v. Collins, 455 F.Supp. 727 (D.Md.1978).
In Hite v. Leeke, 564 F.2d 670 (4th Cir. 1977), we held that “double-celling,” the housing of two prisoners in a cell initially designed for single occupancy, was not itself a violation of the Constitution. It, of course, may be a relevant factor when other consequences of overcrowding create deprivations or impose unusual restrictions and disadvantages upon the prison population.
In their opinions, the district judges placed great emphasis upon “double-celling,” which was extensive in both institutions, but other deprivations were also shown. The “double-celling” was clearly a consequence of overcrowding, and the overcrowding had other consequences. The physical and personnel resources of both institutions were taxed. The overcrowding limited opportunities for recreation, for instruction and rehabilitation, complicated the maintenance of sanitation, required meal service in three separate shifts and probably contributed to a high level of violence and psychological injury to some prisoners. The medical facilities and staffs were also overtaxed, and on cross-appeals there is a complaint that medical care itself was constitutionally deficient. With the elimination of substantial overcrowding, however, the deficiencies of the medical facilities, staffs and services will be diminished.
Under the totality of all of the circumstances, we conclude that the district judges properly found a constitutional violation warranting judicial direction that the overcrowding be eliminated. Overcrowding, with all of its consequences, can reach such proportions that the impact of the aggregate effect amounts to cruel and unusual punishment. We believe that the district judges reasonably found that the point had been reached here. Hence, we affirm the entry of injunctive relief directed to elimination of the overcrowded conditions, and the denial of injunctive relief directed to specific areas of alleged deficiencies such as medical care.
The district judges directed accelerating steps for the elimination of overcrowding by April 1, 1979. Maryland, however, has come forward with a detailed plan involving the construction of a new facility, incorporating the previous planned conversion of another, and the early release of prisoners thought appropriate for release which will accomplish the objective of elimination of overcrowded conditions by June 1, 1980.
The district judges imposed a short compliance timetable. It was appropriate, of course, to emphasize the fact that the situation was serious, and to require that remedial steps should be undertaken promptly. The release of prisoners properly subject to parole may proceed apace, but we are convinced that the overcrowded conditions cannot be completely eliminated without the construction and utilization of a new facility, which Maryland proposes to have available by June 1, 1980. Since the constitutional violation here is not as extreme or as shocking as in some of the reported cases, and since Maryland’s plan is practical and reasonable and will achieve the required objective of elimination of overcrowding in its penal institutions, we think its plan and its schedule deserve judicial approval.
In addition to the claims respecting the general prison populations, in Johnson the court found the conditions of imprisonment in the Special Confinement Area, a section housing mentally disturbed prisoners, were so severe they constituted cruel and unusual punishment. The judge ordered the SCA closed as soon as the inmates could be moved to state mental institutions. In Nelson the court found extended confinement in the punitive isolation unit violated the Eighth Amendment. The judge imposed limitations on the use of the cells. We affirm these findings of constitutional deprivation and the grant of appropriate relief.
The findings of constitutional overcrowding are affirmed. The decree in Johnson, insofar as it affects the Special Confinement Area, and the decree in Nelson, insofar as it deals with punitive isolation, are both affirmed. The denial of specific relief in other respects is affirmed. The cases are remanded to the district court with instructions to fashion new decrees which will incorporate Maryland’s plan and its schedule for the elimination of overcrowding in the two penal institutions.
Judge Russell and Judge Widener dissent from the conclusion that a deficiency of constitutional proportion was shown. They reserve the right later to file an opinion expressing their views.
AFFIRMED IN PART AND REMANDED.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STEPHENS, Associate Justice:
This is an appeal from a final decree of the District Court of the United States for the District of Columbia dismissing the complaint of the appellant (Mrs. Catherine Ruppert) in which she sought a limited divorce, separate maintenance,; and an injunction restraining the appellee from prosecuting a divorce proceeding in Florida. In her complaint the appellant alleged marriage to the appellee, cruelty and desertion, and also that the appellee had instituted a divorce suit against her in Florida, notwithstanding the fact that the marital domicile of the parties was in the District of Columbia, for the purpose of defrauding her of her rights under the marital status. The appellee’s answer to the complaint admitted the marriage, charged that desertion was by the appellant, and asserted a final decree in Florida of absolute divorce. After an initial hearing the trial court announced in a memorandum opinion that the appellant was entitled to the relief sought. The court made no findings of fact and stated no conclusions of law and entered no judgment. The appellee then filed a motion for a new trial upon the ground, among others, of newly discovered evidence. He asserted that a Virginia decree, antedating his marriage with the appellant, which purported to dissolve a marriage between the latter and one Kirke Kibler, was invalid for the reason that the appellant, who was plaintiff in the Virginia suit, had lived not in Virginia, but in the District of Columbia, during the year ('required by Virginia law) prior to the filing of the Virginia action. Hence, urged the appellee at the motion for new trial, the appellant was still married to Kibler at the time of her marriage to the appellee; therefore the latter marriage was invalid and formed no foundation for the appellant’s suit in the District Court. The appellee also asked leave, if the motion for new trial were granted, to amend his answer to the appellant’s complaint so as to include a denial of the validity of his marriage to the appellant and a prayer for its annulment. The appellant countered, at the motion for new trial, with the charge that at the time of the Virginia suit the appellee knew that the appellant had been a resident of the District of Columbia and not of Virginia, but that nevertheless he encouraged the obtaining of the Virginia decree and was kept fully informed of every step taken in respect thereof. The court granted the motion for new trial. The appellee then filed an amended answer admitting a ceremony of marriage with the appellant but asserting the invalidity thereof because of fraud by the appellant upon the Virginia court in respect of her residence and consequent invalidity of the Virginia decree purporting to divorce the appellant and Kibler; and the appellee prayed that the marriage between himself and the appellant be held a nullity and void ab initio. At the new trial the issues were limited to the question of the validity of the Virginia decree; the evidence introduced followed the pattern of the affidavits of the parties under the motion for new trial with the addition of an admission by the appellant that she had never lived in Virginia but that she had represented a Virginia residence to the Virginia court and this notwithstanding a representation to the Supreme Court of the District of Columbia (in an action for divorce filed by her there oil November 23, 1927, and dismissed by her December 8, 1927, just preceding institution of the Virginia suit, on December 19, 1927) that she was a resident of the District. At the conclusion of the hearing the District Court ordered the appellant’s complaint dismissed upon the ground that at the time of her alleged marriage to the appellee she had been previously married and that such previous marriage had not been terminated by death or divorce, whereby the alleged marriage of the appellant and the appellee was null and void ab initio. This order contained a statement to the effect that the appellee’s amended answer had set up, as a bar to the relief sought by the appellant, the nullity of the marriage of the appellant and the appellee by reason of the previous marriage of the appellant and the absence of termination of the same by death or divorce, and to the effect that the appellant had not denied that nullity. The order of dismissal was entered June 11, 1940.
Until June 24, 1940, the law in this jurisdiction had been declared to be that in annulment proceedings the doctrines of laches and estoppel were inapplicable. Simmons v. Simmons, 1927, 57 App.D.C. 216, 19 F.2d 690, 54 A.L.R. 75; Frey v. Frey, 1932, 61 App.D.C. 232, 59 F.2d 1046. But on June 24, 1940, Goodloe v. Hawk, 72 App.D.C. 287, 113 F.2d 753, holding that “the general public policy in this jurisdiction, as judicially interpreted, no longer prevents application in annulment actions of the laches and estoppel doctrines in determining the effect to be given to such [irregular foreign] divorce decree,” and thereby overruling Simmons v. Simmons and Frey v. Frey was decided. (This ruling was later followed in Saul v. Saul, July 21, 1941, 74 App.D.C. 287, 122 F.2d 64.) On June 21, 1940, the time within which the appellant in the instant case could serve a motion for a new trial and the time within which the trial court could grant a new trial upon its own initiative expired. Rule 59 (b) and (c) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. Nevertheless, on June 28 the appellant served and filed a motion to vacate judgment and for new trial and restraining order (against disposition of property in the District of Columbia by the appellee), upon the ground that the order of June 11 was entered “as the result of mistake and inadvertence, the United States Court of Appeals for the District of Columbia having in the interim changed the principle of law upon which said judgment was based.” This motion to vacate and for new trial and restraining order was heard and denied on June 28. On July 1, 1940, this appeal from the order of dismissal of June 11 was taken.
The appellant contends first that the trial court erred in granting a new trial on the ground of newly discovered evidence, and second that in view of Goodloe v. Hawk and Saul v. Saul the appellee is barred by estoppel and laches from attacking the validity of the Virginia decree; under each contention the appellant asks that the trial court’s decision in her favor at the first trial be reinstated.
1. The first contention cannot be sustained. Under familiar principles the action of a trial court on a motion for a new trial is, subject to exceptions not here pertinent (for a discussion of such exceptions see Freid v. McGrath, Nov. 23, 1942, 76 U.S.App.D.C. 388, 133 F.2d 350), a matter within the court’s discretion and its action will not be disturbed on appeal except for abuse. The question presented at the motion for a new trial was one of fact. While that question was presented on affidavits, the trial court had heard the parties at the first trial and was in a position therefore to judge of their credibility. We cannot say that the decision to grant the new trial was so far wanting in evidential support as to be arbitrary.
2. The second contention is in effect an assertion that the appellant is entitled to determination of this case on the basis of the law as declared in Goodloe v. Hawk and Saul v. Saul, and that on the record the appellee is barred by laches and estoppel from attacking the validity of the Virginia decree and that this court should so determine and in consequence forthwith order reinstatement of the original decision in the appellant’s favor.
The appellant is entitled to a determination of this case on the basis of the law as declared in Goodloe v. Hawk and Saul v. Saul. With exceptions not here pertinent (where vested rights have intervened), the general principle is that a decision of a court of appellate jurisdiction overruling a former decision is' retrospective in its operation, and the effect is not that the former decision is bad law but that it never was the law. 14 Am.Jur., Court, § 130; American Sugar Refining Co. v. City of New Orleans, 5 Cir., 1902, 119 F. 691; Groner v. United States, 8 Cir., 1934, 73 F.2d 126; Chase v. American Cartage Co., 176 Wis. 235, 186 N.W. 598. At the time of the trial, in the Circuit Court of Milwaukee County, Wisconsin, of the case last mentioned — an action brought by an administrator for damages resulting from a decedent’s death caused by an automobile collision — it had been held in Prideaux v. Mineral Point, 1878, 43 Wis. 513, 28 Am.Rep. 558, that the negligence of a driver would be imputed to a gratuitous passenger. In a special verdict the jury found that the defendant’s negligence was the proximate cause of the death and assessed damages, but found also that the driver of the car in which the deceased was riding proximately contributed to produce her death, and upon this special verdict and in view of the rule of Prideaux v. Mineral Point the trial court entered judgment for the defendant. The plaintiff appealed. Pending the appeal the Supreme Court of Wisconsin in Reiter v. Grober, 1921, 173 Wis. 493, 181 N.W. 739, 18 A.L.R. 362, and in Brubaker v. Iowa County, 1921, 174 Wis. 574, 183 N.W. 690, 18 A.L.R. 303, overruled Prideaux v. Mineral Point. On the appeal it was held that the case should be disposed of under the law as determined by the later decisions. The court said:
“ . . . The judgment of a trial court that is appealed from cannot establish the ■law of the case. That must be established by this court in the decision upon the appeal. A lawful change in a judicial rule not amounting to a rule of property or its equivalent by a court of last resort becomes effective at once, and thereafter, upon subsequent appeals, operates alike upon acts coming within it whether occurring before or after its announcement. ...” [citing authorities] [186 N.W. at 599] The judgment was reversed and the cause remanded with directions to enter judgment for the plaintiff for the amount of damages assessed. Cf. also American Steel Foundries v. Tri-City Council, 1921, 257 U.S. 184, 42 S.Ct. 72, 66 L.Ed. 189, 27 A.L.R. 360. There a change of law pending appeal was by statute. The Supreme Court held that the case must be determined under the new statute. It said that “The complainant had no vested right in the decree of the District Court while it was subject to review.”
But we cannot now determine on the present record that the appellee is barred by laches and estoppel from attacking the validity of the Virginia decree and in consequence forthwith order reinstatement of the original decision in the appellant’s favor. Such a disposition of the case on appeal in Chase v. American Cartage Co., supra, was, it will have been noted, possible; but there, with a verdict against the defendant on the issue of negligence and an assessment of damages, and with imputed negligence out of the case, no further proceedings were necessary in the trial court. At the new trial of the instant case the court made no findings of fact and stated no conclusions of law upon the issues of laches and estoppel of the appellee to set up the invalidity of the Virginia decree. In this the trial court was not remiss because at the time of the new trial and of the order dismissing the appellant’s complaint Simmons v. Simmons and Frey v. Frey, as pointed out above, reflected the law in this jurisdiction. Nevertheless there should be a determination by the court of first instance of the issues of laches and estoppel and findings of fact and conclusions of law thereon before this court exercises its appellate function. The pleadings may now be amended so as formally to introduce those issues. Rule 15 of the Federal Rules of Civil Procedure. Additional evidence may be introduced if the trial court deems it necessary.
It is contended by the appellee that the doctrines of laches and estoppel can be applied only in an independent annulment proceeding, and not, as here, in a divorce action in which the invalidity of the marriage relied upon by the complainant is asserted, and its annulment sought, in an answer to the complaint. We think this contention not sound. It is true that the statutory estoppel established by D.C. Code (1940) § 30 — 104 is at the end of a provision referring to “A proceeding to declare the nullity of a marriage.” We print that section in the margin. But § 30 — 101 recognizes that the nullity of a prohibited marriage may be shown even in a collateral proceeding. We print the pertinent parts of that section in the margin. The marriage and divorce statutes in question, read as a whole, are, we think, not clear as to the intention of Congress as to whether the doctrines of laches and estoppel can he applied in both an independent annulment suit and in such an attack upon a marriage as is made in the instant case. That being true the statutes must be construed, and, under familiar rules of statutory construction, a reasonable intent must be attributed to Congress. We think that to construe the statutes as meaning that the doctrines of laches and estoppel can be applied only in an independent annulment proceeding and not in an action where the attack upon a marriage by a party thereto is made by way of defense to a divorce action would be improperly to conclude that Congress intended an unreasonable distinction. There seems to be no sensible reason why Congress would permit the defenses to be raised against annulment in the former type of proceeding and not in the latter.
It is further urged by the appellee that at the time the motion to vacate judgment was heard (June 28, 1940), it was called to the attention of the trial court that Goodloe v. Hawk had been decided (June 24), so that the fact that the doctrines of laches and estoppel were applicable in annulment proceedings was known to the court when it overruled the motion to vacate the judgment and for a new trial and restraining order. Therefore, it is contended, the overruling of the motion may be considered a determination against the appellant of the issues of laches and estoppel. But, as was pointed out above, this motion was too late (Freid v. McGrath, supra). Therefore the trial court must properly be taken to have overruled the motion on that ground alone and not to have passed upon the merits of the motion.
It is finally asserted by the appellee that even under Goodloe v. Hawk and Saul v. Saul laches and estoppel cannot be invoked by one confessedly guilty of a fraud which is asserted to have invalidated a marriage, and that therefore the appellant, having admitted her nonresidence in Virginia, cannot raise these defenses against the appellee’s charge that fraud was committed on the Virginia court. But this contention involves the reach of Goodloe v. Hawk and Saul v. Saul and upon this we think we ought not pass in the absence of findings of fact on the questions of fraud on the Virginia court and of the participation of the appellant and appellee, respectively, in that fraud. It is true, as above pointed out, that the trial court stated in effect that the appellant had conceded the nullity of the Virginia decree. But there was no full finding of fact upon the subject of the asserted fraud by the appellant upon the Virginia court and no finding at all in respect of the appellee’s asserted participation in that fraud.
We conclude that the case should be remanded to the trial court for findings of fact and conclusions of law upon the issues of fraud upon the Virginia court, the participation of the parties therein, and laches and estoppel, and for a further hearing if necessary to the end of arriving at such findings and conclusions.
Reversed and remanded.
The appellee’s answer said nothing as to the cruelty.
The appellee supported his motion for a new trial by affidavits and exhibits to the effect that the appellant had been a resident of the District of Columbia during the year prior to the filing of her suit for divorce in Virginia but that she had represented to the Virginia court that she had lived in Virginia during the required year. In his affidavit the appellee took oath also that he did not become aware of the appellant’s asserted misrepresentations to the Virginia court until after the trial of the instant case. The appellant countered with affidavits to the effect t-hat the appellee encouraged the divorce and that he had full knowledge of every aspect of the Virginia proceeding. The appellee filed an affidavit in reply admitting an acquaintance, prior to his marriage with the appellant, with the Virginia decree but denying his knowledge of the fraud upon the Virginia court and knowledge of the residence requirements in Virginia.
“A proceeding to declare the nullity of a marriage may be instituted in the case of an infant under the age of consent by such infant, through a next friend, or by the parent or guardian of such infant; and in the caso of an idiot or lunatic by next friend. But no such pi'oceedings shall be allowed to he instituted by any person who, being fully capable of contracting a marriage, has knowingly and wilfully contracted any marriage declared illegal by the foregoing sections. (Mar. 3, 1901, 31 Stat. 1392, ch. 854, § 1286; June 30, 1902, 32 Stat. 543, ch. 1329.)”
“The following marriages are prohibited in the District of Columbia and shall be absolutely void ah initio, without being so decreed, and their nullity may be shown in any collateral proceedings, namely:
* * *
“Third. The marriage of any persons either of whom has been previously married and whose previous marriage has not been terminated by death or a decree of divorce. (Mar. 3, 1901, 31 Stat. 1391, ch. 854, § 1283.)”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
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songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CHARLES M. ALLEN, Senior District Judge.
The appeals and cross appeals of the parties arise out of a judgment entered following a lengthy bench trial and a 48-page Findings of Fact and Conclusions of Law. The issues presented to the trial court and to this Court involve the respective rights of the Donaheys and Helen Bo-gle under Michigan land purchase law and the rights and liabilities of all the parties under the Comprehensive Environmental Response Compensation and Liability Act (hereinafter CERCLA), 42 U.S.C. § 9601 et seq.
The Donaheys appealed from the judgment of the trial court holding that Richard Donahey was liable under his land purchase contract to Helen Bogle. In addition the Donaheys appealed from the judgment of the trial court that their claims under CERCLA were without merit and that they were not entitled to declaratory judgment relief for future cleanup of the property purchased by the Donaheys. Helen Bogle appeals from the judgment which held that she was a “responsible party” under CERCLA and she contends that she is entitled to a monetary judgment in excess of that awarded by the trial court. Both Helen Bogle and the Donaheys challenge the findings of the court that Seabourne Livingstone was not a “responsible party” under CERCLA.
In 1962, St. Clair Rubber Company rented Marysville, Michigan property for a period of ten years. The lessor was Helen Bogle, who is the sister of Seabourne Livingstone, the sole stockholder of all the stock of St. Clair Rubber Company. The property was again leased in 1972 for another ten year period.
St. Clair’s manufacturing processes left a waste product that was combined with a solvent. This mixture was drained into 55 gallon drums and designated as sludge. In the early 1970s, St. Clair transported 12 to 20 barrels or drums of sludge to the property every six months for disposal. After allowing the sludge to drain from the barrels for approximately one week, the employees returned to burn the sludge. Some time in the 1970s, St. Clair stopped its dumping and burning at the property.
In 1981, Bogle listed the property for sale. Donahey, the majority stockholder of a manufacturing firm, inspected the property and charted an area used as a dump. His attorney sent a letter to Bogle expressing concern over the presence of a “dump.” To allay concern, St. Clair and Donahey entered into an “Agreement to Clean Up Dump”, in which St. Clair promised to remove any hazardous substances found on the property and to restore the land to an environmentally satisfactory condition. The agreement included St. Clair’s promise to indemnify Donahey for costs resulting from St. Clair’s contamination of the land.
On the same day in 1982 on which Dona-hey and St. Clair executed the clean up agreement, Donahey purchased the property from Bogle for $115,000. Their contract provided for a down payment of $28,750, with the balance of the purchase price to be paid over a period of ten years at 11% interest in monthly installments of $980.31.
In 1985, following the publication of a newspaper article revealing the existence of environmental contamination at the site, the Michigan Department of Natural Resources (hereinafter “MDNR”) sent letters designating each party to this law suit a “potentially responsible party,” and requesting certain monitoring and clean-up activities. In 1986, the Donaheys employed an environmental consultant, Lawrence Halfen, to advise them with respect to the contaminated property.
Dr. Halfen’s preliminary investigation found a number of rusting and corroding barrels and non-hazardous waste materials which posed no immediate threat to the environment. After receiving authorization to proceed, he began work in August 1987, collecting and disposing of these old barrels and other materials. He removed approximately 350 cubic yards of material from the site at a cost of approximately $28,000.
However, at the end of the third day of removing the barrels and scraping the site, workers discovered five pits that contained hazardous substances. Dr. Halfen decided to address the problem on a temporary basis. He removed the materials from the pits so that he could assess their nature and volume. After draining the lagoon, he consolidated the pit materials with contaminated and uncontaminated soils taken from other areas at the site and placed the mixture in the lagoon basin. He placed a cap over the mound of materials, erected a snow fence around the area, and obstructed roadway access to the site.
Dr. Halfen characterized his treatment of the materials as a judgment call in the face of an immediate threat. He did not seek the advice of the MDNR. He completed his operations in late August 1987, and on September 1, 1987, he telephoned the MDNR representative to explain what he had found and what he had done. The MDNR never communicated to Donahey or to Dr. Halfen any protests about the work that Dr. Halfen did.
Subsequently, Dr. Halfen proposed further clean up measures at an estimated cost of $447,500. Unwilling to undertake the cost of further clean up efforts, the Donaheys abandoned the property in 1990.
The Donaheys filed suit asserting statutory and common law causes of action against Bogle, St. Clair Rubber and Sea-bourne Livingstone. They sought to rescind the purchase contract with Bogle, to recover costs incurred in attempting to clean up the environmental situation, and to recover attorneys fees of more than $279,000 incurred in these proceedings. By counterclaim, Ms. Bogle alleged a breach of the land purchase contract and failure to pay the sums due under that contract and she sought a judgment for the unpaid amounts plus interest. In addition, she asked for a declaration that she was not a covered party under CERCLA, and that Livingstone, Mr. Donahey and Mrs. Dona-hey were all covered parties.
The matter of rescission was first addressed on a summary judgment motion by District Judge Harvey, who found that the Donaheys were not entitled to rescission. After trial, District Judge Zatkoff reiterated that ruling, and made additional findings and conclusions, including the following pertinent to these appeals:
1. Mrs. Bogle was entitled to judgment for the unpaid balance owing on the land purchase contract plus interest on past due payments at the rate of 11% per year from June 8, 1987 until March 14,1989 (the date of filing of the counterclaim), together with pre-judgment interest from March 14, 1989 to the date of the judgment and judgment interest after the date of judgment.
2. Richard Donahey, Helen Bogle and St. Clair Rubber were covered persons under 42 U.S.C. § 9601 et seq. with respect to the environmental contamination at issue, but neither Pat Donahey nor Livingstone were covered persons.
3. None of the parties had incurred any recoverable response costs under CERCLA and the Donaheys were not entitled to a declaration of future liability pursuant to 42 U.S.C. § 9613(g)(2).
4. Richard Donahey was required to accept title to the property and if he failed to do so, Mrs. Bogle was entitled to present the judgment as deed of ownership to Richard Donahey.
5. Mrs. Bogle had no cause of action against St. Clair Rubber, Livingstone, and the Donaheys under CERCLA.
Before reaching the question of who is responsible for the cost of clean up, we must first dispose of the argument of Do-nahey that he is entitled to rescind the contract for the purchase of the land. He argues that the environmental contaminants that he discovered after the purchase contract was executed constituted an encumbrance that prevented Bogle’s transferring clear title to the property. The trial judge properly held that an “encumbrance” is a mortgage or a mechanics lien or tax lien or something of that nature that diminishes the value of the title to the property; environmental contaminants may diminish the value of the realty, but they do not constitute an encumbrance because they do not affect title. Furthermore, the contract between Donahey and St. Clair, by which St. Clair agreed to clean up the environmental contamination provided the trial court with ample evidence to support the determination that Donahey knew before purchase that there were environmental contaminants on the property.
The trial judge was also correct in finding that Donahey had breached the contract with'Bogle. The record clearly shows that as early as 1987 Donahey stated that he would not make any further payments on the real estate contract. This was anticipatory breach under Michigan law. Jackson v. American Can Co., Inc., 485 F.Supp. 370 (W.D.Mich.1980), and Brauer v. Hobbs, 151 Mich.App. 769, 391 N.W.2d 482 (1986).
Bogle contends that the trial court erred in calculating interest on her monetary award and that she is entitled to both statutory and contractual interest from March 14, 1989 to the date of judgment. The only Michigan authority cited on this point, McGraw v. Parsons, 142 Mich.App. 22, 369 N.W.2d 251 (1985), fully supports Bogle’s position.
We turn next to the issues raised under CERCLA. First, the trial court held that the Donaheys were not entitled to recover any costs under CERCLA for the actions which they took in an attempt to cleanup the property. Secondly, it held that Richard Donahey, Bogle, and St. Clair Rubber were responsible parties for the contamination of the property under 42 U.S.C. § 9607 but also held that Seabourne Livingstone was not liable as an owner or operator because he did not actively participate in the day-to-day activities of the corporation and had no knowledge of the environmental contamination created by it. In addition Bogle appeals from the findings that she was a responsible party as a former owner of the property, and also appeals from the court’s findings that Patricia Donahey was not a covered person under 42 U.S.C. § 9607(a).
The trial court correctly found that Richard Donahey and Helen Bogle and St. Clair were “responsible parties” under 42 U.S.C. § 9607(a). However, the court erred in concluding that Seabourne Livingstone was not liable as an owner under CERCLA. The evidence clearly established that Livingstone had the authority to prevent the contamination of the property by his corporation; thus, as a matter of law, Livingstone was a responsible party. Kelley v. Thomas Solvent Co., 727 F.Supp. 1532 (W.D.Mich.1989); New York v. Shore Realty Corp., 759 F.2d 1032, 1043 (2d Cir.1985); U.S. v. Ward, 618 F.Supp. 884 (E.D.N.C.1985); and U.S. v. Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726 (8th Cir.1986).
The trial court rejected the contention that Halfen’s actions were a legitimate “judgment call,” and concluded that the Donaheys were not entitled to recover any of their costs incurred in the attempt to clean up the property. In making that determination, the court relied upon evidence that the substances discovered at the property were hazardous wastes within the meaning of Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6903(5). Section 6903(5) defines hazardous waste as a compound that may cause death or serious permanent illness or pose a health risk when improperly stored. ENVIRONMENTAL PROTECTION AGENCY regulations define hazardous waste at 40 C.F.R. 261.31, and among the chemicals so designated are benzene, toluene, and xylene, substances used in St. Clair’s rubber manufacturing processes and in churn-washing procedures at St. Clair. Halfen’s testimony corroborated the Judge’s finding with reference to hazardous wastes.
The trial court found that the Donaheys’ clean up effort did not comply with RCRA regulations in that Donahey failed to obtain an RCRA permit and failed to conduct a detailed physical and chemical analysis of a representative sample. See 40 C.F.R. § 270.1(c)(l)(ii), and 40 C.F.R. § 264.13. The court also found that the‘Donaheys had failed to secure the site against unknowing and unauthorized entry by persons or livestock, and based his finding on evidence that the Donaheys had merely placed a snow fence around the consolidated pile in the large lagoon. The court also found that the Donaheys did not receive a permit or permit waiver for their storage of hazardous waste.
The trial court further relied on evidence that the Donaheys provided no drainage control, and that the consolidation of the wastes in the large lagoon increased the surface area of waste exposed to top soil by 50%. The court also found that by relocating the waste from the rubber pile to the large lagoon, Halfen spread.the contamination to a relatively untainted portion of the property. Based on these factors, the trial court held that the Donaheys’ actions did not facilitate the goals underlying CERCLA nor did they in any way improve the condition of the defiled property.
In order to recover the costs incurred in employing Halfen and attempting to improve the environmental condition of their property, the Donaheys are required to show that the property on which hazardous substances were contained was a facility under CERCLA’s definition of that term, that the release or threatened release of any hazardous substance from the facility had occurred, that such release or threatened release caused them to incur response costs that were necessary and consistent with the National Contingency Plan (NCP), and that defendant was one of the statutory classes of persons subject to liability. 3550 Stevens Creek Assoc. v. Barclays Bank, 915 F.2d 1355 (9th Cir.1990). In applying these standards to this case, the trial judge correctly held that an element of the Donaheys’ prima facie case was a showing that the response costs incurred were consistent with or substantially in compliance with the NCP.
The trial court’s findings that the cleanup work attempted by Halfen actually did more damage than benefit is substantiated by the testimony of Hunt, an expert witness, who stated that when Halfen consolidated non-hazardous material with hazardous material he contaminated the nonhazardous so that it would all have to be treated as hazardous. That, in turn, would make disposal much more complicated and expensive. Hunt estimated that it would have cost $305,000 in 1987 to dispose of the 1200 yards of material mounded in the lagoon, whereas it would have cost only $178,000 to dispose of the 800 yards of material actually' taken from the pits. Additionally, Hunt testified that Halfen had increased the health risks by creating an attractive nuisance and by necessitating repeated human contact with the hazardous material.
Although consistency with the NCP is a necessary element for recovery of remedial costs, it does not necessarily follow that consistency with the NCP is required for recovery of monitoring or investigative costs. In Carlyle Piermont Corp. v. Federal Paper Board Co., 742 F.Supp. 814 (S.D.N.Y.1990), the Court held that such costs are recoverable without regard to compliance with the NCP. See also Artesian Water Co. v. Government of New Castle County, 851 F.2d 643 (3rd Cir.1988) (monitoring and impact evaluation costs recoverable regardless of existence of other compensable response costs). This Court believes the Carlyle Piermont reasoning on the instant issue is sound, and we will remand for award of the Donaheys’ initial investigation costs.
Plaintiffs appealed from the decision of the trial court refusing to award them attorneys fees of $279,000. The trial court’s refusal rests primarily on the American Rule, although he also points out that there is specific statutory authorization for the government to recover attorneys fees and no such specific authorization for private parties. However, this Court prefers to follow the reasoning of cases such as Bolin v. Cessna Aircraft Co., 759 F.Supp. 692 (D.Kan.1991), Shapiro v. Alexanderson, 741 F.Supp. 472 (S.D.N.Y.1990), and General Electric Co. v. Litton, 920 F.2d 1415 (8th Cir.1990), cert. denied, — U.S. -, 111 S.Ct. 1390, 113 L.Ed.2d 446 (1991). The Bolin opinion made the following persuasive statement:
By providing private parties with a federal cause of action for the recovery of necessary expenses in the cleanup of hazardous wastes, Congress intended § 107 as a powerful incentive for these parties to expend their own funds initially without waiting for the responsible persons to take action, [citations omitted]. The court can conceive of no surer method to defeat this purpose than to require private parties to shoulder the financial burden of the very litigation that is necessary to recover these costs.
759 F.Supp. at 710.
In following cases cited immediately above, we recognize that there are several cases to the contrary, such as T & E Industries, Inc. v. Safety Light Corp., 680 F.Supp. 696 (D.N.J.1988); Mesiti v. Microdot, Inc., 739 F.Supp. 57 (D.N.H.1990); Regan v. The Cherry Corporation, 706 F.Supp. 145 (D.R.I.1989).
We recognize that the Donaheys’ complaint included ten causes of action, and that the only recovery they have achieved is the very small amount awarded for investigative costs. We remand to the district court the question of amount of attorneys fees in light of the above observations.
In conclusion, the judgment of the trial court is affirmed as to all aspects of the case except for the following:
1. The judgment is reversed insofar as it does not consider Seabourne Livingstone a responsible party under CERC-LA.
2. The judgment is vacated with respect to cost of investigation, and the matter is remanded for determination and award of these costs.
3. The judgment is vacated with respect to the interest recoverable by Helen Bogle, and the matter is remanded for determination and award of statutory and contractual interest from March 14, 1989 to the date of judgment in lieu of the pre-judgment interest which the trial judge awarded her for that period of time.
4. The judgment denying attorneys fees in toto is vacated, and the matter remanded for determination of what constitutes reasonable attorneys fees recoverable under CERCLA.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
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songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
SIBLEY, Circuit Judge.
The Jacksonville Paper Company is a very large wholesale distributor of paper and paper products whose main office and warehouse are in Jacksonville, Florida, but which maintains branch warehouses in twelve other cities in Florida and in two other States. Some of the products it sells are manufactured in Florida by a partnership composed of certain of its officers and stockholders and known as Southern Industries Company. But most of them it purchases in States other than Florida for shipment by boat, rail, or truck across State lines to the various warehouses. The employees of Jacksonville Paper Company order these goods, keep the books concerning them, and make payment for them, and also haul them in from the wharves or freight depots, and unload the freight cars and trucks which bring them to the several warehouses. After sale to the customers the goods are delivered by Jacksonville Paper Company’s trucks. Frequently goods have been resold before they are ordered, and are intended for and presently delivered to these very customers. Quite often they are specially manufactured for such customers, and bear their names. Often, too, they are trucked to customers direct from the wharf or freight car without being deposited in the warehouses. But stocks of merchandise are regularly maintained in the warehouses and the major part of the goods handled are deposited there for a greater or less time until resold or ordered out. At some of the warehouses the sales out are all within the State. At others sales are made across State lines. Practically the entire production of Southern Industries Company is taken by Jacksonville Paper Company, and a large part is thus shipped regularly interstate to the warehouses outside Florida.
Warehouses and factory were all inspected by the Wage and Hour Administrator in December, 1939, and January, 1940, and he concluded all had employees engaged in commerce within Sections 6 and 7 of the Fair Labor Standards Act, 29 U. S.C.A. §§ 206, 207, with which there was not compliance. Southern Industries Company and five of the warehouses, which were selling interstate, were conceded to have employees protected under the Act, but it is claimed they have observed it since April 27, 1940. On July 8, 1940, however, the Administrator filed suit to restrain violations against Jacksonville Paper Company and Southern Industries Company. The court granted an injunction against the latter, and against the former as to the warehouses which sold interstate, but refused it as to the other warehouses, and gave judgment for costs equally divided. Both sides appeal.
It will be helpful first to notice some general principles. Sections 6 and 7 of the Act deal with an “employee who is engaged in commerce or in the production of goods for commerce.” It is the employment of the particular employee and not the business of the employer, which is to be regarded. Yet the two are closely related, because the employee’s work cannot be in commerce unless the employer’s business is to that extent in commerce. On the other hand, the employer may be largely engaged in commerce, but the particular employee, engaged in some other work, may not be. The percentage of the employer’s business intrastate as compared with that interstate proves little. The question must be whether the work of the particular employee for the time in question is in commerce or in the production of goods for commerce. His whole time and work need not be thus in commerce, because the Act does not make any distinction of that sort. If a substantial part of his work is in commerce or in producing goods for commerce, he must be dealt with according to the Act. And. “commerce” must not be limited to “transportation”. Section 3, 29 U.S.C.A. § 203, which is the dictionary of the Act, declares that “Commerce means trade, commerce, transportation, transmission, or communication” interstate. Transportation is only a part of it. Trade is another part, and according to the old maxim, it takes two to make a trade. Importer as well exporter, buyer as well as seller, is a participant; and ordering and paying for goods are included. If across S’tate lines all those engaged in such work are in commerce. The Act, Sect. 13(a) (2), 29 U.S.C.A. § 213(a) (2), excepts employees in a retail or service establishment the greater part of whose selling is in intrastate commerce, so that all employees of these are under or not under the Act. A wholesaler like Jacksonville Paper Company is not included in this exception, and must pay its employees who -are employed in any phase of commerce according to the Act, although all its sales may be made intrastate.
There can be no hard and fast line drawn between the employees at one of these warehouses and those at another. The employees who work exclusively in intrastate business at any of them are not under the Act. Those who work either at selling or delivering across State lines, or at buying and receiving across State lines, are employed in commerce, whether they write the letters, keep the books, or load and unload or drive the trucks. As we understand the record, some of this is done at every warehouse. The unloading at destination of an interstate shipment is work in interstate transportation, whether done by the carrier or another. Baltimore & O. S. W. R. R. v. Burtch, 263 U.S. 540, 44 S.Ct. 165, 68 L.Ed. 433; Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68. And the purchase of goods to be transported across State lines is interstate commerce as truly as the transportation itself. Currin v. Wallace, 306 U.S. 1, and cases cited on page 10, 59 S.Ct. 379, 83 L.Ed. 441.
Without reviewing the multitude of decided cases as to when interstate transportation ends, we are justified in holding that after imported goods are delivered to and received by the importer, and become part of his property held within the State subject to his disposition, whether in the original containers or not, the subsequent sale and delivery of them within the State is intrastate commerce. The typical case is a stock of goods in a warehouse awaiting sales. It does not matter that the goods were imported with a view to selling them afterwards to particular customers, or that according to past experience they would likely be sold to them, or would' surely be sold to someone very soon. If they come to rest in the hands of the importer, they have ceased to be in interstate commerce because of their importation, and his employees thereafter engaging solely in selling them within the State are not employed in interstate commerce.
There are, however, border line distinctions. Where Jacksonville Paper Company takes an order from a customer for goods and purchases them in another State to fill that order, and they are shipped, interstate with the definite intention that those goods be carried at once to that customer, and they are so carried, the whole movement is interstate, and the fact that title may have passed during transit, or that vehicles may have been changed, will not prevent the entire work of delivery to their final destination being an employment in commerce. Where, however, the purpose to deliver particular goods to fill a particular precedent order arises only after the goods come to rest at their originally intended destination, the new intrastate transportation afterwards underaken will not be a part of the original interstate movement, and employees aiding only the intrastate movement are not thereby employed in commerce under the Act.
We therefore do not agree with the District Court that a line can be drawn between all the employees at one warehouse and all those at another. Nor do we agree with the Administrator that all employees at all the warehouses are necessarily under the Act because the goods they handle were imported for sale. The employment of each employee must be looked to, where-ever he may work, to see whether a substantial part of his work during the wage period is in commerce, or not. We think it likely that it will appear that some employees at every warehouse are employed in commerce, and the Administrator in that event will be entitled to declaratory or other relief covering such employees at all the warehouses.
Southern Industries Company as to its employees producing goods for commerce and Jacksonville Paper Company as to those warehouses where employees are conceded to be employed in 4 commerce, say that relief by injunction ought not to be granted because violations of the Act had ceased at latest by April 27, 1940, about six weeks before the suit was filed, and because an injunction will not issue to prevent that which is not threatened or has ceased; citing Industrial Ass’n v. United States, 268 U.S. 64, 84, 45 S.Ct. 403, 69 L.Ed. 849; United States v. United States Steel Corp., 251 U.S. 417, 444, 40 S.Ct. 293, 64 L.Ed. 343, 8 A.L.R. 1121; Blease v. Safety Transit Co., 4 Cir., 50 F.2d 852, 856; Champion Spark Plug Co. v. Reich, 8 Cir., 121 F.2d 769. The Administrator points to Sect. 17 of the Act, 29 U.S.C.A. § 217 giving the court jurisdiction “for cause shown * * * to restrain violations,” and to such cases as United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290, 309, 17 S.Ct. 540, 41 L.Ed. 1007; Federal Trade Commission v. Goodyear Co., 304 U.S. 257, 259, 260, 58 S.Ct. 863, 82 L.Ed. 1326; National Labor Relations Board v. Pennsylvania Greyhound Lines, 303 U.S. 261, 271, 58 S.Ct. 571, 82 L.Ed. 831, 115 A.L.R. 307; and he contends that injunctions to establish public rights stand on a different footing from those in private matters. We are of opinion that Section 17 gives jurisdiction to grant but does not require in every case the grant of an injunction. Injunction is here, as it usually is, in the discretion of the court. This case is not one where the violations were dead issues at the filing of the suit; nor was cessation entirely voluntary, but was the result of recent official pressure. And Jacksonville Paper Company and the Administrator were still at serious issue as to some applications of the law. The District Court refused to hear evidence as to violations between April 27, 1940, and the filing of the suit. We think it would have been in order to hear whether the violations were continuing and whether if they had ceased there was no purpose to renew them; but it is clear there had been recent violations, and there was still contention, and this was enough to ground the grant of injunction upon.
It was error, however, to grant an injunction as broadly as was done, for it reads: “from violating any of the pro-visions of the Fair Labor Standards Act of 1938.” Such an injunction would put the defendants in contempt of court if thereafter in any way they violated this law, whereas it should have been restricted to a repetition of such violations as were found to have been committed, and similar ones. New York, New Haven & H. R. Co. v. Interstate Commerce Commission, 200 U.S. 361, 362, 404, 26 S.Ct. 272, 50 L.Ed. 515. A limited injunction was also granted, but as to Jacksonville Paper Company it refers to employees at named warehouses and offices only.
We need not pass upon the question whether the judgment for divided costs is good as against the Administrator, who asserts he stands as the United States in being immune against costs, for we shall reverse the judgment on the grounds above discussed, and this question is not likely to recur in the case.
We do not undertake to frame a decree appropriate to the whole situation, thinking it can best be done with the aid of counsel in the court below. We therefore reverse the judgment and remand the cause for such modification of the findings as ought to be made and a new decree in accordance with- this opinion.
See 11 Am.Jur., Commerce, especially §§ 43, 46, 62, 63, 64, 66, 69, 71, 74..
We so held in Jax Beer Co. v. Redfern, 5 Cir., 124 F.2d 172, and Swift & Co. v. Wilkerson, 6 Cir., 124 F.2d 176.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
GARTH, Circuit Judge:
This appeal arises from an age discrimination complaint filed by Raymond C. Car-den, a former employee of Westinghouse Electric Corporation, against that company. Carden’s job was eliminated by a reduction in force. He contends that he should have been hired for a new position which consolidated his former job with the job held by another Westinghouse employee, Diane Follett. He claims that Westinghouse’s refusal to hire him for this new “consolidated” position was unlawful.
Carden brought suit in the Eastern District of Pennsylvania on December 17, 1984. Carden received a favorable verdict from the jury, which found that Westinghouse had willfully violated the Age Discrimination in Employment Act (“ADEA”), and also found that Carden had properly attempted to mitigate his damages.
The district court subsequently denied Westinghouse’s motion for a judgment notwithstanding the verdict and a new trial but granted Westinghouse’s motion to vacate the jury’s finding of willfulness. Accordingly, on April 23, 1987, the district court entered judgment in favor of Carden for $86,554 and for $25,000 in attorney’s fees and costs.
Westinghouse appealed at 87-1292 on a number of issues, the primary issue being liability. Carden has cross-appealed at 87-1296. Carden’s cross-appeal is from the district court’s order which vacated the jury’s finding of willfulness. We reverse the judgment in favor of Carden, remand for a new trial and dismiss the cross-appeal which challenged the district court’s order vacating the finding of willfulness.
I.
Raymond Carden was employed by Westinghouse as the manager of Westinghouse’s Records and Micrographics Department in its plant in Lester, Pennsylvania. He had been with the company for eighteen years. In the early 1980’s, because of a downturn in business, Westinghouse began to transfer a number of its operations which had been performed in the Lester plant, to a plant in Orlando, Florida. This transfer of operations eventually rendered it impractical to maintain both a Records and Micrographics Department and a Engineering Document Control Department in the Lester Plant. The manager of Engineering Document Control was Diane Fol-lett. Westinghouse, therefore, decided to consolidate the two departments. At the time the decision to consolidate was made, Carden was 46 years old and Follett was 37.
In January 1983, Westinghouse notified Carden that the company was eliminating his position as manager. On June 28,1983, Westinghouse announced that Follett would assume responsibility for the consolidated departments. The announcement was made by Joseph Clark, who was both Carden’s and Follett’s immediate supervisor. Carden testified that when he asked Clark why he did not get the job, Clark said, “he thought they wanted a younger person for the job.” (A215). Carden was eventually laid off on August 1, 1983.
Westinghouse raises a number of issues on appeal; the most important of which from our standpoint is the asserted error that the district court had improperly received into evidence Carden’s testimony that Clark said “he thought they wanted a younger person.” We regard the admission of that testimony as critical because our reading of the record reveals no other direct testimony as to age as a factor in Westinghouse’s treatment of Carden.
II.
Westinghouse argues that there was insufficient evidence to support a judgment in favor of Carden. As we understand that argument, it depends on our holding that the statement attributed by Carden to Clark was erroneously admitted in evidence. Without that statement, Westinghouse contends that the judgment against it must be reversed.
In developing this argument, Westinghouse recognizes that a judgment in favor of Carden could be predicated not only on a direct finding of intentional discrimination, but also as the district court charged, by proof through circumstantial evidence, that the three-part McDonnell Douglas test had been met. Indeed, the district court charged, among other things:
“Now, the plaintiff may prove his claim either by direct or by circumstantial evidence. By direct evidence, I mean a statement that may be evidence of discriminatory intent. And in this particular case, plaintiff claims that such a statement was made by Mr. Clark...
Plaintiff may also prove his claim by circumstantial evidence. In order to prevail on this basis, plaintiff must prove his claim by a preponderance of the evidence and in the following manner that I will outline to you at this time.
This is a three-part procedure.
First, the plaintiff must prove four different things. First, that he was in the protected age group, that is between the age of 40 and 70.
Second, that he was qualified to do the job.
Third, that his employment was terminated despite the fact there remained work he was qualified to perform.
Fourth, that a younger individual outside the protected age group was selected to do the work.
If you find that the plaintiff has established these facts by a preponderance of the evidence, you will then come to second part of this procedure and you will consider defendant’s reasons for terminating plaintiffs employment.
* * * * * *
Now, these reasons — this moves us to the third part. Do these reasons dispel the inference created by circumstantial evidence that the defendant intentionally terminated the plaintiffs employment because of his age unless you find that the defendant’s explanation was a pretext. That is, that the defendant’s explanation was not credible or that the plaintiff’s age most likely motivated the defendant.
Let me go over some of these concepts again.
In considering the reasons given by the defendant for terminating Mr. Car-den, and in determining whether the plaintiff has fulfilled his burden in proving age discrimination in this case, you are to take into consideration the reasons given by the witnesses for the defendant, for the decision to reduce and then either fold in or consolidate or eliminate plaintiffs job and transfer the remaining duties, which have not been moved to Orlando to Diane Follett.
Under the law, the defendant is not required to prove that the reason for its decision was a good reason or that it was a justifiable reason or that it was one that you would agree with. The fact that an employer made an unwise business decision or had other alternatives is not a sufficient basis for finding age discrimination.
Under the law, the defendant may state some non-discriminatory reason for its decision. If you find those reasons credible, then you may accept these reasons as legitimate, non-discriminatory reasons and return a verdict in favor of Westinghouse unless the plaintiff has proven to you by a preponderance of the evidence that the reasons given by the company were merely a pretext for age discrimination. That the reasons given by the company were merely a pretext for age discrimination.
* * * * * *
Plaintiff must show that but for his age, he would not have lost his job.”
Tr. Transcript, February 19, 1986 at 65-67.
The jury returned a verdict as follows:
THE DEPUTY CLERK:... has the jury agreed upon their verdict?
FOREPERSON: Yes, we have.
THE DEPUTY CLERK: Do you find that age was a determining factor in the decision to terminate plaintiff, effective August 1, 1983, yes or no?
FOREPERSON: Yes.
DEPUTY CLERK: Do you find that the defendant acted willfully, in deciding to terminate plaintiff, did the defendant show reckless disregard when its conduct was prohibited by the Age Discrimination in Employment Act?
FOREPERSON: Yes.
Id. at 73.
Significantly, the jury’s liability interrogatory, and hence the jury’s answer, is in effect a general verdict. It did not distinguish between the two theories on which the district court charged: i.e. liability predicated on a finding of intentional discrimination, or liability predicated on an indirect finding grounded in the three-part McDonnell Douglas formula. Thus, unless we are satisfied that Carden proved both direct and indirect liability on the part of Westinghouse, we are compelled to reverse the judgment because the jury’s verdict, general in nature, may have rested exclusively on a ground that is not supported by evidence. See Avins v. White, 627 F.2d 637, 646 (3d Cir.), cert. denied, 449 U.S. 982, 101 S.Ct. 398, 66 L.Ed.2d 244 (1980).
A.
Under the three part procedure of McDonnell Douglas v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973) an ADEA plaintiff has the burden of establishing a prima facie case of age discrimination. The plaintiff must show that he was laid off from a job, or not hired for a job, for which he was qualified. He must also show that a younger person was hired in his stead. After a plaintiff has thereby established a prima fade case, the burden shifts to the defendant to dispel the adverse inference by articulating “some legitimate, non-discriminatory reason for the employee’s rejection.” Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 253, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207 (1981).
If the defendant satisfies the requirement of articulating a non-discriminatory reason for the defendant’s action, the ultimate burden then remains with the plaintiff to prove to the trier of fact that the defendant intentionally discriminated against the plaintiff. Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 897 (3d Cir.) (in banc), cert. dismissed, — U.S. -, 108 S.Ct. 26, 97 L.Ed.2d 815 (1987). A showing that a proffered justification is pretextual, is itself equivalent to a finding that the employer intentionally discriminated. Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393, 1396 (3d Cir.1984). Thus, either by proving discrimination by direct evidence or by proving pretext, the plaintiff is entitled to prevail.
B.
In our jurisprudence it has been established that a general verdict must be set aside where the jury has been instructed that it could rely on two or more independent grounds or claims and one of those grounds or claims turns out to be insufficient. The application of that principle was expressed in Albergo v. Reading Co., 372 F.2d 83 (3d Cir.1966), cert. denied, 386 U.S. 983, 87 S.Ct. 1284, 18 L.Ed.2d 232 (1967), where the plaintiff asserted two independent claims for recovery and the jury returned a general verdict without specifying whether its decision was based on the first or second claim, or both. We said:
Since the evidence was insufficient to warrant submission of the first claim to the jury, the judgment of the court below would be sustainable only if the verdict rested solely on the second claim. The form of the verdict makes it impossible for us to determine whether it rested on the first claim, the second, or both. Where, as here, a general verdict may rest on either of two claims — one supported by the evidence and the other not — a judgment thereon must be reversed.
Id. at 86-87 (citations omitted).
The same principle was found determinative in Avins v. White, 627 F.2d 637 (3d Cir.1980) where the jury had returned a general verdict awarding $50,000 in compensatory damages for defamation. We reversed the damage judgment because two of the three alleged incidents of defamation were improperly submitted to the jury and it could not be determined whether the jury’s general verdict was based on all three of the defamatory statements or on just one or two.
The same result occurred in United Pilots Association v. Halecki, 358 U.S. 613, 79 S.Ct. 517, 3 L.Ed.2d 541 (1959), where the jury returned a general verdict under instructions that either unseaworthiness of the vessel or negligence, would render the defendants liable. Because the court held that the doctrine of unseaworthiness was not applicable, a new trial was required with respect to the negligence claim because “[t]here [was] no way to know that the invalid claim of unseaworthiness was not the sole basis for the verdict.” Id. at 619, 79 S.Ct. at 520.
The Second Circuit's recent decision in Katara v. D.E. Jones Commodities, Inc., 835 F.2d 966 (2d Cir.1987) reflects the same principle and is representative of cases in other circuits. In Katara, the court observed:
The jury returned a general verdict, which means that its verdict might have been premised upon a finding of a false representation (and reliance) as to safety, margin requirements, or both, or upon a breach of an oral contract. Since there was no basis for a verdict based upon a misrepresentation as to safety, the judgment based on that general verdict cannot stand. Bone v. Refco, Inc., 774 F.2d 235, 242-43 (8th Cir.1985); Morrissey v. National Maritime Union, 544 F.2d 19, 26-27 (2d Cir.1976).
Id. at 971.
Mindful of the principle that we must be able to ascertain the basis of the jury’s verdict where there are two grounds — one valid, the other invalid — we turn to a consideration of the sufficiency of evidence in the present record. First, we consider the direct evidence of discrimination and then we will address the evidence as it pertains to the McDonnell Douglas “pretext” formula.
III.
Westinghouse singles out as error, the testimony given by Carden that his supervisor Clark said “he thought they wanted a younger person.” (A215). This testimony was adduced in the context of Carden’s failure to be hired for the consolidated position to which Follett succeeded.
Westinghouse contends that this testimony is the only testimony in the entire record which could support a finding of intentional discrimination by reason of age; that it is the only direct testimony, as distinguished from circumstantial testimony, of intentional discrimination; and that it was emphasized as such by the district court in its charge, and by Carden’s counsel, in her summation. Moreover, it is the only testimony that could support the jury’s finding of willfulness — a finding, although subsequently overturned by the district court, but which nonetheless is indicative of the jury’s focus on that testimony.
Westinghouse contends that this statement was improperly admitted because it is double hearsay, that Carden did not provide a proper foundation for each level of the two-level hearsay, see Fed.R. Evid. 805, and that without this testimony, there is no evidence to support a finding of intentional discrimination. We are bound to review this contention in light of the record and the district court’s charge which instructed the jury that there were two independent bases of decision, one of which was intentional discrimination.
A.
A district court judge is granted broad discretion in determining what is admissible under the Federal Rules of Evidence. A reviewing court in order to reverse a district court judge’s evidentiary ruling, must determine if the district court abused its discretion.
In its motion for a judgment notwithstanding the verdict and a new trial, Westinghouse renewed its earlier objection to the admission of the challenged statement. The district court, in its memorandum opinion denying Westinghouse’s motion, ruled that since Clark was Carden’s immediate supervisor, the decision to select or not select Carden for the consolidated position was within the scope of Clark’s employment, and thus the statement was admissible under Fed.R.Evid. 801(d)(2)(D). (A55). See e.g. Miles v. M.N.C. Corp., 750 F.2d 867, 874-75 (11th Cir.1985). The district court, apparently did not view the statement as being double hearsay, but regarded it as admissible “one-level” hearsay.
We are persuaded by Westinghouse’s argument that the statement, “they wanted a younger person” involves double hearsay. While the mere statement attributed to Clark may be admissible as a statement attributable to Westinghouse’s agent within the scope of his employment, see Fed.R.Evid. 801(d)(2)(D), the problem presented by this particular statement is that Clark is claimed to have said that “they” wanted a younger person. Thus, it is evident that someone (who has never been identified in the record) said something to Clark which he, Clark, in turn repeated to Carden. In order for the statement to be admissible, there must also be a basis for admitting the statement that “they” made. See Fed.R.Evid. 805. That rule provides:
Hearsay included within hearsay is not excluded under the hearsay rule if each part of the combined statements conforms with an exception to the hearsay rule provided in these rules.
The district court did not specifically address this point and our attention has been called to no exception to the hearsay rule which would permit the introduction into evidence of what “they” said to Clark.
Carden argues that there was no double hearsay. He claims that the statement by Clark is just Clark’s understanding of what Westinghouse wanted and does not reflect a specific declaration by any other individual. The flaw in this argument is that Car-den ignores the fact that Clark said “they wanted a younger person.” That statement clearly indicates that someone or more persons other than Clark himself, constituted “they.”
Carden next argues that it was obvious that the “they” referred to was Lenzy Harper, the Plant Controller, and that the decision not to hire Carden was well within Harper’s scope of employment. He supports this contention by arguing that the testimony indicated that only Harper and Clark were involved in the decision making process to determine who would fill the consolidated position.
While this argument may have some surface appeal, it ultimately falls far short of satisfying us that Carden’s statement was admissible. Nowhere in the record is the “they” ever identified as Harper. Carden had the burden of establishing a foundation which would identify the “they” about whom Clark was speaking. By failing to meet that burden, and thus by failing to identify the unknown “they”, Carden had failed to meet the evidentiary requirements of both Fed.R.Evid. 801(d)(2)(D) and 805.
A somewhat similar circumstance was presented in Hill v. Spiegel, Inc., 708 F.2d 233 (6th Cir.1983). Hill involved an age discrimination suit by a former manager, Hill, against his former employer, Spiegel, Inc. The district court, under Rule 801(d)(2)(D) admitted into evidence statements made by one Spiegel employee, Matthew Baker, that he had been told by other Spiegel employees that Hill had been discharged because of his age.
In Hill, unlike the present case, the identity of the declarants was known, but no evidence appeared of record that “matters bearing upon Hill’s discharge were within the scope of their employment” Id. at 237. Accordingly, the Hill court held that the admission of Baker’s statement was reversible error.
Here of course, the problem is compounded because not only are the declar-ants unknown, but, because they are unidentified, the record could not, and does not, establish that any matter bearing upon Carden’s hiring and firing was within the scope of their employment. An Eighth Circuit case most closely on point has been called to our attention by Westinghouse.
In Cedeck v. Hamiltonian Federal Savings and Loan Association, 551 F.2d 1136 (8th Cir.1977), the court held that the testimony of the plaintiff in a sex discrimination case, regarding the statement made by the defendant’s branch manager (Murphy), was inadmissible hearsay because Murphy’s statement included a statement made by others who were unidentified. This circumstance is virtually the same circumstance as is presented by our record. Because the Eighth Circuit’s analysis is similar to our independent analysis, we reproduce that court’s reasoning:
Appellant argues that Murphy’s statement was admissible as an admission by party-opponent under Fed.R.Evid. 801(d)(2)(D). An argument for admission of the statement under this rule could be made had Murphy stated in effect to Cedeck that she was qualified except for the fact that she was not a male. Part of Murphy’s statement, however, contained a reiteration of what someone told him. Therefore, Murphy’s statement to Cedeck is hearsay within hearsay. Rule 805 provides:
Hearsay included within hearsay is not excluded under the hearsay rule if each part of the combined statements conforms with an exception to the hearsay rule provided in these rules.
Fed.R.Evid. 805. That part of Murphy’s statement which contains a reiteration of what someone told him is not admissible as an admission by party-opponent since the author of the statement is unknown. Furthermore, we do not believe it falls within any of the exceptions to the hearsay rule. Therefore, under Rule 805, the statement is not admissible.
Id. at 1138.
While our independent research has revealed no other case addressing the very issue we confront here, we observe that at least in a different, although related context, declarations of unidentified persons are rarely admitted. This is undoubtedly due in part to the heavy burden which rests on the proponent of the evidence to satisfy evidentiary and trustworthiness requirements. Miller v. Keating, 754 F.2d 507 (3d Cir.1985) (Utterance of unidentified declar-ant not admissible under Rule 803(2)).
Because Carden’s testimony fails the conjoined requirements of Rules 801(d)(2)(D) and 805, we are obliged to hold that the district court improperly exercised its discretion in admitting this testimony.
Thus, we agree with Westinghouse that not only was the testimony inadmissible, but its introduction into evidence was essential, if a finding of intentional discrimination was to be sustained. Furthermore, because we now hold the admission of this testimony was error and that without it there was insufficient evidence to support a finding of intentional discrimination, we must reverse the judgment entered in favor of Carden. We do so, because we have no means of knowing if the jury based its verdict on this insupportable ground.
B.
Having determined that Carden’s statement attributed to Clark should not have been admitted and thus, that there was no basis to support a finding of intentional discrimination, we now address the evidence with respect to pretext.
Westinghouse, in addition to other evidence, presented evidence that the reason it eliminated Carden’s position was due to an economic downturn, leading to a general reduction of force at the Lester plant. Car-den does not dispute this point. Carden does dispute, however, Westinghouse’s articulated reason why it did not hire Carden for the consolidated position.
Westinghouse argued at trial that hiring Carden, instead of Follett would violate the company’s “no bumping” policy. This policy was described by both Clark and Harper at trial. Upon cross examination by counsel for Westinghouse on this matter Clark testified:
Q: What is the company policy with respect to replacing a lower classified manager who is in a job with a higher classified manager?
A: As far as I understand, the policy is not to.
******
Q: Can you tell me if there was a policy, when that policy was in effect?
A: It was in effect as far as I know since I worked there that we did not remove a man from a higher managerial grade and place him in a lower grade position.
Q: I understood it — are you saying you don’t place a higher grade person with a lower placed person or vice versa?
A: We don’t replace the lower person with a higher person.
Trial Tr. February 13, 1986 at 36-37.
Similarly, Harper testified:
Q: Why was — was Carden given an opportunity to take Diane Follett’s job?
A: No, he was not.
Q: Why not?
A: Because we do not let a higher grade management employee displace an incumbent in a lower classified management job.
Q: Did you consider Diane Follett an incumbent in the position?
A: Certainly she was.
Trial Tr. February 14, 1986 at 125-126.
Carden, however, presented evidence to support his argument that the “no bumping” rationale offered by Westinghouse was pretextual. Carden testified that in 1976 he had been bumped by his supervisor and that he then in turn “bumped out” someone subordinate to him. (A194-95, 242-43). He also introduced evidence which would tend to show that the position Follett assumed was a new position, and therefore, she could not have been an incumbent protected by the “no bumping” policy. Thus, Carden argues that if Follett was not an incumbent then the “no bumping” policy was irrelevant.
Carden thus contends that Westinghouse has not offered any reason for its refusal to hire him and that he was therefore entitled to prevail in this action. See Furnco Construction Corp. v. Waters, 438 U.S. 567, 577, 98 S.Ct. 2943, 2950, 57 L.Ed.2d 957 (1978) (“[Wjhen all legitimate reasons for rejecting an applicant have been eliminated as possible reasons for the employer’s actions, it is more likely than not the employer, who we generally assume acts only with some reason, based his decision on an impermissible consideration... ”) (emphasis in original).
Because we have held that the direct evidence of intentional discrimination cannot support the jury’s general verdict, and because arguably, the evidence in this record, even without augmentation, presents at the least a jury question, it is apparent that a new trial must be conducted.
IV.
While our decision to reverse and remand for a new trial renders further discussion of the other issues on appeal unnecessary, we can anticipate that the issue of mitigation of damages may be raised once again before the district court on retrial. We therefore briefly address this issue in the hope of providing some guidance to the district court on remand.
A.
The district court held that the consulting business which Carden started after June 1, 1984, constituted a form of mitigation of damages, and that mitigation was not affected by Carden’s reinvestment of his business proceeds so as to sustain the business. Accordingly the district court rejected Westinghouse’s claim that Carden had failed to mitigate his damages by establishing his own business.
It is the defendant’s burden to establish that plaintiff failed to mitigate his damages in order to limit successfully a plaintiff’s back pay award. See e.g. Ford Motor Company v. EEOC, 458 U.S. 219, 232, 102 S.Ct. 3057, 3066, 73 L.Ed.2d 721 (1982); Goss v. Exxon, 747 F.2d 885, 889 (3d Cir.1984) (Gibbons, J.). To cut off a back pay award, defendants must prove that the plaintiff did not exercise reasonable diligence in seeking employment substantially equivalent to the position he lost. Ford Motor Company, 458 U.S. at 231 and n. 14, 102 S.Ct. at 3065 and n. 14; Nord v. United States Steel Corp., 758 F.2d 1462, 1470 (11th Cir.1985). In this case, Westinghouse does not contest that Carden attempted to mitigate his damages up through June 1, 1984. (A314-15). Westinghouse does argue, that after June 1, 1984, Carden devoted his full energies to establishing his own business, and thus from that point in time Westinghouse contends that Carden is not entitled to back pay.
Westinghouse argues, first, that by starting his own business, Carden had in effect withdrawn himself from the employment market. Westinghouse contends that the decision by Carden to start his own business was analogous to a decision to return to school. Either activity, claims Westinghouse, would cut off back pay since Carden would not be actively seeking work, nor would he be available to accept employment while at school or engaged in business. See Miller v. Marsh, 766 F.2d 490 (11th Cir.1985); Washington v. Kroger Company, 671 F.2d 1072 (8th Cir.1982); Taylor v. Safeway Stores, Inc., 524 F.2d 263, 268 (10th Cir.1975).
The analogy Westinghouse draws between self-employment and a return to school as a full time student, is not persuasive. An individual who attends school as a full-time student does so in order to gain some type of future pecuniary advantage. Such an individual essentially seeks future earnings, while a self-employed person works for both current and future earnings. When monetary expectations are directed only towards the future, back pay cannot legitimately be claimed since no present compensation can be expected. However, a self employed individual has present, as well as future, financial expectations. As such, back pay can be properly claimed.
The threshold question may be asked: was Carden’s choice to enter into his own business a reasonable method of mitigating damages? The burden to prove that it was not, as stated above, falls on Westinghouse. Westinghouse has not directed us to any evidence in the record which would indicate that Carden was acting unreasonably in starting his own business. Furthermore, it is not disputed that Carden had looked for work unsuccessfully for nearly a year.
Thus, we conclude that a self-employed person is “employed” for the purposes of mitigating damages if establishing a business of his own was a reasonable alternative to finding other comparable employment. See Wangsness v. Watertown School Districts, 541 F.Supp. 332 (D.S.D.1982); McCluney v. Jos. Schlitz Brewing Co., 540 F.Supp. 1100 (E.D.Wis.1982).
B.
This still leaves open the question of how to value Carden’s self-employment as mitigation of his damages. As we understand the doctrine of mitigation of damages, it is to prevent the wage earner, such as Carden here, from obtaining a windfall, i.e. a double recovery. Such a double recovery would occur unless legitimate post-discharge earnings were offset against the back pay damages claimed. Where the post-discharge employment is evidenced by another salary, mitigation is readily determined. It is not so readily determined where the discharged employee establishes his own business as Carden did.
In such a situation, a number of questions arise. They do so because of the nature of self-employment. For example: has the plaintiff drawn a salary which has reduced, if not eliminated the year-end profit? Have personal expenses, normally paid by a wage earner from a salary, been absorbed by the business, e.g., personal car expenses, insurance, vacations and other personal expenses? Have dividends been paid? Have profits been earned? Have particular expenses been appropriately offset against revenues? Have profits been reinvested in capital assets and have reserves been established? If so, how should they be treated in a mitigation context. Has the plaintiff benefited by an increase in value of the business?
While these questions do not exhaust the inquiry, they are but a few of the panoply of questions which must be answered when a plaintiff establishes his own business and asserts his self-employment as proper mitigation. Each of these questions necessarily must be resolved by the fact finder, against a backdrop of the governing principles recited earlier: that the plaintiff should not receive double benefits, and that the burden is upon the defendant to prove by how much, if at all, the back pay award should be reduced. The aggregate economic gain found by the jury would then constitute the offset against the plaintiffs back pay damage award.
Because we have ordered a new trial, there is no need for us to address the parties’ arguments with respect to mitigation as they are presented on the instant record. The appropriate time for that discussion will occur when, and if, we are confronted again with this case after retrial.
V.
Our holding on liability, which necessarily results in a new trial obviously dispenses with the need to comment on Carden’s cross-appeal. The cross-appeal was taken from the district court’s order which had vacated the jury’s finding of willfulness.
The district court judge, in his March 12, 1987 opinion which addressed the post trial motions, reversed the jury's determination that Westinghouse’s conduct justified a jury verdict of willful discrimination. That reversal was predicated on two grounds.
First, the district court judge focused on the standard which the jury had been instructed to apply. The district court had instructed the jury, among other things, that in deciding whether or not Westinghouse acted willfully, the jury was to decide “... did the defendant know or show reckless disregard of whether its conduct was prohibited by the Age Discrimination in Employment Act.” Tr. Transcript, February 19, 1986 at 60, 68. That standard was derived from Trans World Airlines v. Thurston, 469 U.S. 111, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985). The district court judge in his opinion pointed out however, that after the jury verdict had been returned, a Court of Appeals decision had been filed which refined the standard to be used in determining willfulness. See Dreyer v. Arco Chemical Co., Div. of Atlantic-Richfield, 801 F.2d 651, 656-57, 658 (3d Cir.1986).
Dreyer explained that in order to distinguish between a “violation, which is almost always intentional, and a willful violation, leading to double damages,” a plaintiff must demonstrate that his employer’s conduct was “outrageous.” Id. The district court’s opinion in this case, went on to state “proof of outrageousness, the [Dreyer] court explained, properly effectuates Congress’ intent of limiting the double damage penalty to the most egregious, i.e., willful, violations. Id. at 657-58, 29 U.S.C. § 626(b); Thurston, 469 U.S. at 125 [105 S.Ct. at 623].” (A45). The opinion concluded, “therefore, my ‘knew or reckless disregard’ jury instruction on the issue of willfulness was inadequate because it allowed the jury to automatically award double damages once it determined Westinghouse violated the ADEA.” Id.
In addition to having recognized a different standard for willfulness, the district court also held that Carden had not presented evidence which satisfied that standard. (A52-53). The district court explained that the statement attributed to
Clark that “they wanted a younger person did not demonstrate outrageousness, and in addition, the district court noted that substantial questions appeared in the record concerning the accuracy of this statement. The district court mentioned as an example, plaintiff’s own notes of his meeting with Clark indicated that Clark mentioned gender, but not age, as a factor in the dismissal decision.” (A53). The district court observed further that no other aggravating factor appeared in the record other than Carden’s claim that Harper had reneged on a pledge to hire him (Carden) to fill the job which was ultimately given to Follett.
Thus, the district court’s holding that the jury finding of willfulness was in error, was predicated on both legal and evidentia-ry grounds. However, because a new trial must be held and the evidence at that proceeding may differ from the evidence before us today, our appropriate disposition is to dismiss the cross-appeal as moot, in light of our direction that a new trial is required. We observe, however, that just as the district court was faced with new case law from this court at the time it considered the post-trial motions, so too do we recognize that since this appeal has been pending before us, the Supreme Court has once again addressed the issue of willfulness. McLaughlin, Secretary of Labor v. Rich-land Shoe Co., — U.S. -, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988). On retrial, we are confident that the jury will be appropriately charged in light of all relevant jurisprudence concerning the issue of wilfulness.
VI.
After having determined that the only evidence of intentional discrimination had been improperly admitted, we have held that it was impossible to discern the basis of the jury’s verdict in favor of the plaintiff, Carden. Thus, as to Westinghouse’s appeal at 87-1292, we will reverse the judgment in favor of Carden and we will remand for a new trial consistent with the foregoing opinion. In light of that disposition, we will dismiss Carden’s appeal at 87-1296.
ON REHEARING
The petition for rehearing filed by appel-lee, Raymond C. Carden, in the above-entitled case, having been submitted to the judges who participated in the decision of this court, and no judge who concurred in the decision having asked for rehearing, the petition for rehearing is denied because among other reasons, appellee’s petition relies upon a ground not heretofore advanced before the district court or this court.
. In 1980 Westinghouse employed approximately 4,000 employees at the Lester Plant. By the date of trial, only 800 employees were still employed at Lester. (A250).
. Carden testified that he had two discussions about the consolidated position with Lenzy Harper, the Plant Controller on June 1 and June 27. (A211-12). Although Carden claims that Harper offered him the consolidated position and that he accepted, Harper testified that he only agreed to consider Carden.
. The other issues raised on appeal by Westinghouse are: (1) was there sufficient evidence to support the jury’s verdict? (2) did plaintiff properly mitigate his damages? (3) did the district court commit reversible error in allowing evidence concerning the emotional effects of
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
Ted Hicks & Associates, Inc. (Hicks), a building contractor, petitions to set aside an order of the National Labor Relations Board (NLRB). The crux of the controversy concerns the interpretation of a prehire memorandum agreement between Hicks and Carpenters Local 1098 (Union). We agree with the NLRB’s interpretation and enforce its order.
In 1969, the Union executed an areawide collective bargaining contract with the Baton Rouge Chapter of the Associated General Contractors of America, Inc. (AGC), a multiemployer bargaining group. In May 1974, a new two-year contract went into effect between the Union and the AGC. It was negotiated pursuant to a provision in the 1969 contract that provided:
This agreement . . . shall remain in full force and effect through March 31, 1972, the anniversary date hereof and from year to year thereafter unless either party, at least ninety (90) days prior to any anniversary date, notify the other party of its desire to modify or terminate same.
Hicks, which was not a member of the AGC, signed a memorandum agreement with the Union on October 11, 1974, stating that both parties would be bound by all provisions of the 1969 collective bargaining contract between the Union and the AGC. The memorandum, moreover, explained that Hicks would abide by “any modifications, extensions, or renewals” of that contract. From October 11, 1974 to May 21, 1976, Hicks adhered to the terms of the 1974 agreement, which was then in effect, and contributed to the Union’s welfare, education, and pension funds.
In 1976, the Union notified the AGC that it wanted to terminate the expiring 1974 contract and negotiate a new agreement. In May 1976, the Union and AGC executed another collective bargaining contract covering a subsequent two-year period. Hicks refused to comply with this agreement, and as a result, the NLRB held the company in violation of the National Labor Relations Act, § 8(a)(1), (a)(5), 29 U.S.C.A. § 158(a)(1), (a)(5).
Hicks argues that the memorandum agreement does not bind the company to all future agreements between the Union and the AGC. It contends, moreover, that the 1969 contract is irrelevant, and it is bound only by the 1974 agreement in effect at the time the memorandum was signed. The NLRB argues that the 1969 contract, which Hicks specifically agreed to follow, was the base contract, and the 1974 and 1976 agreements were only modifications. See NLRB v. R. J. Smith Construction Co., Inc., 1976, 178 U.S.App.D.C. 109, 545 F.2d 187.
The Board’s interpretation of a collective bargaining agreement will stand if it is supported by the record and has a reasonable basis in law. Newspaper Production Co. v. NLRB, 5 Cir., 1974, 503 F.2d 821, 830. We believe that the NLRB’s interpretation in this case meets this standard. Cf. NLRB v. Beckham, Inc., 5 Cir., 1977, 564 F.2d 190 (substantial evidence supported NLRB’s finding that employer was bound by multiemployer bargaining agreement). Hicks offers no explanation, indeed it never attempts an explanation, why it would sign a memorandum agreement in October 1974, stating that it adhered to a 1969 contract, if the 1969 contract had no bearing on the 1974 agreement. Examination, furthermore, of the three Union-AGC contracts — 1969, 1974, and 1976 — reveals that they are nearly identical, except for changes in certain economic terms. It was reasonable, therefore, for the NLRB to conclude that the 1969 agreement was the base contract, and the 1974 and the 1976 agreements were modifications of that base. Thus, the Union’s notice to the AGC in 1974 merely signaled an end to the terms in the 1974 contract and not an end to the Union’s relation with Hicks.
In the alternative, Hicks contends that the 1974 contract is still in effect because it received no notice that the Union wanted to renegotiate this contract. Although Hicks did not receive notice, the Union complied with the requirements of the 1974 contract in notifying the AGC. More importantly, the memorandum agreement does not stipulate that the Union must notify Hicks if it seeks to alter the 1969 contract. Cf. NLRB v. R. J. Smith Construction Co., supra, 545 F.2d at 192 (employer did not comply with termination provisions of prehire memorandum agreements). The memorandum in this case requires only that the Union and Hicks adhere to modifications of the 1969 agreement, which is what the Union did in notifying the AGC.
ENFORCED.
. The full text of the October 11, 1974 memorandum agreement is as follows:
This Agreement is made by and among the undersigned, hereinafter called “EMPLOYER”, “UNION”, or “TRUST(S)”, as the case may be
1. EMPLOYER and UNION agree to comply with, abide by, and be bound by all of the provisions of the collective-bargaining agreement heretofore entered into between the UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, LOCAL UNION 1098 and the BATON ROUGE CHAPTER, ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC., dated March 28, 1969, and any modifications, extensions, or renewals thereof with the same force and effect as though the said collective bargaining agreement was set forth here in full.
2. EMPLOYER agrees to become a party to and be bound by all the terms and provisions of the agreements establishing:
a. CARPENTERS LOCAL NO. 1098 WELFARE FUND, being that Agreement and Declaration of Trust dated August 1, 1969,
b. CARPENTERS LOCAL 1098 PENSION TRUST, being that Agreement and Declaration of Trust dated March 31, 1970,
c. LOCAL 1098 EDUCATIONAL AND TRAINING PROGRAM TRUST, being that Agreement and Declaration of Trust dated April 30, 1970, with the same force and effect as though the agreements were set forth here in full. Without in anywise limiting the generality of the foregoing, EMPLOYER does irrevocably designate and appoint the employers mentioned in the various Trust Agreements as its attorneys in fact for the selection, removal, and substitution of Trustees as provided in said agreement(s) and does hereby agree to make payments covering all of his employees as required by the collective bargaining agreement and the agreements establishing said trusts and does hereby ratify, approve and consent to all matters heretofore done in connection with the creation and administration of such trusts.
3. TRUST(S) agree(s) that EMPLOYER is granted the right to participate in said agreement(s), subject to all the terms and conditions thereof, with the same effect as though he were originally a party thereto.
. Although the memorandum agreement contains no expiration date, the Board’s decision explains how Hicks or the Union could end the agreement:
Inasmuch as the memorandum agreement did not contain an expiration date or express provisions regarding its termination, it is necessary to determine how an end to that agreement could be achieved by the parties. We find that the memorandum agreement by its terms incorporates the provisions of the 1969 agreement, and successor agreements modifying it, including the 1974 agreement which then was effective. Hence, we further find that Respondent was obligated to give notice to the Union at least 90 days prior to the desired date for termination of the memorandum agreement, in accordance with the provisions of the incorporated 1974 contract. By the same token, had the Union desired to terminate the memorandum agreement with Respondent and negotiate a separate 1976 contract, it would have been obligated to give at least 90 days’ notice to Respondent of the proposed termination date. Note that in so finding we reject any construction of our holding that such notice of termination could be by termination of the AGC-Union bargaining agreements. 232 NLRB No. 113 at 7 n.5 (Sept. 30, 1977), R. at 83.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
KERNER, Circuit Judge.
Defendant-appellant, Chesapeake and Ohio Railway Company (Railway), appeals from a jury award of $75,000 in favor of plaintiff-appellee, Jerome C. Hartzler, for injuries incurred when plaintiff’s car collided with defendant’s train which was stopped or moving slowly across an oblique public highway intersection. Jurisdiction is based on diversity of citizenship. We affirm the jury’s finding for plaintiff and the award.
The parties, pursuant to a pre-trial order, stipulated that on the night of October 26, 1966, at approximately 9:15 o’clock, the plaintiff’s automobile collided with the sixtieth car of defendant’s train, a black coal car, where County Road 800E crossed a single set of defendant’s railroad tracks. It was further stipulated that at this particular railroad crossing defendant had erected a single highway cross-arm sign approximately eleven feet high, but that
[s] aid crossing sign was not visible to the traveling public, including plaintiff, approaching said crossing from the north when a train was standing on or passing over said crossing, [and] [t] hat there were no other signs, signals or warning devices installed, erected or painted on or near the intersection of said highway and defendant’s tracks other than the aforesaid cross-arm sign.
The parties also stipulated
[t]hat at said time and place, there were no lights at or near the crossing and plaintiff’s was the only vehicle at or near the crossing and [t]hat at the time of said collision there were no disc warning signs on either the north or south side of the crossing and there had been no such signs for at least two years prior to the accident, although such a sign did exist within eight years prior to said two-year period.
Plaintiff suffered retrograde amnesia, resulting from the accident, and was not able to testify to any facts that occurred during the period several days prior to the accident until several days after the accident. In the absence of eyewitnesses, much of plaintiff’s case on liability was developed by two experts. Dr. J. Stannard Baker, a traffic engineer and Director of Research and Development at the Traffic Institute of Northwestern University, testified that as one approaches the crossing from the north “there is a definite slope downward” and this decreases the ability to stop upon application of the brakes. Dr. Baker further testified that based upon an examination of the scene, skid marks, photographs and his evaluation of damages to the coal ear and automobile, he was of the opinion that Hartzler was traveling between 42 and 54 miles per hour at the time he applied the brakes (the speed limit on 800E was 65 mph). Dr. Baker then stated at the speed of 42 miles per hour, approaching a railroad track intersecting the highway at the the angle defendant’s track intersected and having a grade similar to highway 800E, the point at which the driver could no longer avoid a collision would be 182 feet. This point of no escape, Dr. Baker stated, would increase to 275 feet if the driver were going 54 miles per hour.
The second expert testimony was given by John W. Mihelich, a professor of physics at Notre Dame. Professor Mihelich testified that in his opinion, a dark coal hopper, whether stopped or moving slowly, would be invisible at 150 feet.
My opinion is that with normal headlights, with reflection from the black-top, reflection off the coal train at an angle with respect to the highway, with it reflecting back from the train into the eye, with there being no sharp features to outline the train, such as, say, perhaps a light background, that in all likelihood, the train would be below the level of perception for a distance fairly close beyond the range of the headlights striking the pavement, and I would venture to guess that at 150 feet that train would be invisible, if it’s truly black with no background.
Both experts’ opinions indicate that plaintiff did not see the train until it was too late to avoid a collision.
Defendant-appellant Railway contends that since it violated no statutory duty towards plaintiff, it was error to allow the jury to determine liability based on the common law rules of negligence, because under Indiana law common law negligence does not apply to a railroad where it occupies a crossing and there is a collision. While we agree defendant violated no statutory duty, we disagree that common law negligence rules are inapplicable.
Since our jurisdiction is based on diversity of citizenship, we apply the law of Indiana as interpreted by its highest court. The latest pronouncement of the Indiana Supreme Court concerning the applicability of common law negligence rules to collisions at railroad cx'ossing was made in the recent case of Central Indiana Ry. Co. v. Anderson Banking Co., Ind., 247 N.E.2d 208 (1969). The court in Central Indiana recognized that pxdor Indiana law had adopted the minority view, that a railroad had no duty under any circumstances to warn the public of the presence of a train on a crossing. The court then stated the majority rule:
The doctrine prevailing in most jurisdictions, as the later cases show, is that where there is evidence that the particular crossing, either because of its more or less permanent features or because of circumstances existing and affecting its use at the given time, was. more than ordinarily hazardous, a question for the jury or the trier of facts is usually presented as to whether or not reasonable care on the part of the railroad required it to provide a flagman to warn of approaching trains.
On the other hand, in the absence of evidence of more than ordinary hazard attending public use of the crossing, there is, according to the doctrine generally laid down, no basis for the contention that the railroad company was under any duty to provide a flagman,
and stated that “Indiana has within the last few years showed a tendency to move away from the strict adherence to the minority view and toward the modern view,” Id. at 210, citing Budkiewicz v. Elgin, Joliet and Eastern Ry. Co., 238 Ind. 535, 150 N.E.2d 897 (1958), and a concurring-dissenting opinion in Tyler v. Chicago-Eastern Illinois Railway, 241 Ind. 463, 490, 173 N.E.2d 314, 326 (1961). The Indiana Supreme Court, taking cognizance of the increase and development in automobile travel, clearly indicated its preference for the majority position:
In light of the foregoing discussion, the better rule to adopt is the “Majority Rule” which allows liability to be imposed absent a statutory requirement if the facts of the particular case are such as to give the railroad the duty to warn the traveling public of the extra-hazardous nature of the crossing. The question of the presence of an extra-hazardous crossing could be left to the jury’s determination.
Central Indiana Ry. Co. v. Anderson Banking Co., 247 N.E.2d at 211.
The pronouncements in Central Indiana, while dicta and not essential to the disposition of that case, nevertheless indicate the highest court of the state’s interpretation of the law in this area, and we, sitting as another court of that state, follow that interpretation as the substantive law of Indiana. See e.g., Allstate Insurance Co. v. Charneski, 286 F.2d 238, 244 (7th Cir. 1960).
In the application of a state statute, the federal courts are, of course, bound by the construction made by the courts of the state. Senn v. Tile Layers Union, 301 U.S. 468, 57 S.Ct. 857, 81 L.Ed. 1229. And the obligation to accept local interpretation extends not merely to definitive decisions, but to considered dicta as well. Hawks v. Hamill, 288 U.S. 52, 53 S.Ct. 240, 77 L.Ed. 610; Badger v. Hoidale, 8 Cir., 88 F.2d 208, 109 A.L.R. 798. Indeed, under the implications of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487, and West v. American Telephone and Telegraph Co., 311 U.S. 223, 61 S.Ct. 179, 85 L.Ed. 139, where direct expression by an authorized state tribunal is lacking, it is the duty of the federal court, in dealing with matters of either common law or statute, to have regard for any persuasive data that is available, such as compelling inferences or logical implications from other related adjudications and considered pronouncements. The responsibility of the federal courts, in matters of local law, is not to formulate the legal mind of the state, but merely to ascertain and apply it. Any convincing manifestation of local law, having a clear root in judicial conscience and responsibility, whether resting in direct expression or obvious implication and inference, should accordingly be given appropriate heed.
Yoder v. Nu-Enamel, 117 F.2d 488, 489 (8th Cir. 1941).
Reviewing the facts of the instant case, we hold that the judge did not err in allowing the jury to decide whether the railroad crossing was extra-hazardous. There was sufficient evidence to consider whether the oblique crossing was extra-hazardous because of the absence of an advance warning sign or other signals and lights at the crossing and the fact that the train blocked a sloping crossing in the black of night. As the Indiana Supreme Court stated in Central Indiana Ry.:
In the present case there was evidence introduced that the railroad crossing was at the bottom of a dip in the highway with the road sloping upwards to the south and north of the tracks, that the crossing was not illuminated in any way and that two buildings obstructed the view of the crossing. This evidence is sufficient to allow the jury to determine that the crossing was dangerous to an extra-hazardous extent and to infer this knowledge to the railroad. Appelgate v. Chicago & N.W. Ry. Co. (1948), 334 Ill.App. 141, 78 N.E.2d 793; Chesapeake & Ohio R. Co. v. Elk Refining Co. (1950, C.A. 4th W.Va.), 186 F.2d 301; Tanzi v. New York Cent. R. Co. (1951), 155 Ohio St. 149, 98 N.E.2d 39, 24 A.L.R.2d 1151. 247 N.E.2d at 211.
In addition, the verdict was not based on impermissible speculation and inferences, as the appellant contends. The finding of negligence has ample support in the record concerning the extra-hazardous nature of the crossing and the testimony of the plaintiff’s two expert witnesses, who believed plaintiff did not see the train in time to avoid the accident under the existent conditions. Although there were no eyewitnesses to the collision, negligence can be proved by circumstantial evidence. See e.g., Great Atlantic & Pacific Tea Co. v. McNew, 99 Ind.App. 229, 189 N.E. 641 (1934), and we find our decisions in Foster v. N. Y. C. System, 402 F.2d 312 (7th Cir. 1968), and Iwaniuk, Admr. v. Bethlehem Steel Corp,, 402 F.2d 309 (7th Cir. 1968), holding jury speculation improper, distinguishable because they were based on non-analogous fact situations which did not have the benefit of expert testimony.
Defendant Railway also alleges as error the admission of the expert testimony of Dr. Baker and Professor Mihelich as opinion evidence which invaded the province of the jury. Under either Indiana law, see e.g., Lengyel v. Hecht, Ind.App., 242 N.E.2d 135, 137-39 (1969), or federal law, see e.g., Salem v. U. S. Lines, 370 U.S. 31, 35, 82 S.Ct. 1119, 8 L.Ed.2d 313 (1962), the determination of the admissibility of expert testimony is left to the broad discretion of the trial judge. We find that the testimony of the expert witnesses did not invade the province of the jury, and the trial judge did not abuse his discretion by receiving the expert testimony into evidence.
Appellant’s last allegation of error is directed at several of its instructions which were refused by the trial judge. Two instructions refused by the court would have withdrawn the issue of defendant’s statutory negligence from the jury’s consideration. Although these two instructions were refused, the trial judge did give an instruction to the jury which stated: “I instruct you that there is no evidence upon which you may find that the defendant violated a statutory duty which it owed to plaintiff.” Consequently, it was not error to refuse to give the two instructions dealing with statutory negligence since the subject matter of the refused instruction was covered by instructions which were given. See e.g., Central Indiana Ry. Co. v. Wishard, 186 Ind. 262, 114 N.E. 970, 973 (1917); see also Alford v. New York Central R. Co., 339 F.2d 1019, 1021 (7th Cir. 1964).
The other set of refused instructions would have informed the jury to disregard evidence concerning the absence of signs, signals and other warning devices at the crossing in determining whether the defendant was negligent. As we have stated, pursuant to the Central Indiana Ry. case, the question of the presence of signs, signals and other warning devices is relevant along with other factors, in a jury’s determination of whether a crossing is ultra-hazardous.
For the foregoing reasons, the decision of the district court is affirmed.
Affirmed.
. The railroad sought to have the State Supreme Court accept transfer of the case from the appellate court. The court denied transfer, even though it disagreed with the appellate court that the question of negligence should be withdrawn from the jury, since the appellate court had affirmed the trial court's finding in favor of the plaintiff-appellee.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
PER CURIAM:
Alleging that unconstitutional actions of the defendant city officials caused the loss of an apartment building through foreclosure, the plaintiffs brought suit under 42 U.S.C. § 1983 (1976). Their principal contention was that the income from the building was reduced, and the building itself eventually lost, through the actions of a rent leveling board created by a city ordinance. Inverse condemnation challenges to the constitutionality of the rent control regulation in the New Jersey state courts were unsuccessful, and the plaintiff’s building was finally sold in a mortgage foreclosure proceeding.
After a bench trial, the district court found that res judicata barred consideration of the federal claim, since it was indistinguishable from the prior state actions. The court further found that even if res judicata was not dispositive, the plaintiffs had failed to establish that the loss of the building was proximately caused by the regulatory acts of the city officials. Although rent control reduced the income from the property, the court found the plaintiffs had chosen to maintain a thin equity in the building and did not meet the mortgage payments. In addition, the court concluded that the proceedings before the board comported with due process and that there was adequate cause to support the board’s orders. Moreover, the court found that the defendant officials had established their claim to qualified immunity.
The plaintiffs have appealed from the judgment of the district court, and the defendants have cross-appealed the failure of the district court to award them costs as prevailing parties.
We have reviewed the plaintiffs’ briefs and considered the contentions they raised at oral argument. We conclude that the district court’s findings of fact are not clearly erroneous, and we perceive no reversible error in its rulings of law. Accordingly, the judgment in favor of the defendants will be affirmed.
The district court directed that “each party to the suit is to bear its own costs,” but did not disclose its reasons for that action. Normally costs are allowed as a matter of course to the prevailing party, although the court may direct otherwise. See Fed.R.Civ.P. 54(d). In ADM Corp. v. Speedmaster Packaging Corp., 525 F.2d 662, 664-65 (3d Cir. 1975), we said that when the district court determines that a prevailing party is not entitled to costs, there should be an explanation entered on the record. See also Samuel v. University of Pittsburgh, 538 F.2d 991 (3d Cir. 1976).
Although the decision to deny costs is largely a matter of discretion, an articulation of the basis for the order is necessary for purposes of appellate review. Of course, we express no view as to whether costs should be awarded in this case.
Accordingly, the case will be remanded for further proceedings consistent with this opinion.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PELL, Circuit Judge.
These cross-appeals arise from an order of the district court, which affirmed an order of the bankruptcy court, requiring the respondents to turn over to Bitker, the trustee of the bankrupt Jolin, certain proceeds of a state court judgment in John’s favor, entered prior to, but affirmed and satisfied after, the filing of bankruptcy. The issues are whether the bankruptcy court had the summary jurisdiction it exercised, a precondition of such a turnover order, and, if it did, whether the order in this case was proper.
The underlying facts are not in dispute. In 1966, Jolin commenced a state court lawsuit against his former business partner, one Oster. George P. Kersten and his law firm, Kersten & McKinnon (Kersten), and a Chicago law firm not involved here were John’s counsel. In late 1967, Victor M. Harding and his law firm, Whyte, Hirschboeck, Minahan, Harding & Harland (Harding), were substituted for the Chicago firm. Neither Harding nor Kersten had a written fee arrangement with John. Harding apparently undertook representation on the oral understanding with John that compensation would be on a straight hourly basis, plus expenses, but when it developed that John would be unable to pay such fees, an oral agreement was made for a fee based on the amount and difficulty of services provided and the degree of success achieved, contingent on success. Kersten had a contingent fee oral agreement from the outset.
The litigation was vigorously contested, and proved protracted and expensive to prosecute. A trial in 1968 yielded a verdict for Oster, but Kersten and Harding were able to get it reversed on appeal. A second trial, in 1970, resulted in a judgment of $161,000 for Jolin. Oster appealed, but the Wisconsin Supreme Court affirmed the judgment in June 1972 and denied rehearing in September of that year. Jolin v. Oster, 55 Wis.2d 199,198 N.W.2d 639 (1972).
During the pendency of this litigation, John’s financial situation deteriorated. Unable to pay legal fees in excess of $18,000 to Harding for services provided in establishing the corporation Land Investors, Inc. (Land Investors) and in registering its securities (services unrelated to the Oster litigation), Jolin, in 1969, assigned to Harding $15,000 of any proceeds of the Oster suit as payment in full. In 1970, prior to the second Oster trial, Jolin assigned an unspecified amount of any proceeds of the suit to Thorp Finance Corporation (Thorp), equal to the sum of his and Land Investors’ obligations to Thorp, as additional collateral to secure loans made by Thorp to finance Land Investors. The Thorp assignment was expressly subordinate to attorneys’ liens and the $15,000 Harding assignment.
In early 1972, both Jolin and Land Investors filed bankruptcy petitions. Because of a misunderstanding on Harding’s part the accompanying asset and liability schedules, which his firm prepared, included the Oster judgment and claims thereon with respect to Land Investors, but not with respect to Jolin. Neither Land Investors’ trustee, Verbest (not a party to this appeal), nor Bitker made any attempt to intervene in or in any way influence the final stages of the Oster lawsuit, then on appeal. When the judgment was affirmed, a check for $178,-110.44 drawn to both trustees, Thorp, and Kersten and Harding as attorneys for Jolin was issued in satisfaction. Harding negotiated it to his firm’s trust account, without objection or written approval by the trustees or the bankruptcy court. When the parties were unable to agree on the proper distribution of the sum, Harding distributed it as follows:
Harding and Kersten, for legal services $ 83,145.75
Harding and Kersten, for disbursements 12,403.01
Harding, per assignment 15,000.00
Thorp, per assignment 63,041.68
Retained in trust fund for the benefit of the trustees 4.520.00
$178,110.44
Both trustees filed a joint petition with the bankruptcy court to have Kersten and Harding turn over the entire proceeds of the judgment and to have the court determine the validity and amounts of the claimed liens and assignments. A motion by Kersten and Harding to dismiss the petition for want of the bankruptcy court’s summary jurisdiction was denied, and the bankruptcy court subsequently determined a 40% fee to be reasonable compensation, accepted the validity of the assignment payments to Thorp and Harding, and ordered the turnover to Bitker of the remainder of the judgment proceeds, $23,382.78, plus interest. The district court affirmed this order in its entirety.
On appeal, Kersten and Harding argue that the entire summary proceeding was invalid, because the judgment proceeds were entirely assigned away and were not part of the bankrupt estate, and because the proceeds were held by them (and Thorp) as adverse claimants with bona fide claims. They also assert that the bankruptcy court, even if it had jurisdiction, improperly determined the amount of attorneys’ fees contrary to the evidence. On cross-appeal, the trustee insists that the bankruptcy court erred in sustaining the $15,000 Harding assignment, and in refusing to deduct that sum and the interest earned on the Oster judgment in calculating the 40% fee on that judgment.
I. The Question of Summary Jurisdiction
Section 2(a)(7) of the Bankruptcy Act, 11 U.S.C. § 11(a)(7), creates original jurisdiction in federal bankruptcy courts to [cjause the estates of bankrupts to be collected, reduced to money, and distributed, and determine controversies in relation thereto, except as herein otherwise provided .
As courts of equity, charged with the duty of assuring the fair and efficient settlement of the estates of bankrupts, bankruptcy courts characteristically and properly exercise their jurisdiction in summary fashion. Katchen v. Landy, 382 U.S. 323, 327, 86 S.Ct. 467, 15 L.Ed.2d 391 (1966). It is “elementary bankruptcy law,” id., that this summary jurisdiction exists as to all property in the actual or constructive possession of the court on the date the bankruptcy petition is filed:
Bankruptcy courts have summary jurisdiction to adjudicate controversies relatr ing to property over which they have actual or constructive possession. And the test of this jurisdiction is not title in but possession by the bankrupt at the time of the filing of the petition in bankruptcy. [Footnote omitted.]
Thompson v. Magnolia Petroleum Co., 309 U.S. 478, 481, 60 S.Ct. 628, 630, 84 L.Ed. 876 (1940); accord, Cline v. Kaplan, 323 U.S. 97, 98, 65 S.Ct. 155, 89 L.Ed. 97 (1944); TaubelScott-Kixmiller Co., Inc. v. Fox, 264 U.S. 426, 432-33, 44 S.Ct. 396, 68 L.Ed. 770 (1924); In re American National Trust, 426 F.2d 1059, 1065 (7th Cir. 1970); In re Patrick, 194 F.2d 750, 752 (7th Cir. 1952); 2 Collier on Bankruptcy 123.04[2], at 453 (14th ed. 1975).
Appellants Kersten and Harding do not dispute that this is the law; they urge instead that it does not apply here. Their argument is based on the proposition that property which is held by a third party under a bona fide and substantial adverse claim is not subject to summary bankruptcy jurisdiction. In such cases, they insist, the property holder/claimant cannot be denied the right to litigate his claim in a plenary suit brought in a proper court. We do not doubt that appellants have correctly stated a rule of law, see Cline v. Kaplan, supra; Taubel-Scott-Kixmiller Co., Inc. v. Fox, supra; 2 Collier on Bankruptcy, supra, ¶23.04[2], at 453-55, 464, but we find it has no application to the facts of this case.
The fundamental concept underlying summary jurisdiction is actual or constructive possession of the property in question by the bankruptcy court. Thompson v. Magnolia Petroleum Co., supra; In re American National Trust, supra; 5 J. Moore, Federal Practice f 38.30[3], at 221 (2d ed. 1976). If the court has such possession, it has summary jurisdiction; if, instead, possession of the property is in the hands of a bona fide adverse, claimant, no summary jurisdiction exists. As we have noted, the time to judge possession is the time of filing of the bankruptcy petition. In many cases, the statement of these rules and their straightforward application would provide a ready answer to the question of the propriety of summary jurisdiction. The matter is somewhat complicated here by the fact that the property in question on the filing date was a judgment, an intangible, and not readily capable of “possession” in the ordinary sense. In such cases, the doctrine of constructive possession is applied and suffices to confer summary jurisdiction on the bankruptcy court if the bankrupt was the legal owner of the intangible at the time of filing. As this court stated In re Marsters, 101 F.2d 365, 367 (7th Cir. 1938), cert. denied sub nom. Herman v. Henley, 306 U.S. 663, 59 S.Ct. 788, 83 L.Ed. 1059 (1939):
In the case of a tangible there can be a possession in fact as well as in legal theory; but in the case of an intangible, possession is a legal concept and is manifested only through recognition of legal consequences. It may be said that ownership of intangibles is the subject of possession, or that ownership draws to itself a constructive possession, but such statements merely afford a rational basis for the practical rule that the legal consequences of possession of a tangible res are attached to the ownership of an intangible res. One of the legal consequences of a bankrupt’s possession of a tangible asset is that his trustee succeeds to the possession, and the bankruptcy court thereby acquiring possession, has summary jurisdiction to adjudicate adverse claims respecting the asset.
Accord, In re Rubin, 378 F.2d 104, 109 (3d Cir. 1967); In re Wiltse Brothers Corp., 357 F.2d 190, 193 (6th Cir. 1966); Kohn v. Myers, 266 F.2d 353, 355 (2d Cir. 1959); Benton v. Callaway, 165 F.2d 877, 882 (5th Cir. 1948), aff’d, 336 U.S. 132, 69 S.Ct. 435, 93 L.Ed. 553 (1949); In re Worrall, 79 F.2d 88, 90 (2d Cir. 1935); 2 Collier on Bankruptcy, supra, 123.05[4], at 489; cf. England v. Nyhan, 141 F.2d 311 (9th Cir. 1944).
Appellants urge that Jolin had heavily encumbered his future judgment prior to bankruptcy, and the record and decisions below amply support this assertion. Nonetheless, a bankruptcy trustee “succeeds to a bankrupt’s title to encumbered property, subject to the encumbrance.” In re Chicago, R. I. & P. Ry. Co., 155 F.2d 889, 892 (7th Cir. 1946), rev’d on other grds. sub nom. Fleming v. Traphagen, 329 U.S. 686, 67 S.Ct. 365, 91 L.Ed. 602 (per curiam). Because title creates the constructive possession necessary for jurisdiction, jurisdiction can be defeated only if the encumbrances in question have totally divested the bankrupt of his title. An absolute outright assignment would generally have this effect; conditional or partial assignments would not. Schwartz v. Horowitz, 131 F.2d 506 (2d Cir. 1942); In re Marsters, supra; In re Prince, 89 F.2d 681 (2d Cir. 1937); In re Worrall, supra; Street v. Pacific Indemnity Co., 61 F.2d 106 (9th Cir. 1932), cert. denied, 297 U.S. 718, 56 S.Ct. 595, 80 L.Ed. 1003 (1936); In re Borok, 50 F.2d 75 (2d Cir. 1931); 2 Collier on Bankruptcy, supra, f 23.05[4], at 489-90.
Both the bankruptcy court and the district court have concluded that the liens and assignments created by Jolin on his judgment did not divest him of his title thereto, and we can see no reason to disturb their findings. The action was prosecuted throughout in John’s name, and the record contains repeated admissions by Harding that Jolin was the real, not just the nominal, party in interest, that Jolin retained the right to continue and control the litigation, and that Jolin was his client all the way through. Moreover, a substantial portion of the encumbrance urged by appellants, the “assignment” to Thorp, was not an outright assignment made in payment of a specified part or all of John’s or Land Investors’ debts to Thorp, but was instead merely additional collateral security for payment. An “assignment” in such circumstances is intrinsically conditional on the debtor’s nonpayment of the underlying debt, and does not pass title. Thus this court held In re Muntz TV Inc., 229 F.2d 228 (7th Cir. 1956), that money or property even in the hands of a third party creditor was within the reach of the constructive possession doctrine and supported summary jurisdiction, when that money or property was given to the third party merely as security for debts. The same point was made In re American National Trust, supra, 426 F.2d at 1065, although a different result was reached because the money there involved was contract earnest money, title to which had passed on delivery. Other decisions recognizing the difference, for summary jurisdiction purposes, between outright assignments with rights of title and control and those merely for security purposes include Schwartz v. Horowitz, supra; Street v. Pacific Indemnity Co., supra; and In re Borok, supra. We note also, with reference to appellants’ argument that Jolin had divested himself of all interest in the Oster judgment, that in their unauthorized distribution of the judgment proceeds over $4000 was retained for the benefit of the trustees after appellants had satisfied their asserted liens and assignment and the assignment to Thorp. We conclude that the district court did not err in affirming the finding of the bankruptcy court that Jolin retained the title to and possession of his judgment which were necessary to sustain summary jurisdiction.
The cases relied upon by appellants do not suggest a different result. In re Chicagol and Ideel Cleaners, Inc., 495 F.2d 1283 (7th Cir. 1974), aff’d sub nom. Phelps v. United States, 421 U.S. 330, 95 S.Ct. 1728, 44 L.Ed.2d 201 (1975), does support the notion that adverse possession sufficient to defeat summary jurisdiction can be found where the property in issue was not actually held by the claimant, but it does so in the unique context of a federal tax lien, fully effected as a levy by notice which, this court held, gave the Government “full legal rights in the property levied upon.” Id. at 1285. Likewise, the Fifth Circuit’s decision In re American Southern Publishing Company, supra, 426 F.2d 160, is not in point. The court there did find a lack of summary jurisdiction where the bankrupt’s books in a warehouse had been assigned as collateral for bank loans. But, unlike this case, the bank had full control of the books (the warehouse having been notified), it exercised that control as to the release of books to be shipped to buyers, and it received the payments made on the books shipped. No comparable circumstances exist here.
To the degree appellants’ argument is that the proceeds of the judgment were tangible property actually possessed by them under an adverse claim and never within the possession of the bankrupt, the trustee, or the bankruptcy court, we totally disagree. At the critical time of bankruptcy filing, Jolin had title to and possession of the judgment which passed to his trustee, and the summary jurisdiction of the bankruptcy court attached. We will not honor appellants’ unauthorized attempt to circumvent that jurisdiction by distributing the proceeds at a later date. See Street v. Pacific Indemnity Co., supra, 61 F.2d at 109.
II. The Calculation of the Attorneys’ Lien
The bankruptcy court found that Kersten and Harding had a valid attorneys’ lien for services rendered in the Oster litigation, the district court affirmed that finding, and trastee Bitker does not pursue his objection on cross-appeal. The sole question presented is whether the extent of the lien was correctly assessed below. On this point, cross-appeals were taken. We hold that no error was committed in calculating the extent of the lien.
Kersten and Harding ask us to hold that the bankruptcy court did not have the authority to determine the extent of their lien on a “reasonable fee” basis. To the extent this is merely a suggestion that the intervention of bankruptcy did not vitiate their lien, we need not quarrel with them. The order appealed from recognizes and preserves that lien. However, to the degree appellants suggest that the bankruptcy court could not determine the extent of the lien, we must disagree. Our holding that the bankruptcy court had summary jurisdiction of the judgment proceeds necessarily in this case includes the corollary that it could determine the validity and extent of encumbrances thereto. See Sanders v. Providence Washington Insurance Company, 442 F.2d 1317 (8th Cir. 1971); Jackson v. Vance, 179 F.2d 154 (10th Cir. 1949), cert. denied, 339 U.S. 937, 70 S.Ct. 673, 94 L.Ed. 1355 (1950).
Appellants cite Sherman v. Buckley, 119 F.2d 280 (2d Cir. 1941), cert. denied, 314 U.S. 657, 62 S.Ct. 110, 86 L.Ed. 527; United States v. Transocean Air Lines, Inc., 356 F.2d 702 (5th Cir. 1966); and In re Prudence Co. Inc., 96 F.2d 157 (2d Cir. 1938), cert. denied sub nom. McGrath v. Davison, 305 U.S. 616, 59 S.Ct. 75, 83 L.Ed. 393, to support their contrary argument, but each case is readily distinguishable. In Sherman the Second Circuit refused to hold that the bankruptcy court could not exercise its summary jurisdiction even to liquidate an attorneys’ lien in a proper case. The court did hold that because the bankruptcy trustee, with the permission of the court, had substituted attorneys in an ongoing state court action in the interest of the bankrupt, and the state court as a condition of substitution fixed the amount of the outgoing attorneys’ lien, the trustee could not later enjoin state court proceedings to enforce the incidents of the state court jurisdiction once accepted. Likewise, in Transocean, the federal district court in which a bankrupt’s action had been pending entered an order granting the bankrupt’s initial attorneys’ charging lien once the trustee and the defendant settled the case. The court of appeals affirmed, finding that the district court had authority to enforce the lien, and noting that the trustee raised no objection to that court’s jurisdiction. We need not consider whether the state courts of Wisconsin may have had jurisdiction to determine and enforce appellants’ lien, because those courts did not purport to do so. In response to appellants’ argument that trustee Bitker had no other option than to seek such a determination in the state courts, we note only that neither of the cited cases supports such an absolute rule, and that we would be extremely slow to impose such a duty on a trustee when the schedule of John’s assets filed in the bankruptcy proceedings, prepared by appellant Harding, did not even include the Oster judgment. Bitker did not concede full actual notice of the Oster proceedings, and appellants point to no evidence of such notice, other than communications with the trustee of the corporate bankrupt which can not be presumed to be binding on Bitker. The fact that Harding’s omission in scheduling was in good faith does not serve to create a duty in the trustee.
Nor does the Prudence case support appellants’ argument that the bankruptcy court could not determine the extent of the lien contrary to the attorney-client contract. For in Prudence, as in Transocean and Sherman, a specific contingent fee percentage agreement was demonstrated and enforced. Here, of course, the record fully supports the findings of the courts below that while a contingent fee was agreed to, the precise extent thereof was not. In these circumstances the bankruptcy court had no real alternative to determining a reasonable contingent fee for the Oster case. It was not obliged to accept on their face appellants’ conclusions as to the amount of such a fee.
Having decided that the bankruptcy court had summary jurisdiction over the Oster judgment proceeds and the authority to determine the extent of appellants’ iien on a reasonable fee basis, we have little difficulty affirming the courts below on the substance of the turnover order. Rule 810 of the Rules of Bankruptcy Procedure provides that on review of a bankruptcy court’s decision by the district court, that court “shall accept the referee’s findings of fact unless they are clearly erroneous, and shall give due regard to the opportunity of the referee to judge the credibility of the witnesses.” Nor are we free, on review of the district court’s review, to adopt a more rigorous standard for assessing the facts determined below.
Under this standard, we conclude there was no such error committed here. Appellants insist that the bankruptcy court should have accepted the conclusions of their expert witness that a fee of at least 46.7% of the judgment was reasonable. Although this was the only expert testimony offered, both the conclusions and the methods of their derivation were vigorously contested on cross-examination. Moreover, certain discrepancies in the hourly fee calculations submitted were noted by the bankruptcy court as was the fact that Harding’s estimate of the Oster fees, submitted in the bankruptcy schedule of Land Investors’ assets and liabilities after the great bulk of the legal work on the case had been concluded, was substantially below the level of 46.7% of the judgment, and was in fact substantially less than the fee awarded by the bankruptcy court. In view of these facts, we are convinced no clear error was committed in calculating a 40% fee on the recovery.
On cross-appeal, trustee Bitker urges that the bankruptcy court erred by including, in the figure to which the 40% fee was applied, the $15,000 portion of the judgment which had been assigned to Harding and the interest earned on the judgment. Bitker cites no authority by which we might find such a calculation to have been an error of law, and we see no reason to declare it a clear error of fact in finding a reasonable fee. It is apparent to us that the bankruptcy court in exercising its essentially equitable jurisdiction was reconciling competing claims to property in an effort to reach an overall fair resolution of the controversy before it. See Katchen, supra, 382 U.S. at 327, 86 S.Ct. 467. What we regard as a completed package arrived at by a process which no doubt included some balancing should not be quickly upset by this court. The appellants created an asset by dint of extensive and effective work on their part. The fees they claimed were substantially reduced. We also note some incongruity in the trustee’s arguing here that the bankruptcy court abused the very discretion in determining a reasonable fee that the trustee insists, as pertinent to Harding’s and Kersten’s appeal, was properly exercised. In sum, we decline the invitation to separate out from the equitably created messuage the minor outbuildings to which the trustee points.
III. The Validity of the $15,000 Assignment
Also on cross-appeal, the trustee urges us to find that the courts below erred in finding the assignment to Harding to have been based on adequate consideration. We will not second-guess these factual determinations. The record manifestly supports the conclusion that the assignment of $15,000 of a speculative future judgment as payment in full for already accrued legal bills in excess of $18,000 was made in exchange for adequate consideration.
For the reasons stated herein, the order of the district court, affirming the turnover order of the bankruptcy court, is
AFFIRMED.
. Appellants assert that there being no diversity between the parties in this proceeding, the only proper forum for such a plenary action would be the state courts. Because we find summary jurisdiction to have been proper in this case, it is not necessary for us to consider the question.
. Where the property is held by a third party without a bona fide and substantial adverse claim, the bankruptcy court is considered to have constructive possession of the property and, accordingly, to have summary jurisdiction. Harris v. Avery Brundage Co., 305 U.S. 160, 59 S.Ct. 131, 83 L.Ed. 100 (1938); Taubel-Scott-Kixmiiler Co., Inc. v. Fox, supra. It is with reference to this rule that decisions, such as that of this court In re Process-Manz Press, Inc., 369 F.2d 513 (7th Cir. 1966), cert. denied sub nom. Limperis v. A. J. Armstrong Co., Inc., 386 U.S. 957, 87 S.Ct. 1022, 18 L.Ed.2d 104 (1967), cited by appellants, hold that bankruptcy courts should make preliminary determinations as to the substantiality of the claims of third party possessors before exercising summary jurisdiction. Where, as here, a third party claimant does not have possession of the property in question on the date of bankruptcy filing, there is no need for such a determination. A third party claim, no matter how substantial, does not defeat summary jurisdiction unless accompanied by possession in the claimant. See In re American Southern Publishing Company, 426 F.2d 160, 163 (5th Cir. 1970), cert. denied sub nom. Bailes v. First National Bank of Mobile, 400 U.S. 903, 91 S.Ct. 141, 27 L.Ed.2d 140.
. Section 2(a)(7) of the Bankruptcy Act, 11 U.S.C. § 11(a)(7), provides that an adverse party in possession of property may consent to jurisdiction by failing to object, but appellants properly point out that their objection to summary jurisdiction was timely and has not been so waived.
. We note, however, that even had appellants received the check satisfying the Oster judgment on the day before filing, there is substantial doubt that a different result would obtain. Harding and Kersten were payees on the check only as attorneys for Jolin, and it is well established that the bankruptcy court has constructive possession of the bankrupt’s property held by an agent. Harris v. Avery Brundage Co., supra, 305 U.S. 160, 59 S.Ct. 131, 83 L.Ed. 100; In re Naviera Azta, S.A., 500 F.2d 390 (5th Cir. 1974) (per curiam). There is doubt that property so held can be the subject of an adverse claim, id., and see 2 Collier on Bankruptcy, supra, H 23.06[3], at 505, but we need not resolve that question here.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ARNOLD, Circuit Judge.
This is a petition for habeas corpus filed under 28 U.S.C. § 2254 by William A. Jones, Jr., a prisoner in state custody. Jones claims that his federal rights were violated when a Missouri statute, enacted after his conviction, was not applied to reduce his sentence. The District Court disagreed with Jones’s contention and dismissed his petition. We affirm.
On August 29, 1988, Jones pleaded guilty to three drug offenses. He was sentenced to three concurrent terms of 10 years. At the time, the maximum punishment for the offenses in question was 20 years. Mo.Ann.Stat. § 195.200.1(1) (Vernon 1983). Later, on August 28, 1989, the maximum penalty was reduced to seven years. Mo.Ann.Stat. § 195.202 (Vernon Supp.1991). At the bottom of Jones’s theory of relief is Mo.Ann.Stat. § 1.160 (Vernon 1969), which, he claims, entitles him to a reduction of sentence to three concurrent seven-year terms. This statute provides in pertinent part:
No offense committed ... or prosecution commenced or pending previous to or at the time when any statutory provision is repealed or amended, shall be affected by the repeal or amendment, ... except ... that if the penalty or punishment for any offense is reduced or lessened by any alteration of the law creating the offense, the penalty or punishment shall be assessed according to the amendatory law.
The District Court interpreted this provision not to apply to Jones’s case, because the prosecution against him was no longer pending at the time the law reducing the punishment became effective. Jones claims, as a matter of statutory interpretation, that the District Court was mistaken, but that contention, even if we agreed with it, would not entitle him to federal habeas corpus relief. An incorrect application of state law, without more, doés not establish that a prisoner is being held in violation of the laws or Constitution of the United States, which is a prerequisite for relief under Section 2254 of the Judicial Code.
In an attempt to avoid the force of this reasoning, Jones’s appointed counsel, who has shown considerable ingenuity on behalf of his client, also makes a Sixth Amendment argument. This amendment, made applicable to the states through the Due Process Clause of the Fourteenth Amendment, entitled Jones to the effective assistance of counsel, the argument runs. If counsel had filed an appeal from Jones’s conviction, the appeal would probably have still been pending at the time the new, seven-year penalty became effective. And, even if no appeal had been filed, counsel would have had one year, that is, until August 29, 1989, within which to file a motion for a belated appeal under Mo.Sup. Ct.R. 30.03. The one-year period expired just one day after the effective date of the new, more lenient sentencing statute. So, even if the motion for leave to file a late notice of appeal had ultimately been denied, Jones’s case would have been pending when the new law became effective, and he would have been entitled to its benefit.
There are a number of problems with this argument. In the first place, Jones did have counsel at the time he pleaded guilty and was sentenced. If there had been anything to appeal, counsel would no doubt have appealed. Jones does not claim that there would have been any basis for an appeal, and, in view of the fact that the convictions were based on pleas of guilty, we cannot think of any basis, either. Jones points out that the bill which ultimately reduced the penalty to seven years was introduced in the Missouri State Senate on January 9, 1989, so a lawyer, if one had been appointed for him, could have found out about the bill, followed its progress, and been ready to file an appropriate motion at the time it became effective. We are unaware of any authority that would impose such a far-ranging obligation on a state. One against whom a criminal prosecution has been filed is entitled to counsel, either retained or appointed. But once the prosecution is complete, there is no requirement, at least none in the federal Constitution, that counsel stay with the defendant, so to speak, in case some later event, not even foreseeable at the time of the conviction, should occur to entitle the defendant to some sort of relief.
On this theory, every person convicted of crime would be assigned counsel by the state simply for the purpose of watching to see if anything potentially favorable, in the form of a new law or otherwise, might happen. We can understand Jones’s disappointment that, as things worked out in his case, he had no lawyer standing by to try to take advantage of the new statute at the proper time. We are clear, though, that the absence of this kind of standby counsel does not infringe any federal constitutional right.
Affirmed.
. The Hon. John F. Nangle, Senior United States District Judge for the Eastern District of Missouri.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STEVENS, Circuit Judge.
The Sherman Act condemns vertical, as well as horizontal, agreements in restraint of trade. However, by virtue of § 2 of the McGuire Act, two types of vertical agreements — those requiring a vendee to resell at prices fixed by his vendor, and those requiring the vendee to require his customers to resell only at fixed prices — are exempt from the antitrust laws if such agreements are lawful under applicable state law. The question presented by this case is whether the state law which governs the legality of the latter type of agreement between a vendor and a vendee is that of the state where the vendee is located or that of the state or states where the vendee’s customers are located. We have no doubt that the vendee’s location is determinative for the latter, as well as the former, type of agreement.
I.
Corning Glass Works manufactures and distributes various trademarked products used in food preparation and service. Corning sells to wholesalers located in 45 states and the District of Columbia; those wholesalers, in turn, sell to retailers who resell to consumers in all 50 states and the District.
Coming’s form contract with its distributors contains a fair trade agreement obligating the wholesalers (a) to sell only at prices set by Corning, and (b) not to sell to any reseller unless such reseller has agreed with Corning to maintain Coming’s fair trade prices. These agreements are only effective “as to each state and as to such sales where it is lawful so to agree.” Since the legal effect of fair trade agreements varies from state to state, the Corning form contract has a varying impact on its wholesalers.
There are currently 14 states and Puerto Rico and the District of Columbia-in which fair trade agreements are illegal as a matter of state, as well as federal, law; they are described as “free trade” states. The remaining 36 “fair trade” states comprise two principal types. In each of the “non-signer” states the legislature has authorized judicial enforcement of fair trade prices even against sellers who have not signed a fair trade contract and has permitted the use of customer restriction clauses; there are currently 14 such “non-signer” states. In the “signer-only” states — of which there are currently 22 — either the courts have refused, usually on state constitutional grounds, to enforce the statutory remedy against non-signers, or, in some instances, no remedy against non-signers has been provided by the state legislature. In either event, in such a state a fair trade agreement is lawful although it is enforceable against the “signer only.” With the exception of Maine, each of these “signer-only” states also authorizes the use of customer restriction clauses.
The problem presented by this case has assumed significance as the number of “free trade” and “signer-only” states has increased. For it principally involves the validity of Coming’s customer restriction clause as applied to wholesalers in free trade states who sell to retailers in signer-only states. Does § 2 of the McGuire Act legalize Coming’s attempt to require those wholesalers to refuse to sell to retailers in fair trade states who have not agreed to maintain Coming’s fair trade prices?
In Count II of its five-count complaint against Corning, the Commission took the position that this requirement is a non-exempt restraint of trade forbidden by § 1 of the Sherman Act, and therefore unlawful under § 5(a)(1) of the Federal Trade Commission Act. Based on a stipulated record, the Administrative Law Judge dismissed all counts of the complaint, but on appeal the Commission unanimously reversed as to Count II and issued its cease and desist order. The case is here on Coming’s petition for review, claiming that the Commission misconstrued the McGuire Act and that, in all events, the Commission’s order was “unnecessarily punitive.” We find no merit in Coming’s position.
II.
The decision of this case depends upon the proper construction of the words “such resale” as used in the so-called “when lawful” clause in paragraph (2) of § 2 of the McGuire Act. Before quoting the relevant language, it is appropriate to note that the “when lawful” clause was originally enacted as part of the antitrust exemption contained in the Miller-Tydings Act in 1937 and was retained verbatim when Congress broadened the vertical price-fixing exemption in 1952.
The principal ways in which the McGuire Act broadened the exemption were (1) by including the non-signer aspects of state fair trade legislation; (2) by making the exemption applicable to stipulated, as well as minimum prices; and (3) by adding an exemption for agreements requiring a vendee to limit his resales to persons who agree to maintain fair trade prices. This last provision — the so-called “vendee clause” — is relevant to our problem.
To facilitate our explanation of our understanding of the second paragraph of § 2 of the McGuire Act, we italicize the portions of the paragraph which were not a part of the Miller-Tydings Act, we underline the “vendee clause” and the “when lawful” clause, and we print in bold face the word “resale” which appears once in the phrase following the vendee clause and twice in the “when lawful” clause.
(2) Nothing contained in this Act or in any of the Antitrust Acts shall render unlawful any contracts or agreements prescribing minimum or stipulated prices, or requiring a vendee to enter into contracts or agreements prescribing- minimum or stipulated prices, for the resale of a commodity which bears, or the label or container of which bears, the trade-mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with commodities of the same general class produced or distributed by others, when contracts or agreements of that description are lawful as applied to intrastate transactions under any statute. law, or public policy now or hereafter in effect in any State. Territory, or the District of Columbia in which such resale is to be made, or to which the commodity is to be transported for such resale. 66 Stat. 632; 15 U.S.C. § 45(a)(2).
As originally enacted in the Miller-Tydings Act, it is manifest that the word “resale” had the same meaning each time it was used. Since the vendee clause was not then a part of the statute, the word “resale” consistently referred to the first resale by a vendee, rather than to any subsequent resale by a purchaser from the vendee, for at that time the exemption covered only the terms of the minimum resale price maintenance agreement between a vendor and his immediate vendee, and made no reference to agreements restricting the vendee’s right to choose his own customers.
We have no doubt, therefore, that if the words “such resale” as used in the McGuire Act retain the same meaning as they did in the Miller-Tydings Act, the Commission is correct in its view that the legality of a customer restriction clause in an agreement between a manufacturer and a wholesaler is governed by the law of the state in which the wholesaler resells the trademarked article.
The question, then, is what change, if any, in the meaning of the word “resale” resulted from the insertion of the vendee clause in the forepart of the paragraph. Before attempting to answer this question, it is useful to note that the word “resale” performs two quite different functions. First, it is part of the description of the kind of agreements that are covered by the exemption, and, second, it is part of the identification of the states whose law determines whether the agreement is valid or invalid. There is no doubt about Congress’ intent to modify its description of exempt agreements to include customer restriction clauses as well as price-fixing clauses. There is, however, no indication that Congress intended t,o make any change in the identity of the states whose laws would determine the availability of the exemption, or to have the law of more than one state applicable to any one agreement. We first consider the meaning of the word “resale” as part of the description of covered ■ agreements and then as part of the “when lawful” clause.
To make sense out of the vendee clause, and also to retain the significance of the price-fixing clause, it is necessary to give the word “resale” a double meaning in the phrase immediately following the vendee clause. For, to the extent that the phrase modifies the price-fixing clause, it obviously still refers to the first resale by the immediate vendee; but to the extent that the same phrase modifies the vendee clause, it must refer to a resale by a person who has purchased from that vendee. Unless the phrase performs this dual function, either the original price-fixing exemption would have been changed or else the vendee clause would be meaningless. The word “resale” as first used in paragraph (2) of § 2, therefore, has a different meaning in the two contexts in which it modifies its two antecedent clauses.
When the same word appears in the “when lawful” clause, logically it might have either of the two meanings it first conveyed, or it might again convey a double meaning. As a matter of pure grammar, there is force to the argument that the word should be given a double meaning every time it is used, particularly since it is modified by the adjective “such” when it is repeated in the “when lawful” clause.
Under this reading, the word “resale” would have a double meaning every time it is used, and would make the validity of a single agreement between Corning and one of its wholesalers in a free trade state depend upon the law of at least two different states. Although, purely as a matter of literal construction, the word “resale” could be given a consistent double meaning, that reading is certainly not a necessary one. When it is recalled that the original phrasing of the “when lawful” clause as it appeared in the Miller-Tydings Act used the words “such resale” to refer to the first resale by the immediate vendee, it is perfectly reasonable to retain the same construction after the addition of the vendee clause. Indeed, if we were to give the word a double meaning in the “when lawful” clause, we would unnecessarily complicate the statute and broaden the exemption.
The basic purpose of the statute was to exempt certain “contracts or agreements” from the Sherman Act. The statutory language — in both the prohibitory portion of the Sherman Act and the exemptions found in the Miller-Tydings Act and the McGuire Act — focuses our attention on the agreement which is challenged. In this case, that agreement is between a manufacturer and a wholesaler; it restricts the wholesaler’s freedom to resell in two ways: first,- it establishes the prices at which he may resell and, second, it limits the persons to whom he may resell. It would be anomalous, indeed, for Congress to provide that the lawfulness of the two restrictive clauses in the same agreement should be determined by the law of two different states. It is only logical that the law of the same state should control the legality of the entire fair trade agreement and, further, that the state be the one in which the vendee — in this case the wholesaler — is to make the resales described in the contract.
Coming’s construction would allow a manufacturer to impose an otherwise illegal restraint upon a wholesaler in a free trade state because of the fair trade policies in effect in a state where some of his customers are located. Such construction would be inconsistent with the basic explanation of both the Miller-Tydings amendment and the McGuire Act as forms of “state’s rights” legislation. Thus, in 1937 Senator Tydings noted that the bill under consideration would simply enable the states “to carry into effect their own public policy.”
The Amendment was seen as immunizing contracts in restraint of trade where such contracts were lawful under the fair trade acts of the states “where made or where they are to be performed.” S.Rep.No.257, 75th Cong., 1st Sess. 2 (1937). See also H.R.Rep.No. 382, 75th Cong., 1st Sess. 2 (1937). The focus was on the immunization of specific contracts and not on the immunization of a series of consensual transactions.
This underlying policy, that a contract’s antitrust immunity is to be determined by looking to the law of the state where the contract is executed or to be performed, was reaffirmed in the passage of the McGuire Act. The preamble of the Act provided that its purpose was “to protect the rights of States. to regulate their internal affairs.” As Representative McGuire, sponsor of the measure, noted,
This bill is merely an enabling measure.... If a State does not believe in price maintenance, it is not forced to tolerate the practice. In the absence of State legislation authorizing price maintenance, the Federal law remains unchanged. No State need fear any encroachment on its internal affairs by neighboring States pursuing a different policy. 97 Cong.Rec. 13404-05 (1951) (emphasis added).
Each state has an interest in determining whether its citizens should buy and sell subject to fair trade restraints or free of such restraints. That interest is essentially the same with respect to both types of vertical restraints authorized by the McGuire Act. As Corning recognizes, were it to impose a resale price restriction on resales by its Missouri wholesaler, such a contract provision would violate the antitrust laws. Missouri is a free trade state; Missouri’s public policy is not to immunize price restrictions placed on the sales of goods by Missouri merchants. It is equally clear that Missouri has not immunized customer restrictions placed on the sale of goods by Missouri merchants.
Corning incorrectly assumes that the significance of the vendee provision in its fair trade contract with wholesalers is limited to price maintenance in fair trade states. But even if maintaining the retail price may be the ultimate purpose of the vendee clause, it is clearly not the clause’s only effect. The clause seriously restricts the Missouri wholesaler’s freedom of choice in selling to retailers located in neighboring fair trade states. Thus, the clause imposes a restraint of trade in Missouri, and is inconsistent with Missouri public policy. To paraphrase Representative McGuire, a state like Missouri should not be forced to tolerate a practice which its own public policy does not condone; it should not be subjected to encroachment on its internal affairs by neighboring states pursuing a different policy.
The Commission’s interpretation of the “when lawful” clause fully respects the public policies of the three classes of states.
a. In free trade states, the policy of preventing restraints of trade is fully vindicated. Neither a vertical price-fixing clause nor a customer restriction clause contained in a contract governing the resale in the free trade state is exempt from the antitrust laws.
b. In signer-only states, the policy of permitting vertical restraints of trade which are voluntarily assumed by contracting parties while prohibiting the imposition of involuntary restraints on non-contracting parties is fully vindicated. In those states Corning may continue its price maintenance program to the extent that it is able to persuade retailers to enter into price-fixing agreements voluntarily and to induce wholesalers in those states to accept customer restriction clauses in their contracts. But Corning may not restrain the freedom of a non-signing retailer to purchase from accessible wholesalers in neighboring free trade states by imposing customer restriction clauses on such wholesalers. The involuntary restraint resulting from such a clause would offend the policies of both the free trade state and the signer-only state. As the Commission noted, the fact that signer-only states no longer have or enforce non-signer legislation reflects their desire to protect non-signing merchants from involuntary restraints. It would be inconsistent with that interest to deny those retailers the right to purchase from wholesalers in free trade jurisdictions free of any restraint which they had not voluntarily accepted.
c. In non-signer states, Coming’s fair trade program is essentially unimpaired. Even though non-signer state retailers may now obtain goods from free trade state wholesalers without first contracting with Corning, they may not lawfully sell these items below the fair trade price. (See, e. g., § 2 of the Illinois Fair Trade Act, supra n. 5). Corning may continue to insist on vendee clauses in its contracts with non-signer state wholesalers, as such clauses are lawful under the fair trade acts of all non-signer states.
In sum, we agree with the Commission’s interpretation of the McGuire Act; the exemption of a customer restriction clause in a wholesaler contract depends on the law of the state in which the resale of the product by the wholesaler to the retailer takes place. This interpretation fully respects the public policies of all three types of jurisdictions and accords with the basic federal “policy in favor of competition.” Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974).
III.
With respect to the Order issued by the FTC in this case, Corning argues that it was not given an adequate opportunity to be heard on the terms of the final order. We disagree.
The Commission’s Complaint, issued January 13, 1972, was accompanied by a proposed order, described in the accompanying Notice as “the form of Order which the Commission has reason to believe should issue if the facts are found to be as alleged in the Complaint.” The Motion for Summary Decision filed by complaint counsel sought “that the order to cease and desist proposed by the Commission be entered against Respondent.” This motion was served on October 2, 1972, some eight months after the issuance of the Complaint. Corning did not attack the proposed order, even though complaint counsel’s motion sought a complete disposition of the case. Only in its Motion for Reconsideration, filed after the Commission’s decision, did Corning contest the form of the Order. While concluding that Coming’s contentions were not timely, the Commission nevertheless considered, and rejected, the merits of Coming’s arguments. We feel that Corning was given an ample opportunity to be heard on the propriety of the Order.
Corning, finally, contends that the Order is “unnecessarily punitive” in three respects. It objects to the requirements that it mail a copy of the Order to all retailers in the 14 non-signer fair trade states, that it “encourage” its signer-only state retailers to ignore Coming’s fair trade prices, and that it refrain for three years from the use of pre-priced product containers and the use of fair trade prices in advertisements in areas where Corning may not lawfully control resale prices.
The Commission must be accorded broad discretion in framing its orders to insure the effective termination of any violation. As we stated in L. G. Balfour Co. v. F.T.C., 442- F.2d 1, 23 (7th Cir. 1971),
It is well settled that the choice of the remedial order is committed to the discretion of the Commission. F.T.C. v. Mandel Bros., Inc., 359 U.S. 385, 392-393, 79 S.Ct. 818, 3 L.Ed.2d 893 (1959); Niresk Industries, Inc. v. F.T.C., 278 F.2d 337, 343 (7th Cir. 1960), cert. denied, 364 U.S. 883, 81 S.Ct. 173, 5 L.Ed.2d 104 (1960). Except where the remedy selected bears no reasonable relation to the unfair practices found to violate Section 5, the courts will not reverse or modify the Commission’s choice. F.T.C. v. National Lead Co., 352 U.S. 419, 428-429, 77 S.Ct. 502, 1 L.Ed.2d 438 (1957); National Bakers Services, Inc. v. F.T.C., 329 F.2d 365, 367 (7th Cir. 1964).
The Commission has met these requirements. While the retailers in the 15 non-signer states will still be required to maintain the fair trade retail prices for Coming’s products, they now may purchase those products from free trade state wholesalers at non-fixed prices. Thus, by requiring Corning to inform these retailers of the FTC Order, the Commission furthers the goal of removing the vestiges of past Corning violations.
Similarly, the FTC decision may open a significant source of supply for retailers in signer-only states who do not wish to maintain the fair trade price. Some of those retailers who signed fair trade contracts with Corning may have acted under the compulsion of the illegal Corning customer restriction clause in the free trade state wholesale contracts. The Commission could reasonably conclude that the most effective way to abolish the effects of this violation is to inform those signer-only state retailers whose fair trade contracts were submitted through free trade state wholesalers that “unless and until [they] enter into new retailer contracts, [they] may and are encouraged to” sell Coming’s merchandise at such prices as they wish. This is what the FTC order requires.
We also agree with the Commission that any practical problems Corning may have in preventing the use of pre-marked containers and fair trade priced advertisements in areas where Corning may not lawfully fix prices are best resolved as a compliance matter, rather than by revising the language of the Order.
Finally, we note Coming’s challenge to the impartiality of the Commission because of its consistent opposition to resale price maintenance in general and legislative exemptions from the antitrust laws for this form of pricefixing in particular. There is no merit to this challenge. It is certainly proper for the Commission to express the consumer point of view when antitrust amendments, or exemptions, are being considered by the Congress. Its performance of that public service in no way qualifies its status as an independent agency entitled to our respect in the discharge of its quasi-judicial functions. Moreover, contrary to Coming’s argument, the views of complaint counsel as reported in the press certainly may not be used as a basis for questioning the independence of the members of the Commission itself. Indeed, we think our interpretation of the statute is strongly buttressed by the fact that it accords with the expert and experienced views of the agency charged with administration of the statutory scheme of which the McGuire Act is a part.
Accordingly, we affirm and enter judgment enforcing the order of the Federal Trade Commission.
. Act of July 14, 1952, Pub.L.No.542, 66 Stat. 631-632, which amended § 5(a) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(2)). There is no question that, absent such a statutory exemption, both types of vertical agreements violate § 1 of the Sherman Act (15 U.S.C. § 1) and § 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)). See Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 386, 71 S.Ct. 745, 95 L.Ed. 1035; Federal Trade Commission v. Beech-Nut Packing Co., 257 U.S. 441, 453-455, 42 S.Ct. 150, 66 L.Ed. 307; United States v. Arnold, Schwinn & Co., 388 U.S. 365, 377-378, 87 S.Ct. 1856, 18 L.Ed.2d 1249; United States v. Bausch & Lomb Optical Co., 321 U.S. 707, 721, 64 S.Ct. 805, 88 L.Ed. 1024.
. The products are known as “Corning Ware,” “Pyrex,” and “Corelle.” The Commission does not question the fact that these products are trademarked and are “in free and open competition with commodities of the same general class” within the meaning of 15 U.S.C. § 45(a)(2).
. The relevant provisions in Coming’s wholesale contracts are as follows:
“6. FAIR TRADE AGREEMENT — As to each state and as to such sales where it is lawful so to agree (but not elsewhere or otherwise).
(a) Distributor agrees that it will not (except as specifically permitted by statute) directly or indirectly advertise, offer for sale or sell any PYREX ware or CORNING WARE products at prices less than the fair trade prices now or hereafter designated and set forth in Schedule A less discounts listed in Schedule B applicable to the products sold.
(b) Distributor agrees that it will not sell or transfer PYREX ware or CORNING WARE products to any reseller unless such reseller has agreed with Corning to maintain Coming’s fair trade prices.
“7. APPLICABLE LAW — This agreement, entered between Corning and Distributor at Corning, New York, is governed by the laws of the State of New York. The agreements contained in the Fair Trade Agreement set out in paragraph 6 hereof shall apply solely to sales, offers or advertisements only when and where agreements of the character of those therein contained shall be lawful as applied to intrastate transactions under any statute, law or public policy, now or hereafter in effect, in the state in which such resale is to be made or to which products are to be transported for such resale. In other states the prices referred to in paragraph 6 hereof are merely suggested as possible resale prices which may or may not be adopted for resale in those states in the sole discretion of the Distributor.”
. The free trade jurisdictions are:
Alabama
Alaska
District of Columbia
Hawaii
Kansas
Mississippi
Missouri
Montana
Nebraska
Nevada
Puerto Rico
Rhode Island
Texas
Utah
Vermont
Wyoming
. The non-signer states are:
Arizona
California
Connecticut
Delaware
Illinois
Maryland
New Hampshire
New Jersey
New York
North Dakota
Ohio
Tennessee
Virginia
Wisconsin
A typical non-signer state fair trade act is that of Illinois:
“Section 1. No contract relating to the sale or resale of a commodity which bears, or the label or content of which bears, the trade mark, brand or name of the producer or owner of such commodity and which is in fair and open competition with commodities of the same general class produced by others shall be deemed in violation of any law of the State of Illinois by reason of any of the following provisions which may be contained in such contract:'
(lj That the buyer will' -not1.resell such commodity except at the price stipulated by the vendor.
(2) That the producer or vendee of a commodity require upon the sale of such commodity to another, that such purchaser agree that he will not, in turn, resell except at the price stipulated by such producer or vendee.
******
“Sec. 2. Wilfully and knowingly advertising, offering for sale or selling any commodity at less than the price stipulated in any contract entered into pursuant to the provisions of section 1 of this Act, whether the person so advertising, offering for sale or selling is or is not a party to such contract, is unfair competition and is actionable at the suit of any person damaged thereby.
■ “Sec. 3. This Act shall not apply to any contract or agreement between producers or between wholesalers or between retailers as to sale or resale prices.
The provision of this Act shall not apply to any contract or agreement relating to any commodity which may be sold or offered for sale to the State of Illinois or to any of its administrative agencies or political subdivisions, or to any municipality, or to any free public library, endowed library, college, university or school.library in this State.” Act of July 8, 1935, Laws of 1935, p. 1436, as amended by Act of June 25, 1941, Laws of 1941, p. 1115. Ill.Rev.Stat. 1973, ch. 121‘/2, §§ 188-190.
. See, for example, Corning Glass Works v. Ann & Hope, Inc. of Danvers, 294 N.E.2d 354, 361-363 (Mass. 1973), holding the Massachusetts non-signer provisions invalid as an unlawful delegation of legislative power to private persons. Justice Braucher’s opinion describes the trend of decisions in other states as well.
. The signer-only states are:
Arkansas
Colorado
Florida
Georgia
Idaho
Indiana
Iowa
Kentucky
Louisiana
Maine
Massachusetts
Michigan
Minnesota
New Mexico
North Carolina
Oklahoma
Oregon
Pennsylvania
South Carolina
South Dakota
Washington
West Virginia
A typical signer-only state fair trade act is that of Arkansas:
“No contract relating to the sale or resale of a commodity which bears, or the label or container of which bears, the trademark, brand, or name of the producer or distributor of such commodity and which commodity is in free and open competition with commodities of the same general class produced or distributed by others shall be deemed in violation of any law of the State of Arkansas by reason of any of the following provisions which may be contained in such contract:
(a) That the buyer will not resell such commodity at less than the minimum price stipulated by the seller.
(b) That the buyer will require of any dealer to whom he may resell such commodity an agreement that he will not, in turn, resell at less than the minimum price stipulated by the seller.
(c) That the seller will not sell such commodity:
(1) To any wholesaler, unless such wholesaler will agree not to resell the same to any retailer unless the retailer will in turn agree not to resell the same except to consumers for use and at not less than the stipulated minimum price, and such wholesaler will likewise agree not to resell the same to any other wholesaler unless such other wholesaler will make the same agreement with any wholesaler or retailer to whom he may resell; or
(2) To any retailer, unless the retailer will agree not to resell the same except to consumers for use and at not less than the stipulated minimum price.” Acts 1937, No. 92, § 2, p. 345; Arkansas Stat.1947, 1957 Replacement, Title 70, ch. 2, § 70-202.
. Count I charged Corning with using its fair trade contracts to fix free trade state wholesaler minimum resale prices whenever these wholesalers sell to a fair trade state retailer. Count III alleged that Corning has required wholesalers in signer-only fair trade states to refuse to sell to retailers who fail to sign fair trade contracts with Corning. Count IV alleged that Corning worded its fair trade contracts so as to obfuscate the circumstances in which price and customer restrictions are applicable. Count V charged Corning with establishing an illegal quantity discount schedule.
. The parties had stipulated that relief could also be granted on Counts I and IV if the violation alleged in Count II were found.
. Act of August 17, 1937, ch. 690, Title VIII, 50 Stat. 693-694; 15 U.S.C. § 1.
. This change — made necessary by the Supreme Court’s decision in Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035 — was made in paragraph (3) of § 2 of the McGuire Act.
“(3) Nothing contained in this Act or in any of the Antitrust Acts shall render unlawful the exercise or the enforcement of any right or right of action created by any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia, which in substance provides that willfully and knowingly advertising, offering for sale, or selling any commodity at less than the price or prices prescribed in such contracts or agreements whether the person so advertising, offering for sale, or selling is or is not a party to such a contract or agreement, is unfair competition and is actionable at the suit of any person damaged thereby.” 66 Stat. 632; 15 U.S.C. § 45(a)(3).
The “vendee” clause and the “when lawful” clause, which we construe in this case, are found in paragraph (2) of § 2, quoted in the text infra.
. Note the inclusion of the phrase “or stipulated” in paragraph (2) of § 2 of the Act, 15 U.S.C. § 45(a)(2), quoted infra.
. The McGuire Act amendments were to § 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and not to § 1 of the Sherman Act, 15 U.S.C. § 1, as was the Miller-Tydings Act. Nevertheless, the changes made in the McGuire Act were clearly intended to affect § 1 of the Sherman Act as well, as the “Nothing contained in this Act or in any of the Antitrust Acts.. ” language in paragraphs (2) and (3) of § 2 indicates.
. If the same descriptive language had been used twice to describe two types of vertical agreements, it would be obvious that the word “resale” had two different meanings. Comparable meaning would be conveyed by a provision describing “(a) agreements prescribing minimum or stipulated prices for the resale of a commodity..., and (b) agreements requiring a vendee to enter into contracts or agreements prescribing minimum or stipulated prices for the resale of a commodity... ” In part (a) of such a provision the word “resale” would refer to the first resale whereas in part (b) the same word would refer to a subsequent resale.
. Alternatively, the word “vendee” might be interpreted as referring to a retailer who purchased from a wholesaler-party to a fair trade contract with the defendant manufacturer. Under that interpretation, the word “resale” would still refer to the sale by the retailer, rather than to the wholesaler’s resale.
. Although Corning argues for a literal interpretation of the clause, it does not expressly suggest that the word “resale” should be given a double meaning. On the contrary, Corning argues that the words “such resale” refer to the first resale the first time they are used in the “when lawful” clause and to the second resale the second time they are used in that clause. It is, however, perfectly clear that any difference in meaning between the first and second portions of the “when lawful” clause — between contracts “lawful in any State... in which such resale is to be made” and “lawful... in any State... to which the commodity is to be transported for such resale” — could not have been intended to have any relevance to the problem presented by this case. For, we reiterate, the vendee clause was not a part of the statute when that language was first enacted. We therefore need not express any opinion on the significance, or possible superfluity, of that clause as applied to situations not before us. See the discussion in the Commission opinion, Corning Glass Works, 82 F.T.C. 1675, 1759 (1973). We find neither textual nor historical support for Coming’s suggestion that the word “resale” has one meaning when it is used in the first portion of the “when lawful” clause and a different meaning when it is used in the second portion of that clause. If this is not a fair statement of Coming’s argument, and if it is really contending that the word refers to the second, rather than the first, resale in both parts of the “when lawful” clause, then the transport clause would be just as superfluous as Corning asserts it to be under the Commission’s interpretation; for in that event, the first portion of the “when lawful” clause would compel the result for which Corning contends.
. The price-fixing clause would be tested by the law of the state where the wholesaler is located but the customer restriction clause would be tested by the law of the state or states where the wholesaler’s customers are located.
. It is, of course, “common experience that identical words may be used in the same statute, or even in the same section of a statute, with quite different meanings.” Wood v. Dennis, 489 F.2d 849, 853 (7th Cir. 1973), cert. denied, 415 U.S. 960, 94 S.Ct. 1490, 39 L.Ed.2d 575, and cases cited therein. We attach greater significance to the Supreme Court’s repeated admonition that exemptions from the antitrust laws are to be strictly construed, see, e. g., United States v. McKesson & Robbins, Inc., 351 U.S. 305, 316, 76 S.Ct. 937, 100 L.Ed. 1209; United States v. Philadelphia. National Bank, 374 U.S. 321, 348, 83 S.Ct. 1715, 10 L.Ed.2d 915, than to following a nice literal construction which is certainly not compelled by either the history or the purpose of this statute.
. Moreover, the language of Coming’s own agreement purports to make its application to the parties depend upon the law of the place “where it is lawful so to agree.” One might expect this language to refer to the place where the agreement at issue was either made or is to be performed rather than to the place where persons who are not parties to the agreement conduct their business.
. It would be particularly anomalous to have the validity of a customer restriction clause which restrains a wholesaler in free trade state “A” — and merely affects the prices at which retailers may sell in fair trade state “B” — turn on the legality of customer restriction clauses in state “B”. Coming’s position would be less anomalous if it made the validity of the customer restriction clause in state “A” turn on the legality of the price-fixing section in state “B”. There is no way the present statutory language can be so interpreted.
. “[I]t should be observed, in the first place, that the bill under consideration is simply an enabling act. It permits the States, without the complications of possible violation of Federal law, to carry into effect their own public policy, and it is limited to a specific type of legislation now on the statute books of 27 States.
“These State laws are applicable only to transactions consummated wholly within the borders
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PREGERSON, Circuit Judge:
I. BACKGROUND
This appeal involves the construction of an interstate highway project in Hawaii which has been the subject of litigation now spanning some sixteen years. The litigation began in 1972, when the Stop H-3 Association sought permanently to enjoin construction of the highway, known as the H-3 project, out of concern for its impact on the environment. That same year the parties worked out a stipulation providing that construction would proceed at both ends of H-3, but would cease in the central portion of the highway pending a trial on the merits. The district court accordingly issued a temporary injunction enjoining work on the project pending resolution of the action. C.R. 43.
The consolidated complaint of the environmental organizations, appellants here, raised a number of issues, two of which are relevant to this appeal. First, appellants contended that appellees had violated the National Environmental Policy Act of 1969, 42 U.S.C. §§ 4321-4347 (“NEPA”), by filing a deficient Environmental Impact Statement (EIS).
Second, appellants maintained that appel-lees had not complied with section 4(f) of the Department of Transportation Act of 1966, 49 U.S.C. § 303, and section 18 of the Federal Aid Highway Act of 1968, 23 U.S. C. § 138. These sections contain nearly identical language and are commonly referred to collectively as “section 4(f)” or the “4(f) statutes.” Under section 4(f), the Secretary
shall not approve any program or project which requires the use of any publicly owned land from a public park, recreation area, or wildlife and waterfowl refuge of national, State, or local significance as determined by the Federal, State, or local officials having jurisdiction thereof, or any land from an historic site of national, State, or local significance as so determined by such officials unless (1) there is no feasible and prudent alternative to the use of such land, and (2) such program includes all possible planning to minimize harm to such park, recreational area, wildlife and waterfowl refuge, or historic site resulting from such use.
The Secretary’s determination that the conditions of section 4(f) are satisfied is known as a “section 4(f) statement.”
The case went to trial in 1974. After the trial, the district court found that appellees had not violated NEPA, section 4(f), or any other federal, state or local provisions. As a result, it lifted the preliminary injunction. Stop H-3 Ass’n v. Brinegar, 389 F.Supp. 1102 (D. Hawaii 1974), rev’d. sub nom. Stop H-3 Ass’n v. Coleman, 533 F.2d 434 (9th Cir.), cert. denied, 429 U.S. 999, 97 S.Ct. 526, 50 L.Ed.2d 610 (1976). However, on appeal to this court, appellants sought and obtained reimposition of the preliminary injunction. Stop H-3 Ass’n v. Coleman, 533 F.2d 434 (9th Cir.), cert. denied, 429 U.S. 999, 97 S.Ct. 526, 50 L.Ed.2d 610 (1976). We held that appellees had failed to comply with section 4(f) before approving the release of federal funds for H-3. Id. at 445. Specifically, we held that the Moanalua Valley, through which H-3 would pass, was protected land; therefore we rejected the Secretary’s argument that section 4(f) did not apply. Id.
Appellees subsequently filed a 4(f) statement for Moanalua Valley, but the Secretary found reasonable alternatives to using that land and did not approve the project. Appellees then decided to reroute H-3 to the north, filing a supplemental EIS (SEIS) and 4(f) statement which the Secretary approved in 1981. In the meantime, the district court continued to enforce the preliminary injunction, holding that the new route was within the purview of the 1972 stipulation.
Appellants challenged the new proposal, raising forty-eight separate claims. Appellants were primarily concerned with the impact of the new route on two protected areas, the Pali Golf Course and Ho’omalu-hia Park. After a 1981 trial on the merits, the district court ruled in favor of appellees on nearly all counts. Most importantly, the district court affirmed the Secretary’s ’determination that there was no prudent alternative to the new proposal, and approved both the EIS and SEIS. Having identified only minor noncompliance with NEPA and section 4(f), the district court decided to lift the preliminary injunction. Stop H-3 Ass’n v. Lewis, 538 F.Supp. 149 (D.Hawaii 1982).
A second appeal to this court ensued, and we once again reimposed the preliminary injunction. We were not convinced that the “Makai Realignment” and the “No Build Alternative” were imprudent. We held that such a determination was an abuse of discretion on the record as it then existed, and remanded the matter to the Secretary for further consideration. We affirmed the district court in all other respects. Stop H-3 Ass’n v. Dole, 740 F.2d 1442 (9th Cir.1984), cert. denied, 471 U.S. 1108, 105 S.Ct. 2344, 85 L.Ed.2d 859 (1985).
On October 18, 1986, the Continuing Appropriations Bill for Fiscal Year 1987, Pub. L. No. 99-500, 100 Stat. 1783 (later reenacted as Pub.L. No. 99-591, 100 Stat. 3341) became law. Section 114 of this bill, 100 Stat. 1783-349 (later reenacted as 100 Stat. 3341-349), ordered the Secretary to approve construction of H-3 “notwithstanding” section 4(f). On January 16,1987, the Secretary approved the section of H-3’s central portion lying between the Halawa and Kaneohe interchanges, but suspended approval for the small segment lying between the Kaneohe and Halekou interchanges.
Appellees then moved for dismissal of the complaint, arguing that section 114 had rendered moot all issues raised in appellants’ complaint that remained after this court’s 1984 decision. Appellees also moved for a lifting of the preliminary injunction, arguing that the requirements of the 1972 stipulation, NEPA and its regulations had all been complied with. The district court agreed with appellees, and on May 26, 1987 dismissed the complaint and lifted the preliminary injunction. C.R. 507, 508.
In this third appeal, appellants challenge the district court’s decision to dismiss the complaint and lift the preliminary injunction. Specifically, they argue that the requirements of the 1972 stipulation, NEPA, and the applicable regulations have not been satisfied. They also contend that section 114 is an unconstitutional exercise of congressional power, violating the Spending Clause, the equal protection component of the Fifth Amendment’s Due Process Clause, and the principle of separation of powers. Appellants seek reversal of the district court’s decision and reimposition of the preliminary injunction.
II. STANDARD OF REVIEW
We review de novo the district court’s decision to grant a motion to dismiss for mootness. See Sample v. Johnson, 771 F.2d 1335, 1338 (9th Cir.1985), cert. denied, 475 U.S. 1019, 106 S.Ct. 1206, 89 L.Ed.2d 319 (1986). The district court’s decision to lift the preliminary injunction is reviewed for abuse of discretion. See Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1021 (9th Cir.1985), cert. denied, 474 U.S. 1059, 106 S.Ct. 802, 88 L.Ed.2d 778 (1986).
III. DISCUSSION
A. NEPA and the Stipulated Injunction
Appellants argue that the district court erred in holding that appellees had complied with the terms of the stipulated injunction. According to appellants, the terms of the stipulation required that the court determine the adequacy of a Third Supplemental Environmental Impact Statement, which appellees were in the process of preparing, before construction of H-3 could proceed. Because appellants were not given the opportunity to litigate the adequacy of the Third SEIS, they argue, the injunction should be reinstated.
Appellants also contend that appellees' decision to prepare a Third SEIS lengthened the EIS process beyond the approval of the 1982 EIS and thus rendered premature the district court’s dismissal of the action. According to appellants, the district court could not dismiss the action pri- or to its approval of the Third SEIS.
1. The Stipulation
In 1972, the parties entered into a stipulation that provided, in relevant part:
It is agreed that Defendants shall not permit construction, further acquisition of right of way, or further letting of contracts on the Moanalua-Haiku Segment until the adequacy of the Final Environmental Impact Statement is determined by this Court.
C.R. 34, at 3.
In 1980, PHWA approved a final SEIS for the North Halawa Valley alignment of the H-3 project. Together with the 1972 Moanalua Valley EIS (“1972 EIS”) and the 1973 Supplemental EIS (“1973 Preface”), the 1980 SEIS constituted the EIS for the North Halawa Valley alignment of the project. Location and design approval for the H-3 project was given on February 5, 1981. On April 10, 1981, appellants filed a 142 page, 48 count, Amended and Supplemental Complaint for Declaratory and In-junctive Relief, challenging the appellees’ decision to proceed with the H-3 project.
In its decision of April 8, 1982, the district court held that the 1972 EIS and 1973 Preface complied with the requirements of NEPA and were properly approved. Stop H-3 Ass’n v. Lewis, 538 F.Supp. 149, 183 (D. Hawaii 1982), aff'd in part and rev’d in part, 740 F.2d 1442 (9th Cir.1984), cert. denied, 471 U.S. 1108, 105 S.Ct. 2344, 85 L.Ed.2d 859 (1985). The district court further held that the 1980 SEIS was properly prepared and circulated and adequately discussed the project’s impact upon North Ha-lawa Valley. Id. The court held that the EIS as a whole “sufficiently addresses the project’s socio-economic impacts and relationship to the Oahu General Plan.” Id. The district court however ordered appel-lees to prepare and circulate another supplemental EIS to reflect “new and significant” information that had arisen since the draft 1980 SEIS was circulated and not discussed in the North Halawa Valley EIS. Id. at 183, 184. The court also set aside the Secretary’s section 4(f) determination concerning Ho’omaluhia Park on the ground that “the 4(f) statement does not adequately support the finding that all possible measures have been taken to minimize harm to the park.” Id. at 183. The court however affirmed the Secretary’s conclusion that no feasible and prudent alternatives exist to the use of the park. Id. Finally, holding that conditions had changed sufficiently since imposition of the injunctions to justify terminating those injunctions and ordering new relief, the district court vacated the then-extant injunctions against the H-3 project and set aside the Secretary’s grant of location and design approval for the project. Id.
Appellees accordingly prepared a second SEIS, which FHWA approved on September 28, 1982. The Secretary of Transportation thereupon granted new location and design approvals for the H-3 project on November 12, 1982. Appellants did not challenge the validity of these actions; they have never contended that appellees failed to comply with the district court’s 1982 order.
Appellants however appealed from the district court’s 1982 decision. In 1984, we affirmed the district court’s 1982 ruling in respect to the adequacy of the 1980 EIS under NEPA. Stop H-3 Ass’n v. Dole, 740 F.2d 1442, 1465 (9th Cir.1984), cert. denied, 471 U.S. 1108, 105 S.Ct. 2344, 85 L.Ed.2d 859 (1985). We reversed, however, the district court’s conclusion that the Secretary had correctly determined, under section 4(f), that there were no feasible and prudent alternatives to the “constructive use” of Ho’omaluhia Park. Id. at 1450-58. We therefore ordered the district court to reinstate the injunctions against further construction of H-3 pending the Secretary’s compliance with section 4(f) as the statute applied to Ho’omaluhia Park. Id. at 1465.
Following this court’s 1984 decision, therefore, the only obstacles remaining to construction of H-3 were the requirements of section 4(f) and the district court’s approval of the Final EIS. On October 18, 1986, President Reagan signed Public Law No. 99-500, 100 Stat. 1783. Section 114, 100 Stat. 1783-349, provides:
(a) The Secretary of Transportation shall approve the construction of Interstate Highway H-3 between the Halawa interchange to, and including the Halek-ou Interchange (a distance of approximately 10.7 miles), and such construction shall proceed to completion notwithstanding section 138 of title 23 and section 303 of title 49, United States Code [i.e., section 4(f)].
(b) Notwithstanding section 102 of this joint resolution the provisions of subsection (a) shall constitute permanent law.
The clear intent and effect of this statute is to exempt the H-3 project from the requirements of section 4(f). As we explain below, section 114 does not suffer from any of the constitutional infirmities advanced by appellants. Therefore, enactment of section 114 left only one impediment to construction of H-3: approval of a Final EIS for the project.
2. The Third SEIS
After enactment of section 114, appellees carried out a formal reevaluation of the H-3 project pursuant to 23 C.F.R. 771.-129(c)(2). This regulation requires such reevaluations when major steps to advance a project have not occurred within three years after the approval of the final EIS. Based on this reevaluation, defendants began to prepare a Third SEIS, to consider the impact of the highway on archaeological resources and banana farmers in the vicinity of the proposed Kaneohe Interchange (the Luluku area). A draft Third SEIS was made available to the public on January 29, 1987, and official notice of its availability was published in the Federal Register on February 6,1987. 52 Fed.Reg. 3856 (1987).
On January 16, 1987, based on the re-‘ evaluation, the Acting Division Administrator of FHWA approved the H-3 project, authorizing detailed design and construe- ■ tion work. At the same time, however, the' Acting Division Administrator suspended his approval insofar as it would have authorized design and other project-related work in the vicinity of the proposed Kaneohe Interchange, pending completion of the Third SEIS.
On February 11, 1987, appellees filed a joint motion to dismiss thé action, on the grounds that the unchallenged issuance and FHWA approval of the 1982 SEIS satisfied the requirements of both NEPA and the district court’s 1982 decision and order, and that passage of section 114 had rendered moot any issues remaining in the litigation. C.R. 494. In their opposition to the motion, appellants argued that dismissal was unwarranted because the stipulation required that the adequacy of the Third SEIS be litigated prior to dismissal of the action. C.R. 495.
The district court, in its Decision and Order of May 8, 1987, granted appellees’ motion to dismiss, and terminated the injunctions in force. C.R. 507. The court held that the adequacy of the Final EIS had been determined by the court and that the issues in the lawsuit had all been resolved. Id. at 12. The court further held that “the formal reevaluation and subsequent preparation of the Third SEIS do not change the status of the Final EIS approved in 1982.”' Id. The district court concluded that because appellees had complied with NEPA and the terms of the stipulation, and because the enactment of section 114 had rendered moot any issues based on section 4(f), there was no further need to enjoin construction of H-3.
We agree with the district court’s reasoning. As discussed above, the district court in 1982 had determined that the North Ha-lawa Valley EIS was adequate except for its failure to discuss certain “new and significant” information which had arisen following circulation of the draft 1980 EIS. Stop H-3 Ass’n v. Lewis, 538 F.Supp. at 183-84. This court affirmed that determination in 1984. Stop H-3 Ass’n v. Dole, 740 F.2d at 1465. Appellees accordingly prepared a Second SEIS discussing the new information; FHWA approved the Second SEIS in September 1982. Appellants have never challenged the adequacy of the SEIS ordered by the district court in 1982. The district court, therefore, could correctly find that the 1982 EIS constituted a “final” and “adequate” EIS for the H-3 project, notwithstanding appellees’ decision to prepare a Third SEIS.
Moreover, there is no authority for the proposition that the decision to prepare a Supplemental EIS after a Final EIS has been approved requires that work outside the area affected by the Supplemental EIS be halted. Appellants cite in their brief a number of cases which, they argue, constitute such authority. See Conservation Society of Southern Vermont, Inc. v. Secretary of Transportation, 531 F.2d 637 (2d Cir.1976); Ecology Center of Louisiana, Inc. v. Coleman, 515 F.2d 860 (5th Cir.1975); Conservation Society of Southern Vermont, Inc. v. Secretary of Transportation, 508 F.2d 927 (2d Cir.1974), vacated and remanded, 423 U.S. 809, 96 S.Ct. 19, 46 L.Ed.2d 29 (1975), on remand, 531 F.2d 637 (2d Cir.1976); Sierra Club v. Stamm, 507 F.2d 788, 793 (10th Cir.1974); Citizens for Balanced Environment & Transportation, Inc. v. Volpe, 503 F.2d 601 (2d Cir.1974), cert. denied, 423 U.S. 870, 96 S.Ct. 135, 46 L.Ed.2d 100 (1975); Sierra Club v. Callaway, 499 F.2d 982, 990 (5th Cir.1974); Indian Lookout Alliance v. Volpe, 484 F.2d 11, 19 (8th Cir.1973); Jones v. Lynn, 477 F.2d 885 (1st Cir.1973); Named Individual Members of San Antonio Conservation Society v. Texas High way Department, 446 F.2d 1013 (5th Cir.1971), cert. denied, 406 U.S. 933, 92 S.Ct. 1775, 32 L.Ed.2d 136 (1972); Appalachian Mountain Club v. Brinegar, 394 F.Supp. 105, 115 (D.N.H.1975); Atchison, Topeka & Santa Fe Railway Co. v. Callaway, 382 F.Supp. 610 (D.D.C.1974); Movement Against Destruction v. Volpe, 361 F.Supp. 1360, 1384 (D.Md.1973), aff'd per curiam, 500 F.2d 29 (4th Cir.1974); James River v. Richmond Metropolitan Authority, 359 F.Supp. 611, 635 (E.D.Va.1973), aff'd, 481 F.2d 1280 (4th Cir.1973); Committee to Stop Route 7 v. Volpe, 346 F.Supp. 731, 740 (D.Conn.1972). However, none of these cases present a situation where, as here, a Final EIS has already been prepared and approved. Instead, the cases cited by appellants all concern the appropriate scope of an initial EIS; the cases stand only for the proposition that a single project cannot be artificially subdivided into a number of separate projects for which separate EIS’s may be prepared. In this case, appellees have not attempted to segment the H-3 project into separate projects. Rather, appellees acknowledge that the H-3 project as a whole required approval of a Pinal EIS before construction could commence. They argue, correctly, that the 1982 EIS fulfilled this function.
We hold that the district court correctly determined that FHWA's decision to prepare a Third Supplemental EIS did not deprive the 1982 EIS of its status as a Final EIS. Because the district court’s approval of the 1982 EIS satisfied the requirement of the 1972 stipulation, and because NEPA permits work on those parts of a project unrelated to a Supplemental EIS to go forward when the project is already the subject of an adequate Final EIS, we affirm the district court’s decision that neither NEPA nor the stipulation barred dissolution of the injunction and dismissal of the action.
B. Spending Clause
Appellants argue that by exempting the H-3 project from the requirements of section 4(f), section 114 exceeds Congress' power under the Spending Clause of the Constitution. Section 114 violates the Constitution, according to appellants, because the Spending Clause permits expenditures only for “national” purposes, yet the H-3 project, appellants argue, serves only “local” purposes.
As support for their contention that the H-3 project is of “local” and not “national” significance, appellants point to the fact that the proposed highway is contained entirely within the state of Hawaii, and could only carry vehicles from one point in Hawaii to another. In addition, they note that a report issued in 1982 by the Congressional Budget Office (CBO) describes the highway as having “local” rather than “national” importance. Congressional Budget Office, The Interstate Highway System: Issues and Options, Table C-l (June 1982).
In response, appellees argue, first, that section 114 does not represent an exercise of Congress’ power under the Spending Clause because section 114 does not itself authorize the expenditure of funds. Thus, appellees imply, section 114.cannot violate the requirements of the Spending Clause. Second, appellees contend that even if section 114 were construed as an exercise of the spending power, the provision is a valid exercise of that power because the H-3 project is of “national” not “local” importance.
We find it unnecessary to decide whether section 114 is a spending measure, because it is clear that the H-3 project, whose construction section 114 mandates, is of national and not merely local importance and was intended to serve the general welfare. As the district court observed, H-3 is a part, of an interstate highway system which serves important defense functions. Decision and Order, C.R. 507 at 5. Therefore, even if we were to accept appellants’ characterization of section 114 as a spending measure, we would conclude that the provision falls comfortably within the scope of the spending power.
Congress has declared that prompt completion of the entire Interstate System is a matter of national importance. In the Federal-Aid Highway Act, Congress stated:
It is hereby declared to be in the national interest to accelerate the construction of the Federal-aid highway systems, including the National System of Interstate and Defense Highways, since many of such highways, or portions thereof, are in fact inadequate to meet the needs of local and interstate commerce, for the national and civil defense.
It is hereby declared that the prompt and early completion of the National System of Interstate and Defense Highways, so named because of its primary importance to the national defense and hereafter referred to as the “Interstate System”, is essential to the national interest and is one of the most important objectives of this Act.
23 U.S.C. § 101(b)) (1988). Congress’ explicit policy articulation demonstrates that completion of the entire interstate system, including construction of component highways either between or within individual states, is a matter of national importance.
As the district court correctly stated, the mere fact that H-3 is contained entirely within Hawaii does not negate the fact that it is part of a national system of highways. Decision and Order, C.R. 507 at 5. Nor does the CBO’s denomination of H-3 as a project of “local” importance supercede Congress’ own statement, in section 101(b), that the Interstate System of which H-3 is a part is of national importance.
Finally, we believe that appellants’ Spending Clause objection to section 114 is answered by the Supreme Court’s directive in Buckley v. Valeo:
Appellants’ “general welfare” contention erroneously treats the General Welfare Clause as a limitation upon congressional power. It is rather a grant of power, the scope of which is quite expansive, particularly in view of the enlargement of power by the Necessary and Proper Clause.... It is for Congress to decide which expenditures will promote the general welfare.
424 U.S. 1, 90, 96 S.Ct. 612, 668-69, 46 L.Ed.2d 659 (1976) (emphasis added). See also South Dakota v. Dole, 483 U.S. 203, 107 S.Ct. 2793, 2796, 97 L.Ed.2d 171 (1987) (“In considering whether a particular expenditure is intended to serve general public purposes, courts should defer substantially to the judgment of Congress.”). Because Congress’ statement in section 101(b) of the Federal-Aid Highways Act makes it clear that Congress considered completion of the Interstate System a matter of national importance, and because section 114 was enacted to expedite the System’s completion, we must defer to Congress’ determination that any spending to implement section 114 will promote the general welfare.
C. Equal Protection
Appellants ask this court to hold that section 114 violates the equal protection component of the Fifth Amendment. They argue, first, that legislation which is alleged to harm the environment should be subjected to heightened judicial scrutiny because the right to a healthy environment is an “important” individual right and because Congress violated constitutional principles of federalism in enacting a provision which, according to appellants, invidiously discriminates against citizens of Hawaii. According to appellants, we must strike down section 114 under heightened scrutiny because the statute is not substantially related to achievement of an important governmental purpose. Second, appellants contend that section 114 is constitutionally defective even when reviewed for rationality using minimum scrutiny, because it creates an arbitrary classification by denying residents of Hawaii the environmental protections provided by the 4(f) statutes.
The district court rejected appellants’ arguments. The court observed, first, that no court has found that there is a fundamental right to a healthy environment. Decision and Order, C.R. 507 at 7. Therefore, heightened judicial scrutiny of section 114 was inappropriate. Next, the district court held that Congress had a rational basis for passage of section 114. The court stated:
In addition to the rising costs of the [H-3] project over the past 14 years, Congress has the power to overturn judicial decisions which they feel are based on an interpretation of a statute [i.e., section 4(f) ] inconsistent with the intent of Congress when the law was passed. That is what Congress has done here.
Id. at 7-8.
Appellants contend that the district court erred in applying the “rational basis” test to resolve their equal protection claim. The court, according to appellants, should have employed an “intermediate” level of scrutiny for two reasons. First, appellants argue that intermediate scrutiny of a statute affecting the environment is appropriate because such statutes impinge on the “important” individual right to a healthy environment. Section 114, appellants maintain, denies residents of Hawaii this right, and thereby violates their right to equal protection of the laws. Second, appellants contend that intermediate scrutiny of section 114 is required because the legislation rests on a distinction between citizens and non-citizens of Hawaii, a distinction which violates the constitutional principle of federalism.
Intermediate scrutiny is only employed when “concerns sufficiently absolute and enduring can be clearly ascertained from the Constitution and [Supreme Court] cases_” Plyler v. Doe, 457 U.S. at 218 n. 16, 102 S.Ct. at 2895 n. 16. Appellants argue that their interest in having a “clean and healthful environment” rises to this level. Appellants concede that no court has yet found that preservation of a healthy environment constitutes a concern of constitutional magnitude deserving heightened judicial scrutiny in the context of equal protection challenges to legislation alleged to degrade the environment. They nonetheless argue, with some force, that the right to a healthy environment is one this court should recognize because of its great importance to the well-being of all persons.
We agree that it is difficult to conceive of a more absolute and enduring concern than the preservation and, increasingly, the restoration of a decent and livable environment. Human life, itself a fundamental right, will vanish if we continue our heedless exploitation of this planet’s natural resources. The centrality of the environment to all of our undertakings gives individuals a vital stake in maintaining its integrity.
However, we need not decide here whether the importance of a healthful environment gives rise to a right of constitutional magnitude. Even assuming, arguendo, that enjoyment of a healthful environment is an important right for purposes of equal protection analysis, section 114 satisfies the requirements for validation of legislation under the intermediate level of scrutiny appellants urge this court to apply-
First of all, we have found no authority forbidding Congress in all instances from carving out a local exception to a national policy. To the contrary, many decisions approve such action. See, e.g., Friends of the Earth v. Weinberger, 562 F.Supp. 265, 270 (D.D.C.1983), appeal dismissed without opinion, 725 F.2d 125 (D.C.Cir.1984) (“Jackson amendment” exempting Executive branch report on how MX missiles were to be based from NEPA requirements); Sequoyah v. TVA, 480 F.Supp. 608 (E.D.Tenn.1979), aff'd, 620 F.2d 1159 (6th Cir.), cert. denied, 449 U.S. 953, 101 S.Ct. 357, 66 L.Ed.2d 216 (1980) (provision of Energy and Water Development Act authorizing Tennessee Valley Authority to impound Tellico River notwithstanding requirements of Endangered Species Act or “any other law”). In Sequoyah v. TVA, the court stated that “[tjhere is no question... that Congress has the power to make exceptions to rights it or state legislatures have created by statute, as long as such exceptions are not invidiously discriminatory.” 480 F.Supp. at 610-11. Finding nothing invidiously discriminatory in Congress’ decision to exempt the Tellico Dam project from otherwise applicable legal requirements, the Sequoyah court rejected plaintiffs’ equal protection argument. Id. at 612.
Appellants argue that this case, unlike Sequoyah, presents an example of “invidiously discriminatory” legislation. They contend that in enacting section 114 Congress singled out Hawaii and its citizens for unique and onerous treatment. According to appellants, the “legislative classification” embodied in section 114 is between the entire population of Hawaii, whose interaction with and enjoyment of the environment will be diminished by H-3, and all other United States citizens. This alleged imposition on citizens of Hawaii of a disadvantage not shared by citizens of the other states, appellants maintain, invidiously discriminates against Hawaiians based on their state citizenship in violation of the constitutional principle of federalism. Federalism principles, as appellants point out, forbid the federal government from treating any state as the inferior of any other state, regardless of its order of entry into the Union. Appellants contend that section 114 has precisely this effect, because it allegedly subjects Hawaii and its citizens to a burden which no other state must bear. Appellants conclude that this court should strike down section 114 because the statute imposes hardships on a group whose membership is determined by reference to a classification, state citizenship, which undermines federalism’s precept that all states in the federal Union stand on an equal footing.
We do not accept appellants’ analysis. First, section 114 does not, as appellants believe, rest on a legislative distinction between Hawaii and the other 49 states. Section 114 by its terms refers only to the H-3 project. The statute does not exempt all federal highway construction projects in Hawaii from the requirements of section 4(f); rather, it exempts one project located in Hawaii from the 4(f) statutes. Even when we look beyond its terms to its effect, section 114 does not affect the state of Hawaii as a whole, to the exclusion of the rest of the nation. Instead, the effects of section 114 will be felt by any United States citizen whose use and enjoyment of Hawaii’s environment is affected by H-3, regardless of that person’s state of residence. Thus in depicting citizens of Hawaii as a disadvantaged “class” for purposes of equal protection analysis, appellants include people who will not be affected by construction of H-3, and overlook others who will. In short, it cannot be said that section 114 rests on a state-based classification simply because it refers to a project located in Hawaii.
Even if we were to accept appellants’ contention that section 114 creates a legislative classification which subjects citizens of Hawaii to treatment different from that accorded to citizens of the other states, we could not conclude that the statute invidiously discriminates against citizens of Hawaii in violation of the principles of federalism. Contrary to appellants’ assertion, it is simply not true that Congress may not create exemptions from generally applicable statutes in order to authorize state-specific projects. See, e.g., Trans-Alaska Pipeline Authorization Act, Pub.L. 93-153, 87 Stat. 576 (amending the Mineral Lands Leasing Act, 30 U.S.C. § 185 [1970 ed.], to overcome that Act’s width limitation for pipelines and thereby permit construction of the Trans-Alaska Pipeline). See also Izaak Walton League of America v. Marsh, 655 F.2d 346, 367 (D.C.Cir.), cert. denied, 454 U.S. 1092, 102 S.Ct. 657, 70 L.Ed.2d 630 (1981).
We note, also, that appellants have not alleged that Congress was motivated by discriminatory animus against Hawaii or its citizens when it enacted section 114. Nor is there any evidence in the record that Congress intended to harm the people of Hawaii by exempting the H-3 project from the 4(f) statutes. To the contrary, there is evidence that Congress was partly motivated by its belief that the highway would benefit Hawaii. See H.R.Rep. No. 99-1005, 99th Cong., 2d Sess. 784 (1986) (“The conferees also take note of the fact that H-3 has been the subject of litigation for more than 14 years. During that time,... the people of Hawaii have been deprived of a much needed highway.”). The Supreme Court has stated, in the context of claims of gender discrimination, that while the disparate impact of a facially neutral statute provides the “starting point” for review, “purposeful discrimination is ‘the condition that offends the Constitution.’” Personnel Adm’r of Massachusetts v. Fee ney, 442 U.S. 256, 274, 99 S.Ct. 2282, 2293-94, 60 L.Ed.2d 870 (1979). Discriminatory purpose, the Court explained, implies more than an awareness of consequences. Id. at 279, 99 S.Ct. at 2296. “It implies that the decisionmaker... selected or reaffirmed a particular course of action at least in part ‘because of,’ not merely ‘in spite of,’ its adverse effects upon an identifiable group.” Id. Appellants’ allegations would have' to meet this standard in order to establish an equal protection violation because section 114 does not on its face refer to the state or people of Hawaii, and because appellants argue that their claim should receive the same level of judicial scrutiny as would a claim of gender discrimination. Because appellants have neither alleged nor shown that section 114 reflects a purpose to discriminate on the basis of state citizenship, we conclude that section 114 does not invid
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WILBUR, Circuit Judge.
This is an appeal from a judgment in favor of the defendant. The facts are stated clearly and briefly by the District Judge in his memorandum opinion, and for that reason we quote therefrom as follows:
“This is an action to compel refund of $4,147.93, representing federal income taxes computed at- the prevailing corporate rate for the calendar year 1928. The amount sued for was paid under protest by plaintiff, Security First National Bank of Los Angeles, as trustee, to the defendant collector. The sole question for decision is whether the project or enterprise denominafced Trust No. 5833, as it is disclosed by the evidence, is an association within the purview of section 701 (a) (2) of the Revenue Act of 1928, 26 TTSCA § 2701 (a) (2). The pertinent part of that section reads: ‘the term “corporation” includes associations, joint-stock companies, and insurance companies/ The defendant collector demanded and collected the tax from plaintiffs upon the ground that it was an association as described in the Revenue Act aforesaid. The plaintiffs contend that such ruling was erroneous and illegal, and that the enterprise under consideration is shown by the evidence herein not to be an association within the aforesaid section, but that it is to be considered solely as a fiduciary for income tax purposes. It is admitted that, if the enterprise is properly classified as an ‘association,’ the amount sued for cannot be recovered by plaintiff herein.
“The following facts have been established : In October, 1924, one Cotton, a real estate operator in Los Angeles, Cal., in association with other persons, undertook to acquire by purchase a traet of approximately 90 acres of land, to improve the same by laying out streets and other ways, to install' sidewalks, water, electricity, and other utilities therein, and to subdivide the traet into city lots and to sell them to the public at a substantial profit. The scheme involved an outlay of capital both for the purchase price of the acreage and also to pay for the improvements and subdivision- expenses. The land was owned by the Southern California Edison Company, which agreed to sell it to Cotton and his associates for $810,-000. The contemplated improvements amounted to approximately $250,000. A written contract of sale of the traet was accordingly entered into by one Parran acting as the agent of the buyers and promoters, Cotton and his associates, and the Southern California Edison Company, the seller. The agreement provided for the payment of $100,000 in cash and the balance of the purchase price within 90 days of the date of the contract. In order to finance the project, a syndicate of some 40 persons was organized. These persons were invited by Cotton and his associates to subscribe and invest various amounts of money in the undertaking ranging from $1,000 to $15,000 each. The purpose of the syndicate as well as the invitation to join therein was to enable the participants to realize a profit upon their investments in the project. The aggregate amount realized from such subscriptions was $250,000. The contract with the Edison Company was assigned to the Security Trust & Savings Bank, predecessor of one of the plaintiffs herein as trustee. Concurrently, the subscribers of the $250,-000 paid their money to said trustee. The Security Trust & Savings Bank, as such, advanced the further sum of $400,000 to the project, and took a first lien upon the assets of the enterprise as its security for payment of such loan with interest. An additional sum of $212,500 was advanced by Cotton and an associate, Bryan, and these two took a second mortgage on the assets of the enterprise as security for the payment of their loan, with interest. The moneys thus obtained in accordance with a written instrument denominated as a declaration of trust, Trust No. 5833, were applied on the purchase price of the 90-acre traet of land.
“The declaration of trust under which the project was so launched and carried out is a lengthy document that has been introduced in evidence herein, and that has been carefully considered by the court. I consider it unnecessary to set it forth in extenso. Suffice it to say that it conforms generally to similar instruments common in the realty subdivision activities of Los Angeles, Cal., and is what is popularly known therein as a ‘real estate subdivision trust.’ It was executed by the Security Trust & Savings Bank as trustee, Dean Farran, acting on behalf of Cotton and associates as trustor, and the subscribers or investors of the $250,-000 as beneficiaries. It provided a complete, and to some extent a self-executing, scheme for the payment of the purchase price of the property; the payment of the two mortgage loans; the reimbursement of those who had subscribed and invested money therein; the payment of all expenses attendant upon the improvement and subdivision of the tract of land and for the sale of the entire subdivided parcel of real property. It declared that all beneficial interest in the trust is owned by the investors of the $250,000, and that such interest be divided into units of $1,000 each, and that eaeh beneficiary shall be deemed to hold one of such units for each $1,000 that he had paid into the trust or should thereafter pay into it. It provided that, in all dealing with the trustee and the beneficiaries, the trustee shall be bound by the written direction of any three of the board of five beneficiaries termed the ‘board of syndicate managers,’ which board was chosen by the subscribers of the $250,000, and had power to establish the price at which the real property was to be sold by the trustee; to fix the terms of sale; the manner, method, and time of disposition of the proceeds of such sale; the person to whom all money coming into the hands of the trustee under the declaration was to be paid after certain payments rigidly fixed by the declaration of trust had been made; the amount of such payments; to fix the restrictions, covenants, conditions, and reservations under and upon which the property or any part of it shall be sold; the form of deeds and contracts to be executed by the trustee in case of any sales; to fix and determine the manner, method, cost, and improvement of the property; and in all other respects to have the power to bind each and every beneficiary in all dealings with the trustee and with other parties in connection with the subdivision and sale of the property. It provided that no lot is to be sold by the trustee for less than the minimum price thereof fixed by a schedule of minimum prices that was annexed to said declaration and made a part thereof, but, as before stated, it gave to the syndicate managers the power of fixing the prices at which the property of the subdivision might be sold. A real estate firm of Los Angeles was irrevocably constituted the agent of the beneficiaries for the sale of the property for a period of two years from the date of the declaration of trust, but, as just adverted to, the sales agency could sell the real property only upon such price, terms, restrictions, and covenants as were fixed by the board of managers by written direction to the trustee and subject to such conditions. The sales agency could direct the trustee to convey the property with the same force and effect as if such direction had been given by the board of managers’ direction. At the expiration of two years, the board of managers were authorized to designate some other agency, if it so desired, for the sale of the trust property.
“The trustee is directed to apply the proceeds of sales to the payment of taxes, costs, charges, and expenses, etc.; to the payment of its own services; to the payment of money loaned the project by the bank, by Cotton, and by others, and to the payment to the subscribers to the amount that they had subscribed to the project and certain additional amounts specifically mentioned and designated in the trust instrument, and, in addition, to pay as directed by the board of managers any further amount of money that would be received by them on account of sales of real property of the trust as directed by the board of syndicate managers.
“The declaration provided that the beneficiaries agreed that they would subdivide and improve the real property as provided in the trust instrument, and that such work of improvement would be installed and completely and fully paid for within two years of the date of such instrument.
“It also provided that the trustee may resign and discharge itself of the trust by a written notice to the board of managers thirty days before such resignation shall take effect, and successor may thereupon be appointed by an instrument in writing executed by the beneficiaries and accepted by the successor trustee. Should the beneficiary fail to make such appointment before the expiration of such thirty-day period, then the trustee may thereupon appoint a temporary successor trustee to fill such vacancy until such successor be appointed by the beneficiaries, and it further provided that any such successor should be vested with all the estates, rights, powers, and duties of its predecessor trustee. It was also .stated in the declaration of trust that no sale or transfer of beneficial interests under the trust shall be valid or binding upon the trustee until the instrument making such assignment or transfer shall have been approved by and deposited with the trustee excepting only where such interest may pass or be transferred by a judgment or decree of court, and then only upon proof satisfactory to the trustee of the legality and validity of the procedure in sueh matters being presented to the trustee. It stated that the legal and equitable title to the real property was vested in the trustee for the purposes of administering the trust,' and that no person beneficially interested in the trust has any right, title, interest, or estate in the property covered by the declaration, nor has any person beneficially interested under said declaration of trust any right or power to apply for or secure a dissolution or termination of the trust or partition or division of any of the trust estate; it being further recited that the entire beneficial interest of any and all beneficiaries under the declaration of trust is personal property only consisting of the .right to enforce the performance of this trust according to its terms. It was further provided in the declaration that the trust shall continue to and until the sale and disposition in fee of all the property subject to the trust and the disposition of all proceeds thereof in accordance with the terms of said declaration of trust or until the expiration of twenty-five years, whichever event shall happen first. There are other and further provisions in the declaration of trust, but sufficient has already been stated to designate the character of the instrument as well as the classification of the component entities and persons that are described therein. * * *
“The evidence shows that the owners of beneficial interest frequently sold the same, and that a legal form was provided for the purposes of sale and transfer, and it appeared that ten units were assigned during the calendar year 1928, and that there were other units assigned by the owners for collateral purposes. It is true that the enterprise sold only one lot during the year 1926, but during that period the sales agency was actively engaged in an effort to dispose of the unsold lots, and that in the period approximately $340,000' was collected on lot sales, interest, etc., and that the total expenses for administration for . the same period amounted to approximately $30,000. It is unnecessary to review all of the evidence as to the financial operations of the enterprise. Suffice it to say that it was a very profitable venture, and resulted, not only in the payment in full of all obligations incurred on account of the purchase, improvement, subdivision, and sale of the tract of land, but, in addition, made a handsome profit to all who invested or were interested in the enterprise.”
The problem to be 'solved in this litigation is whether or not the appellant is an association within the meaning of the aet of Congress above referred to. Section 701 (a) (2) of the Revenue Act of 1928 (26 USCA § 2701 (a) (2). This subdivi- ’ sion of the Revenue Act is a re-enactment without change of language used in the Revenue Acts of 1918, 1921, 1924 and 1926. After the enactment of the Revenue Aet of 1918, the Commissioner of Internal Revenue, acting under the authority and direction of said aet requiring him to prescribe and publish all needful rules and regulations for the enforcement of the act, adopted articles 1502 and 1504, amended August 31, 1925, of regulation 65 pertaining to the Revenue Aet of 1924, articles 1502 to 1504 of regulation 60 pertaining to the Revenue Act of 1926, which, are identical with articles 1312 and 1314 adopted under the Revenue Aet of 1928. In view of the adoption of these interpretative regulations by the Commissioner, Congress, in the adoption of the Revenue Aet of 1928, must be deemed to have considered and adopted the interpretation placed upon the statute by the Commissioner of Internal Revenue, in a matter as indefinite as the definition, of “an association.” Upon this subject, the Supreme Court, in an opinion written by Justice Butler, in Brewster v. Gage, 280 U. S. 327, 50 S. Ct. 115, 117, 74 L. Ed. 457, stated:
“It is the settled rule that the practical interpretation of an ambiguous or doubtful statute that has been acted upon by officials charged with its administration will not be disturbed except for weighty reasons. Logan v. Davis, 233 U. S. 613, 627, 34 S. Ct. 685, 58 L. Ed. 1121; Maryland Casualty Co. v. United States, 251 U. S. 342, 349, 40 S. Ct. 155, 64 L. Ed. 297; Swendig v. Washington Water Power Co., 265 U. S. 322, 331, 44 S. Ct. 496, 68 L. Ed. 1036. * * *
“The regulations promulgated under that section are substantially the same as the earlier regulations.’ Regulations 65, art. 1594; Regulations 69, art. 1594. The substantial re-enactment in later acts of the provision theretofore construed by the Department is persuasive evidence of legislative approval of the regulation. National Lead Co. v. United States, 252 U. S. 140, 146, 40 S. Ct. 237, 64 L. Ed. 496; United States v. Cerecedo Hermanos y Compania, 209 U. S. 337, 339, 28 S. Ct. 532, 52 L. Ed. 821; United States v. G. Falk & Brother, 204 U. S. 143, 152, 27 S. Ct. 191, 51 L. Ed. 411. The subsequent legislation confirmed and carried forward the policy evidenced by the earlier enactments as interpreted in the regulations promulgated under them.”
The regulations referred to first adopted, in their present form, by the amendment of Regulation 65, August 31, 1925, are as follows :
“Art. 1312. Association. Associations and joint-stock companies include associations, common law trusts, and organizations by whatever name known, which aet or do business in an organized capacity, whether created under and pursuant to state laws, agreements, declarations of trust, or otherwise, the net income of which, if- any, is distributed or distributable among the shareholders on the basis of the capital stock which each holds, or, where there is no capital stock, on the basis of the proportionate share or capital which each has or has vested in the business or property of the organization. A corporation which has ceased to exist in contemplation of law but continues its business in quasi-corporate form is an association or corporation within the meaning of Section 701.
“Art. 1314. Association Distinguished from Trust. Where trustees merely hold property for the collection of the income and its distribution among the beneficiaries of the trust, and are not engaged, either by themselves or in connection with the beneficiaries, in the carrying on of any business, and the beneficiaries have no control over the trust, although their consent may be required for the filling of a vacancy among the trustees or for a modification of the terms of the trust, no association exists, and the trust and the beneficiaries thereof will be subject to tax as provided by Section 161-170 and by Articles 861-891. If, however, the beneficiaries have positive control over the trust, whether through the right periodically to elect trustees or otherwise, an association exists within the meaning of Section 701. Even in the absence of any control by the beneficiaries, where the trustees are not restricted to the mere collection of funds and their payment to the beneficiaries, but are associated together with similar or greater powers than the directors in a corporation for the purpose of carrying on some business enterprise, the trust is an association within the meaning of the act.”
These regulations in the present form are said to be based upon the decision of the Supreme Court in Hecht v. Malley, 265 U. S. 144, 44 13. Ct. 462, 467, 68 L. Ed. 949 (1923) dealing with the Revenue Acts of 1916 and 1918. The court in that ease said:
“We think that the word ‘association’ as used in the Act clearly includes ‘Massachusetts Trusts’ such as those herein involved, having quasi-corporate organizations under which they are engaged in carrying on business enterprises. What other form of ‘associations,’ if any, it includes, we n'eed not, and do not, determine. * *
“We conclude, therefore, that when the nature of the three trusts here involved is considered, as the petitioners are not merely trustees for collecting funds and paying them over, but are associated together in much the same manner as the directors in a corporation for the purpose of carrying on business enterprises, the trusts are to be deemed associations within the meaning of the Act of 1918; this being true independently of the large measure of control exercised by the beneficiaries in the Hecht and Haymarket Cases, which much exceeds that exercised by the beneficiaries under the Waehusett Trust. We do not believe that it was intended that organizations of this character — described as ‘associations’ by the Massachusetts statutes, and subject to duties and liabilities as such — should be exempt from the excise tax on the privilege of carrying on their business merely because such a slight measure of control may be vested in the beneficiaries that they might be deemed strict trusts within the rule established by the Massachusetts courts.”
If we accept, as we think we should, the interpretation placed upon'the word “association” by the Commissioner of Internal Revenue, inferentially approved and adopted by Congress in subsequent legislation, based upon the decision of the Supreme Court in Hecht v. Malley, supra, it follows that there are two criteria for determining whether or not an organization or combination of individuals is taxable as an association. The first test found in article 1312 is the business test; that is to say, the test as to whether or not the organization formed “to do business in an organized capacity” and for the distribution of the profits among the shareholders in proportion to the investment or shares. The second test, contained in article 1314, is for the purpose of distinguishing an association from a trust, and depends upon the question of whether or not “the beneficiaries have positive control over the trust, whether through the right periodically to elect trustees, or otherwise.” It appears from the terms of the trust, as stated in the foregoing excerpts from the memorandum opinion of Judge McCormick, that, while the ordinary business of the trust or association is carried on by agents designated in the trust and appointed by the trustees, the board of managers had at all times effective control of the business, and that the beneficiaries of the trust had the control over the syndicate managers indicated as the test in article 1314; that is, they had the power to select the managers. The language of the declaration of trust in that regard is as follows: “That said Board of Syndicate Managers shall consist at the outset of John T. Cooper,'H. H. Cotton, Godfrey Edwards, Otto G. Wildey, and C. C. C. Tatum, and until the Trustee receives a notice in writing, signed by beneficiaries holding at least three-fourths of the entire number of said units of beneficial interest, changing the personnel of said board of syndicate managers, the trustee shall act upon the written direction of any three (3) of said named persons; but from and after receipt by it of such notice in writing notifying it of change in personnel of said board of syndicate managers, it shall act only upon the written directions of any three (3) of the persons comprising said board of syndicate managers as changed by such written notice.”
It would seem clear that under the terms of the declaration of trust, the syndicate, organized for the purpose of purchasing, subdividing, improving, and selling, a large tract of land, was engaged in doing business for profit, and that the trust was distinguishable from a simple trust by reason of the control exercised over matters of its management and business by the board of managers and beneficiaries.
The appellant contends, however, that notwithstanding the existence of such powers they were not actually exercised during the tax year 1928, and that the true test is whether or not such powers were exercised, citing Gardiner v. United States (C. C. A.) 49 F. (2d) 992, 996. The answer to this contention, we think, is found in the statement of facts by the trial court as to the business done in the year 1928. Under these circumstances, it can hardly be said that the powers of the managers or beneficiaries were not exercised during that time. The business of the association was active and was participated in by the agents and managers thereto authorized.
The appellant insists that the enterprise of the syndicate here involved was a joint adventure, citing 33 C. J. 841; Peterson v. Nichols, 90 Wash. 398, 156 P. 406; Sander v. Newman, 174 Wis. 321, 181 N. W. 822; Central Trust Co. v. Creel, 184 Ky. 114, 211 S. W. 421; Camp v. U. S., 15 Ct. Cl. 469; Barton v. Wamsley, 194 Iowa, 591, 190 N. W. 18; Discus v. Scherer, 277 Ill. 168, 115 N. E. 161.
Of course it is quite immaterial as 'to whether or not the organization under consideration is a joint adventure within the meaning of that term as defined by the foregoing authorities. The question here is whether or not the organization is an association within the'meaning of that term as used by Congress in its revenue laws. Burk-Waggoner Oil Ass’n v. Hopkins, 269 U. S. 110, 46 S. Ct. 48, 70 L. Ed. 183. It is claimed, however, by the appellant that this distinction between a joint adventure and an association has been recognized in the administration of the revenue law, and, .to sustain this proposition, appellant cites Appeal of Florida Grocery Co., 1 B. T. A. 412; Appeal of Ernest Woodruff, 4 B. T. A. 842; Alger Melton v. Commissioner, 7 B. T. A. 717; also Article 1317 of Regulations 74, Revenue Act of 1928, as follows: “Joint ownership, joint investment in, and ownership of real and personal property not used in the operation of any trade or business and not covered by any partnership agreement, does not constitute a partnership. Co-owners of oil lands engaged in developing the property through a common agent are not necessarily partners.”
In E. A. Landreth Co. v. Commissioner, 11 B. T. A. 1, the Board of Tax Appeals held that the agreement under which funds were secured by the owner of an oil lease for the development of property was a joint adventure and not an association.
In Myers, Long & Co. v. Commissioner, 14 B. T. A. 460, it was held that persons associating themselves for the ctevelopment of oil and gas lands without definite organization did not constitute a corporation within the meaning of section 1 of the Revenue Act of 1918 (40 Stat. 1057), and section 2 of the Revenue Acts of 1921 (42 Stat. 227) and 1924 (43 Stat. 253, 26 USCA 1262) but were joint adventurers and must be taxed as individuals. Similar ruling was made in Royal Syndicate v. Commissioner, 20 B. T. A. 255. In Sugg v. Hopkins (C. C. A.) 11 F.(2d) 517, it was held that there was no partnership for the handling of 10,000 sheep jointly owned. In McCausey v. Bumet, 60 App. D. C. 201, 50 F.(2d) 491, a syndicate to purchase baifk stock was held to be a joint adventure and not an association.
These cases indicate that there are some joint adventures which are not associations within the meaning of the revenue law, but they are far from sustaining the proposition that all joint adventures are not taxable as associations. Every association of individuals, whether a partnership or corporation or syndicate, is in a broad sense a joint adventure, although not strictly such within the meaning of that term as usually employed in text-books and judicial opinions. In determining whether or not a joint adventure is taxable as an association, we must look to the nature of the business and character of the organization to determine whether or not it is taxable.
It is claimed by the appellant that the enterprise does not sufficiently resemble a corporation to justify being classed as a corporation. This is a mere restatement of the proposition that the organization under consideration is not an association within the meaning of the statute. We have recently had occasion to consider the question of whether or not a trust created for liquidation of the affairs of a corporation was an association within the meaning of the statute. Commissioner v. Atherton (C. C. A.) 50 F.(2d) 740. Our decision in that ease is cited as authority for the proposition that the organization in the case at bar is not taxable, because in legal effect it is a liquidating organization. An examination of the two trusts indicates clearly that there is a very definite distinction in the case at bar; the trust or syndicate or association was organized for the purchase and sale of a tract of land which was to' be improved for the purpose of rendering the land salable and augmenting the profits to be derived therefrom. In the trust under consideration in Commissioner v. Atherton, supra, the sole and only purpose of the trust was to convey to these trustees assets which eould no longer be profitably held by the public utility corporation in connection with its business as a public utility. Other differences can be readily ascertained by an examination of the decision in that ease.
Appellant cites in his brief a number of cases in whieh the Board of Tax Appeals has distinguished between an association and a joint adventure or partnership. We think it unnecessary to consider these cases separately, or determine their applicability to the case at bar. It is sufficient in that regard to call attention to a more recent decision of the Board of Tax Appeals in passing upon the taxability of a California subdivision real estate syndicate similar to that involved here. Sloan v. Commissioner (Prentice Hall Fed. Tax Serv., 1931, p. 1831) 24 B. T. A. 61. The trust was held to be an ‘association taxable under the internal revenue laws, and, in that connection, the Board of Tax Appeals stated: “ * * * The courts and this Board have uniformly held that a trust operating a business for profit is an association taxable as a corporation. * * ” Up to the date of the declaration of trust, only two, if any, of the beneficiaries herein were owners of any interest in the parcel of land. * * * Everything in the record indicates that the beneficiaries herein entered into a voluntary association for the purpose of acquiring, subdividing, improving and selling Dominguez Harbor Tract No. 2, with the expectation of realizing a.profit therefrom.”
Appellant contends that this latest decision of the Board of Tax Appeals is contrary to the current trend of the decisions of the Board and of the courts. It is sufficient to say that this opinion was deliberately arrived at, and represents the present view of the Board of Tax Appeals upon the exact question here involved.
We conclude that the association, or syndicate, organized for the purpose of subdividing the 90 acres of land in question, was an association within the meaning of the Revenue Law of 1928, doing business as such during the year 1928, and taxable as an association.
Judgment affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OAKES, Circuit Judge:
This appeal is yet another chapter in the litigation between the Board of Education of the City School District of New York City and what is now the Department of Education over the latter’s declaration of the former’s ineligibility for funds under the Emergency School Aid Act of 1972 (ESAA), 20 U.S.C. §§ 1601-1619 (current version at 20 U.S.C. §§ 3191-3207). In the ESAA I litigation, the Supreme Court, in affirming this court’s affirmance of the district court, held that discriminatory impact rather than discriminatory intent is the standard by which ineligibility under ESAA is to be measured because to treat as ineligible only those applicants who intend to perpetuate racial isolation would defeat the stated objective of ESAA, which is to end de facto as well as de jure segregation. The Supreme Court also held that a prima facie case of discriminatory impact may be made with a proper statistical study. The ESAA I cases sustained the Department of Health, Education, and Welfare’s (HEW’s) denial of a Board of Education ESAA assistance application that related to a grant of some $3.5 million for the fiscal year 1977-1978. Before instituting the ESAA I litigation, the Board did apply, pursuant to 20 U.S.C. § 1605(d)(1) (current version at 20 U.S.C. § 3196(c)(1)), for a waiver of HEW’s ineligibility determination. But the ESAA I litigation did not concern that application for a waiver, even though HEW had denied the application within approximately one month of the date the Board filed the ESAA I litigation.
HEW also denied the Board’s initial application, and the Board’s application for a waiver of ineligibility, for some $2.36 million in ESAA funds for the following fiscal year, 1978-1979. In connection with those denials, the Board filed the ESAA II litigation, in which the district court affirmed HEW’s finding of ineligibility but subsequently remanded the waiver application to HEW. The trial court’s remand was affirmed by a two-to-one panel majority of this court, with a petition for rehearing en banc denied. In ESAA II the panel majority of this court took the view that HEW’s approval of a voluntary plan to remedy discrimination in the school district could be sufficient to warrant issuance of a waiver; this court rejected HEW’s contention that its regulations forbade granting a waiver until the school district achieved the final teacher assignment goals in the remedial plan. Thus in ESAA II this court upheld the district court’s requirement that HEW issue a waiver upon a demonstration that the applicant has ceased its disqualifying activity and has provided acceptable assurances that such conduct will not reoccur. The court’s remand to HEW for a redetermination of the waiver application in connection with the 1978-1979 ESAA funds is still pending.
Encouraged by its success in ESAA II on the waiver application question with respect to fiscal 1978-1979, the Board filed this litigation, ESAA III, seeking to overturn the denial of its application for a waiver of HEW’s determination of ineligibility for fiscal year 1977-1978 funds — the ineligibility determination upheld in ESAA I. The United States District Court for the Eastern District of New York, Jack B. Weinstein, Judge, held for the Board of Education below, Board of Education v. Harris, 79 Civ. 3222 (E.D.N.Y. Feb. 21, 1980). Upon a trial on the merits under Federal Rule of Civil Procedure 65(a)(2), and upon the records in the earlier cases and in a related case, the district court granted the Board’s application for a declaration that HEW’s denial of the Board’s 1977-1978 fiscal year waiver application was improper and inconsistent with the governing federal statute. The court then remanded the waiver application for de novo consideration consistent with ESAA II, and ordered that the original approximately $3.5 million earmarked for the school district for the 1977-1978 fiscal year be preserved and set aside, pending reconsideration of the Board’s waiver application. We affirm.
DISCUSSION
On appeal the Department of Education makes two points. The first one, and a very simple one it is, is that this court erroneously decided ESAA II or, to put it euphemistically, that HEW’s denial of the Board’s application for a waiver for the 1978-1979 funds was not inconsistent with the statute. The answer to this contention is as simple as the point made. A panel of this court is bound by a previous panel’s opinion, until the decision is overruled en banc or by the Supreme Court. Although the author of this opinion dissented vehemently in ESAA II, he was unable to attract sufficient support from the active judges on the court of appeals for a rehearing en banc. Therefore, unless the Supreme Court grants certiorari and overturns ESAA II, that decision is the law of the circuit and we are bound to follow it. This does not mean that on remand, the Department of Education is bound by any factual determinations that it may make in the course of deciding the pending ESAA II remand concerning the Board’s application for a waiver for the 1978-1979 fiscal year funds. After all, the application for a waiver for 1977-1978 was made before the parties entered into the voluntary Memorandum of Understanding, which was the basis of the ESAA II litigation. But the principles of law stated by this court in ESAA II are binding, and under those principles neither the statute nor the regulations permit the denial of an application for a waiver on the ground that the effects of prior discrimination persist. Thus as a matter of law, the district court properly remanded to the Department of Education the Board’s application for a waiver for 1977-1978.
The second contention of the Department of Education is that the present action is barred by the final judgment in ESAA I — in other words, that as a matter of res judicata, the judgment sustaining the denial of the Board’s initial application for ESAA funds bars an action concerning the denial of the Board’s subsequent application for a waiver of the ineligibility determination. The question is whether the Board is merely asserting “a new ground for recovery,” see Brown v. Felsen, 442 U.S. 127, 133, 99 S.Ct. 2205, 2210, 60 L.Ed.2d 767 (1979). In this regard the Department of Education is correct that res judicata generally prevents litigation of “all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding,” id. at 131, 99 S.Ct. at 2209 (citing Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 378, 60 S.Ct. 317, 320, 84 L.Ed. 329 (1940)). The Department of Education argues that because the Board could readily have asserted in the ESAA I litigation the claim that its application for a waiver was improperly denied, it cannot now make that assertion. The heart of the Department of Education’s argument is the further contention that because ESAA I and this case involve the same funds, the claims for relief are necessarily the same.
In Herendeen v. Champion International Corp., 525 F.2d 130 (2d Cir. 1975), this court held that even though the same parties or their privies had been involved in a prior suit, there was not in that second suit the requisite identity of causes of action to call into play the doctrine of res judicata. We said in that diversity action that the proper criteria — most frequently cited by both this court and the New York courts — are
whether a different judgment in the second action would impair or destroy rights or interests established by the judgment entered in the first action, whether the same evidence is necessary to maintain the second cause of action as was required in the first, and whether the essential facts and issues in the second were present in the first.
Id. at 133-34 (footnotes omitted). The fact that the new cause of action could have been joined with the cause of action asserted in the earlier case was not found to be determinative. Id. at 135.
We think that the test outlined in Herendeen is applicable here. And applying that test to this case, we hold that res judicata does not bar litigation of HEW’s denial of the Board’s application for a waiver of ineligibility with respect to the 1977-1978 fiscal year funds. Congress has established two possible ways in which a school district can receive ESAA funds — by an initial application for the funds or by an application for a waiver of a denial of the initial application. See 20 U.S.C. § 1605(d)(1) (current version at 20 U.S.C. § 3196(c)(1)). In this case the Board is not seeking to redress the same injury that it sought to redress in ESAA I, which was the initial denial of the $3.5 million grant. Instead, the Board is seeking relief here from the denial of a waiver of that initial ineligibility determination. It is true that many of the same facts are in evidence in both cases, but the essence of ESAA I was the denial of the initial grant application, a denial based on a determination of ineligibility. The essence of the instant case, on the other hand, is the denial of the later-filed application for a waiver of ineligibility. A school district that is eligible for funds does not, of course, need a waiver; an applicant seeking a waiver concedes ineligibility for purposes of the waiver application. In these cases the finding of ineligibility based on discrimination turned on factors süch as the racial distribution of faculty among different schools in the district, see ESAA I litigation, while the determination whether to grant a waiver, at least under the ESAA II case, turns on factors such as the likelihood of faculty transfers meeting the goals set out in the Memorandum of Understanding and the good faith of the Board of Education in seeking to implement the remedial program embodied in that agreement.
The statutory scheme, as noted above, provides two distinct means of obtaining ESAA funds. As a matter of fair and equitable implementation of the law, it may be said that the sense of the statutory scheme is that a board of education should be permitted to litigate separately claims relating to denial of an initial application and claims relating to the denial of a waiver, see Restatement (Second) of Judgments § 61.2(l)(d) (Tent.Draft No. 5, 1978).
Judgment affirmed.
. Board of Educ. v. Harris, 444 U.S. 130, 100 S.Ct. 363, 62 L.Ed.2d 275 (1979), aff’g sub nom. Board of Educ. v. Califano, 584 F.2d 576 (2d Cir. 1978), aff’g 77 Civ. 1928 (E.D.N.Y. Apr. 18, 1978) (ESAA I).
. Id. at 151-52, 100 S.Ct. at 375.
. Board of Educ. v. Califano, 464 F.Supp. 1114 (E.D.N.Y. 1979) (ESAA II).
. Board of Educ. v. Harris, 622 F.2d 599 (2d Cir.), rehearing en banc denied, 622 F.2d 619 (2d Cir. 1979), cert. denied,-U.S.-, 101 S.Ct. 940, 67 L.Ed.2d 110 (1981) (ESAA II).
. Id. at 609-10.
. The district court considered the record in the related case of Caulfield v. Board of Educ., 486 F.Supp. 862 (E.D.N.Y. 1979), which was later affirmed, 632 F.2d 999 (2d Cir. 1980).
. 622 F.2d at 612.
. Note 1 supra.
. See notes 3 and 4 supra.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HEANEY, Circuit Judge.
The appellants, owners of land near the southern city limits of Sioux City, Iowa, challenge the district court’s grant of summary judgment to the defendant city and its council members in their action under the federal antitrust law, 15 U.S.C. §§ 1 and 2; the Civil Rights Act, 42 U.S.C. § 1983; and the Iowa Competition Law, Iowa Code Ann. § 553.4 (West Supp.1983). The city council passed zoning ordinances which allegedly prevented the appellants from commercially developing their land on the city’s periphery. The appellants allege the ordinances were the product of an agreement between the council and a downtown developer, Metro Center, Inc., to prevent competition with planned downtown redevelopment. The district court held that the city and its council were immune from antitrust liability under the state action doctrine; that the council members had absolute legislative immunity from the action brought under section 1983; and that the constitutional claims against the city were legally unsupportable. We affirm.
I.
BACKGROUND
Iowa passed an urban renewal law in 1957, Iowa Code Ann. §§ 403.1-403.20 (West 1976). The stated policy of that statute is to halt the physical decay of Iowa cities and the accompanying growth of urban social problems. The statute provides that each local government may formulate a workable program for using private and public resources to further urban renewal goals. Every city has the authority to prepare, adopt and revise from time to time a general plan for the physical development of the municipality as a whole. Section 403.6 delegates to every municipality the “powers necessary or convenient to carry out and effectuate the purposes and provisions of the urban renewal law,” id. at § 403.6, including the power to execute contracts for redevelopment, and to “zone or rezone any part of the public body,” id. at § 403.12(1).
Sioux City officials and businesses have been increasingly concerned with downtown development since the mid-1960’s. In 1964, a committee of downtown businesses and community leaders submitted a plan to the city council evaluating alternatives for maintaining a viable business climate in the city. The city council appointed a Central City Committee to formulate recommendations for orderly development of the central business district. The city applied for funds from the federal government to prepare a General Neighborhood Renewal Plan encompassing 215 acres and to plan a three-block total clearance project know as Central Business District-East (CBD-E). Eventually, the city acquired real estate in the CBD-E, offered it for redevelopment to private parties, and issued bonds for the construction of parking garages and other improvements. Meanwhile, an eleven-block area adjacent to the CBD-E was also targeted for redevelopment and designated the Central Business District-West (CBD-W). The city applied for federal assistance to survey and plan this area in 1966 but did not receive the funds until 1971. The city thereafter proceeded with active redevelopment of the CBD-W and entered into redevelopment agreements with a private developer, Metro Center, Inc., in February of 1974.
At the time the city council contracted with Metro Center, its president was Howard Weiner who had been a member of the Sioux City Council from January of 1973 to November 7, 1973. Weiner lost his bid for re-election to the city council and became president of Metro Center three weeks later. Metro Center submitted the sole bid to redevelop three parcels in the CBD-W. Its proposal included plans for a major hotel, department stores, a convention center and related commercial development. Under the redevelopment contract, the city was obligated to obtain federal grants for the CBD-W area, secure real estate, clear the property for redevelopment, and provide streets, sidewalks, street lights and other urban utilities. In return, Metro Center was obligated to purchase the property from the city, build the commercial facilities it had proposed, procure financing and secure tenants.
The appellants acquired their property along the southern limits of Sioux City in 1962. In 1966, the city annexed the property and apparently zoned it to permit commercial development. In May of 1974, soon after the city entered into the contract with Metro Center, the appellants sold 19 acres of this land to General Growth Properties, a real estate development company, for the development of a regional shopping center. The appellants retained approximately 70 acres of adjoining land which they allege they planned to develop commercially to take advantage of business drawn to the regional shopping center. As part of the purchase agreement, the appellants agreed to construct roads to facilitate the area development. When the transaction was complete, the parties publicly announced General Growth’s plans to develop a regional shopping center.
The prospect of a regional shopping center competing for commercial tenants with the downtown project concerned Weiner, the president of Metro Center. Weiner states in his deposition that he talked to council members about the importance of limiting commercial development outside the downtown and specifically about the threat posed by General Growth’s plan for a regional shopping center. On July 22, 1974, the city council enacted the Interim Development Ordinance which temporarily suspended unplanned development within the city pending the completion of the Plan and Zoning Commission’s comprehensive review of the general plan and zoning ordinance. The interim ordinance did not change any zoning classifications, but it restricted the issuance of building permits, approval of site plans in designated areas, and certain types of residential and commercial development.
In November, 1975, appellant Gene Scott requested a “preplat” conference with the planning department and an informal review of the proposed development of his property under the Interim Development Ordinance. The Community Development Director advised the council that the request was in conflict with the provisions and policy of the interim ordinance. On February 17, 1976, the city council granted a conditional variance for preparation of a grading plan only. Scott never applied for a building permit or variance under either the interim ordinance or the permanent ordinance enacted by the city council on August 2, 1976. The permanent ordinance also left appellants’ property with a zoning classification that does not allow for the development of a regional shopping center and other retail commercial developments.
The appellants filed their original complaint on January 19, 1979. The complaint alleged violations of the Sherman Act, 15 U.S.C. §§ 1 and 2, and was amended December 3, 1981 to allege a violation of the Civil Rights Act, 42 U.S.C. § 1983. The appellants contended that the city and its council members conspired with Weiner and Metro Center to prevent the appellants from developing their land around General Growth’s planned regional shopping center. On December 15, 1982, the district court rejected the defendants’ first motion for summary judgment holding that the state action immunity doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), did not shield the municipal defendants and that, in view of this Court’s decision in Westborough Mall v. City of Cape Girardeau, 693 F.2d 733 (8th Cir.1982), cert. denied, — U.S. —, 103 S.Ct. 2122, 77 L.Ed.2d 1303 (1983), appellants’ civil rights claim presented a question for the jury. On May 3, 1983, the court also denied a renewed motion for summary judgment in which the defendants contended that the Iowa Urban Renewal Law provided state authorization sufficient to trigger state action immunity. The court subsequently reconsidered that denial in light of our then-recent opinion, Gold Cross Ambulance & Transfer v. City of Kansas City, 705 F.2d 1005 (8th Cir.1983), cert. filed, 52 U.S.L.W. 3039 (1983), and granted the defendants’ summary judgment motion on June 17, 1983. This appeal followed.
II.
ANTITRUST CLAIMS
The initial issue in this case is whether the state action doctrine shields the municipal defendants from liability for violations of the federal antitrust laws.
A. State Action Doctrine.
The Supreme Court established state action immunity from the federal antitrust laws in Parker v. Brown, supra, 317 U.S. at 350-351, 63 S.Ct. at 313. It held a California marketing program enacted by the state legislature was exempt from challenge under the Sherman Act because the program “derived its authority from the legislative command of the state.” Id. at 350, 63 S.Ct. at 313. Because neither the Sherman Act itself nor its history suggested an intent to restrain state legislative action, the Court declined to extend the reach of antitrust liability to include such action:
In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state’s control over its officers and agents is not lightly to be attributed to Congress.
Id. at 350-351, 63 S.Ct. at 313.
The Supreme Court has since had occasion to address the question of whether, and under what circumstances, state action immunity is available to a state’s municipalities. In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978), a plurality of four Justices rejected the claim that the state action doctrine extends to “all governmental entities, whether state agencies or subdivisions of the state * * * simply by reason of their status as such.” Id. at 408, 98 S.Ct. at 1134. The Court emphasized that cities have not historically been treated as the equivalent of states and that serious economic dislocation could result if cities were free to place their own parochial interests above the national economic goals reflected in the antitrust laws. Id. at 412-413, 98 S.Ct. at 1136. The Justices nonetheless acknowledged that a state may choose to effectuate its policies through the instrumentality of its municipalities. Thus, the Parker doctrine would exempt from the ambit of antitrust liability municipal anticompetitive conduct engaged in “pursuant to state policy to displace competition with regulation or monopoly service.” Id. The state policy relied on would have to be “clearly articulated and affirmatively expressed.” Id. at 410, 98 S.Ct. at 1135. This does not mean the municipality must be able to point to a specific, detailed legislative authorization; rather, an adequate state mandate exists when the authority given to the municipality to operate in a certain area indicates “that the legislature contemplated the kind of action complained of.” Id. at 415, 98 S.Ct. at 1138.
In Community Communications Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), the Court held that a state’s general grant of extensive powers of self-government, or “home rule,” to its municipalities does not provide specific enough state authorization to trigger state action immunity. Boulder had passed an ordinance prohibiting a cable television company from expanding its business in the city. Boulder claimed state action immunity because of its status as a home rule municipality. The Supreme Court disagreed, stating “the requirement of ‘clear articulation and affirmative expression’ is not satisfied when the state’s position is one of mere neutrality respecting the municipal actions complained of as anticompetitive.” Id. at 55, 102 S.Ct. at 843 (emphasis in original). A legislature cannot be said to have contemplated specific conduct if it allows a municipality to do what it pleases. See id.
This Circuit has had the opportunity to address the state authorization aspect of state action immunity in eases where a specific state statute engendered the challenged city actions. In Gold Cross Ambulance & Transfer v. City of Kansas City, supra, 705 F.2d at 1015, we held that Missouri’s comprehensive statutory scheme regulating ambulance service in the state authorized the single-operator ambulance system adopted by Kansas City. In Central Iowa Refuse Systems, Inc. v. Des Moines Metro Solid Waste Agency, 715 F.2d 419 (8th Cir.), cert. filed, 52 U.S.L.W. 3441 (1983), a private solid waste disposal facility challenged a city agency’s requirement that all solid waste generated in its jurisdiction be disposed of at its own facilities. We held state authorization for such activity could be implied from an Iowa statute which encouraged the construction of sanitary landfills by local governments and contemplated that revenue bonds would finance joint undertakings by cities and counties to provide common disposal facilities. Id. at 425-427.
These cases analyzed the state action immunity issue in two steps: First, the state legislature must have authorized the challenged municipal activity. Second, the legislature must have intended to displace competition. Gold Cross Ambulance & Transfer v. City of Kansas City, supra, 705 F.2d at 1101; Central Iowa Refuse Systems, Inc. v. Des Moines Metro Solid Waste Agency, supra, 715 F.2d at 425. See also, Areeda, Antitrust Law ¶ 212.3a at 53 (Supp.1982). Reasoning from the language in City of Lafayette v. Louisiana Power & Light Co., supra, 435 U.S. at 415, 98 S.Ct. at 1138, which states that the necessary legislative intent exists where “the legislature contemplated the kind of action complained of,” we held the state policy to displace competition can be inferred “if the challenged restraint is a necessary and reasonable consequence of engaging in the authorized activity.” Gold Cross Ambulance & Transfer v. City of Kansas City, supra, 705 F.2d at 1013; see Central Iowa Refuse Systems, Inc. v. Des Moines Metro Solid Waste Agency, supra, 715 F.2d at 427; Areeda, Antitrust Immunity for “State Action” After Lafayette, 95 Harv.L.Rev. 435, 446 (1981).
B. The State’s Authorization.
To determine whether the state authorized the acts complained of we must first determine what those acts are. The appellants specifically challenge the council’s passage of the ordinances which prevented them from commercially developing their land. They also challenge the council’s dealings with Metro Center prior to the passage of the ordinances. Thus, the first question is whether the Iowa Urban Renewal Law authorized both zoning in furtherance of urban renewal goals and the relationship between the city and Metro Center complained of here.
The Iowa Urban Renewal Law gives both general and specific authorization for a municipality’s use of zoning power to further the policy of urban renewal. Two extremely broad grants of power are contained in the statute. Section 403.6 begins with the statement that “[e]very municipality shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this chapter.” Iowa Code Ann. § 403.6 (West 1976). Section 403.12 echoes this broad authorization giving local public bodies the powers to do “any and all things necessary to aid or cooperate in the planning or carrying out of an urban renewal project.” Id. § 403.-12(l)(c). The specific powers granted to municipalities for urban renewal include the power to zone or rezone any part of the municipality or public body. Id. §§ 403.6(8) & 403.12(l)(h).
The appellants argue the city’s power to zone to further its urban renewal plan is limited to those areas that have been designated for redevelopment. The breadth of the grant of power contained in these provisions, together with the language authorizing zoning or rezoning of any part of the municipality or public body, belies any such limitation in the state’s authorization. Thus, the urban renewal law clearly authorized Sioux City to zone outlying areas of the city to protect urban renewal goals.
Iowa’s urban renewal law also authorizes municipalities to contract with private developers for the commercial redevelopment of a designated urban renewal area. The municipality may acquire real estate in a designated area. Id. §§ 403.6(3) & 403.7. That property may then be sold, leased or otherwise transferred to private companies to be developed for, among other things, commercial uses. Id. § 403.8(1). The private purchasers are obligated to devote the property to uses specified in the overall urban renewal plan and other public interest requirements determined by the municipality. Id. The municipality furnishes roads, public utilities, and other public improvements for the urban renewal project. Id. § 403.6(2). Thus, Iowa law authorized the contract between the Sioux City Council and Metro Center and also, presumably, their preliminary dealings together as contracting parties.
The more difficult question is whether the Iowa Legislature intended to sanction the specific zoning ordinances complained of here. The district court, following our opinion in Gold Cross Ambulance, held that because Sioux City’s zoning was a necessary and reasonable consequence of engaging in the authorized urban renewal activity, the intent element was satisfied. The court found the city’s ordinances were necessary to protect its investment in its downtown development. The court further found that the ordinances were not an unreasonable consequence of the state’s goal of promoting urban redevelopment combined with the broad authority vested in the municipalities to accomplish this goal.
We agree with the district court that the importance the Iowa Legislature placed on urban renewal, and the broad powers it gave to municipalities to address the problem, support a finding that the legislature contemplated the type of zoning ordinances passed by Sioux City. The Iowa Legislature considered the decay of its urban areas a serious threat to the economic, social and physical welfare of state residents. It noted that the existence of slum and blighted areas contributes to the spread of disease and crime, reduces tax revenues, impairs the growth of municipalities and retards the provision of housing accommodations. Id. § 403.2(1). To combat this “growing menace,” the legislature empowered municipalities not only to zone, inspect, and regulate private real estate, but to do all things necessary to assure the success of their urban renewal projects. The legislature’s deep concern and broad delegation of power contributes to our finding that it contemplated the challenged zoning.
A more compelling reason to find the necessary legislative intent, however, is that the legislature has put municipalities in the position of partially financing commercial development. The Iowa Urban Renewal Law allows cities to raise a substantial amount of money for their urban renewal ventures through federal and local government loans, tax levies and the issuance of bonds. Id. §§ 403.6(5), 403.6(8) & 403.9. The district court found Sioux City had raised approximately $30 million in public financing to support its urban renewal project.
We can assume that the state legislature appreciated the harsh economic realities faced by the city that undertakes such a project. In Central Iowa Refuse Systems, Inc. v. Des Moines Metro Solid Waste Agency, supra, 715 F.2d at 427, this Court held the Iowa Legislature contemplated a monopoly by a metropolitan solid waste facility when it authorized the financing of such facilities by revenue bonds. “When ascertaining what was in the minds of the legislators, we cannot ignore the realities of the municipal bond market in the mid 1970’s. The legislature surely realized the importance of assuring a source of repayment in order to make the bonds marketable.” Id.
Similarly, here, the state legislature must have anticipated that once a municipality became financially and legally committed to commercial development in urban areas, it would use its delegated powers, including the power to zone and rezone, to protect that commitment. Consultants to the Sioux City Council advised discouraging shopping centers in favor of the downtown because dispersing major retailing facilities among several locations in a market of Sioux City’s scale would reduce the chances of success for the downtown project. The challenged ordinances were thus a reasonable and necessary' consequence of the city’s role in implementing state urban renewal goals.
In sum, we hold the Sioux City ordinances meet both prongs of the state action immunity test as stated in Gold Cross Ambulance: First, the Iowa Legislature, in both general and specific provisions of the Iowa Urban Renewal Law, authorized the challenged activities — zoning to protect urban renewal goals and the relationship between the city and Metro Center. Second, the legislature contemplated that municipalities might enact the type of ordinances enacted by Sioux City. We base this latter conclusion on the belief that the city’s zoning action is the necessary and reasonable consequence of allowing municipalities to join in downtown redevelopment projects with private commercial developers and to invest substantial sums of public money in such projects.
The district court also-properly concluded that the state action doctrine did not require the state to actively supervise the challenged restraint. The Supreme Court has required active state supervision in those cases where it has extended state action immunity to private entities or individuals. See, e.g., California Retail Liquor Dealers Association v. Midcal Aluminum, Inc., 445 U.S. 97, 99,100 S.Ct. 937, 940, 63 L.Ed.2d 233 (1980); Cantor v. Detroit Edison Co., 428 U.S. 579, 582, 96 S.Ct. 3110, 3113, 49 L.Ed.2d 1141 (1976). In Gold Cross Ambulance & Transfer v. City of Kansas City, supra, 705 F.2d at 1014, we held, however, that the state supervision requirement is not applicable to municipal officials. Unlike private parties, municipal officials are accountable for their decisions to the citizens they represent. State supervision is therefore less necessary to prevent abuse of power. Moreover, while the state authorization requirement for municipal decisions tests whether the challenged local activity is truly state action, the state supervision requirement serves that function for private conduct. Id.
The appellants argue that, after Gold Cross Ambulance, state supervision is still applicable when a municipality is engaged in conduct outside the scope of traditional governmental functions. We need not reach this issue because we agree with the district court that zoning for urban renewal purposes is a traditional governmental function designed to protect public health and safety. The mere investment of public funds does not make a project proprietary rather than governmental. See Central Iowa Refuse Systems, Inc. v. Des Moines Metro Solid Waste Agency, supra, 715 F.2d at 428. We thus conclude active state supervision of Sioux City’s urban renewal projects and attendant zoning decisions was not necessary to shield Sioux City and its officials from antitrust liability in this case.
C. Acts Outside the State’s Authorization.
Our holding that the Iowa Urban Renewal Law provides a clear and affirmative expression of a state policy favoring Sioux City’s action does not end our inquiry. The appellants assert the city council acted outside the state authorization and thus its actions cannot be shielded from antitrust liability. They allege that the city’s zoning decision was the product of an anticompetitive “conspiracy” between the city and Metro Center rather than urban renewal policy. They further allege that because the city council did not follow the procedures outlined in the urban renewal statute for amending the plan when it passed the challenged ordinances, it forfeited state authorization.
A city council could conceivably violate the antitrust laws by entering into an agreement with a private developer to restrain trade. See Westborough Mall v. City of Cape Girardeau, supra, 693 F.2d at 746; Mason City Center Association v. City of Mason City, 671 F.2d 1146, 1149 (8th Cir.1982); Whitworth v. Perkins, 559 F.2d 378, 381 (5th Cir.1977), vacated on other grounds, 435 U.S. 992, 98 S.Ct. 1642, 56 L.Ed.2d 81 (1978); Areeda, Antitrust Law, supra, H 203.3 at 12-13. In this case, however, the appellants have alleged no actions which appear outside the ambit of the city’s antitrust immunity.
As previously stated, the city is immune from antitrust liability for passage of the interim and permanent ordinances. The appellants nonetheless intimate that the city should be subject to antitrust liability because Metro Center urged the council members to pass the ordinances. We reject this contention. Antitrust immunity is meaningless in this context unless it extends to the council’s proper dealings with Metro Center prior to the council’s official zoning action. The Iowa Urban Renewal Law authorized Sioux City’s joint endeavor with Metro Center to redevelop the city’s decaying commercial district. Metro Center thus had legitimate reason to discuss with council members the effect a regional shopping center would have on their joint project. Since the state has authorized both the business relationship between the city and Metro Center and the city’s zoning actions, it is clear that Metro Center’s proper dealings with the council fall within the ambit of antitrust immunity.
The appellants point to the relationship between the president of Metro Center, Howard Weiner, and some of the city council members as proof of an anticompetitive agreement. Weiner was on the city council just prior to becoming president of Metro Center. Metro Center submitted the sole bid to redevelop CBD-W while Weiner was on the council. Weiner states in his deposition that he had close personal friendships with at least five of Sioux City’s council members. He talked to these and other members of the council about General Growth’s plans for a regional shopping center and urged the council to take preemptive action. Based on his deposition, there is no doubt Weiner used his best efforts to get the council to pass the ordinances favoring the downtown project.
Without the broad grant of immunity in this case, Weiner’s activities may have preserved the conspiracy question for the jury. In Westborough Mall v. City of Cape Girardeau, supra, 693 F.2d at 746, we stated that “a conspiracy to thwart normal zoning procedures and to directly injure the plaintiffs by illegally depriving them of their property is not in furtherance of any clearly articulated state policy.” In that case, however, we did not have specific legislative authorization of the acts complained of and the requisite legislative intent. We do not think Sioux City should be deprived of immunity simply because Weiner knew some of the council members and perhaps talked to them personally about factors important to the success of the downtown project. The purpose of state action immunity is to allow states and municipalities with state authorization to pursue health and welfare goals without threat of antitrust liability. That purpose would be frustrated in this case if the mere label “conspiracy” were enough to warrant an antitrust trial. The appellants do not allege that the council members were involved in bribery or other illegal acts. We thus conclude the appellants’ allegations do not remove the municipal defendants from the ambit of antitrust immunity.
Neither do we find the appellants’ allegation that the city departed from the state mandated procedures in passing the challenged ordinances adequate grounds for stripping the city of immunity. The city’s departure from state procedural requisites would have to be extreme to warrant the threat of antitrust liability. State authorization for antitrust purposes does not re quire administrative decisions that are free from ordinary errors. As a commentator recently noted:
The Lafayette authorization requirement should not be manipulated in such a way as to thwart the fundamental Parker policy against antitrust scrutiny of state action. The antitrust court should require no more than that the result of the agency’s.act or decision was of the sort contemplated by state anticompetitive policy. “Ordinary” errors or abuses in the administration of jurisdiction conferred by the state should be left for state tribunals to review.
Areeda, Antitrust Law, supra, ¶ 212.3b at 57.
Here, the appellants apparently allege the city did not amend its general urban renewal plan before enacting the ordinances. We do not view this error to be of a magnitude that necessitates abrogating the city’s antitrust immunity.
In sum, we do not believe a material issue of fact exists as to whether the city acted outside the state’s authorization for antitrust purposes either in its dealings with Metro Center prior to passing the challenged ordinances or in the procedures followed to enact them. We therefore affirm the district court’s grant of summary judgment to the municipal defendants on appellants’ antitrust claims.
III.
CONSTITUTIONAL CLAIMS
The district court also granted the municipal defendants summary judgment on the appellants’ constitutional causes of action brought under 42 U.S.C. § 1983. The appellants’ broadly worded complaint alleges that the city’s zoning action deprived them of equal protection, substantive due process, procedural due process, and constituted a taking without just compensation. The district court rejected the appellants’ constitutional claims and also held that the city council members had absolute legislative immunity. Because we agree that the appellants’ constitutional claims are merit-less, we affirm on that basis and do not address the legislative immunity issue.
The appellants claim they were denied substantive due process because the city’s ordinances denied them the right to use their property in accordance with the zoning classification in effect when they made their initial plans to commercially develop the property. We agree with the district court that the ordinances do not infringe on any fundamental rights. Thus, the ordinances survive a substantive due process challenge if they were designed to accomplish an objective within the government’s police power, and if a rational relationship existed between the provisions and purpose of the ordinances. Gold Cross Ambulance & Transfer v. City of Kansas City, supra, 705 F.2d at 1015. A finding that the ordinances had a rational basis also defeats the appellants’ equal protection claim.
As explained in the antitrust section of this opinion, the city designed the interim and permanent ordinances to further its urban renewal goals. The state’s urban renewal law clearly placed this objective within the city’s power. Moreover, the ordinances were rationally related to the goal of urban renewal. The city had already made a substantial investment in revitalizing its downtown commercial district. It had good reason to believe the investment would fail if competing regional shopping centers siphoned off the market. Because the city had a rational basis for passing the challenged ordinances, we hold summary judgment was proper on the appellants’ substantive due process and equal protection claims.
The appellants’ procedural due process claim must also fail. To sustain a procedural due process claim, the appellants must first establish that they possessed “a legitimate claim of entitlement” to the zoning and building permits which would allow commercial development of their land. Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). This entitlement could be based upon state or local law or upon an express contract or mutual understanding with the defendants. See id. at 577-578, 92 S.Ct. at 2709; Perry v. Sindermann, 408 U.S. 593, 600-603, 92 S.Ct. 2694, 2699-700, 33 L.Ed.2d 570 (1972); Brockell v. Norton, 688 F.2d 588, 590-591 (8th Cir.1982). For example, under Iowa vested rights law, the appellants might have acquired a property right in the use of their commercial zoning if they made legitimate and valuable expenditures before passage of the ordinance on the assumption the land would retain its commercial zoning. See Nemmers v. City of Dubuque, 716 F.2d 1194, 1197-1198 (8th Cir.1983). Application for a building permit at a time when commercial development was permissible under the applicable ordinances might also have created a claim of entitlement sufficient to trigger due process guarantees. See Scott v. Greenville County, 716 F.2d 1409, 1418 (4th Cir.1982) (applying South Carolina law). Here, however, appellants do not allege they had applied for any building permits or made any appreciable expenditures before the interim ordinance was passed. Without a legitimate claim of entitlement, the appellants’ procedural due process claim fails.
Similarly, the appellants’ taking claim is without merit. The city’s action did not confiscate the appellants’ property, it merely diminished the land’s value. Diminution in value, standing alone, does not establish a “taking.” See, e.g., Penn Central Transportation Co. v. New York City, 438 U.S. 104, 131, 98 S.Ct. 2646, 2662, 57 L.Ed.2d 631 (1978); Euclid v. Ambler Realty Co., 272 U.S. 365, 47 S.Ct. 114, 71 L.Ed. 303 (1926). Appellants allege no facts which would take their claims outside this general rule.
In sum, we affirm the district court’s grant of summary judgment on the appellants’ section 1983 claims.
IV.
CONCLUSION
We agree with the district court that under this Circuit’s precedents, Sioux City is shielded from antitrust liability. The state legislature authorized municipalities to invest public money in joint ventures with private developers to renew decaying urban areas. The legislature delegated to the municipalities general and specific powers to do all things necessary, including zoning and rezoning all parts of the municipality, to assist and protect these urban renewal projects. In our view, Sioux City’s ordinances protecting the downtown commercial district are a reasonable and necessary consequence of the state’s authorization. Furthermore, because the Iowa Urban Renewal Law also authorized the council’s dealings with Metro Center prior to passage of the ordinance, they are also accorded antitrust immunity. Finally, we also affirm the district court’s grant of summary judgment on the appellants’ section 1983 action.
. Metro Center is a named defendant in this case, but is not a party to this appeal.
. The district court granted summary judgment on all claims, apparently including the actions brought under the Iowa Competition Law. The appellants do not specifically challenge the dismissal of the state claim, rather they contend the district court erred in holding the state action doctrine was applicable here.
. Other Supreme Court decisions have further refined the Parker state action doctrine. E.g., Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976); Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975).
. This standard has since been adopted by a majority of the Court. Community Communications Co. v. City of Boulder, 455 U.S. 40, 50-51, 102 S.Ct. 835, 840-41, 70 L.Ed.2d 810 (1982).
. Section 403.6 enumerates the powers delegated to municipalities. Iowa Code Ann. § 403.6 (West 1976). Section 403.12 enumerates the powers granted to public bodies, id. § 403.12, which includes political subdivisions of the state, id. § 403.17(3). Thus, the powers included in both sections are delegated to the state’s municipalities, although section 403.6 specifically addresses municipalities.
. Iowa Code Ann. § 403.2 (West 1976) provides in pertinent part:
1. It is hereby found and declared that there exists in municipalities of the state slum and blighted areas, as herein defined, which constitute a serious and growing menace, injurious to the public health, safety, morals and welfare of the residents of the state; that the existence of such areas contributes substantially and increasingly to the spread of disease and crime, constitutes an economic and social liability imposing onerous municipal burdens which decrease the tax base and reduce tax revenues, substantially impairs or arrests the sound growth of municipalities, retards the provision of housing accommodations, aggravates traffic problems and substantially impairs or arrests the elimination of traffic hazards and the improvement of traffic facilities; and that the prevention and elimination of slums and bligfited areas is a matter of state policy and state concern * * *.
. In addition to the general grant of all powers "necessary or convenient to carry out and effectuate the purposes and provisions of this chapter," section 403.6 specifically empowers municipalities, among other things, to carry out urban renewal projects; to make and execute contracts; to disseminate slum clearance information; to contract for the repair and furnishing of all services and facilities for or in connection with an urban renewal project; to acquire any real or personal property for administrative purposes and to hold, improve, clear or prepare such property for development; to encumber or dispose of any real property; to invest urban renewal project funds; to obtain money from the federal, state or county government; to make all necessary surveys and planning; to plan for the relocation of people and businesses; to appropriate funds; to levy taxes; to zone and rezone any part of the municipality; to sell and convey real property. Iowa Code Ann. § 403.6 (West 1976).
. Scott v. City of Sioux City, C79-4009, slip op. at 11 (W.D.Iowa April 4, 1983) (order for final pretrial conference).
. Because we find state action immunity shields the defendants in this case, we need not discuss possible immunity under the Noerr-Pennington doctrine. See United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); Eastern Railroad Presidents v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961).
. The appellants contend the ordinances infringed on their fundamental right to receive just compensation for a taking. We think that the appellants' taking claim should stand or fall on its own merit, rather than serve as a back door for other constitutional challenges.
. The appellants question whether the city’s proffered rationale is the real reason the city passed the ordinance. As long as a rational basis exists, however, it need not be the real reason for the governmental action to satisfy substantive due process. See, e.g., Williamson v. Lee Optical Co., 348 U.S. 483, 490, 75 S.Ct. 461, 465, 99 L.Ed. 563 (1955).
.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
O’SULLIVAN, Circuit Judge.
On October 26, 1962, plaintiff-appellant, Martin Fass, was fired from his job as an aeronautical engineer for the Aeronautical Systems Division (ASD), a division of the Air Force Systems Command, located at Wright-Patterson Air Force Base, Ohio. Following review of his dismissal and denial of reinstatement by various administrative agencies, which we detail below, appellant brought suit in the United States District Court for the Southern District of Ohio, Western Division. His complaint sought reinstatement with back pay; the named defendants were military officers and officials of the agencies who ordered and reviewed plaintiff’s dismissal. The District Judge granted the defendants’ motion for summary judgment, dismissing the complaint. Plaintiff appealed to this Court. We affirm.
By letter dated September 18, 1962, plaintiff received a six and one-half page, single-spaced “Notice of Proposed Dismissal” from the chief officer of one of ASD’s engineering branches, charging that his work was inefficient: in particular, various reports he had submitted were technically incorrect, deviated from the scope of the assignments given to him, and had taken an excessive amount of time to prepare. He was also charged with displaying an improper job attitude in his approach to the tasks required of him and in his relationship with his superiors. These deficiencies were supported by illustrations setting out the standards applicable to plaintiff’s work and his departures therefrom. Plaintiff responded to the “Notice” in a 41 page letter, but upon determination that his reply did not adequately refute the charges made against him, he was dismissed from his employment on October 26, 1962.
Under Department of Air Force regulations, plaintiff had a right, which he exercised, to appeal his removal to the Commander of ASD. To facilitate this appeal an Ad Hoc Committee was established to hear testimony and receive exhibits pertinent to the charges made against plaintiff, and to advise the Commander accordingly of the evidence which supported or did not support them. After the Committee conducted its hearing it submitted its findings of fact to Major General R. G. Ruegg, Commander of ASD, who sustained the removal.
Since plaintiff was a veteran, he was entitled to appeal the Commander’s decision to the Chicago Regional Office of the United States Civil Service Commission (CSC). 5 U.S.C.A. § 863. This led to another hearing in Dayton, Ohio, on June 26, 1963, conducted by a representative of the Chicago Regional Office; once again the dismissal was sustained. Plaintiff next appealed to the CSC’s Board of Appeals and Review in Washington, D. C., which held in an opinion issued on January 23, 1964, that “Mr. Fass’s removal was procedurally adequate and for such cause as will promote the efficiency of the service.”
Plaintiff then brought suit in the District Court, urging various inadequacies in the above administrative proceedings and seeking reinstatement in his job with back pay. The District Judge noted that he could not consider the merits leading to plaintiff’s dismissal, found that the required procedural steps in the previous reviews of plaintiff’s removal had been complied with, and awarded summary judgment to the government.
Preliminarily, we advise our agreement with the District Judge’s statement of the limited role the courts are to play in cases where individuals dismissed from federal employment seek judicial review of their severance. Our recent decision in Baum v. Zuckert, 342 F.2d 145 (CA6, 1965), had to do with a suit by a discharged employee of the Air Force seeking reinstatement. The Civil Service Commission, as here, had upheld the discharge. Judge Phillips, speaking for this Court, took occasion to say;
“The function of a reviewing court in cases involving the discharge of civil service employees is a limited one. Powell v. Brannan, 91 U.S.App.D.C. 16, 196 F.2d 871, 873. The judicial function is to determine whether there has been substantial compliance with applicable procedures and statutes, and not to review the administrative determination as to the wisdom or good judgment of the agency in exercising its discretion. Hargett v. Summerfield, 100 U.S.App.D.C. 85, 243 F.2d 29, 32, cert. denied, 353 U.S. 970, 77 S.Ct. 1060, 1 L.Ed.2d 1137. The courts will not examine into the merits of the dismissal. Ellis v. Mueller, 108 U.S.App.D.C. 174, 280 F.2d 722, cert. denied, 364 U.S. 883, 81 S.Ct. 172, 5 L.Ed.2d 104; Green v. Baughman, 100 U.S.App.D.C. 187, 243 F.2d 610, 613, cert. denied, 355 U.S. 819, 78 S.Ct. 25, 2 L.Ed.2d 35.” 342 F.2d at 147.
We may not, therefore, pass on plaintiff’s claim before us that certain findings by the Ad Hoc Committee were not justified by the evidence, that plaintiff’s reports were accurately prepared and pertinent to the assignments given him, and that his “improper job attitude” was attributed to him by a jealous and biased supervisor. These declarations were all presented before the various administrative agencies, and were not persuasive enough to offset the testimony and documents, adverse to plaintiff, presented at the hearings. Similarly, we cannot consider the alleged error in the proceedings before the Ad Hoc Committee caused by the refusal to allow plaintiff to inquire into his supervisor’s supposed dislike for him. The development of the evidence before the Committee, which dealt mainly with the merits and deficiencies of the accused reports, was strictly within the discretion of the Committee’s chairman.
We turn consequently, to an examination of plaintiff’s allegations of procedural inadequacies at the different administrative levels. Plaintiff claims, initially, that the charges made against him in the “Notice of Proposed Dismissal” were not specific enough to provide an opportunity for him to respond to them. Air Force Manual (AFM) 40-1, chap. AF S-1.4, fl 4(c) does indeed require that when steps are taken to remove an employee, the statement of reasons underlying such action must be specific and detailed. But this requirement was met. The “Notice” sent to plaintiff consisted of six and one-half single-spaced typewritten pages, declaring precisely what had been required of plaintiff in his job, how he failed to meet his assigned tasks, and how errors in his past performances had been called to his attention. The document was replete with examples drawn from plaintiff’s work product which evidenced his deficiencies in one respect or another, and indicated that his job attitude — his unwillingness to cooperate with others, his refusal to carry out the assignments given him — compounded his employment. difficulties. Plaintiff, we believe, was; afforded fair notice of what he had to meet.
Plaintiff argues also that he was unable to reply properly to the “Notice” because he could not obtain an affidavit supporting his position from a John Cole, a physicist serving in a branch of ASD. The “Notice” did allow plaintiff to submit such documents. Allegedly, Cole was contacted by plaintiff’s supervisor who informed him that an action was pending against plaintiff; and Cole subsequently told plaintiff when the latter came to see him in late September, 1962, that he would only comment upon the merits of the accused reports through channels. Cole later asserted that plaintiff never asked him for an affidavit, but admitted he would not give plaintiff his views on plaintiff’s work at that time. Cole did testify, however, on behalf of plaintiff at the Ad Hoc Committee hearing. He recited that Pass’s reports were in his opinion acceptable in some respects, and was critical of them in others. We cannot say that the failure of plaintiff to obtain an affidavit from Cole prior to filing a reply to the “Notice” jeopardized his procedural rights in any meaningful way. Plaintiff had the right to seek affidavits to implement his reply, but it does not follow that Cole’s refusal to give him one, even though such refusal may have been instigated by a superior, in any way impaired the validity of the proceedings.
Plaintiff next asserts that the Commanding Officer of Wright-Patterson Air Force Base did not review the findings and procedures of the Ad Hoc Committee’s hearing. That is true, but the Commander of Wright-Patterson was not the relevant party who was to pass on the merits of plaintiff’s dismissal, as required by AFM 40-1, chap. A-12, § 5, t[ 6. ASD is a division of the Air Force Systems Command, headed by Major General R. G. Ruegg; and though a tenant of Wright-Patterson, ASD is not under the jurisdiction of Wright-Patterson’s base commander. In prosecuting an appeal in such situation,
“ * * * the [Ad Hoc] committee will prepare a complete record of the matter and will submit the original to the commander * * *. When civilian personnel services are furnished tenant or off-base activities, of the same or different command, not under the jurisdiction of the commander, the record will be forwarded to the commander through the service commander.” AFM 40-1, chap. A-12, § 5, IT 5.
In this case, the record, including the Ad Hoc Committee’s findings of fact, was forwarded to Major General Ruegg, who sustained the decision of removal.
On June 26, 1963, the day that the representative of the Chicago Regional Office conducted plaintiff’s second hearing, plaintiff was shown — but not given — a copy of the “Analysis of Issues” in his case. Air Force Regulations (AF M, 40-1, chap. A-2, § 2, f[ 11) state that such an analysis is included in the complete appellate record, “pertinent parts” of which are to be furnished a discharged employee who is prosecuting an appeal. Plaintiff argues that the failure to give him the “Analysis” before the hearing date prejudiced him, because he did not know what additional evidence he would have to produce to meet the specifications the “Analysis” contained. The regulations themselves are unclear, because of certain typographical errors, as to just what the “pertinent parts” of a record are that are to be given an employee; but Air Force Civilian Personnel letter 1-63, dated January 25, 1963, was circulated to clear up any confusion in the matter. The letter indicates that' a discharged employee, seeking reinstatement, is entitled to a transcript of the (Ad Hoc Committee) hearing and exhibits introduced thereat, and a copy of the hearing committee’s findings of fact as an inclbsure to the commander’s decision. Plaintiff received these items, and we consider that they constituted the “pertinent parts” of the record, as defined by the Air Force regulations.
Plaintiff further contends that the proceedings before the Chicago Regional Office repesentative were deficient in two other respects- — first, because the representative did not consider additional exhibits introduced before him and commented upon in subsequent briefs of plaintiff. The opinion of the Chicago Regional Office, however, fairly read, indicated that such new evidence was reviewed but found not to add anything of significance to what had already been adduced before the Ad Hoc Committee.
Second, plaintiff submits that the Chicago Regional Office of the Civil Service Commission erroneously limited the scope of its review. This is portrayed by the following recital in the final decision of the Board of Appeals and Review:
“The Chicago Regional Office obtained a copy of the agency’s first level appellate record, conducted a personal investigation, conducted a personal hearing, and received from representatives of both sides briefs and reply briefs with additional exhibits. Upon the record, thus assembled, the Regional Office decided to restrict its appellate review to the situation as it existed on the date of the removal. Apparently this was done on the erroneous assumption that the procedures of the agency’s first-level appellate review and the results of that review were not for consideration on appeal to the Commission.”
The Board of Appeals, however, proceeded to review the entire administrative record, including the area not fully examined by the Civil Service Commission’s Chicago Regional Office, saying “The Board of Appeals and Review has fully considered the appellate record as developed in the Chicago Region and as augmented by your [plaintiff’s counsel] notice of appeal submitted with your letter of October 3, 1963 * * *and ended the matter with the final administrative ruling:
“Upon the entire appellate record and for the reasons indicated above, the Board of Appeals and Review finds, as did the Regional Office, that Mr. Fass’s removal was procedurally adequate and for such cause as will promote the effciency of the service. The Regional Office decision to approve the removal action is affirmed.”
We consider, therefore, that if there was a technical error in the Regional Office’s limitation upon its review, it was of little significance. It did not impair the substantiality of the Civil Service Commission’s compliance with prescribed procedures.
As we have indicated, the District Judge dispatched this matter on the government’s motion for summary judgment. He had before him the administrative record of the removal and agency proceedings, and his decision was based on a review of those proceedings and not, as plaintiff contends, solely on the government’s pleadings and briefs.
Summary judgment is an appropriate means of resolving issues of law like the one presented here — whether there was substantial administrative compliance with applicable regulatory and statutory procedures. Seebach v. Cullen, 338 F.2d 663, 664, (CA9, 1964), cert. den. 380 U.S. 972, 85 S.Ct. 1331, 14 L.Ed.2d 268.
The judgment of the District Court is affirmed.
. Sections 1361 and 1391, Title 28 USC were relied upon for jurisdiction and venue. Section 1361 provides that,
“The district courts shall have 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.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MARSHALL, Circuit Judge.
Charles Catalano, presently serving a twenty-five year sentence for armed bank robbery at Alcatraz, appeals from the denial, without a hearing, by the United States District Court for the Eastern District of New York of a motion pursuant to 28 U.S.C.A. § 2255 to vacate the judgment of conviction there rendered.
Reading Catalano’s papers with the liberality to be accorded pleadings of an incarcerated litigant not represented by counsel see Holiday v. Johnston, 313 U.S. 342, 350, 61 S.Ct. 1015, 85 L.Ed. 1392 (1941), we conclude that petitioner’s detailed allegations, replete with dates and with the names both of alleged participants and of witnesses, sufficiently pose the contention that petitioner was rendered incompetent throughout the trial by the daily administration of medicines at the place where he was then confined.
Petitioner’s competency during the trial may be challenged by motion under 28 U.S.C.A. § 2255, Bishop v. United States, 350 U.S. 961, 76 S.Ct. 440, 100 L.Ed. 835 (1956). *No claim of such incompetency was litigated at the trial or presented by prior motion under § 2255. Nothing in the present motion or in the files and records of the case conclusively controverts his assertions. The affidavit in opposition is insufficient to show that Catalano’s assertions are frivolous. Consequently, improbable or unbelievable as these assertions may be, see Walker v. Johnston, 312 U.S. 275, 287, 61 S.Ct. 574, 85 L.Ed. 830 (1941), there must be a hearing at which Catalano is present and at which he may both call and examine witnesses, United States v. Hayman, 342 U.S. 205, 72 S.Ct. 263, 96 L.Ed. 232 (1952); United States v. Paglia, 190 F.2d 445 (2 Cir. 1951); Green v. United States, 158 F.Supp. 804 (D.Mass. 1958), aff’d 256 F.2d 483 (1st Cir.), cert. denied 358 U.S. 854, 79 S.Ct. 83, 3 L.Ed.2d 87.
We recognize that the various collateral procedures designated to remedy fundamental injustice have been much abused; indeed it was to alleviate such abuse that § 2255 was enacted, see United States v. Hayman, supra, pages 210-.219. But abuse of judicial process must rather be risked than denial of fundamental rights, see United States v. Tribote, 297 F.2d 598 (2 Cir., decided November 22, 1961). Moreover in suitable instances the perjury statute may be invoked.
Reversed and remanded for hearing.
. Although 18 U.S.C.A. § 4245 provides a procedure by which, upon certification by The Director of The Bureau of Prisons, a prisoner’s competency during the trial may be investigated after his conviction, we do not pause to consider the effect of this section on motions under 28 U.S. C.A. § 2255 grounded on incompetency during the trial resulting from mental disease or defect, see 28 U.Chi.D.Rev. 154 (1960). Even if 18 U.S.C.A. § 4245 be regarded as the exclusive means for pressing such a claim, and we do not at all imply that we would so hold, it was plainly not devised for inquiry into a temporary incapacity without residual effect, Johnston v. United States, 292 F.2d 51 (10th Cir. 1961).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM.
Michael Lally appeals pro se from the orders of the district court dismissing his complaint for failure to state a claim. After carefully reviewing the record, we affirm.
This action arose out of the manner in which a $48,000 debt owed by Lally was collected by appellees Crawford County Trust and Savings Bank and its employee, Jimmie Thomas. Lally filed a complaint for violations- of 42 U.S.C. § 1983, the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (RICO), and the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1601-1692o (FDCPA), which the district court ultimately dismissed for failure to state a claim. This appeal followed.
A party is subject to suit under 42 U.S.C. § 1983 if “the conduct allegedly causing the deprivation of a federal right [can] be fairly attributable to the State.” Lugar v. Edmondson Oil Co., 457 U.S. 922, 937, 102 S.Ct. 2744, 2753, 73 L.Ed.2d 482 (1982). In the case at bar, Lally’s § 1983 claim was based on the allegation that Thomas acted under color of state law when he threatened to have Lally put in jail for violating state criminal statutes. We hold that the district court properly dismissed Lally’s § 1983 claim for lack of state action.
Although a pro se complaint is to be liberally construed, it “must contain specific facts supporting its conclusions.” Martin v. Sargent, 780 F.2d 1334, 1337 (8th Cir.1985). In pleading RICO violations, a litigant must allege the time, place, and content of all false representations. Bennett v. Berg, 685 F.2d 1053, 1062 (8th Cir.1982), rev’d in part on other grounds, 710 F.2d 1361 (banc), cert. denied, 464 U.S. 1008, 104 S.Ct. 527, 78 L.Ed.2d 710 (1983). This Lally failed to do in spite of the fact that the district court afforded him sufficient opportunity to amend his complaint and warned that his failure to do so would result in dismissal. The district court’s dismissal of Lally’s RICO and FDCPA claims was proper.
Accordingly, the judgment of the district court is affirmed.
. The Honorable Donald E. O'Brien, Chief Judge, United States District Court for the Northern District of Iowa.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
ALLEN, Circuit Judge.
These cases arise on petitions to review a decision of the Tax Court of the United States which determined a deficiency in unjust enrichment taxes imposed under § 501(a) (1) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev.Acts, page 944, for the taxable year of Oct. 1, 1934, to Oct. 1, 1935. The Commissioner had theretofore determined a deficiency of $56,692.64, together with a penalty of $14,173.16. The Tax Court, after exhaustive hearings, reduced the deficiency to $38,840.41, together with a penalty of $9,710.10.
The Commissioner attacks the action of the Tax Court in holding that an item of attorneys’ fees was taxable as an accrued expense, thereby reducing the deficiency theretofore determined, while the taxpayer contends that the decision of the Tax Court is not supported by any evidence and that serious error of law was committed.
The taxpayer, a Kentucky corporation, is engaged in the general packing house business in Louisville, Kentucky, purchasing and slaughtering cattle, sheep, calves and hogs, and purchasing pork, beef and other meat products from other packers. The pork and beef produced by the taxpayer from its own slaughtering is called own-slaughter pork and beef, and that purchased by it from other packers is called purchased pork and beef. Beef so purchased was sold in a fresh state, with the exception of that used in the manufacture of chili, corned beef and sausage. Veal and lamb were sold without processing. The tax to which the taxpayer was subject was a processing tax on pork and pork products arising under the taxing provisions of the Agricultural Adjustment Act, Title 7 U.S.C. § 601 et seq., 7 U.S.C.A. § 601 et seq., enacted, May 12, 1933, and Regulations issued thereunder. Both the taxpayer’s own-slaughter pork and its purchased pork were sold either in a fresh state or after further processing into sausage, cured, smoked, or cooked meats. Fresh hams purchased by the taxpayer were commingled with fresh hams from taxpayer’s own-slaughter hogs, and 99% of taxpayer’s fresh hams, whether purchased or own-slaughter, were processed into smoked hams. Practically all the bacon cuts were processed into bacon and 85% to 90% of the shoulders of hogs were cured and smoked. Sausage was manufactured partly from the taxpayer’s own-slaughter meats and partly from purchased meats. The sausage contained varying percentages of pork and beef, some of it being manufactured exclusively from pork. Hams were boiled and baked, and chili, which is composed entirely of beef, was produced in the sausage department.
The Agricultural Adjustment Act imposed a processing tax upon certain basic agricultural commodities, including hogs. The statute [Title 7 U.S.C. § 609(d) (8), 7 U.S.C.A. § 609(d) (8)], provided that as to the processing of hogs, “the term ‘processing5 means any manufacturing or other processing involving a change in the form of the commodity or its preparation for distribution or use, as defined by regulations of the Secretary of Agriculture; and in prescribing such regulations the Secretary shall give due weight to the customs of the industry.” In accordance with the statute, regulations were promulgated which govern this case.
The Tax Court overruled the Commissioner’s determination as to a number of items which affected the net taxable profit calculated to have been made by the taxpayer during the taxable year, and thus reduced the tax, which was laid upon net income. § 501(a), Revenue Act of 1936. It held that the Commissioner erred (1) in crediting to authorized deductions rent received in the amount of $12,402.80 and allocating $6,672.90 thereof to own-slaughter pork and the remainder to other departments of the taxpayer; (2) in allocating $899.18 of bad debts to own-slaughter pork and using it to reduce the amount of expenses deducted; (3) in refusing to allow the deduction of some $18,000 of attorneys’ fees discussed below. The Tax Court also held that the Commissioner erred in his method of computing sales of own-slaughter and purchased pork. It decided that the computations of gross sales of purchased pork should be based upon live weight rather than upon cost, together with an arbitrary write-up of one and one-half cents a pound, which was the Commissioner’s yardstick. Applying this method of computation, the Tax Court concluded that $222,300.59 was the amount realized from the sale of articles containing purchased pork, being some $43,000.00 more than the amount for the same item computed by the Commissioner and to that extent to the advantage of the taxpayer, for the Tax Court did not impose the tax upon net income from purchased pork transactions.
The Commissioner does not attack the Tax Court’s reversal of his determination on these items with exception of that as to attorneys’ fees; but the taxpayer, emphasizing the errors made by the Commissioner, contends that his action in assessing the deficiency was so arbitrary, inaccurate and unjust as to render the assessment void in its entirety, and to deprive it and each of the findings and computations made in arriving at the deficiency of the usual prima facie presumption of co^ectness. This contention raises the most serious legal problem in the case, for the Tax Court, while finding that certain of the computations were inaccurate, nevertheless gave to other important findings of the Commissioner the full advantage of the prima facie presumption.
The taxpayer attacks as arbitrary the failure of the Commissioner to ascertain an average margin by which to test the extent to which the taxpayer is alleged to have shifted the burden of the tax. The taxpayer was not in business during the six' years preceding the imposition of the federal excise tax, and therefore it urges that the Commissioner, in order to have any basis for holding that the taxpayer shifted the tax, should have determined under § 501(e) (2) (f) (1) printed in the footnote, the average margin of respective concerns engaged in a similar business and similarly circumstanced. The Commissioner made no such determination, and the taxpayer did not request him to do so.
We think the Tax Court ruled correctly that the failure of the Commissioner in this regard was not arbitrary. It is not shown that the taxpayer had made the return required under § 503(b) of the Revenue Act of 1936, 26 U.S.C.A. Int.Rev. Acts, page 948, and Regulations 95, Art. 27 (6), nor elected to rely on the provisions of § 501(e) (2) by filing its return on the basis required by that paragraph. Since the taxpayer thus failed to avail itself of its statutory right to notify the Commissioner that it expected to rely upon the average margin provisions of the statute, it cannot now complain of the Commissioner’s failure to act. Also § 501(f) requires the average margin “when necessary for a fair comparison.” The Tax Court correctly declared that in the absence of proof that data for a six-year period was in fact necessary for comparison, a finding of arbitrariness would be unwarranted. Cf. Lee Wilson & Co. v. Commissioner, 8 Cir., 123 F.2d 232.
Nor did the Commissioner act arbitrarily in ruling that the taxpayer shifted the tax. It is contended that the record contains no evidence whatever to this effect. However, the taxpayer entered the processing tax on its books as part of the cost of the hogs. While it did not bill the tax separately to its customers, nor accept nor contract for a refund in the amount of the tax, its president testified that it endeavored in its business to recover all costs, including federal taxes. The Act contemplated that the consuming public should pay the tax. United States v. Poindexter & Sons Merchandise Co., 8 Cir., 128 F.2d 992, 995, certiorari denied, 317 U.S. 677, 63 S.Ct. 159, 87 L.Ed. 543. The fact that the taxpayer included it in costs, which it endeavored to recover in its prices, creates an inference that the tax was shifted. Colonial Milling Co. v. Commissioner, 6 Cir., 132 F.2d 505, certiorari denied, 318 U. S. 780, 63 S.Ct. 857, 87 L.Ed. 1148. The taxpayer did not satisfactorily rebut this inference.
The errors corrected by the Tax Court did not invalidate the authenticity of the Commissioner’s other detailed computations, nor deprive him as to other items of the advantage of the presumption of accuracy and validity. The Commissioner’s computations are in many respects concededly accurate, for as to his major calculations, such as the amount of sales of fresh pork, smoked hams, smoked meats, etc., the taxpayer’s accountant testified that they were correct.
The taxpayer particularly attacks the action of the Tax Court in giving weight to the presumption when it adopted as the cost of beef used in the sausage department the Commissioner’s figure of some $42,000 as against the taxpayer’s figure of some $52,000. Since the taxpayer’s figure was based not upon actual cost, which was nowhere shown on its books, but upon Chicago prices rather than local Louisville prices, it was not error to adopt the lower calculation.
The taxpayer also vigorously objects to the fact that the Tax Court gave weight to the presumption in adopting the Commissioner’s allocation of expense deductions aggregating $253,684, to own-slaughter pork. The taxpayer’s evidence on this point is unsatisfactory. It admitted that any allocation must be approximate and that many of its totals were not allocated among the various departments. In brief, the errors of the Commissioner were corrected by the Tax Court within the injunction of the Supreme Court in Helver-ing v. Taylor, 293 U.S. 507, 55 S.Ct. 287, 79 L.Ed. 623. The points as to which the Commissioner’s determination was wrong were so separate and distinct from the two items in question here that they do not compel a conclusion that these totals were wrongfully computed.
Finally, it is urged that the deficiency as determined by the Tax Court is not supported by any substantial evidence. The taxpayer lists the overstatement of five items aggregating $122,565.63. Of these the Tax Court corrected four items substantially to the advantage of the taxpayer; but it still contends that the income from own-slaughter pork is overstated by over $100,000.00. This item, the taxpayer claims, was overstated, due to the fact that the Commissioner left in the net income the sales value attributable to the beef in sausage, and that the Tax Court did not correct this. It contends that the Commissioner, in arriving at the net taxable income, arbitrarily overstated the gross income from own-slaughter pork and arbitrarily understated the deductions therefrom, unfairly computing net loss, and that the error was not corrected by the Tax Court.
We think Dobson v. Commissioner, 320 U.S. 489, 64 S.Ct. 239, 88 L.Ed. 248, has peculiar application to this case. The Tax Court, aided by its staff of expert accountants, gave long and careful consideration to this case. Its detailed and well-considered opinion deals with every important factual aspect of the controversy. It is not here material whether some other inference might fairly be drawn from the facts. Boehn v. Commissioner, 66 S.Ct. 120; Commissioner v. Scottish American Co., 323 U.S. 119, 65 S.Ct. 169. We have jurisdiction only to decide whether the ruling of the Tax Court presents any clear-cut mistake of law. Examining the record to determine whether the findings are supported by any evidence, we conclude not only that substantial evidence exists, but that as to most of the items controverted there is ample evidence.
The burden was on the taxpayer to show that the Commissioner’s determinations on the points here at issue were incorrect, and it has not borne this burden. It had to show the beef content of the sausage items, and this it has not done. In fact it appears that the, pork content in sausage was substantially higher than that testified by the taxpayer’s accountant. The taxpayer asserted that the beef content in sausage had a sales value of over $118,-000.00; but this is not demonstrated. Typical of the gaps in appellant’s figures is the fact that the item of “Meats ' from other packers,” which is listed in the account of the sausage department, totaling $39,511, in no way indicates how much of the meat so purchased was beef and how much pork, nor does the taxpayer’s accountant give this information.
Also, under the applicable regulations this tax should have been laid not only upon .own-slaughter pork, but upon purchased pork. The amount of $222,-300.59, calculated by the Tax Court to be the amount realized from the sale of articles containing purchased pork should have been included in its computation of the net taxable income.
Section 609(a) of the Agricultural Adjustment Act (Title 7 U.S.C., 7 U.S.C.A.), provided that the processing tax shall be levied, assessed and collected upon the first domestic processing of the commodity. Under paragraph (d) (8) of the section, “processing” means “any manufacturing or other processing involving a change in the form of the commodity or its preparation for distribution or use, as defined by regulations of the Secretary of Agriculture. * * *” Section 501(f) (2) of the Revenue Act of 1936 provided thát the term “cost” means in the case of articles manufactured or produced by the taxpayer the cost to the taxpayer of “materials entering into the articles.” It is true that the regulations promulgated on October 18, 1933, defined the term “first domestic processing” as being “the slaughtering of hogs for market.” However, subsequent regulations issued by the Secretary of Agriculture on October 29, 1934, and effective November 1, 1934, thus being in force for 364 days of the taxable year involved herein, provided:
“The term ‘first domestic processing1 means the slaughter of hogs for market; except that (a) in the case of a producer or feeder who shall distribute the carcass or any edible hog product diréctly to a consumer, the term ‘first processing* means the preparation of the carcass or any edible hog product for sale, transfer or exchange or for use by the consumer, and only the edible product or products so sold, transferred, exchanged or distributed by or for the producer or feeder shall be deemed to have been processed, and (b) in the case of a producer or feeder who shall sell, transfer or exchange any carcass or edible hog product (1) to any person engaged in reselling, rehandling, cutting, trimming, rendering, or otherwise preparing such products for market (including, but not limited to, retailers, wholesalers, distributors, butchers, packers, factors, or commission merchants), or (2) to any restaurant, hotel, club, hospital, institution, or establishment of similar kind or character, the term ‘first domestic processing’ means the initial act of such person, restaurant, hotel, club, hospital, institution, or establishment which involves the preparation of the carcass or any edible hog product for further distribution or use.”
These regulations were not cited nor mentioned in the record, nor at the hearing in this court.
Under the express requirement of the above regulations not only was the net income from the sale of own-slaughter hogs taxable, but also the net income from the curing and smoking of hams and bacon and other pork products and the preparation of sausage, whether made from own-slaughter pork or purchased pork. The taxpayer was not only a producer which slaughtered its own hogs; it also “engaged in reselling, rehandling, cutting, trimming, rendering, or otherwise preparing” edible hog products which it had purchased from other producers. The first domestic processing upon which the processing tax was to be levied, therefore, included not only the slaughter of hogs for market, but also taxpayer’s initial acts in preparing purchased pork for further distribution or use. The tax should have been laid upon the taxpayer’s edible products, containing purchased pork as well as own-slaughter pork. This would add to the net income received from the sale of articles containing own-slaughter pork such an increased amount that, the finding of deficiency may well err on the side of being too small rather than too large. Since the Commissioner specifically waived any question of error in this calculation, however, we do not remand the case for further computation, but simply affirm upon this phase of the matter.
The Tax Court erred in its determination that a deduction should be allowed the taxpayer for legal fees incurred in the suit instituted to contest the constitutionality of the Agricultural Adjustment Act. The oral contract for the fee was contingent upon the success of the suit. The Tax Court reduced the deduction of $20,000 claimed by the taxpayer and limited it to about $18,000, this being the amount of the fee based upon taxes imposed during the taxable year. The Commissioner had allowed this same fee as a deduction from net income tax for 1935, but he refused to allow it as a deduction in determining the income subject to the unjust enrichment tax, upon the ground that the item was not accruable within the taxable year.
Section 501(c) (1) of the Revenue Act of 1936 allows a deduction from the gross income from sales of articles with respect to which the processing tax was imposed but not paid, of “the allocable portion of the deductions from gross income for the taxable year which are allowable under the applicable Revenue Act.”
The Agricultural Adjustment Act was held invalid on Jan. 6, 1936, and the fee was paid the same month. The item was not accrued on the taxpayer’s books in 1935. The Tax Court seemed to think that since the agreement was definite in amount, being for 20% of the processing taxes saved if the law should be declared unconstitutional, and since the services were performed during the taxable year and the processing taxes were fixed in amount for the year, that this was a business expense properly accrued as to processing taxes incurred for 1935. We think that the fee could not be deducted as an accrued business expense because the taxpayer’s liability did not become settled and the amount was uncertain during the year 1935. The taxpayer recognized the contingency of the item by not accruing it on its books. A taxpayer “may not accrue an expense the amount of which is unsettled or the liability for which is contingent * * Security Flour Mills Co. v. Commissioner, 321 U.S. 281, 64 S.Ct. 596, 597, 88 L.Ed. 725; Dixie Pine Products Co. v. Commissioner, 320 U.S. 516, 64 S.Ct. 364, 88 L.Ed. 270; Commissioner v. Blaine, Mackay, Lee Co., 3 Cir., 141 F. 2d 201.
The case is remanded to the Tax Court with instructions to disallow the deduction for legal fees. In all other respects the order is affirmed.
Section 501, Revenue Act of 1936.
“(a) The following taxes shall be levied, collected, and paid for each taxable year (in addition to any other tax on net income), upon the net income of every person which arises from the sources specified below:
“(1) A tax equal to 80 per centum of that portion of the net income from the sale of articles with respect to which a Federal excise tax was imposed on such person but not paid which is attributable to shifting to others to any extent the burden of such Federal excise tax and which does not exceed such person’s net income for the entire taxable year from the sale of articles with respect to which such Federal excise tax was imposed.
* * £ * * * * *
“(e) For the purposes of subsection (a) (1), (2), and (3), the extent to which the taxpayer shifted to others the burden of a Federal excise tax shall be presumed to be an amount computed as follows:
“(1) From the selling price of the articles there shall be deducted the sum of (A) the cost of such articles plus (B) the average margin with respect to the quantity involved; or
“(2) If the taxpayer so elects by filing his return on such basis, from the aggregate selling price of all articles with respect to which such Federal excise tax was imposed and which were sold by him during the taxable year (computed without deduction of reimbursement to purchasers with respect to such Federal excise tax) there shall be deducted the aggregate cost of such articles, and the difference shall be reduced to a margin per unit in terms of the basis on which the Federal excise tax was imposed. The excess of such margin per unit over the average margin (computed for the same unit) shall be multiplied by the number of such units represented by the articles with respect to which the computation is being made;
“(f) As used in this section—
“(1) The term ‘margin’ means the difference between the selling price of articles and the cost thereof, and the term ‘average margin’ means the average difference between the selling price and the cost of similar articles sold by the taxpayer during his six taxable years preceding the initial imposition of the Federal excise tax in question, except that if during any part of such six-year period the taxpayer was not in business, or if his records for any part of such period are so inadequate as not to furnish satisfactory data, the average margin of the taxpayer for such part of such period shall, when necessary for a fair comparison, be deemed to be the average margin, as determined by the Commissioner, of representative concerns engaged in a similar business and similarly circumstanced.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MARTIN, Circuit Judge.
This complicated litigation, involving millions of dollars, has been heard on the consolidated argument of nine cases and reaches us on appeal, in summary proceedings in a corporate reorganization in bankruptcy, in causes 8802-8808 from a judgment of the District Court for the Eastern District of Michigan against six appellants, Gulf Refining Company of Louisiana, Gulf Refining Company, Humble Oil and Refining Company, Shell Oil Company, Inc., Freeport Sulphur Company, all corporations, and Ernest Cockrell; on appeal from an interlocutory injunction in 8614, restraining appellants Ernest Cockrell, his curator ad hoc, and their attorneys, from further proceedings in a suit pending in the 25th Judicial District Court for the Parish of Plaquemines, State of Louisiana;' and on appeal from an interlocutory injunction in 8894, restraining appellants Ernest Cockrell and two Louisiana law firms, Herold, Cousin & Herold, and Plauche & Plauche, and also the Moran Corporation of the South and Isaac E. Heller, who are not appellants, from taking any further steps in another suit pending in the same Louisiana Judicial District Court.
The appellee, Frank Fitzgerald, trustee for Mt. Forest Fur Farms of America, Inc., the corporate debtor, appealed in the main case (8802-8808 consolidated) from that portion of the judgment which denied the full relief sought; but, for brevity and clarity, will be designated only as appellee.
On July 16, 1926, a corporation, Mt. Forest Fur Farm, was created under the laws of Michigan for the purpose of owning and operating fur and game farms in Michigan and elsewhere in the United States and in Canada and of manufacturing and dealing in furs and fur garments, including the right to deal in real estate in furtherance of its charter purposes. On March 29, 1928, this Michigan corporation sold its properties and assets to the debtor, Mt. Forest Fur Farms of America, Inc., incorporated under the laws of Delaware with like charter powers. The consideration received for this conveyance was stock of the new corporation and the assumption by it of all contracts and liabilities of the vendor. See Morlock v. Mount Forest Fur Farms of America, Inc., 269 Mich. 549, 257 N.W. 880. On September 28, 1928, Mt. Forest Fur Farm executed a deed to Mt. Forest Fur Farms of America, Inc., conveying the Louisiana land which is the subject matter of the present controversy.
Before the debtor corporation was created, Mt. Forest Fur Farm, after considerable negotiation, entered into a written agreement with appellant Ernest Cockrell, an oil operator, to purchase, for a consideration of two dollars per acre, approximately 53,000 acres of land situated on the west side of the Mississippi River in Plaquemines Parish, Louisiana. This contract of sale contained a perpetual reservation in Cockrell of “one-eighth of all minerals, including oil, gas and sulphur, which may be found in, under and upon said land.”
Earnest money was paid and, after much wrangling between the parties, during which Cockrell threatened to call the deal off unless a required first payment of purchase money was made by a specified date, a deed to 127/150ths’ interest in the land, described by townships and sections in Pla-quemines Parish, Louisiana, as containing 52,500 acres, more or less, was executed by Cockrell to Mt. Forest Fur Farm on April 11, 1927, and recorded the following day. This deed contained an ambiguous mineral reservation. The consideration, paid partly in cash and partly by the delivery of one promissory note and the assumption of another, totaled $88,900 for Cockrell’s 127/150ths’ undivided interest in the land.
The other 23/150ths' undivided interest, owned by the Moran Corporation of the South, was acquired by Mt. Forest Fur Farm on June 30, 1928, by a deed of conveyance unquestionably reserving in the vendor all mineral rights.
Obvious ambiguity in the mineral reservation clause of the deed from appellant Cockrell to Mt. Forest Fur Farm is the fundamental casus belli in the instant case.
We quote the much-mooted language: “This Vendor is vested with and specially retains for himself, his heirs and assigns, and reserves from this sale, a perpetual royalty equal to one-eighth of all minerals, including oil, gas and sulphur, which may be found in, under, upon or beneath the lands herein above described, together with perpetual and exclusive rights to make and execute mineral leases on all or any portion of said lands for the exploration, development, production and marketing of any and all of said minerals, and also including perpetual rights of ingress and egress solely for said purpose of exploration, development, production and marketing of said minerals, at all times, and likewise the use of so much of the surface of said premises as may be found necessary and convenient for the exploration, development, production and marketing of said minerals which may be found and produced from said premises.”
This reservation has been construed by the Supreme Court of Louisiana, which, adversely to the contention made by Mt. Forest Fur Farms, Inc., plaintiff in a suit brought in Louisiana to recover bonus money amounting to $50,000 which Cockrell received from the Gulf Refining Company for granting and extending a mineral lease, held that by virtue of the above quoted clause in his deed to Mount Forest Fur Farm, Cockrell had retained the perpetual and exclusive right to make and execute mineral leases on all or any portion of the land; that he had retained not merely the right to select the lessee and to fix the terms of the lease, and to lease as agent, but also the right to lease for his own benefit and that of his heirs and assigns “save as otherwise expressed” in the reservation; and that he was entitled to “all that the lease might bring, save as therein specified.” Accordingly, denying the claim of Mt. Forest Fur Farms, the court affirmed a judgment awarding Cockrell the bonus money. But the court announced that it was not concerned with the right to the royalties from the lease. Mt. Forest Fur Farms of America, Inc. v. Cockrell, 179 La. 795, 155 So. 228, 229.
If we have jurisdiction, this undecided issue, inter alia, must be decided here; if we have not, a court of competent jurisdiction should be the forum.
The lease from Cockrell of all mineral rights in the land to Gulf Refining Company of Louisiana was dated March 15, 1928; and, subsequently, on May 7, 1928, Roxana Petroleum Corporation (now appellant Shell Oil Company, Inc.) acquired from the Moran Corporation of the South a mineral lease on the remaining 23/150ths’ interest in the 52,500 approximate acreage. On July 18, 1928, Roxana Petroleum Corporation and appellant Humble Oil and Refining Company obtained from the State of Louisiana, through its Governor, Huey P. Long, a lease of the mineral rights on the bed of Lake Grand Ecaille. By contract of October 8, 1929, appellants Humble Oil and Refining Company, Gulf Refining Company of Louisiana and Shell Oil Company, Inc. (which had succeeded Roxana), agreed to develop and operate jointly all mineral leases owned by them or subsequently acquired in an area which embraced the 52,-500 acre tract. On February 10, 1932, appellant Freeport Sulphur Company subleased from the three oil companies all their rights and privileges under their respective leases to explore for, mine, produce and market sulphur.
After the discovery of oil on the property, the Board of Commissioners for Buras Levee District filed suit claiming title to 1,136 acres of the land. Mt. Forest Fur Farms of America, Inc., the Moran Corporation of the South, the -three oil companies, and Ernest Cockrell ’were named as defendants; and, after a vigorous defense, succeeded in winning a four to three decision in the Supreme Court of Louisiana, rejecting the claims of the Levee Board. Board of Commissioners for Buras Levee District v. Mt. Forest Fur Farms of America, Inc., 178 La. 696, 152 So. 497.
But the Levee Board persisted in making claim to other portions of the realty. Cock-rell countered by filing a declaratory judgment suit in the Federal Court which resulted in a decision that the judgment of the Louisiana Supreme Court in the Buras Levee Board suit was res adjudicata.only as to the 1,136 acres there in controversy and that the title-claim of the Buras Board to the remaining portion of the land had not been adjudicated. Board of Com’rs for Buras Levee Dist. v. Cockrell, 5 Cir., 91 F.2d 412.
In consequence of this decision, the oil companies, the sulphur company and Cock-rell, under advice of counsel, compromised the adverse claims of the Levee Board and other intertwined claimants. More than $475,000 has been paid to the Levee Board, its assignees, and the holders of over-riding royalty agreements under these compromise settlements. Appellants are presently paying royalties on their consolidated leases from the Levee Board.
In the summer of 1929, the oil companies drilled for oil and produced it in paying quantities in June, 1931. Since then, their production of oil from the premises in controversy has been continuous. Likewise, the sulphur company has continuously produced sulphur since December, 1933. The operations of the mineral lessees will be detailed later in this opinion.
At no time has either the debtor corporation or its predecessor, Mt. Forest Fur Farm, ever attempted to prospect the land, or produce oil, sulphur, or minerals therefrom. The use and occupancy of the property by these successive owners has been limited exclusively to fur gathering purposes.
Due to its default on contracts with many persons for the breeding of muskrats, Mt. Forest Fur Farms of America, Inc., on August 21, 1931, consented to receivership in a stockholders’ suit in chancery in the Circuit Court for Wayne County, Michigan. The receiver took charge and carried on the business of trapping on the company’s Louisiana, property until abandonment of this enterprise in the early part of 1932.
An involuntary creditors’ petition for reorganization of the debtor under Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, was filed and allowed in the United States District Court. On appeal, the district court order approving the petition for reorganization was reversed and the cause remanded. Mount Forest Fur Farms of America, Inc. v. Farnsworth, 6 Cir., 92 F.2d 342.
■ A voluntary petition of the debtor for reorganization under Section 77B ensued and was approved by the district court, whose orders approving the petition, overruling creditors’ motion to dismiss, and appointing Frank Fitzgerald, trustee, were affirmed on appeal. In re Mt. Forest Fur Farms of America, Inc., 6 Cir., April 5, 1939, 103 F.2d 69.
Shortly after his appointment as temporary trustee, appellee obtained a show-cause order against which appellants filed motions to quash on jurisdictional grounds. No ruling was made upon the motions. On January 4, 1940, appellee Fitzgerald, then and now permanent trustee, filed an amended petition upon which he obtained an order to show cause why appellants should not be enjoined from exploring, drilling, mining, selling, moving, or otherwise appropriating oil, gas, sulphur and other minerals from the debtor’s property in Louisiana; or, in the alternative, why appellants should not be directed to pay unto the petitioning debtor the royalties theretofore accrued or thereafter accruing for oil, gas, sulphur and other minerals already removed, or which might thereafter be removed, if it should be made to appear that appellants have the right to extract the minerals but have failed in the discharge of their legal obligation to pay the royalties due thereon.
Seasonably to the return day of the show-cause order, appellants, entering only special appearances, filed motions to quash and to dismiss the summary proceedings against them, averring that the court had no jurisdiction to enter the show-cause order of January 4, 1940.
These motions to quash and to dismiss presented elaborately the basis of objection of appellants to the jurisdiction. However, after hearing a two days’ argument, the district court entered an order postponing disposition of the motions until the trial on the merits. Finally, after hearing all the evidence in the case, the motions to quash and to dismiss the summary proceedings were denied. The alternative motions of appellants for a stay of the proceedings and for a reference of the issues to the Louisiana State Courts for determination were likewise denied.
The trustee for the debtor corporation, moreover, prevailed upon the merits. The determinative adjudications of the district court were, as follows:
(1) The interests of appellants under ■ the lease from Cockrell to the Gulf Refining Company of Louisiana were limited to one-eighth of 127/lSOths of the minerals in controversy, and the debtor was vested with the other seven-eighths therein.
(2) Appellant, Freeport Sulphur Company, must account to the trustee for the debtor, on the basis of the proceeds from seven-eighths of 127/150ths of the sulphur produced (less the cost of production and a reasonable profit), for the minerals removed from August 23, 1938 (the date of the original petition and show-cause order), to date.
(3) Likewise, appellant, Humble Oil and Refining Company (the operating company under the agreement among the appellant oil companies), must account to the trustee for the proceeds of seven-eighths of 127/150ths of the oil produced, less the cost of production and a reasonable profit.
(4) Should appellant, Freeport Sulphur Company, whose operations were expressly conditioned in the decree, continue to produce sulphur from the land and should appellant, Humble Oil and Refining Company, continue to produce oil, each shall respectively account to the trustee for seven-eighths of 127/150ths of the sulphur and oil produced, less the cost of production and a reasonable profit to be subsequently determined.
(5) A hearing was ordered to be held to ascertain such cost of production and reasonable profits and the amounts now due or hereafter to become due from the production of oil and sulphur, pending which hearing the above-named appellants shall pay into the registry of the court, for future disposition by court order, four dollars a ton on all sulphur and ten cents a barrel on all oil thereafter produced from the entire mineral interest in all the property.
(6) Upon failure of the two above-named appellants- to pay the amounts specified in the preceding paragraph, each shall be restrained and enjoined from further production of sulphur and oil on the property.
Cases 8802-8808 are here on appeal from the judgment and decree of the district court, both upon the merits and upon the jurisdictional motions and the motions to stay and to refer the issues to the courts of Louisiana.
Case 8614 is before us on appeal from the interlocutory injunction, restraining further steps or proceedings by appellants in suit entitled Mt. Forest Fur Farms of America, Inc., v. Ernest Cockrell, et al. [No. 1190], instituted March 30, 1936, by the debtor corporation concerning similar subject matter to that embraced in cases 8802-8808 and now pending in the 25th Judicial District Court for the Parish of Plaquemines, Louisiana. Appellants challenged the jurisdiction of the United States District Court to issue the injunction.
Likewise, consideration of case 8894 presents in the first instance the question of jurisdiction involved in cases 8802-8808. The appeal is from an interlocutory injunction, restraining further steps by appellant Cockrell and the law firms of Herold, Cousin & Herold, and Plauche & Plauche, all appellants, and the Moran Corporation of the South and Isaac E. Heller, in a pending suit entitled Ernest Cockrell, et al. v. Moran Corporation of the South, et al. [No. 1603], filed October 14, 1940, in the 25th Judicial District Court for Plaquemines Parish, Louisiana. In its decree, the court below recited that the subject matter in the pending Louisiana case [No. 1603] is substantially identical with the issues adjudged in cases 8802-8808.
Manifestly, if the district court lacked jurisdiction in cases 8802-8808, the interlocutory injunctions in cases 8614 and 8894 were improvidently granted.
In all these appealed cases, we confront at the threshold the question whether the district court had jurisdiction to enter the show-cause orders. If a negative answer is impelled by applicable law, there should be no further adjudication here.
(1) The challenged jurisdiction must be resolved, not by a test of title, but by determination of the issues of possession of the res in controversy as of the time reorganization proceedings were instituted by the debtor corporation.
No jurisdiction vests in a court, of bankruptcy to adjudicate, in a summary proceeding, a controversy over property held adversely to the bankrupt estate, except by consent of the adverse claimant, or where the adverse claim is merely color-able. Unless summary jurisdiction exists, the trustee in bankruptcy must resort to plenary suit. Harrison v. Chamberlin, 271 U.S. 191, 46 S.Ct. 467, 70 L.Ed. 897; In re Cadillac Brewing Co., 6 Cir., 102 F.2d 369. Compare First National Bank v. Chicago Title & Trust Co., 198 U.S. 280, 25 S.Ct. 693, 49 L.Ed. 1051.
The Supreme Court, while recognizing in Taubel, etc., Co., v. Fox, 264 U.S. 426, 44 S.Ct. 396, 68 L.Ed. 770, the power of Congress to determine the extent of the exercise of bankruptcy jurisdiction by summary proceeding in Federal Courts through possession of the res or otherwise, held that no summary jurisdiction to adjudicate the validity of a substantial adverse claim to property not in possession of the Federal Court, except by consent of the adverse claimant, had been conferred by the Bankruptcy Act of 1898, 11 U.S.C.A. § 1 et seq. Mr. Justice Brandéis stated (264 U.S. at page 433, 434, 44 S.Ct. at page 399) : “As every court must have power to determine, in the first instance, whether it has jurisdiction to proceed, the bankruptcy court has, in every case, jurisdiction to determine whether it has possession actual or constructive. It may conclude, where it lacks actual possession, that the physical possession held by some other persons is of such a nature that the property is constructively within the possession of the court. * * * But in no case where it lacked possession, could the bankruptcy court, under the law as originally enacted, nor can it now (without consent) adjudicate in a summary proceeding the validity of a substantial adverse claim.” Cf. First National Bank of Negaunee v. Fox, 6 Cir., 111 F.2d 810.
It was reasserted in Harris v. Brundage Co., 305 U.S. 160, 59 S.Ct. 131, 83 L.Ed. 100, that in every case the bankruptcy court has power, in the first instance, to determine whether it has such actual or constructive possession as is essential to procedural jurisdiction, and to determine controversies relating to property in possession of agents of the debtor at the time of the filing of the petition in bankruptcy.
In a recent case, Thompson v. Magnolia Petroleum Company, 309 U.S. 478, 481, 60 S.Ct. 628, 630, 84 L.Ed. 876, the Supreme Court said: “Bankruptcy courts have summary jurisdiction to adjudicate controversies relating to property over which they have actual or constructive possession. And the test of this jurisdiction is not title in but possession by the bankrupt at the time of the filing of the petition in bankruptcy.”
The rule, that if ownership is claimed by the bankrupt all property in his possession at the time of the filing of the petition in bankruptcy passes into the custody o-f the bankruptcy court, has been applied to a railroad reorganization under Section 77 of the Bankruptcy Act, as amended March 3, 1933, c. 204, Sec. 1, 47 Stat. 1474, 11 U.S.C.A. § 203 note. But the right of the court to issue injunctions and all writs necessary to protect its physical possession from interference was predicated upon possession of the res. Ex parte Baldwin, 291 U.S. 610, 615, 54 S.Ct. 551, 78 L.Ed. 1020.
Appellee has made the point that in Continental Illinois Nat. Bank & Trust Co. v. Chicago, Rock Island Ry., 294 U.S. 648, 55 S.Ct. 595,79 L.Ed. 1110, which sustained the constitutionality of Section 77 of the Bankruptcy Act, the highest court maintained the power of a bankruptcy court to issue, in a summary proceeding, injunctive process to prevent interference with a plan of railroad reorganization. The opinion, however, does not gainsay the principle that jurisdiction in a summary proceeding rests upon actual or constructive possession of the res. No adverse claim by one in possession was involved and the asserted liens were not disputed. The power of a district court to issue process for service outside the district, pursuant to Section 77(a), was upheld.
A provision similar to that contained in Section 77(a) will be found in Chapter X, § 111, of the Chandler Act, 11 U.S.C.A., § 511: “Where not inconsistent with the provisions of this chapter, the court in which a petition is filed shall, for the purposes of this chapter, have exclusive jurisdiction of the debtor and its property, wherever located.”
Neither exclusive jurisdiction of the debtor nor power to issue process outside the district confers upon the bankruptcy court the power, in a summary proceeding, to decide, without the consent of an adverse claimant, a controversy concerning property in his possession, unless his claim be merely colorable. Were it otherwise, every bona fide possessor of property held adversely to a bankrupt could be haled into a distant Federal Court to defend his right to the property whenever the trustee in a reorganization proceeding should choose to corral him summarily.
No such unreasonable election may be deduced from the language of the statute, or from the authorities which have been considered.
(2) Does the res in controversy here consist of mineral rights or servitudes susceptible of separate ownership and possession apart from the ownership and possession of the surface of land?
Does the exercise of a mineral right or servitude by extracting and actually possessing the minerals from land constitute possession of the right or servitude?
To determine the issue of jurisdiction, these questions must be answered in accordance with Louisiana law. Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487. The highest state court is the final authority on state law. Fidelity Trust Co. v. Field, 311 U.S. 169, 61 S.Ct. 176, 85 L.Ed. 109. We must, therefore, carefully study the opinions of the Supreme Court of Louisiana.
It has long been settled law in Louisiana that oil and gas in place are not subject to absolute ownership as specific things apart from the soil of which they form part, and that a grant or reservation of such oil and gas carries only the right to extract such minerals from the soil. Frost-Johnson Lumber Co. v. Sailing’s Heirs, 150 La. 756, 91 So. 207, 242, citing eight earlier Louisiana decisions. The court said: “ * * * No matter what the intention of the parties be, the owner of lands cannot convey or reserve the ownership of the oils, gases, and waters therein apart from the land in which they lie; and we so hold, because the owner himself has no absolute property in such oils, gases, and waters, but only the right to draw them through the soil and thereby become the owner of them.” 150 La. at page 863, 91 So. at page 245.
In Wemple v. Nabors Oil & Gas Co., 154 La. 483, 97 So. 666, the court declared that there are only two kinds of estates in land: (1) corporeal, termed ownership [Civil Code, Art. 505] and (2) incorporeal, termed servitude [Civil Code, Arts. 533, 646, 647]; and that mineral servitudes grant merely the right to extract and appropriate minerals. Decision of the case, which was a civil action by a landowner for slander of title, was grounded, however, upon the failure of one who had acquired mineral rights from a prior owner to explore for minerals within the required ten years’ prescription period. We find nowhere in the opinion an intimation that the right of a person entitled to a mineral servitude to possess the same through exercise should be denied.
Appellee places what seems to us insecure dependence upon Federal Land Bank of New Orleans v. Mulhern, 180 La. 627, 157 So. 370, 95 A.L.R. 948. The defendant had mortgaged real property to the plaintiff. Subsequently, he entered into a mineral lease with a third party, who drilled and brought in a gas well. A foreclosure suit, brought by the mortgagee, was sustained upon the ground that either partial or total exhaustion of the gas supply would impair “the real right to take gas from the land,” and would necessarily depreciate the security of the mortgage. The emphatic fact was that the mortgage antedated the mineral lease. Appellee stresses the following language of the original opinion: “While the owner of land does not own the fugitive minerals, such as oil and gas, beneath its surface, but only the right to reduce them to possession and ownership, and while such minerals are not susceptible of ownership apart from the land [citing Frost-Johnson Lumber Co. v. Sailing’s Heirs, supra], yet those minerals, while in place in the ground beneath the surface, unsevered, are real estate, a part of the land itself, a part of the realty, as much so as timber, coal, iron, and salt.” 180 La. at page 634, 157 So. at page 373.
But, on rehearing, the court explained: “What the court intended to state was, that the owner of real estate unquestionably has a right to go on his land and reduce to possession fugitive minerals, in order to gain complete ownership thereof. He can therefore contract away to another, in the form of a mineral or mining lease, this real right.”
Appellee leans heavily upon a case decided fifteen years ago, Exchange National Bank of Shreveport v. Head, 155 La. 309, 99 So. 272, 274.
The facts were that a mortgage creditor began a foreclosure proceeding in the state court, pending which the mortgagor (Shields) was adjudged bankrupt. The mortgagee dismissed his state court action and proved his debt in bankruptcy. The property of the bankrupt was ordered sold, free of all liens and incumbrances; the mortgagee purchased the mortgaged land at the bankruptcy sale, and instituted suit in the state court against the mineral lessee (Head) for cancellation of the mineral lease from the public records.
The mortgagee (the Exchange National Bank) prevailed. It was held that, though the mineral lease had been executed before the mortgage, prior recordation of the mortgage entitled the trustee in bankruptcy, being vested with all rights of the mortgage creditor, to sell the land free of the rights of the mineral lessee (Head).
Certain dicta in the opinion of. the Supreme Court of Louisiana is stressed by appellee: “ * * * The only right which was conveyed by Shields to Head under the oil lease was a right of servitude (an incorporeal right), a real right on the land, a right to extract the oil and utilize the gas from the land, and when Shields surrendered the land in bankruptcy, this real right (this servitude) went with the land into the possession of the trustee in bankruptcy and likewise the possession of the land, for as we have already seen (Nabors Oil & Gas Co. v. Louisiana Oil & Refining Co., supra [151 La. 361, 91 So. 765]), the lessee under an oil and gas lease cannot deny or contest the right of possession of his lessor.”
The opinion writer in the Head case, in citing Nabors Oil & Gas. Co., supra, evidently did not recall that on rehearing of the Nabors case [151 La. 361, 91 So. 778]; the court had said: “A majority of the members of this court did not concur in the expressions in the opinion originally handed down in this case. * * * the doctrine that an ordinary lessee, as of a house or farm, cannot dispute the title of his lessor during the term of the lease, has no application to a contract by which a person acquires mineral rights, in the form or name of a contract of lease. Such a contract, in that respect, is more like a sale than an ordinary lease.”
Nor can the obiter dicta in the Head case be reconciled with later decisions: Bodcaw Lumber Co. of Louisiana v. Cox, infra, and Connell v. Muslow Oil Co., infra.
It was held in Bodcaw Lumber Co. of Louisiana v. Cox, 159 La. 810, 106 So. 313, 314, that a sale of land for taxes does not divest the reservation of a prior mineral servitude. The court said that in all cases cited “in which it was held that oil and gas beneath the surface is not subject to ownership, as corporeal property, it was plainly and distinctly held that the grant or reservation of the oils and gases carried with it the right to extract such minerals from the soil; that such right was an incorporeal right — a real right or servitude.” It was further declared that “when the plaintiff reserved the oil, gas, and minerals under the land sold, it reserved the right to mine for such minerals and to reduce them to possession, and, this being a real, incorporeal right, the plaintiff unquestionably has a standing in court to vindicate and protect such right * * In the Bodcaw case, in holding that plaintiff’s ownership of the mineral servitude could not be. disturbed by a tax sale, the court relied upon Shaw v. Watson, 151 La. 893, 92 So. 375, 378, where it had been denied that a transfer of mineral rights is nothing more than the imposition of an incumbrance, like a mortgage or an ordinary lease for occupancy or cultivation; but on the contrary had been announced that the sale of mineral rights, constituting a servitude upon the land, of the character of incorporeal real property, is an alienation of a part of the landowner’s interest in land and is “a dismemberment of his ownership,” being “more like a sale of an undivided interest in the land than like the imposing of a mortgage or an ordinary lease upon the land.”
Adherence to the same concept was manifested in Wiley v. Davis, 164 La. 1090, 115 So. 280, and in Palmer Corporation of Louisiana v. Moore, 171 La. 774, 132 So. 229.
In the former case, it was said that “the granting of a mineral lease on property is the granting of a servitude thereon [citation] and hence constitutes a dismemberment of said property amounting to a partial alienation thereof.” 115 So. 281.
In the latter case, the statement was made that “when a landowner sells only the mineral rights in his land, or sells the land and reserves the mineral rights, the transaction constitutes a dismemberment of the ownership, and is a sale or reservation, as the case may be, of one of the elements of ownership.” 132 So. 232.
Further rationale to the same effect is found in the earlier case of Hanby v. Texas Co., 140 La. 189, 190, 194, 72 So. 933, 934, where it was observed that the right of an owner to use the surface of his land to reduce to possession underlying oil and gas may be so alienated by him as to “dismember the title,” whereupon the resultant rights “retain the nature of the thing upon which they bear as though no dismemberment had occurred.”
Connell v. Muslow Oil Co., 186 La. 491, 172 So. 763, 766, decided in 1937, is a strong bulwark for the position of appellants. The facts in that case were that the lessee of the mineral rights to 80 acres of land in Caddo Parish, Louisiana, produced oil on the south forty acres of the tract. Reserving all mineral rights, the landowner subsequently sold the land to another, who conveyed the north forty acres without reservation of the mineral rights. Traced from this vendee through two similar conveyances, in which the mineral rights were not reserved or mentioned, Connell acquired title to the north forty acres, took possession of the land which he had purchased, and cultivated a part of it. He held possession for the prescriptive period required to acquire title by adverse possession in Louisiana. No well having been drilled on the north forty acres, Connell sued the Muslow Oil Company, which had acquired the mineral rights to the entire eighty acres. He claimed that, by prescription of ten years, he owned the mineral rights to the north forty acres, upon which no well had ever been drilled. In opposition, the Muslow Oil Company claimed possession of the mineral rights, or servitude, upon the north forty acres by reason of the admitted fact that it had drilled a well on the south forty acres of the tract.
The contention of the Muslow Oil Company was sustained for the reason that “the exercise of the mineral rights, or servitude, on any part of one continuous tract of land upon which the servitude is imposed is considered an exercise of the right bn the whole tract.” Quoting Article 3432 of the Louisiana Civil Code, the court said that “the possession of incorporeal rights, such as servitudes and other rights of that nature, is only a quasi possession, and is exercised by the species of possession of which these rights are susceptible.” The court emphasized that the original mineral-rights lessee and its successors in title had “retained possession of the mineral rights, or servitude, on the whole 80 acres of land, in the only way that the law provides for the exercise of the right of possession of a servitude, or an incorporeal right.”
The court said, further: “It is not disputed that the exercise of the servitude, by the operating of the oil well, was open and notorious, and apparent to every one in the neighborhood. There was the derrick, the pumping rig, oil tanks, and other apparatus, and trucks hauling materials to the well; all of which was obvious to every one in the vicinity, and the passersby. * * * The important fact is that the Natalie Oil Company [original lessee] and its successors in title, by exercising their mineral rights, or servitude, upon a part of the 80 acres of land, protected the servitude on the whole 80 acres against loss by prescription.” 186 La. at pages 494-496, 172 So. at pages 764, 765.
Likewise, in a late case, Allison v. Maroun, 1939, 193 La. 286, 190 So, 408, 410, the ratiocination was repeated that “the kind or species of possession of which a mineral lease is susceptible, or the way in which the lessee may exercise his right of possession, is by drilling or exploring for the minerals, and taking possession of such as he may discover.”
Although the mineral lessee’s suit was dismissed because there was no proof that he had explored or drilled for minerals, it was said that “it may be assumed that a holder of a mineral lease may, under the provisions of Act No. 205 of 1938, maintain an action for slander of his title, if he is actually exercising his right of possession of his ‘incorporeal immovable property.’ * * * ” 193 La. at page 293, 190 So. at page 410.
Asserting that “mineral servitudes are property rights, in fact, the most valuable property in the State,” the Supreme Court of Louisiana recently held in Ohio Oil Co. v. Cox, 196 La. 193, 198 So. 902, 908, that the drilling of a “dry hole” by the as-signee of a mineral-rights lessee interrupted the running of prescription then accruing against the claims of the mineral claimants.
From our foregoing review of the Louisiana authorities, we conclude that, under Louisiana law, a landowner may lease his own right to extract minerals from his land in such manner as to vest the mineral-rights lessee with the right to possess the mineral servitude by exercising it; and that such possession is adverse to any claimant, including the owner, who asserts an adverse claim to the mineral rights.
(3) The actual possession by appellants of their mineral servitudes by the active exercise thereof has been abundantly shown by evidence of record.
After obtaining its sulphur rights by sublease on February 10, 1932, appellant, Freeport Sulphur Company, entered upon a survey, followed by the
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PHILLIPS, Chief Judge.
This is a petition to enforce an order of the National Labor Relations Board.
The respondent, Burton-Dixie Corporation, in its answer consented to the entry of an enforcement order, except in so far as the Board’s order (1) directed it to cease and desist from refusing to bargain collectively with International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local No. 452, A. F. of L., and upon request to bargain collectively with such Union, and (2)' directed it to cease and desist from granting wage increases to its employees without first consulting with the Union.
Organizational activities in respondent’s plant in Denver, Colorado, began early in February, 1952. Between February 4 and February 7, 1952, employees of the respondent signed cards authorizing the Union to represent them as their collective bargaining agent. On the latter date, at about 1:30 p. m., Bailey, a Union organizer, went to the office of the respondent in Denver and requested Hill, the Denver plant manager, to recognize the Union as the bargaining agent of the employees. Bailey then had 17 cards, which was one short of a majority. Hill stated that he was not sure he had authority to recognize the Union as the bargaining agent and that he would take the matter up with his superiors in Chicago. Báiley testified that he replied that he could not wait and would file a petition with the National Labor Relations Board seeking an election and stated: “ * * * if they did agree to bargain with us collectively, I would withdraw it at a later date, * * Clearly, the request for recognition was a continuing request and was so understood by Bailey and Hill.
Hill, in his testimony, denied that Bailey requested the respondent to bargain collectively with the Union. A letter written by Bailey immediately after the conversation tends to corroborate Hill’s testimony.
■ Immediately after the conference on February 7, Hill telephoned Sevcik, respondent’s general manager at Chicago. Sevcik immediately flew to Denver, arriving’ the evening of February 7. On February 8, at 12:30 p. m., Bailey, after having received cards from more than a majority of respondent’s employees, went to respondent’s plant in Denver and engaged in a conversation, with an employee, Trujillo, who had been obtaining signed Union cards. Sevcik came out and ordered Bailey off respondent’s property. Bailey told Sevcik he was Herb Bailey of the Teamsters’ Union; that he had had a nice conversation with the local plant manager on February 7. Sevcik stated he did not care what Bailey did on February 7 and told him to get oil the property or he would break his back and every bone in his body. Bailey stated he would like to introduce himself and discuss the matter. Sevcik stated he didn’t care “what you are, get off the property, and quick.” As Bailey was leaving, Sevcik stated: “I will have you understand I operate ten Burton-Dixie plants and no * * * Union ever got in any of them and they will never get in any of our plants.” Sevcik interspersed his statements with profane language.
At about 2 p. m., February 8, Sevcik called the employees into a meeting which lasted the remainder of the afternoon. Sevcik addressed the meeting and set forth the benefits the respondent could offer, including bonuses and paid vacations. He called upon Trujillo and another employee, whom he had been informed were assisting in organizing the employees, to state what benefits the Union could offer. Sevcik stated that there would be no Union in the plant and that he would keep only the loyal employees.
During the week of February 11, respondent granted wage increases made retroactive to February 6 to many of the employees. Respondent did not consult the Union with respect to such increases, although it knew that the Union claimed it represented a majority of respondent’s employees.
The principal issue is whether the respondent refused to bargain with the Union as the representative of respondent’s employees. Ordinarily, in order to support a finding of a refusal to bargain collectively, there must be an express request to bargain by the Union and a refusal by the employer.
In National Labor Relations Board v. Columbian Enameling & Stamping Co, 306 U.S. 292, 297, 59 S.Ct. 501, 504, 83 L.Ed. 660, the court said:
“Since there must be at least two parties to a bargain and to any negotiations for a bargain, it follows that there can be no breach of the statutory duty by the employer— when he has not refused to receive communications from his employees —without some indication given to him by them or their representatives of their desire or willingness to bargain. In the normal course of transactions between them, willingness of the employees is evidenced by their request, invitation, or expressed desire to bargain, communicated to their employer.”
Here, there was an express request that the respondent recognize the Union as the exclusive bargaining agent of its employees. There was, however, no express request to bargain, but it was clearly implied that such a request would follow recognition of the Union, and we think the statements made by Sevcik to Bailey, fairly construed, amounted, in substance and effect, to an affirmative statement that respondent would not bargain or otherwise deal with the Union as the representative of its employees. Clearly, after Sevcik’s statements to Bailey, a request by Bailey that respondent bargain with the Union as the representative of the employees would have been utterly vain and useless and a mere formality. We think that Sevcik’s statements amounted to an affirmation that respondent would not bargain with the Union and warranted the Board in finding that respondent had refused to bargain with the Union as the representative of the employees.
Respondent’s action in granting wage increases without consulting the Union constituted a violation of § 8(a) (1) and (5) of the National Labor Relations Act, as amended, 61 Stat. 136, 29 U.S.C.A. § 141 et seq.
The order will be enforced.
. Hereinafter called the Union.
. See, also, Atlas Life Ins. Co. v. National Labor Relations Board, 10 Cir., 195 F.2d 136, 138; Joy Silk Mills v. National Labor Relations Board, 87 U.S.App.D.C. 360, 185 F.2d 732, 741; National Labor Relations Board v. Valley Broadcasting Co., 6 Cir., 189 F.2d 582, 586.
. National Labor Relations Board v. Crompton-Highland Mills, Inc., 337 U.S. 217. 218. 219. 234. 69 S.Ct. 960. 93 L.Ed. 1320; May Dept. Stores Co. v. National Labor Relations Board, 326 U.S. 376, 384, 66 S.Ct. 203. 90 L.Ed. 145.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
HARRY PHILLIPS, Circuit Judge.
Defendant-appellant, Kenneth Ray Crowder, along with Glennis Ronald Tucker and Albert Ray Green, was indicted for robbery of the Acme Federal Savings and Loan Association of Coving-ton, Kentucky, herein called Acme. Tucker and Green entered pleas of guilty. Appellant plead not guilty and was tried and convicted by a jury. His sentence was fixed at fifteen years.
This appeal presents two principal questions: (1) The sufficiency of the evidence-to sustain the verdict; and (2) the refusal of the district court to grant a motion for a new trial on grounds of newly discovered evidence.
(1) The Sufficiency of the Evidence
Appellant relied upon an alibi as his principal defense, contending that he was asleep at home at the time of the robbery. He was supported in this contention by his wife and by the testimony of Tucker and Green.
The uncontradicted evidence established that appellant rented an apartment at the “Ida Spence Homes” in Covington; Tucker stayed at appellant’s apartment part of the time; on the night of February 28, 1963, Tucker and appellant went to Cincinnati, picked up Green and did a considerable amount of drinking during the rest of the night; these three defendants were involved in an automobile accident about 10:05 a. m., March 1, 1963; one of the vehicles involved in the accident was a white Buick; the accident took place about a quarter of a block from Acme; on the same day at about two or three minutes after 12:00 noon, Acme was robbed; two men definitely identified as Tucker and Green entered Acme and committed the robbery; approximately forty-five minutes later a white 1955 Buick which was identified as the get-away car was found parked near the Ida Spence Homes; shortly afterwards it was learned that the occupants of the car had entered the apartment of appellant; the police then went to this apartment and found the three men upstairs lying across beds, fully clothed, with their eyes closed, asleep or pretending to be asleep ; and a search produced the major part of the money and the billfolds which were taken from victims in Acme at the time of the hold-up.
Tucker and Green testified on behalf of the defendant to the effect that the three had returned to Crowder’s apartment after the 10:05 a. m. accident; that Crowder went to sleep; that Green then decided to go home and asked Tucker to drive him; that Green and Tucker then left the apartment but on the way they stopped in the vicinity of Acme and had another drink; while there the subject of bank robbery came up and the decision was made to rob Acme, primarily because they had a wreck in the area and. it “seemed the logical place to do it;” that they bought caps and sunglasses for a disguise; that they had purchased the pistol used in the robbery about a week and a half before; that there was no advance planning; that they were the only two parties involved; that after the robbery they returned to appellant’s apartment because it was closer than Green’s house; that the caps, sunglasses and pistol were thrown away behind the Ida Spence Homes; that the proceeds of the robbery were divided between the two and that appellant did not receive any of the stolen money; that Tucker placed part of his share of the money under the mattress of a baby bed and the rest in a pocket of a jacket belonging to appellant which Tucker sometimes wore; and that appellant was not involved in any way in the robbery.
Appellant testifed that he returned home after the accident, went upstairs and went to sleep and did not leave until taken by the police. He stated that the only time that he was awake the other two were in the apartment and he did not ask them what they were doing. His wife testified that Crowder arrived home sometime between five or six and nine or ten o’clock and was at home at the time of the robbery.
The government’s evidence showed-that the defendants ate, bought gasoline and had an automobile accident in the Acme area; and that Tucker and Green entered Acme, and Green held four persons as hostages in the back room. Each of the four hostages testified that Green informed them that the get-away car would be outside at 12:08.
Billfolds were taken from three of these hostages which were found later at appellant’s apartment. A deaf mute who entered Acme immediately after the robbery and gave a description of the car indicated that a third man was in the car at the time the other two left the scene of the robbery. -A construction worker saw a white 1955 Buick outside Acme and testified that a man was sitting under the wheel although he could not identify him. A tenant living next door to appellant testified that appellant and Tucker, with a third person, passed by her window about one o’clock. The stolen money and the three wallets were found in appellant’s apartment. The money was in three locations, with the larger sum being found on Green, the one who handled the gun, and two approximately equal amounts were found under the mattress of the baby bed and in appellant’s jacket pocket, which was hanging in the closet.
The conflicts in the testimony presented questions of credibility- to be determined by the jury, whose province it is to weigh the evidence, resolve conflicts therein, and draw reasonable inferences therefrom. “The verdict of a jury must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it.” Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680. Applying this rule, we find that there is sufficient evidence to support the verdict.
(2) Motion for a New Trial on Grounds of Newly Discovered Evidence
Appellant filed notice of appeal from his conviction on July 8, 1963. On December 1, 1964, this court remanded the case to the district court for the sole purpose of considering a motion for a new trial based upon newly discovered evidence. This motion was grounded upon an affidavit signed by Glennis Roland Tucker stating that Crowder did not participate in the crime but that one Dwight Courtney was the third participant.
The district court on February 18, 1965, denied the motion for a new trial without an evidentiary hearing, saying that:
“The record in this case has been re-examined in the light of the defendant’s motion. The so-called new evidence is nothing more than the statement of a co-defendant who was present at the time of trial and who testified in behalf of the defendant, Crowder. Glennis Ronald Tucker, who signs the affidavit on which the motion for a new trial is based and who himself has plead guilty to the offense charged, testified that on the day of the robbery he was in company with the defendant, Kenneth Ray Crowder, and had been in Crow-der’s home after a night of drinking with his other co-defendant, Green. He stated that he left Crowder’s house at approximately 11:15 or 11:30, committed the robbery with his co-defendant, Green, and returned to Crowder’s house where the three defendants and the money were found by the officers. He testified that there was only one other person with him in the commission of the crime, that is, his co-defendant, Green. Now, according to his affidavit, there were three persons involved in the robbery, one of whom he says was Dwight Courtney. Notwithstanding these conflicting statements, it is established, by Tucker that he and his associates in the bank robbery were at the home of the defendant, Crowder, immediately before and immediately after the robbery. The jury saw these witnesses testify and heard the witnesses for the United States and it is brought out in detail all the surrounding facts and circumstances.
“It is my judgment that the verdict should not be set aside on the ground of newly discovered evidence unless the evidence is of such a character that there is a strong probability of a different verdict in the event of a new trial * * *
******
“Tucker testified in the case on June 27, 1963 but he did not make the affidavit on which the motion is based-until July 30,1964.”
Appellant contends that the denial of the new trial motion was an abuse of discretion on the part of the district court or alternatively that the order should be vacated and remanded for an evidentiary hearing.
The granting or refusal of a motion for a new trial upon the ground of newly discovered evidence rests in the sound discretion of the trial court and a new trial will not be granted unless such evidence would probably bring about a different result. In the absence of a clear showing of abuse of discretion in determining the probable effect of the newly discovered evidence in changing the result of the trial, the action of the district judge in overruling the motion for a new trial will not be disturbed on appeal. United States v. Lewis, 338 F.2d 137 (C.A.6), cert. denied, 380 U.S. 978, 85 S.Ct. 1342, 14 L.Ed.2d 272, and cases therein cited.
In this case the district judge heard Tucker’s testimony before the jury to the effect that only two persons were involved in the robbery and that appellant did not participate. The jury refused to believe this testimony. This same witness now has undertaken by affidavit to change his story and say that three persons were involved in the robbery, but that appellant was not the third person. We find no abuse of discretion on the part of the district judge in denying the motion for a new trial.
Appellant alternatively says that he should be granted an evidentiary hearing on his motion for a new trial.
In Lyles v. United States, 272 F.2d 910, 912 (C.A.5) the court said:
“Ordinarily the district court may in its discretion determine a motion for new trial upon affidavits without more. Ewing v. United States, 1942, 77 U.S.App.D.C. 14, 135 F.2d 633, 638. There are, however, exceptional cases in which an oral hearing should be granted. * * * ”
In Gordon v. United States, 178 F.2d 896 (C.A.6), cert. denied, 339 U.S. 935, 70 S.Ct. 664, 94 L.Ed. 1353, the new trial motion was denied after being considered only on affidavits.
Appellant contends that Dwight Courtney, the person identified by Tucker’s affidavit as having been the third party involved in the robbery, is now being held in the Federal Prison at Chillicothe, Ohio, and that the case should be remanded to the district court for a hearing on the motion for a new trial in order that Courtney may be introduced as a witness. This too presents a matter within the discretion of the district judge.
Under -the facts and circumstances of this case we find no abuse of discretion on the part of the district court in denying without an evidentiary liearing the motion for a new trial.
The judgment of the district court is affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
INGRAHAM, Circuit Judge:
This Florida diversity case presents questions of basic contract law. Plaintiff-appellant Albert Brown filed suit against Financial Service Corporation, International (FSC), a Georgia corporation, alleging that it breached its contract to repurchase certain stock which had been issued to Brown while he was employed by the company’s wholly owned subsidiary, Financial Service Corporation of America. FSC counterclaimed for the balance due on a promissory note held by it and executed by Brown in November 1968 shortly after he became employed by the company. Although we fundamentally disagree with the district court’s reason for granting summary judgment to FSC on Brown’s claim, we affirm that decision and also affirm the lower court’s summary judgment award to FSC on its counterclaim.
I.
The operative facts are undisputed. In November 1968 negotiations between FSC and Brown culminated in Brown’s employment by the company as a senior vice president and director of its subsidiary, Financial Service Corporation of America. The compensation package arranged for Brown included a $40,000 a year salary plus bonuses, a new or used Cadillac, and, most significantly for our purposes, an agreement to sell Brown 4000 shares of FSC’s non-publicly held stock at $5 a share. Brown began work in mid-November of 1968. In late May 1969 William Branch, FSC’s assistant secretary and the person in charge of issuing the company’s stock, wrote a letter to Brown concerning the 4000 shares of stock to be issued pursuant to the employment bargain. This letter summarized the ways in which the stock purchase could be financed, as well as describing the various steps necessary to finalize the transaction. Enclosed with this letter was the Stock Purchase Agreement which set forth the specific terms of the purchase. This document is the source of the present difficulties.
The controversial provision deals with the disposition of the stock when the purchaser ceases to work for the company. For ease of reference we will call this the repurchase provision, and it provides:
“When, for any reason, Representative’s employment with the Company terminates, the Company shall have one year from the date of such termination to repurchase any shares sold under this agreement for their fair market value at the time of such repurchase, which fair market value shall be the price adopted for the Company’s stock by the Board of Directors of the Company in the most recent meeting of the Board preceding the termination of Representative’s employment at which such action was taken. This option to repurchase shall be exercised by the Company sending written notice of its intent to exercise to Representative at his last address as shown on the Company’s records. Such notice shall specify the time, place, and manner in which the repurchase shall occur. Thereafter, at the time and place and in the manner so specified the Company shall make payment for the stock to be repurchased in cash or by check and Representative shall, immediately upon making of such payment, deliver to the Company valid title to said stock and all certificates evidencing said stock free of all claims, liens, and encumbrances of any nature whatever.”
In response to Branch’s letter Brown called Branch sometime between May 29, 1969 and June 6, 1969, to discuss the stock purchase transaction. Although the content of this conversation is in dispute, all agree that it took place and that it precipitated a letter from Brown to Branch which accompanied the signed stock purchase agreement when it was returned, via the mails, to Branch’s office in Atlanta. This cover letter, dated June 6, 1969, discussed several matters relating to the purchase, but the significant element at this point is the reference to the repurchase or termination of employment clause; Brown wrote as follows:
“I wanted also to confirm the discussion you and I had yesterday on the phone on questions that I had raised. Referring to the termination of employment clause in the stock purchase agreement, while it is stated that the company shall have one year to repurchase any shares, we agreed that the company would repurchase almost immediately after termination. if
Branch received Brown’s letter but took no further action other than to issue the 4000 shares of stock once the financing had been arranged.
In the fall of 1969 the relationship between Brown and FSC began to deteriorate and it was agreed, on what appear to be rather amicable terms, that Brown’s employment would end on January 15, 1970. For reasons not entirely clear and unnecessary to relate in order to resolve the present appeal, Brown and FSC encountered problems in settling up following his termination. Although FSC was at one time willing to repurchase the stock for $10 a share and hold the proceeds until a final determination was made of amounts allegedly owed to FSC by Brown, Brown would not agree to this offer. FSC subsequently decided that its. financial condition was such that it would not repurchase the stock. Left with 4000 shares of apparently unmarketable stock, Brown filed suit in November 1970 seeking damages from FSC for the alleged breach of its contract to repurchase the stock. He also alleged that the company had failed to sell him the additional 1000 shares mentioned in the employment agreement, thus reasoning that FSC was liable for the difference between the purchase price of this stock and the price due upon repurchase. In addition to denying liability FSC counterclaimed for $11,600, asserting that Brown was liable for this amount as the unpaid balance on a promissory note executed by Brown and held by FSC.
After the parties stipulated that the case was a proper one for summary judgment, the trial court granted FSC’s motion in Brown’s suit and in its counterclaim. The court decided that the pa-rol evidence rule precluded it from considering anything other than the stock purchase agreement to determine whether FSC had a duty to repurchase Brown’s stock. The court reasoned as follows:
“Upon reading and analyzing paragraph 3 [the repurchase clause] the Court is convinced that the company was not obligated to repurchase but merely possessed an option. There is no ambiguity in the stock purchase agreement; its terms are clear. The cover letter of June 6, 1969 and any conversations between Brown and Branch prior to [or] contemporary to the stock purchase agreement may not vary its terms. The parol evidence rule . . . precludes varying an unambiguous written agreement by evidence of a contemporaneous oral understanding. . . .”
Rejecting Brown’s defense that he was not liable for the balance due on the note because FSC had breached the employment agreement of which the note was an integral part, the court held for FSC on its counterclaim.
The significant issue on appeal is, stated broadly, whether the trial court erred in holding that FSC did not have a duty to repurchase the 4000 shares of stock. Although we take an altogether different view of the case than did the trial court, we reach the same result regarding FSC’s obligation to repurchase. Other issues raised concern FSC’s asserted liability on the 1000 additional shares of stock and the propriety of the court’s holding on the counterclaim. Because of our resolution of the repurchase issue against Brown, there is no need to consider his contention relative to the 1000 shares, and we affirm without further discussion the court’s holding that Brown is liable on the promissory note.
II.
The flaw in the trial court’s analysis is its implicit conclusion that the stock purchase agreement represented the complete agreement of the parties and that therefore Brown’s cover letter had no legal significance according to the parol evidence rule. The parol evidence rule is a rule of the substantive law of contract, and its purpose is to preserve the sanctity of a written agreement once it is determined that the writing fully states the agreement of the parties. See South Florida Lumber Mills v. Breuchaud, 51 F.2d 490 (5th Cir., 1931), cert. den., 284 U.S. 659, 52 S.Ct. 37, 76 L.Ed. 558; Everglade Lumber Co. v. Nettleton Lumber Co., 111 Fla. 333, 149 So. 736 (1933); Sears v. James Talcott, Inc., 174 So.2d 776 (Fla. App.1965). Of necessity then the first question is whether the writing fulfills this function so as to be an integration of the parties understanding. Carolina Metal Products Corp. v. Larson, 389 F.2d 490 (5th Cir., 1968); Florida Capital Corp. v. Robert J. Bissett Const. Inc., 167 So.2d 595 (Fla.App.1964); see G. Grismore, Principles of the Law of Contracts, § 94 (J. Murray ed. 1965). To answer this question a court should consider the writing as well as 'the circumstances surrounding its execution, Florida Capital Corp. v. Robert J. Bissett Const. Inc., supra, at 599, and parol and extrinsic evidence may be used in making this determination. Carolina Metal Products Corp. v. Larson, supra, 389 F.2d, at 493. We hold that Brown’s cover letter should have been considered as a part of the parties’ agreement concerning the terms of the stock purchase. See Johnson v. Smith, 84 So.2d 722 (Fla.1956); Holcomb v. Bardill, 214 So.2d 522 (Fla.App.1968).
Without doubt a covering letter may constitute a part of the total agreement. Gateway Co., Inc. v. Charlotte Theaters, Inc., 297 F.2d 483 (1st Cir., 1961); see Johnson v. Smith, supra; Fraser v. Lewis, 187 So.2d 684 (Fla. App.1966). Here the cover letter itself clearly establishes that its purpose was to summarize in writing the content of a telephonic conversation concerning the purchase agreement; the cover letter specifically discusses terms of the stock purchase agreement. Moreover, the letter not only accompanied but was a cover to the signed stock purchase agreement when it was returned to Branch’s office in Atlanta, And finally, Branch realized that at least to some extent the letter modified the terms of the purchase agreement. In short, the existence of the cover letter and the circumstances surrounding the execution of the stock purchase agreement preclude the conclusion that it was intended by the parties as the final memorial, the integration, of their understanding concerning the terms of the stock sale. Consideration of the cover letter would not, therefore, violate the parol evidence rule because the cover letter was a part of the contract. For this reason it was erroneous for the trial court to reject the cover letter when determining the rights and liabilities of the parties under the purchase agreement.
III.
The decision that the parties’ contract is embodied in both the cover letter and the stock purchase agreement does not, of course, end the matter. For now there are arguably inconsistent contractual provisions dealing with the same subject matter — that is, the rights and duties of the parties on the purchaser’s termination of employment. We agree with the trial court that the stock purchase agreement standing alone does not impose a duty on the company to repurchase Brown’s stock. The problem is that the cover letter says “we agree that the company would repurchase almost immediately after termination.” Interpreting these words in the manner urged by Brown would lead to the conclusion that this language means that the company had an obligation to repurchase the stock and that this repurchase must occur immediately after termination. Two duties are thus created: (1) the duty to repurchase; and (2) the duty to do so immediately after termination. Obviously this interpretation is in direct conflict with the interpretation of the agreement as giving the company an option to repurchase but imposing no affirmative duty.
There is, however, another interpretation which could be accorded to this language from the cover letter. Rather than treating this statement as creating two duties, it could-be interpreted as imposing only a duty on the company to exercise its option immediately on termination. In the circumstances of this case it is this interpretation which we adopt as representing the intention of the parties at the time this contract was consummated. We reach this conclusion on the basis of the following analysis in which we apply several well established principles for the interpretation and construction of contracts.
The first principle is that in interpreting contractual language to determine the rights and obligations of the parties to the agreement the contract must be considered as a whole in an effort to give meaning to all of its provisions. See Union Central Life Ins. Co. v. Neuhoff, 157 Fla. 98, 24 So.2d 906 (1946); Blackshear Mfg. Co. v. Fralick, 88 Fla. 589, 102 So. 758 (1925). See generally 3 Corbin on Contracts, § 549 (1960). Florida courts have long recognized that “[i]f clauses in the instrument are repugnant to each other, they must be reconciled, if possible . . . . ” McNair & Wade Land Co. v. Adams, 54 Fla. 550, 45 So. 492, 493 (1907). To interpret the language in Brown’s letter as creating a duty in the company to repurchase his stock would render completely nugatory one of the crucial provisions of the document which he signed and returned to FSC. We would have to totally disregard the language in the purchase agreement conferring an option to the company to repurchase. By interpreting the disputed language in Brown’s letter as going only to the time of repurchase rather than establishing such a duty, we afford meaning and significance to all parts of the contract. This interpretation also fulfills our duty to reconcile provisions which at first glance appear repugnant to each other.
The principle that conflicting provisions should be reconciled in order to give meaning to all parts of the contract might not warrant interpreting Brown’s language as we have. Another established rule of contract interpretation, however, is that courts may look to subsequent action of the parties to determine the interpretation that they themselves placed on the contractual language. LaLow v. Codomo, 101 So.2d 390 (Fla.1958). The conduct of both parties subsequent to Brown’s termination leaves us convinced that neither FSC nor Brown believed that the company had an affirmative duty to repurchase his shares.
The voluminous record made on the parties’ cross-motions for summary judgment is replete with correspondence from Brown to FSC and vice versa. A good portion of these communications deal directly with the disposition of Brown’s stock. Understandably since Brown would have received $40,000 from the sale, he was anxious for this to occur so that he could retire the note negotiated to finance the purchase in the first place. But none of his many letters exhorting the company to hurry up and repurchase his stock speak in terms of an affirmative obligation on the part of FSC. Likewise, when FSC offered to repurchase and hold the proceeds until the final accounting was completed, the offer spoke in terms of FSC’s right to repurchase instead of a duty to do so. Brown even mentioned in two letters to two different officers of FSC that he might hold the stock until the company went public. The extensive correspondence between Brown and FSC simply does not support the interpretation now sought by Brown. Considering the contract as a whole, the circumstances surrounding its execution, and the conduct of the parties subsequent thereto, our conclusion is that this contract does not impose a duty on FSC to repurchase the 4000 shares of stock issued to Brown.
The judgment of the district court is affirmed.
. Financial Service Corporation of America is also a Georgia corporation, but is registered as a foreign corporation in Florida and does business there. It appears that FSCA is a licensed broker/dealer, a member of the Midwest and Boston Stock Exchanges and is engaged in the sale of mutual funds, securities and other related investments. Mr. Brown was the company’s sales manager for Florida and officed in Fort Lauderdale. He was a Florida citizen at the time this law suit was filed. It is unclear from the record whether Mr. Brown was the senior FSCA official in Florida, but it is safe to say that he had a significant hand in the company’s operations there.
. The employment contract also stated that 1000 additional shares of FSC stock would be sold to Brown when they became available. Subsequently this stock was available at a price of $7 a share. For reasons we are unable to discern either the company failed to offer this stock to Brown or he failed to purchase it.
. The full text of this letter is as follows:
FINANCIAL SERVICE CORPORATION
May 29, 1969
Mr. Albert A. Brown 4100 Galt Ocean Drive Ft. Lauderdale, Florida 33308 Dear Al:
In accordance with your previously expressed interest in purchasing shares of Financial Service Corporation, International stock, we are enclosing the following forms :
Sign and Return
(1) Stock Purchase Agreement (2 copies) 1
(2) Promissory Note (2 copies) 1
(3) Stock Powers (1) 1
(4) Affidavit (2 copies) 1
(5) Offering Circular
Do not return
All items which you are to execute must he received in our office within ten (10) days from the date of this letter. If these documents have not been returned, we will assume that you are no longer interested in purchasing the stock.
The prospectus mentions a price per share of $5.00. The value of FSCI stock is determined by its Board of Directors at regular intervals. The price per share of this offering to you was set at $5.00 on July 1, 1968.
The Stock Purchase Agreement outlines the terms and conditions of your investment in FSCI stock. Please read it carefully..
There are several methods which can be used to pay for your FSCI stock. 1. Obviously, a cash payment will be the least expensive to you. If you choose this method, please return your check with the other documents.
2. Financing through a local bank connection may be your next choice. It is probable that more attractive terms are available locally, plus the advantage of strengthening your personal banking relationship. If this method is to be used, a check should also accompany the above executed documents.
(R-721)
3. You may wish to avail yourself of the financing plan available through the Citizens and Southern Bank in Atlanta, Georgia, which is described on the last page of your Stock Purchase Agreement, Appendix A.
4. Finally, a combination of the above can be arranged.
If you select option 3 or 4, you must execute the Note and Stock Powers which are enclosed. The Note evidences your agreement to pay the balance of the purchase price not paid in cash at the time of your purchase. The security for the Note will be your FSCI stock. Therefore your stock certificates will be held as collateral until the Note is paid in full. A Stock Power is included for each certificate that will be issued.
The Affidavit evidences your understanding of the restrictions placed on the transferability of the shares you propose to purchase. This document is necessary because of State and Federal security laws.
When you have executed these documents and returned them to us as outlined above, we will issue certificates in your name and either mail them to you or deliver them to the Bank depending on the payment method you select.
Very truly yours, /s/ William H. Branch, Jr. Assistant Secretary
. This letter reads:
June 6, 1969
Mr. William Branch
Financial Secretary
Financial Service Corp. of America
Financial Service Building
148 Cain Street
Atlanta, Georgia 30303
Dear Bill:
As per your letter of May 29, 1969, I am indicating by the enclosures — stock purchase agreement and affidavit — my desire to purchase the 4,000 shares of stock indicated on the agreement. I have not returned the promissory note or stock powers because I should like very much to finance this purchase locally if I can. I have just not had the time this week to do anything along these lines — but I am certainly intent on purchasing this stock through a loan whether it be through a local banking institution or through an Atlanta bank.
I wanted also to confirm the discussion you and I had yesterday on the phone on questions that I had raised. Referring to the termination of employment clause in the stock purchase agreement, while it is stated that the company shall have one year to repurchase any shares, we agreed that the company would repurchase almost immediately after termination. We also agreed that the market value of the stock was actually determined twice each year — in June and December. I referred to this item because of the reference in that same clause No. 3 in the stock purchase agreement which refers to the meeting of the Board “at which such action was taken”.
Furthermore, we also agreed that the 15% charge referred to. in clause No. 1 of the agreement for collection by an attorney would only be in effect if the principal and interest of the note were not collectible.
We also agreed that if I were to anticipate payment of the note or of any portion of the note, I would receive a corresponding refund or reduction of interest charges.
Referring to paragraph No. 4, miscellaneous, we agreed that the reference to either party having the right to offset or cancel existing indebtedness, referred to a standard approach to the cancelling of indebtedness by offsetting it with other sources of dollars.
(R-725) The only other comment made in our discussion was that this stock purchase agreement was different from the one issued to some men in the company which called for repurchase of a portion of a man’s stock holdings if he did not earn specific or required amount of dollars during a prior twelvemonth period. This arrangement did not apply to me in that this agreement calls for the repurchase by the company at a fair market value at the time of such repurchase.
By the way, I am including two copies of the stock purchase agreement since I would like a completed one returned to me for my files.
Kindest regards, FINANCIAL SERVICE CORP. OF AMERICA ALBERT A. BROWN Senior Vice President AAB/jp Enclosures
. The purchase of the 4000 shares was financed by Brown’s note for $20,002. The stock served as collateral for this loan and immediately after its execution FSC discounted the note with an Atlanta bank. In March 1970, when FSC offered to repurchase Brown’s shares, the note had a payoff of $18,059.87.
. Although not before us on this appeal there is a related suit filed by Financial Service Corporation of America against Brown for damages allegedly sustained while Brown was in the company’s employment.
. As to the 1000 shares Brown claims that he should have been issued this stock at $7 a share and that the company was obligated to repurchase at $10 a share. See note 2, supra. He would then have realized a $3000 profit, and it is this amount which he claims as damages. Since we hold that there is no obligation to repurchase, his claim is without merit. According to the district court’s opinion FSC is willing to sell him 1000 shares at $7 a share.
. Perhaps our conclusion in this regard will be clearer if we backtrack to the question of whether there was a contract at all. Branch’s initial letter was clearly an offer to sell 4000 shares of stock to Brown. This letter included the terms of the purchase and covered such things as offering price, the number of shares, the methods by which the purchase could be financed, and other relevant considerations concerning the transaction. If Brown had signed the stock purchase agreement at this point and returned it without further action, then FSC would have had an acceptance of its offer. But Brown did not do this; instead he called Branch and discussed with him certain aspects of the purchase, including but not limited to, what would happen in the event he left FSC’s employment. Brown’s cover letter is an outward manifestation of his failure to assent unequivocally to the terms of the stock purchase agreement. As such, Brown’s action of signing the purchase agreement and attaching his cover letter was nothing more than a counter offer. FSC would have been warranted in refusing to issue the -stock to Brown until it liad his assurance that he agreed without reservation to the terms of the purchase agreement. But Branch, although realizing that Brown did not agree completely, issued the stock to him anyway. This act was legally an acceptance of the terms of Brown’s counter offer. It is clear then that the parties contract includes both the signed stock purchase agreement and the cover letter.
. As Judge Tuttle once noted:
“It is axiomatic that the first task of a court in contract interpretation is determining from the agreement itself and the ' surrounding circumstances what the intent of the parties was. If, after examining all these sources of information, it is still not possible to determine the intent of the parties, courts can rely on rules of law which purport to determine what, in certain circumstances the parties intended, when, in fact, no one really knows what was intended. . . ” Southern Bell T & T v. Florida East Coast Ry. Co., 399 F.2d 854, 856 (5th Cir., 1968).
. See note 5, supra.
. We agree with FSC’s statement in its brief that this offer, made on March 12, 1970, to repurchase was not an attempt to exercise its option but was only an effort to resolve its dispute with Brown.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MANSFIELD, Circuit Judge:
Defendants American Airlines, Inc. (American) and McDonnell Douglas Corporation (McDonnell Douglas) appeal from that portion of a judgment entered in the Southern District of New York pursuant to the order of Judge Milton Pollack after a jury rendered a special verdict awarding plaintiff Jane Shatkin $87,500 for conscious pain and suffering experienced by her son Lloyd Shatkin immediately prior to the crash of an American Airlines jet on which he was a passenger. Plaintiff cross-appeals from that portion of the special verdict that awarded her $15,000 for loss of services and $15,000 for loss of financial support. We reverse the award for pre-impact pain and suffering and remand with instructions to enter judgment for the defendants notwithstanding the verdict. We affirm the awards for loss of services and financial support.
This case stems from the highly publicized crash of a DC-10 plane on an American Airlines flight near O’Hare International Airport on May 25, 1979, after it lost an engine during take-off. All of those aboard the plane, including Lloyd Shatkin and his wife, Ina, were killed immediately upon impact. Mr. and Mrs. Shatkin left mutual wills bequeathing their property in the event of their simultaneous deaths to their respective parents. Lloyd’s will left three-quarters of his estate to his mother, Jane S. Shatkin, and one quarter to his wife’s parents. His mother was appointed executrix of his estate and as such brought this action against American and the jet’s manufacturer, McDonnell Douglas, to recover damages for wrongful death and pre-impact pain and suffering. On June 29, 1979, the Judicial Panel on Multidistrict Litigation ordered the action transferred to the Northern District of Illinois pursuant to 28 U.S.C. § 1407 for consolidated pre-trial proceedings. After conducting extensive discovery the parties entered a “no contest” stipulation as to the defendants’ liability on September 10, 1982. On November 18, 1982, the action was remanded to the Southern District of New York for trial of the damages claim.
Following further discovery trial was held from June 9 through June 13, 1983. The evidence was undisputed that the plane was a wide-bodied three-engine DC-10 manufactured by defendant McDonnell Douglas Corporation and operated by defendant American Airlines on its Flight 191, which took off on May 25, 1979, from O’Hare International. Airport, Chicago, Illinois. Upon take-off the plane lost an engine on its left side. Mr. Shatkin, a passenger, was seated on the right side of the plane in seat No. 24H, from which a passenger would not normally be able to note the absence of an engine on the left side. The total flight lasted 31 seconds from take-off until the crash.
Portions of a report of the National Transportation Safety Board (NTSB), which is based on data from the plane’s flight recorder, reveal that the plane was able to take off smoothly despite the loss of the engine, climbing to 325 feet. The flight lifted off in a slight left wing-down attitude. This condition was corrected by application of a right wing-down aileron and right rudder, stabilizing the plane at a wings-level stance, and the plane continued to climb. At about 11 seconds before impact the plane began to roll slightly to the left. It was not until 3 seconds before impact that the plane reached a 90-degree position. It then crashed. Barbara Mueller, who witnessed the movements of the plane from a distance of 2V2 miles from the airport and 1 mile from the scene of the crash, testified that she saw the plane tilt from side to side and descend nose-down just before the crash. However, she did not see the take-off and had no recollection of the timing of the movements she witnessed other than to say, “It might have been seconds, minutes, I cannot really tell you.” Thus there is not necessarily any inconsistency between her testimony and the flight recorder. Both indicate that the plane was not in obvious difficulty until a very short time before impact.
In view of the “no contest” stipulation with respect to liability the trial was concerned almost entirely with proof as to damages. Aside from evidence as to the plane’s pre-impact movements no proof of conscious pain and suffering on the part of Lloyd Shatkin was introduced. However, plaintiff did offer some evidence in support of her claim for loss of services and financial support.
At the time of the crash Lloyd Shatkin was 29 years old and employed as a buyer for Mayfair Incorporated, a retail home furnishing firm in Albany, New York. His 1979 salary was $18,000 a year. His employer testified that his 1980 salary probably would have been $28,000 to $80,000, including bonus, but that it was impossible to estimate his future income from the company.
Plaintiff Jane S. Shatkin, a nurse, was a 66-year old widow (her husband died in 1969) with a life expectancy of 14.8 years at the time of her son’s death. She had received $80,000 in life insurance payments on her husband’s death and returned to work. She earned approximately $12,000 to $14,-000 in 1978 and $12,000 in 1979. Prior to his death her son Lloyd had in 1969 assigned to her monthly payments of $96.01 due under an annuity inherited from his father, which expired in 1979. The son was apparently devoted to his mother, making small gifts to her from time to time, advising that she could come to live with him rather than go into a home and doing repair jobs for her around her house.
After a voir dire Judge Pollack filed an opinion (published at 565 F.Supp. 93) refusing to admit the testimony of Dr. Edmund Mantell, an economics expert called by plaintiff to testify as to his projections of Lloyd Shatkin’s future gifts to Mrs. Shatkin based on assumptions as to economic trends, future tax rates, Lloyd’s income and percentages of disposable income that he assumed Lloyd would probably have assigned to his mother. Objections to the evidence were sustained on the ground that “Dr. Mantell’s assumptions and techniques of calculation involve egregious and gross error at almost every step,” 565 F.Supp. at 94, and that “[tjhese assumptions are no more than conjecture and wild speculation.” Id. at 95. Judge Pollack concluded that “[gjiven all the facts and circumstances of this case, the testimony would seriously prejudice, mislead and confuse the jury....” Id. at 96.
The jury returned special verdicts awarding $87,500 for Lloyd Shatkin’s conscious pain and suffering prior to impact, $15,000 for the loss of household services that Lloyd would otherwise have performed for his mother, and $15,000 for support Lloyd would have given his mother over the course of their respective life expectancies. On June 20, American moved pursuant to Rule 50(b) of the Federal Rules of Civil Procedure for judgment notwithstanding the verdict on the claim for pre-impact pain and suffering; in the alternative, American sought an order pursuant to Rule 59 setting aside the verdict and granting a new trial on that issue. The court denied the motion on July 5 and entered judgment on July 6, 1983, from which the defendants appeal.
On August 6, 1983, plaintiff moved for leave to file a motion for a new trial on the issues of loss of support and services, alleging that the jury’s awards were inadequate. On August 12, 1983, the district court denied the motion both on the merits and because it was untimely, from which plaintiff appeals.
DISCUSSION
Plaintiffs Claim for Pre-Impact Pain and Suffering
Defendants claim that the district court erred in not dismissing plaintiff’s claim based on the deceased’s alleged pre-impact pain and suffering. Relying principally on Clancy v. Port of New York Authority, 55 A.D.2d 587, 389 N.Y.S.2d 615 (1st Dept.1976), they contend that under New York law no recovery may be had on such a claim. Secondly they argue that, even if damages could be recovered for pre-impact pain and suffering, the claim here was wholly unsupported by the evidence. Since we agree with the latter contention it is unnecessary to rule on the former.
Assuming that pre-impact pain and suffering is compensable, it must first be shown by a preponderance of the evidence that the decedent had some knowledge or other basis for anticipating the impending disaster; otherwise no basis would exist for a finding of fright or mental anguish. In granting summary judgment dismissing a similar claim, the court in Anderson v. Rowe, 73 A.D.2d 1030, 425 N.Y.S.2d 180 (4th Dept.1980), recognized this elementary proposition:
“The plaintiff was not able to present any evidence that they suffered any conscious pain. Nor was the plaintiff able to show evidence from which one might imply that the decedents were aware of the danger and suffered from pre-impact terror.” (73 A.D.2d at 1030, 425 N.Y.S.2d at 181).
Similarly, in Feldman v. Allegheny Airlines, Inc., 382 F.Supp. 1271 (D.Conn.1974), aff’d in relevant part, 524 F.2d 384 (2d Cir.1975), even though there was evidence suggesting that some passengers anticipated the plane crash that killed the decedent, the court dismissed the claim for pre-impact conscious pain and suffering, stating:
“Nor was any evidence presented from which the Court could fairly infer that the decedent was aware of the proximity of disaster in advance of the actual impact. Mr. Kelly was alert to the situation only because he was monitoring the plane’s descent by looking out the window; the plane’s attitude underwent no dramatic change indicative of disaster.
“Based on the proof adduced specifically on this point and on the totality of the circumstances of this case, the Court concludes that it would be too speculative to award damages for Mrs. Feldman’s conscious pain and suffering and contemplation of death.” (382 F.Supp. at 1300-01).
Eyewitness testimony to the decedent’s pain and suffering is not essential to recovery; indeed, in most cases of the present type it would be difficult if not impossible to obtain. But at least some circumstantial evidence must be adduced from which it can reasonably be inferred that the passenger underwent some suffering before the impact. See, e.g., Solomon v. Warren, 540 F.2d 777, 792 (5th Cir.1976), cert. dismissed, 434 U.S. 801, 98 S.Ct. 28, 54 L.Ed.2d 59 (1977) (permissible to infer that four people aboard small Cessna plane were aware of impending death from fact that pilot radioed plans to ditch at sea).
[3] In the present case there is no evidence in the record from which a person could reasonably find that Lloyd Shatkin suffered any conscious pain and suffering prior to the impact which instantly killed him. The NTSB report, the reliability of which has not been questioned (indeed it was introduced by the plaintiff), reveals that despite the loss of the left engine the plane on which Shatkin and his wife were passengers took off normally, was able to correct a slight bank to the left, and did not go into its 90-degree left plunge until only 3 seconds before it crashed. There is no evidence permitting an inference that Shatkin was aware that the left engine had been lost on take-off; since he was seated on the right side of the wide-bodied plane, it would be sheer speculation to infer that he knew of the incident. There was no evidence that the pilot or anyone else called the danger to the passengers’ attention. As far as the record is concerned Shatkin could have dozed off in his seat. Even if one accepts as wholly credible the testimony of Mrs. Mueller that from a distance of 1 to 2h miles she saw the plane tilt and roll just before the crash this evidence is wholly insufficient to create an inference that Shatkin knew something was wrong. It is a common experience for a plane in no danger to bank to one side immediately after take off, sometimes sharply, in order to conform to prescribed traffic patterns.
On this record we are therefore forced to conclude that even assuming a claim for pre-impact pain and suffering were recognizable in New York, the district court erred in denying defendants’ motion for judgment NOV dismissing plaintiff’s claim. In view of the insufficiency of the evidence we need not rule upon the issue of whether such a claim, if supported by evidence, would be insufficient on its face. For the same reason we also need not decide whether certain remarks of plaintiff’s counsel and the witness Barbara Mueller were so inflammatory as to require a new trial.
The Cross-Appeal
In support of her cross-appeal from the judgment awarding her $15,000 for loss of services and $15,000 for loss of financial support, plaintiff contends that Judge Pollack erred in (1) excluding evidence of her financial needs and the defendant’s possible future income, (2) refusing to admit the proffered expert testimony of Dr. Edmund Mantell, and (3) applying a higher burden of proof than that required by New York law. We have reviewed each of these arguments and find them to be without merit.
It is elementary that a claim for loss of financial support may be supported by evidence of the plaintiff’s needs, and the deceased’s probable future income, even though inexact, since such proof by its nature usually cannot be precise. See Jones & Laughlin Steel Corp. v. Pfeifer, -- U.S. --, 103 S.Ct. 2541, 76 L.Ed.2d 768 (1983); Parilis v. Feinstein, 49 N.Y.2d 984, 985-86, 429 N.Y.S.2d 165, 166, 406 N.E.2d 1059, 1060 (1980). The same principle governs admission of evidence regarding services the deceased would probably render to the plaintiff. But the proffered evidence must be relevant to the issues on trial within the meaning of Fed.R.Evid. 401. The trial judge is vested with wide discretion in determining whether an adequate foundation has been laid for admission of the evidence and whether its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issue, or misleading the jury. Fed.R.Evid. 403. See United States v. Corr, 543 F.2d 1042, 1051 (2d Cir.1976); United States v. Catalano, 491 F.2d 268, 273 (2d Cir.), cert. denied, 419 U.S. 825, 95 S.Ct. 42, 42 L.Ed.2d 48 (1974).
In the present case the district court excluded evidence of the plaintiff’s needs and her son’s income not because of inexactness but because of her failure to lay a proper foundation by showing the probability that he would support her and the extent of such likely support. The evidence on that score was limited to several vague assurances made by Lloyd and repeated by his mother at trial, and similar testimony by a friend of the family. Yet it was clear to Judge Pollack that the only support Lloyd had ever given his mother during his lifetime was a monthly annuity of $96.01, which his father had left him, and which was due to expire in 1979. Although Mrs. Shatkin’s financial difficulties were said to have begun when she retired from her position as director of health services at Sarah Lawrence College on January 1,1978, Lloyd gave her no additional money before his death in late May 1979. Moreover, Mrs. Shatkin was only a secondary beneficiary under Lloyd’s will, which left everything to his wife. If his wife had lived, Mrs. Shat-kin would have received nothing from his estate.
There was no evidence that Lloyd had ever made a firm commitment with any reasonable degree of certainty to support his mother. Given this state of the record we cannot say that the district court abused its discretion in refusing to admit evidence regarding Mrs. Shatkin’s financial condition and standard of living and testimony of her son’s employer about his possible future income. As Judge Pollack stated to plaintiffs counsel “[There] is not a sufficient foundation for what you are attempting to do. You are extrapolating speculations on hypotheses with more speculations at the end. The answer is that you have not laid a foundation for any such evidence.”
Nor do we find that Judge Pollack erred in excluding the testimony of Dr. Edmund Mantell, plaintiff’s economics expert, on the extent of plaintiff’s lost support. Here the district court, in ruling on the admissibility of the proposed testimony, possessed not only the power under Fed.R. Evid. 403 to determine whether it had a propensity for misleading or confusing the jury, see United States v. Margiotta, 662 F.2d 131, 142 (2d Cir.1981), cert. denied, -- U.S. --, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983); United States v. Bowe, 360 F.2d 1, 15 (2d Cir.), cert. denied, 385 U.S. 961, 87 S.Ct. 401, 17 L.Ed.2d 306 (1966), but also the discretionary right under Fed.R.Evid. 703 to determine whether the expert acted reasonably in making assumptions of fact upon which he would base his testimony, see Zenith Radio Corp. v. Matsushita Electric Industrial Co., 505 F.Supp. 1313, 1325-26, 1330 (E.D.Pa.1981); 3 J. Weinstein & M. Berger, Weinstein’s Evidence 1703[03] (1982) (the court must find that the data underlying the expert’s opinion are “of a kind that is reasonably relied upon by experts in the particular field”).
The district court noted a number of assumptions and assertions made by Dr. Man-tell that were so unrealistic and contradictory as to suggest bad faith. For example, although the only contribution that the decedent had made to his mother was his assignment of the $96.01 monthly annuity due to expire in 1979, Dr. Mantell assumed that Lloyd would have contributed 20% of his disposable income to his mother. That figure was derived from statistics indicating that the average head of a household spends 20% of his income on himself; we find no basis for using that statistic in these calculations, where it has no relevance at all. In a further effort to justify such a high level of projected contributions, Dr. Mantell compared their discounted present value with Mrs. Shatkin’s undiscounted projected consumption; such an “apples and oranges” comparison simply cannot withstand scrutiny. Moreover, after projecting Lloyd’s income for 1990 to be either $151,990 or $117,700, Dr. Mantell deducted no state tax and applied a constant 11.7% federal tax rate. That assumption is highly suspect even when considered on its own; it is completely unacceptable when one realizes that he used a 23% rate in calculating the tax on Mrs. Shatkin’s income from whatever award she might receive, which of course would be far less than Lloyd’s annual income. Clearly such proposed testimony was riddled with errors, and therefore ex-cludable under Fed.R.Evid. 703. In addition, it would probably have hopelessly confused and misled the jury because of the latter’s inability to appraise the extremely questionable and unsupported assumptions underlying the testimony. We therefore conclude that the trial court’s decision to exclude that testimony was not erroneous.
Finally, plaintiff claims that it was error for the district court not to charge the jury on New York’s “Noseworthy rule,” which permits a plaintiff in a wrongful death action to assume a lower burden of proof than in an ordinary negligence action. Noseworthy v. City of New York, 298 N.Y. 76, 80 N.E.2d 744 (1948). We are not persuaded that the Noseworthy rule applies to this case, where the defendants have conceded their liability and the only issue is the proper measure of damages. But even if we assume that it was error not to charge the rule with respect to proof of loss of support and services the error was clearly harmless. There simply was no evidence that the plaintiff would have received any financial support from her son other than the annuity that expired in 1979. Viewed in that light the jury’s special verdict of $15,000 was not unreasonable. The $15,000 verdict for the loss of Lloyd’s services— which amounted to repairing an iron, changing light bulbs, moving furniture and the like during his occasional visits to Mrs. Shatkin’s home — was also quite adequate. In short, applying the Noseworthy rule would have made no difference in this case.
The judgment, insofar as it awards $87,-500 for pain and suffering, is reversed and the case remanded for entry of judgment notwithstanding the verdict on that issue. In all other respects the judgment is affirmed.
. Following New York’s choice of law principles, we apply New York law to this case, both because of the numerous contacts with the forum, and because the parties have conducted the entire litigation on the assumption that New York law governs. See Cousins v. Instrument Flyers, Inc., 44 N.Y.2d 698, 405 N.Y.S.2d 441, 376 N.E.2d 914 (1978).
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
CONTIE, Circuit Judge.
Birch Run Welding & Fabricating, Inc. (Birch Run) petitions for review of, and the National Labor Relations Board (Board) cross-applies for enforcement of, a Board order concluding that Birch Run violated § 8(a)(3) of the National Labor Relations Act (Act) by laying-off thirteen employees after becoming aware of an organizational campaign by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (Union). For the reasons stated below, we enforce the Board’s order.
I.
As of January 1983, Birch Run employed thirty-five to forty employees at' its plant located in Birch Run, Michigan. The company President was Harold Johnson. Birch Run’s plant was divided into front and back shops. The front shop contained tool rack fabrication and repair operations. The back shop housed a machine shop and an assembly floor where die cast machines were built and used die cast machines were rebuilt. Employees Kamrade, Oberg, Parlberg, Schmidt and Wade worked days in the front shop along with several other unidentified employees. Their supervisor was George Anscomb. Employees Altman, Aquirre, Benham, Berg, Sparck and Yaklin worked nights in the front shop. The record does not identify their supervisor. Employees Clark and Humes worked days in the back shop machine shop under supervisor Gerald Johnson. Employees Ruhr, Morris, Reikowski, VanNess and Zabarcki worked days in the back shop assembly floor under supervisor Thomas Goodreau. Employees Hogan, Metiva and Reittenbach worked nights in the back shop machine shop under supervisor Ted Dahl. The record is unclear about who worked nights in the back shop assembly floor. Employees Barske and Lonsway (and possibly others) may have worked in this area.
Birch Run frequently laid off employees. Employees Aquirre, Oberg, Parlberg, Schmidt and Zabarcki, for instance, had all been temporarily laid off in the past. The company had no formal lay-off policy and did not use the seniority system. If an employee were working on an order at the time of a lay-off, he would finish before being laid-off even if a more senior employee were available. Nor were recalls based upon seniority. The company usually did lay-off the night shift before the day shift, however.
Humes, a lathe operator, contacted union representative Roster late in 1982. Ten employees, including Humes, attended an organizational meeting at a union office in Saginaw on January 16, 1983. Some employees signed union authorization cards. Eighteen to twenty employees attended a second meeting at a union office located outside Saginaw on January 23. More employees signed authorization cards and the group formed an organizing committee consisting of employees Altman, Aquirre, Barske, Hogan, Humes, Lonsway, Metiva, Oberg, Parlberg, Reittenbach, Sparck and Zabarcki. The union sent a letter containing these names to the purported Chairman of the Board of Birch Run. The postal service returned this letter unopened, however, and there is no evidence that Birch Run ever learned of its contents.
At this time, Birch Run was experiencing economic difficulties. An unspecified number of employees had already been laid-off and others had been assigned to jobs outside of their normal classifications. Work existed, however, for the employees who remained on January 25 and 26, the dates upon which the relevant events occurred.
Company President Johnson met with all night shift employees on January 25 and with all day shift employees at 7:00 A.M. on January 26. Johnson stated that business was not good because many of Birch Run’s competitors were going bankrupt, thereby flooding the market with die cast machines. Moreover, many company customers were going bankrupt and were not paying their bills. Thus, the company was accepting low profit or no profit tool rack work merely to maintain a “core” of good workers. Although supervisor Anscomb would begin traveling in an attempt to attract new business, the prospects were not good. Johnson also stated that a local bank wanted the company to lay-off thirty percent of its remaining workers but that the company wanted to avoid further layoffs. Johnson indicated that Birch Run was “holding water” and would not “fold.” No pay raises or paid vacations would be forthcoming in the foreseeable future, however. Employee Zabarcki testified at the hearing before the Administrative Law Judge (AU) that a similar speech had been given one month before a large lay-off early in 1982 (Tr. at 323).
Humes returned to his work station after the meeting. Harold Johnson approached and offered Humes a pay raise because of his good work performance provided that he did not tell other employees. Humes accepted. Supervisor Gerald Johnson subsequently approached Humes and stated that he would have difficulty explaining the lack of pay raises when there was sufficient work in the plant to keep the remaining employees busy. Both men then went to Harold Johnson’s office. As the latter was explaining recent losses, Humes interrupted and stated:
I think it’s about time we stopped beating around the bush____ I think you guys know there’s an organizing drive going on in the shop right now and I don’t know why you have me up here showing me this stuff, but I I think it’s for this reason, and if you don’t know it, you do now. (Tr. at 39).
The Johnsons denied prior knowledge of the union campaign and asked what the employees wanted. Humes responded that the employees wanted many different things, including job security, and that they had not believed a word that Harold Johnson had said at the meeting.
At lunch hour on January 26, Humes gave union buttons, pens and pocket protectors bearing union insignia to Schmidt and Zabarcki. Schmidt placed a pocket protector in his shirt pocket where it remained for the rest of the day. Zabarcki wore a union button on his shirt for the remainder of the day.
At 3:00 P.M., supervisor Anscomb approached Schmidt with a blueprint. As the men leaned over the blueprint, Anscomb gave Schmidt a job assignment that would require several hours to complete. The men then straightened. Anscomb saw the union pocket protector, stated that he would return momentarily and walked away. When Anscomb returned ten or fifteen minutes later, he laid-off Schmidt effective at the 3:30 P.M. shift ending time despite the fact that he had just given Schmidt the new assignment.
Supervisor Goodreau laid-off Humes, Clark and Zabarcki. These lay-offs also were effective at 3:30 P.M. Schmidt and these three employees subsequently received letters suggesting that they seek employment elsewhere because there was no reason to believe that they would be recalled. Although Clark, Schmidt and Za-barcki had been laid-off before, they had never received such letters. Birch Run also laid-off Parlberg and VanNess on the afternoon of January 26. VanNess was not a union adherent. Employee Morris, who was a union supporter, was not laid-off.
Before leaving the plant at 3:30 P.M., Humes gave the union campaign materials to Hogan, the night shift lathe operator. At lunch time, Hogan distributed union materials to Aquirre, Oberg, Sparck and Yak-lin. Aquirre and Oberg attached buttons to their coats and hung them near their work stations. Yaklin wore a union button on his hat for the rest of the evening.
Although supervisor Anscomb usually did not arrive at the plant until 5:00 A.M., he appeared at 11:00 P.M. on January 26 and laid-off Altman, Aquirre, Benham, Oberg, Reittenbach, Sparck and Yaklin. All but Benham were union adherents. Oberg asked if the company was not making enough money or did not have sufficient work. Anscomb responded that the company was making money and had plenty of work. When Oberg then inquired about the reason for the layoffs, Anscomb stated, “it’s all part of the game.”
Union supporters Hogan and Metiva were not laid-off on January 26. Even though Hogan could produce only one-third as much as Humes on the lathe, he replaced Humes on the day shift lathe operation. The record further reflects that when the thirteen employees were laid-off on January 26, they left behind uncompleted assignments.
After the lay-offs, Hogan taught supervisor Dahl to use the lathe and taught supervisor Gerald Johnson to operate the boring mill. Although the plant had operated on a five-day work week before January 26, the plant frequently operated six days per week thereafter. Moreover, within three months after the lay-offs, Birch Run hired two new assemblers and six new machine shop workers. Although Altman, Aquirre, Benham and VanNess eventually were recalled, none of the other laid-off employees has been recalled.
Since Birch Run contended at the administrative hearing, in response to the General Counsel’s charges, that the lay-offs were economically motivated, the AU evaluated the case under the standards set forth in Wright Line, 251 N.L.R.B. 1083 (1980). The AU held that the General Counsel had shown that anti-union animus had contributed to Birch Run’s decision to lay-off the thirteen employees. Furthermore, the company had not rebutted this prima facie case. The AU concluded, therefore, that Birch Run had violated § 8(a)(3). The AU ordered Birch Run to cease and desist from violating § 8(a)(3), to reinstate the laid-off employees with back pay, to expunge any reference to the lay-offs from the employees’ personnel records and to post notices. The Board subsequently adopted the AU’s order. 269 N.L.R.B. No. 136. Birch Run then filed this petition for review and the Board cross-applied for enforcement.
II.
In NLRB v. Transportation Management Corp., 462 U.S. 393, 103 S.Ct. 2469, 76 L.Ed.2d 667 (1983), the Supreme Court approved the Wright Line method of analyzing cases involving charges of employment actions motivated by anti-union animus and employer protestations of legitimate reasons for the actions. In a case involving lay-offs, the General Counsel must prove that anti-union animus partially motivated or contributed to the lay-off decision. If this prima facie case is established, then the employer must show by a preponderance of the evidence that the employees would have been laid-off even if they had not engaged in protected activity. Id. at 395, 103 S.Ct. at 2471; N.L.R.B. v. A & T Manufacturing Co., 738 F.2d 148, 149 (6th Cir.1984); N.L.R.B. v. Valley Plaza, Inc., 715 F.2d 237, 241 (6th Cir.1983). Since employer motivation is a factual question, A & T Mfg., 738 F.2d at 149 (cases collected), the Board’s conclusion concerning motivation must be upheld if supported by substantial evidence on the record considered as a whole. Id.; 29 U.S.C. § 160(e). Contrary to Birch Run’s assertion, improper employer motivation need not be demonstrated by direct evidence but may be inferred from all the circumstances. See N.L.R.B. v. G & S Metal Products Co., Inc. 489 F.2d 441, 443 (6th Cir.1973); N.L.R.B. v. Buckhorn Hazard Coal Corp., 472 F.2d 53, 55 (6th Cir. 1973); N.L.R.B. v. Lawson Printers, Inc., 408 F.2d 1004, 1005 (6th Cir.1969). The Board’s inference of improper motivation must be upheld if it is reasonable in light of the proven facts. See Radio Officers’ Union v. N.L.R.B., 347 U.S. 17, 49, 74 S.Ct. 323, 340, 98 L.Ed. 455 (1954); N.L.R.B. v. Paschall Truck Lines, Inc., 469 F.2d 74, 76 (6th Cir.1972).
In the typical § 8(a)(3) case, the General Counsel must demonstrate that the employer was aware of the pro-union sentiments of individual employees. See M.S.P. Industries, Inc. v. N.L.R.B., 568 F.2d 166, 176 (10th Cir.1977); Majestic Molded Products, Inc. v. N.L.R.B., 330 F.2d 603, 606 (2d Cir.1964). The evidence in the present case shows that Birch Run knew of Humes’ and Schmidt’s pro-union sentiments before the lay-offs. Humes told company President Johnson his feelings and supervisor Anscomb saw Schmidt’s union pocket protector. In addition, Birch Run may have known of the sympathies of Aquirre, Oberg, Yaklin and Zabarcki because they displayed union materials either on their persons or near their work stations on January 26, 1983. There is no evidence in the record, however, to support the conclusion that Birch Run knew before the lay-offs that alleged discriminatees Altman, Ben-ham, Clark, Parlberg, Reittenbach, Sparck and VanNess were union adherents. Indeed, such proof would have been impossible as to Benham and VanNess because those two employees were against the union. Consequently, had the General Counsel proceeded in this case under the usual § 8(a)(3) theory, substantial evidence would not have supported the Board’s conclusion regarding at least seven of the employees. The Board’s conclusion as to Aquirre, Oberg, Yaklin and Zabarcki also may have been problematic.
As indicated in the AU’s opinion, however, the General Counsel proceeded under an alternate theory. Specifically, the courts have held that although the General Counsel must usually show that the employer knew about individual employees’ union activities before the Board may conclude that the employer violated § 8(a)(3), the General Counsel may also prevail by showing that the employer ordered general lay-offs for the purpose of discouraging union activity or in retaliation against its employees because of the union activities of some. This theory is viable even though some employees who actually opposed the union (i.e., Benham and VanNess) were laid-off with their pro-union counterparts. See Merchants Truck Line, Inc. v. N.L.R.B., 577 F.2d 1011, 1016 (5th Cir.1978); M.S.P. Industries, 568 F.2d at 176; Majestic Molded, 330 F.2d at 606. Moreover, the theory can be valid even though not all union adherents were laid-off (i.e., Hogan, Metiva and Morris). The focus of the theory is upon the employer’s motive in ordering extensive lay-offs rather than upon the anti-union or pro-union status of particular employees. The rationale underlying this theory is that general retaliation by an employer against the workforce can discourage the exercise of section 7 rights just as effectively as adverse action taken against only known union supporters.
We hold that the evidence in this case amply supports the Board’s inference that Birch Run retaliated in a general manner against its workforce because some employees had engaged in protected activities. First, the record reflects that as of 7:00 A.M. on January 26, 1983, Birch Run assured its employees that it wanted to avoid additional lay-offs in order to maintain a core of competent workers even if low profit or no profit work had to be accepted. The record further shows that on the date of the lay-offs, sufficient work existed to occupy the remaining employees. Indeed, supervisor Anscomb told employee Oberg that the company was making money and that there was plenty of work. The only significant event occurring between the 7:00 A.M. meeting and the afternoon and evening lay-offs was that Humes informed company President Johnson that an organizational campaign had begun. Johnson reacted negatively to this information. There is absolutely no evidence that the company’s financial position deteriorated during the day on January 26 such that immediate lay-offs were necessary.
Birch Run counters that although a meeting designed to assure employees that the company would try to avoid lay-offs occurred in early 1982, lay-offs nevertheless followed. This argument is flawed because a month passed between the meeting in early 1982 and the subsequent layoffs. Birch Run’s financial position may well have changed in the interim. In contrast, there is no evidence that an unfavorable change in financial position occurred on January 26, 1983. Moreover, without regard to the absence of change in financial position, Birch Run’s decision to lay-off thirteen employees within hours after becoming aware of the union organizational effort supports the Board’s inference of improper motivation. See Coil-A. C. C., Inc. v. N.L.R.B., 712 F.2d 1074, 1076 (6th Cir. 1933); N.L.R.B. v. Stemun Manufactur ing Co., Inc., 423 F.2d 737, 742 (6th Cir. 1970).
Second, Birch Run substantially deviated from past practice in implementing the layoffs. This court has held that an employer’s deviation from past practice can be an indicia of anti-union animus. See N.L.R.B. v. Comgeneral Corp., 684 F.2d 367, 370 (6th Cir.1982) (deviation from past disciplinary practice during early stages of union campaign). The evidence shows that the laid-off employees had not completed assigned tasks. In contrast, the company’s custom was to wait for an order or assignment to be completed before laying-off the employee who had performed the task. This deviation from past practice is most graphically illustrated by the company’s treatment of Schmidt. Although supervisor Anscomb gave Schmidt an assignment requiring several hours to complete at 3:00 P.M., Anscomb laid-off Schmidt minutes later after spotting the latter’s union pocket protector.
Birch Run also deviated from custom in transferring some night shift employees to the day shift instead of first laying-off the entire night shift. The decision to replace Humes with the far less efficient Hogan is particularly probative of the company’s motives. After the 7:00 A.M. meeting on January 26, company President Johnson offered Humes a raise because of his good work performance. Yet, the company laid-off Humes hours later. The only significant intervening event was the discussion between Humes and the Johnsons in which Humes informed the Johnsons that an organizational campaign had commenced.
The company further deviated from past practice in sending letters to Clark, Humes, Schmidt and Zabarcki suggesting that they seek work elsewhere because there was no reason to believe that they would be recalled. Since three of these four employees were among the most prominent union adherents, the Board reasonably could view the letters as evidence of the company’s anti-union animus.
Having concluded that the Board reasonably inferred that anti-union animus contributed to Birch Run’s decision, we also hold that the evidence supports the Board’s determination that the employees would not have been laid-off had they not engaged in protected activities. Although the company contends that the lay-offs were motivated by economics, the record shows that there was sufficient work as of January 26 to keep the remaining employees busy. Moreover, the company expanded the work week and hired eight new employees shortly after the lay-offs. The company did not keep its promise, made at the 7:00 A.M. meeting on January 26 before becoming aware of the organizational campaign, that laid-off employees would be recalled before new employees would be hired.
The Board’s determination that the layoffs of the thirteen employees were unlawfully motivated is supported by substantial evidence. Accordingly, the order of the Board is Enforced.
. The Board also determined that Birch Run had not violated § 8(a)(1) of the Act, that Daniel Oberg was a protected employee under the Act and that Frederick May, Jr., plant manager of Saginaw Engineering and Control Company, was not an agent of Birch Run. These findings are not at issue on this appeal.
. The record indicates that Oberg sometimes worked nights.
. On this point, the AU commented:
Although past history discloses numerous layoffs, and even discloses that Respondent similarly addressed its employees in early or spring 1982, as it later did on January 26, 1983, and yet laid-off employees in 1982, there es no past history disclosing such erratic behavior by Respondent where expectations of employment are given and shattered within a matter of a few hours.
ALJ opinion at 21.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BOWNES, Circuit Judge.
This is an appeal from a directed verdict for defendants. In a medical malpractice suit, plaintiff-appellant Peter Ricciardi attempted to introduce into evidence on various grounds a note entered into his medical chart stating that an unscheduled event occurred while he was undergoing surgery. The physician who made the entry did not have personal knowledge of the event and could not recall the source of the information. Ricciardi appeals the district court’s rulings that the note was inadmissible hearsay and that his expert witness would not be allowed to rely on the note in forming an opinion as to the cause of Ricciardi’s injuries. We affirm.
I. BACKGROUND
On July 11, 1979, Ricciardi underwent surgery at the Children’s Hospital Medical Center (the Hospital) in Boston, Massachusetts, for the replacement of his aortic valve. He suffered neurological difficulties after the operation because, according to him, someone was negligent during his operation. He brought a malpractice suit against the Hospital, surgeons William Norwood and Rosalyn Sterling, and the anesthesiologist, “John Doe.”
Ricciardi’s only proof of negligence was a note dated July 13, 1979, two days after the operation, entered into his medical chart by Dr. Krishna Nirmel, a neurology resident at the Hospital. The note, contained in a three-page handwritten consultant’s report, said: “during surg. episode of aortic cannula accidently out x 40-60 secs.” An aortic cannula provides a means of circulating blood from the heart-lung machine back into the body when the heart is being bypassed for surgery. The note was the basis for Ricciardi’s theory that a cannula being used during his operation came out because of someone’s negligence and an air embolus was introduced into his blood stream. Dr. Nirmel, however, did not have personal knowledge of the alleged event and did not know where he obtained the information he recorded in the note. He said he usually spoke with the nurses and staff attending to the patient before, during, and after surgery, but in this instance he could not recall speaking with any members of the surgical team. He assumed that he obtained the information from “professional people.”
At pretrial the case was defined as involving only two issues: (1) whether the cannula came out; and if so, (2) whether this caused Ricciardi’s injuries. The note, therefore, was crucial to Ricciardi’s case. The district court rejected his various attempts to introduce the note at trial. The court ruled that the note was hearsay not within any exceptions and that it did not become an adoptive admission of party-opponent Dr. Norwood when he heard of it. The court also refused to allow Ricciardi’s expert witness, Dr. Harold Kay, to rely on the note in forming his opinion about the cause of Ricciardi’s injuries. Because there was no other evidence of negligence, the court directed a verdict for defendants.
II. THE EVIDENTIARY RULINGS
Dr. Nirmel’s note clearly is hearsay. It is a statement made by someone other than the declarant offered to prove the truth of the matter asserted. See Fed.R.Evid. 801. The note, therefore, is not admissible evidence unless it comes within an exception to the general rule excluding hearsay. See Fed.R.Evid. 802. Ricciardi argues that the note is admissible on five grounds: (1) under the hearsay exception provided in the Massachusetts hospital records statute, Mass.Gen.Laws Ann. ch. 233, § 79 (West 1986); (2) as a record of a regularly conducted activity under Fed.R.Evid. 803(6); (3) as a recorded recollection under Fed.R. Evid. 803(5); (4) as a statement not specifically covered by other exceptions under Fed.R.Evid. 803(24); and (5) as an adoptive admission by party-opponent Dr. Norwood under Fed.R.Evid. 801(d)(2)(B). Ricciardi also contends that the court erred when it refused to allow his expert witness to rely on the note in forming an expert opinion.
A. The Massachusetts Statute and Federal Rule 803(6)
Mass.Gen.Laws ch. 233, § 79, provides a hearsay exception for certain hospital records required to be kept by law. The parties agreed that this statute had “at least something to do with the admissibility of this particular note.” The court then considered whether the note fit within the state exception and concluded that it did not.
The correlative Federal Rule governing the admissibility of hospital records is Rule 803(6), the hearsay exception for records of a regularly conducted activity. In general, the Federal Rules apply to all cases in the district courts, including diversity actions. McInnis v. A.M.F., Inc., 765 F.2d 240, 245 (1st Cir.1985); Fed.R.Evid. 1101(b). Congress’ power to promulgate rules of evidence for use in federal court, even though they may differ from state rules, has been established since Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). “Of course, federal courts and Congress are constitutionally precluded from displacing state substantive law with federal substantive rules in diversity actions.” McInnis v. A.M.F., Inc., 765 F.2d at 244. The question here, then, is whether application of the federal business records exception impinges on some substantive state policy embodied in the state rule. We do not see how applying the federal rule in this case would be such an intrusion.
The Massachusetts Supreme Judicial Court, in construing its statute, said that “[apparently the legislation making this hearsay evidence admissible was enacted primarily to relieve the physicians and nurses of public hospitals from the hardship and inconvenience of attending court as witnesses to facts which ordinarily would be found recorded in the hospital books.” Leonard v. Boston Elevated Ry., 234 Mass. 480, 482, 125 N.E. 593, 593 (1920). Arguably, all hearsay exceptions are premised on a conclusion that the utility and reliability of certain kinds of hearsay outweigh the difficulties and burdens of obtaining the declarant’s testimony. Although the federal rule is not specifically aimed at hospital records, it provides a hearsay exception for records kept in the course of any regularly conducted business activity, which would include publicly supported hospitals. The federal rule, therefore, is consistent with the state legislature’s concern about the undue burden of requiring medical personnel in publicly supported hospitals to testify despite the availability and usual reliability of regularly kept records.
Moreover, the statute functionally is evidentiary in nature. The Supreme Judicial Court described it “in effect” as an exception to the hearsay rule that “allows admission of the substantive content of hospital records because of the presumption of reliability which attaches to statements relating to treatment and medical history in these records.” Bouchie v. Murray, 376 Mass. 524, 527-28, 381 N.E.2d 1295, 1298 (1978). The federal rule does the same thing. See 4 J. Weinstein & M. Berger, Weinstein’s Evidence ¶ 803(6)[01], at 803-175 (1985); Bouchie v. Murray, 376 Mass, at 528, 381 N.E.2d at 1295 (Supreme Judicial Court cited to federal cases and commentary concerning Rule 803(6) in construing the purpose of the state hospital records exception). In fact, these two rules are very similar in application. In this case, the note is inadmissible under both rules. Therefore, even if we could discern some substantive policy at stake in the state hospital records exception, there would be no conflict with that policy in applying the federal rule here.
The Supreme Judicial Court has recommended a four-part analysis for determining the admissibility of hospital records under the state rule. Bouchie v. Murray, 376 Mass, at 531, 381 N.E.2d at 1300. “First, the document must be the type of record contemplated by [Mass.Gen.Laws ch.] 233, § 79.” Id. There is no dispute that Dr. Nirmel’s consultation report, ip which the note was contained, was such a document. “Second, the information must be germane to the patient’s treatment or medical history.” Id. The district court concluded that the note would be germane to Ricciardi’s care and treatment plan because it would be of some help in identifying the cause of his problem. We agree. “Third, the information must be recorded from the personal knowledge of the entrant or from a compilation of the personal knowledge of those who are under a medical obligation to transmit such information.” Id. The district court correctly ruled that this requirement was not met because Dr. Nirmel did not have personal knowledge of the event he recorded, nor had it been shown that he obtained his information from someone with an obligation to supply it. A transcribed note of unknown origins does not “possess the characteristics justifying the presumption of reliability” normally accorded hospital records. Id. at 528, 381 N.E.2d at 1298.
Under the fourth part of the analysis, the Supreme Judicial Court instructed that if the information was not recorded from personal knowledge, but instead was volunteered by a third person, the statements “are not admissible unless they are offered for reasons other than to prove the truth of the matter contained therein or, if offered for their truth, come within another exception to the hearsay rule.” Id. at 531, 381 N.E.2d at 1300. Simply stated, such information is only admissible if it would come in on some other basis.
The same result is reached under the business records exception in the Federal Rules. To be admissible under Rule 803(6), the entry in the record must be the opinion or diagnosis of the physician who made it or of some other “person with knowledge.” In Petrocelli v. Gallison, 679 F.2d 286 (1st Cir.1982), this court considered the admissibility of parts of a hospital record describing an event during an operation the patient underwent several months earlier and containing the patient’s description of the cause of his pain. It was unclear whether the information originated from the reporting doctors or from the patient or his wife. Id. at 290. We said:
Given the impossibility of determining from the records themselves whether these reports reflected medical judgments, and the lack of any corroborative evidence or testimony offered by the plaintiffs to assure the court that these were professional opinions, the district court could reasonably determine that the notations were simply too inscrutable to be admitted, bearing in mind that, if admitted under Rule 803(6), they would be admitted for their truth without any opportunity to cross-examine the physicians who made them.
Id. at 291. Although Dr. Nirmel’s entry did not concern an event occurring before the alleged malpractice, and there is no indication that the patient himself provided the information, the note suffers from the same critical deficiency as the entries in Petrocelli: the source of the information is unknown.
Furthermore, a record is not admissible under the federal rule if “the source of information or the method or circumstances of preparation indicate lack of trustworthiness.” Fed.R.Evid. 803(6). An unknown source is hardly trustworthy. See Meder v. Everest & Jennings, Inc., 637 F.2d 1182, 1187 (8th Cir.1981). Therefore, there is no conflict between the state and federal rules. The note is not admissible under either.
B. Federal Rule 803(5)
Dr. Nirmel’s inability to recall the source of the information he entered into Ricciardi’s chart also is fatal to admissibility under the recorded recollections exception provided in Federal Rule 803(5). The record must be of “a matter about which a witness once had knowledge” to be admissible as a recorded recollection. Fed.R. Evid. 803(5). Dr. Nirmel did not personally observe the surgery and later make a record of it. He obtained the information from someone else who may or may not have had personal knowledge of the events in the operating room. If the recorder wrote down hearsay, the hearsay itself must come within an exception to be admissible. Weinstein’s Evidence 11803(5)[01], at 803-162 to -163. This cannot be established if the source of the information is unknown. The note, therefore, is not admissible as a recorded recollection.
C. Federal Rule 803(24)
Neither is the note admissible under the residual exception provided in Federal Rule 803(24). Ricciardi argues that the district court erred by giving only “superficial and inadequate” consideration to the admissibility of the note under this exception. The court’s decision not to allow the note in under Rule 803(24) may have been summary, but little explanation was needed after its extensive analysis into the trustworthiness of the note in relation to the other exceptions. Rule 803(24) applies only to statements not specifically covered by other hearsay exceptions “but having equivalent circumstantial guarantees of trustworthiness.” Fed.R.Evid. 803(24). The note did not have such guarantees and was, therefore, not admissible under the residual exception.
D. Adoptive Admission
Under the Federal Rules, “[a] statement is not hearsay if ... [tjhe statement is offered against a party and is ... a statement of which he has manifested his adoption or belief in its truth.” Fed.R. Evid. 801(d). Ricciardi contends that the note became an adoptive admission of party-opponent Dr. Norwood. According to Ricciardi, Dr. Norwood must have read the note around the time it was written, and by not objecting to it, he impliedly manifested his belief in its truth.
Ricciardi did not make any showing to the district court, however, of circumstances under which Dr. Norwood “manifested his adoption or belief” in the note’s truth. He points only to Dr. Norwood’s deposition testimony, which was not before the district court and is not entitled to be considered here. Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1174 (5th Cir. 1985) (per curiam) (on petition for a rehearing); Fleming v. Gulf Oil Corp., 547 F.2d 908, 911 (10th Cir.1977). No other witness said anything about Dr. Norwood seeing the note or his reaction to it. Thus, there is not a sufficient basis to conclude that Dr. Norwood read the note and under the cir-
cumstances would have objected to it if he did not think it were true. Weinstein’s Evidence ¶ 801(d)(2)(B)[01], at 801-202 n. 15 (“In all cases ... the burden is on the proponent to convince the judge that in the circumstances of the case a failure to respond is so unnatural that it supports the inference that the party acquiesced in the statement.”).
E. Basis for Expert Opinion
As an alternative basis for introducing Dr. Nirmel’s note to prove that the cannula came out during surgery, Ricciardi sought to have an expert witness, Dr. Kay, rely on the statement to form an opinion that this occurred. Dr. Kay testified that there were numerous ways a potentially injurious embolus could have occurred in Ricciardi’s situation. The most common way, he said, was if residual air were trapped in the chambers of the heart or in the aorta. He said it also could occur if air were introduced into the heart through a monitoring line, or through the aortic cannula when it was initially inserted, if it leaked or became disconnected, or if it came out during surgery. Dr. Kay told the court that if he could rely on Dr. Nirmel’s note, it would be his opinion that the cause of the embolus was that the cannula came out. Otherwise, he would have to conclude, based on probabilities, that the cause was residual air being trapped. The court ruled that the note was too unreliable to be used as the basis of Dr. Kay’s opinion and, therefore, Dr. Kay was unable to support Ricciardi’s theory of the case.
Under the Federal Rules, an expert is not confined to admissible evidence in forming an opinion. Rule 703 provides that an expert may base an opinion on inadmissible facts or data if “of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject.” “[T]his part of the rule is designed to prevent enlarging the category of permissible data to break down the rules of exclusion unduly.” Almonte v. National Union Fire Ins. Co., 787 F.2d 763, 770 (1st Cir.1986). It is especially important when the facts or data on which the expert seeks to rely have obvious characteristics of unreliability.
The “fact” or “datum” on which Dr. Kay offered to base his opinion was not one medical experts frequently encounter. Dr. Kay said that never before had he seen such a statement in a hospital chart. Although neurological consultation reports may well be the “type” of records upon which an expert would reasonably rely, there has been absolutely no showing here that unattributed material usually comprises a part of such consultative reports, or that experts in the field would rely on this kind of a statement. The evidence Ricciardi claims meets this requirement falls far short. Dr. Kay’s testimony certainly does not establish that experts in the field would rely on such a note. Indeed, his characterization of the note as “bizarre” suggests the contrary. Ricciardi also refers to the testimony of Dr. Michael Bresnan, a pediatric neurologist at the Hospital, who said that when he examined Ricciardi he read Dr. Nirmel’s report. Dr. Bresnan said he did not have any doubt about what was written in the chart and that he accepted what Dr. Nirmel wrote “to be the truth as he has reported it to be.” Dr. Bresnan was not asked, however, whether he accepted the note about the cannula in particular, or whether he would rely on this type of note in forming an expert opinion. Dr. Bresnan’s only specific reference to the contents of Dr. Nirmel’s report concerned a description of Ricciardi’s difficulties and a differential diagnosis of three possible causes of them. This does not establish that experts reasonably would rely on the note about the cannula. Therefore, we hold that it was within the district court’s discretion not to allow Dr. Kay to rely on the note in forming his expert opinion. United States v. Wilson, 798 F.2d 509, 517 (1st Cir.1986) (“Under Rule 703, the admission of expert testimony is a matter reserved to the trial court’s discretion.”).
Ricciardi also argues that, in ruling that Dr. Kay could not rely on the note, the district court erroneously took into consideration that his opinion would embrace the ultimate issue in the case. Rule 704 provides that except for testimony as to the mental health or condition of a criminal defendant, “testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact.” According to Ricciardi, at the end of the trial the court implied that it might have ruled differently if the opinion were not being used to prove the decisive fact in the case: that the cannula came out. We disagree. When it considered the basis for Dr. Kay’s proffered opinion, the court clearly decided not to allow him to rely on the note because of its unknown origin and consequent unreliability, and we have concluded that this was within the district court’s discretion. The discussion to which Ricciardi points was made in the context of the court’s decision to direct a verdict for defendant. The court said that given the way the issues had been defined, the cannula coming out was “the decisive fact that determines negligence, if there was any.” The court was not saying that Dr. Kay could not rely on the note to form an opinion embracing the decisive fact, but that because the note was the only evidence that did embrace the ultimate issue, and it was not admissible as evidence or properly the basis for an expert opinion, a directed verdict was in order.
III. CONCLUSION
Ricciardi’s medical malpractice claim was based on a single bit of hearsay evidence: a handwritten comment from an unknown source buried in a three-page consultation report made two days after the operation. The note did not have the circumstantial guarantees of trustworthiness to justify an exception to the general rule of excluding hearsay; there was an insufficient basis to conclude that defendant Dr. Norwood manifested an adoption or belief that it was true to qualify it as an adoptive admission; and it was not established that it was the kind of information upon which an expert would reasonably rely in forming an opinion. Therefore, the note was not admissible evidence and not properly the basis for an expert opinion. We affirm the district court’s evidentiary rulings and the directed verdict for defendant.
Affirmed.
. Fed.R.Evid. 801(c) defines hearsay as follows: " ‘Hearsay is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.”
. The Massachusetts hospital records statute provides in pertinent part:
Records kept by hospitals, dispensaries or clinics, and sanatoria under [the Massachusetts statute requiring certain publicly supported hospitals to maintain records] shall be admissible ... as evidence in the courts of the commonwealth so far as such records relate to the treatment and medical history of such cases and the court may, in its discretion, admit copies of such records, if certified by the persons in custody thereof to be true and complete; but nothing therein contained shall be admissible as evidence which has reference to the question of liability.
. Rule 803(6) provides a hearsay exception for:
A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term “business” as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.
We note that Massachusetts has a separate hearsay exception for business records in general, similar to Rule 803(6), which provides:
An entry in an account ... or writing or record, whether in the form of an entry in a book or otherwise, made as a memorandum or record of any act, transaction, occurrence or event, shall not be inadmissible in any civil or criminal proceeding as evidence of the facts therein stated because it is transcribed or because it is hearsay or self-serving, if the court finds that the entry, writing or record was made in good faith in the regular course of business and before the beginning of the civil or criminal proceeding aforesaid and that it was the regular course of such business to make such memorandum or record at the time of said act, transaction, occurrence or event or within a reasonable time thereafter.
Mass.Gen.Laws Ann. ch. 233, § 78. None of the parties has contended that this statute applies or that it has any substantive implications.
. Rule 803(5) provides a hearsay exception for:
A memorandum or record concerning a matter about which a witness once had knowledge but now has insufficient recollection to enable him to testify fully and accurately, shown to have been made or adopted by the witness when the matter was fresh in his memory and to reflect that knowledge correctly. If admitted, the memorandum or record may be read into evidence but may not itself be received as an exhibit unless offered by an adverse party.
. McGarry v. United States, 388 F.2d 862, 869 (1st Cir.1967), cert. denied, 394 U.S. 921, 89 S.Ct. 1178, 22 L.Ed.2d 455 (1969), is consistent with this requirement. In McGarry, this court held that an internal revenue agent’s memorandum of a conversation with a taxpayer, in which the taxpayer admitted including certain income in his return, was admissible as a recorded recollection. Although not stated explicitly in the opinion, the taxpayer’s statement was an admission.
. Rule 803(24) provides a hearsay exception for:
A statement not specifically covered by any of the foregoing exceptions but having equivalent circumstantial guarantees of trustworthiness, if the court determines that (A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence. However, a statement may not be admitted under this exception unless the proponent of it makes known to the adverse party sufficiently in advance of the trial or hearing to provide the adverse party with a fair opportunity to prepare to meet it, his intention to offer the statement and the particulars of it, including the name and address of the declarant.
. Apparently, the deposition was filed but neither offered in evidence nor brought to the district court's attention. Even if the district court had been presented with this testimony, however, we think it still would have been proper not to allow the note into evidence as an adoptive admission. During his deposition, Dr. Norwood related only vague recollections of “probably" having read or heard about the note while on the staff at the Hospital. He said his only memory of having a reaction to it was that he was curious, but he could not remember any specific measures taken to track the information to clarify the situation. A failure to object to the information would not necessarily manifest a belief in the note’s truth. A physician’s first response to information suggesting a problem during surgery may be to research the matter. In this case, there were other physicians, anesthesiologists, nurses, and technicians in the operating room. Therefore, when Dr. Norwood first learned of the note, he might not have had sufficient knowledge to assess its verity and affirm or deny it. See Weinstein's Evidence ¶ 801(d)(2)(B)[01], at 801-203.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
WINTER, Circuit Judge:
As more particularly set out in Servo Corporation of America v. General Electric Company, 337 F.2d 716 (4 Cir. 1964), we held U. S. Patents Nos. 2,880,309 and 2,903,575, of which Servo was the assignee, invalid and, hence, incapable of infringement by General Electric. The patents were for devices known as “hot box detectors,” useful in the railroad industry to detect an abnormal quantity of heat emanating from freight car journal boxes. At the same time, we concluded that General Electric had been unjustly enriched by its wilful copying of Servo’s device, purportedly constructed under U. S. Patent No. 2,880,309, in breach of a confidential relationship between Servo and Southern Railway Company, for which Servo had installed a device for testing and experimentation; and we remanded the ease for a determination of Servo’s damages in its claim for unjust enrichment. General Electric, which had abandoned its efforts to develop a workable hot box detector near the close of 1955, was shown by the evidence to have obtained Servo’s proprietary interest in its claimed invention on April 10, 1958, when its engineering personnel inspected Servo’s installation, took photographs, made notes, and obtained drawings and engineering data. We made no determination of the extent and scope of Servo’s proprietary interest or General Electric’s misappropriation. Reference to the opinion in that case is made for a fuller statement of the facts and our holding.
Later, in Servo Corporation of America v. General Electric Company, 342 F.2d 993 (4 Cir. 1965), we denied a petition for rehearing, but clarified the scope of our previous holding and our directions to the district court on remand, by stating:
“We think it consistent with the opinion heretofore filed that the district court should allow Servo damages only for General Electric’s appropriation of that portion of its work which was not publicly disclosed prior to the visit to Salisbury on April 10, 1958, and that these damages should be measured by General Electric’s cost of acquiring the same information by its own experimentation.” Id., p. 993.
Thus, as the parties in this appeal agree, we directed the district court to address itself to the three questions: (1) what portion of Servo’s work was not publicly disclosed prior to April 10, 1958, (2) what portion of the undisclosed work was appropriated by General Electric as a result of its April 10, 1958 inspection, and (3) what would it have cost General Electric to acquire the same information by its own experimentation ?
The district court, with the aid of a Special Master appointed to assist in the determination of damages, who participated in the proceeding, determined that Servo had not publicly disclosed its device in its entirety, that the essential undisclosed feature which General Electric appropriated was the orientation angles, and that damages of $50,000.00 “would be proper, fair and reasonable.” Judgement accordingly was entered and both parties have appealed. We reverse, and remand for further proceedings.
In the proceedings on remand in the district court, and in this Court, Servo insists that the combination of all of the elements of the hot box detector was undisclosed and, impliedly although far from explicitly, that General Electric did not theretofore know, and hence appropriated, all that Servo had developed. General Electric, on the other hand, sought to establish that all of the elements of the detector had been publicly disclosed in trade papers and industrial fairs prior to April 10, 1958, and, again impliedly but not explicitly, that General Electric had developed its competing product from such sources of information, rather than the April 10, 1958 inspection.
Servo sought to take the deposition of a patent attorney and other employees of International Telephone & Telegraph Company. I. T. & T. had expended great effort and considerable sums of money in an unsuccessful effort to develop a hot box detector of its own. The purpose of the deposition was to discover I. T. & T.’s cost of development, presumably as some measure of what General Electric’s costs might have been had it been established that General Electric appropriated some of Servo’s accomplishments. General Electric moved to quash the taking of these depositions, and served interrogatories upon Servo, seeking discovery of what disclosure Servo had made prior to April 10, 1958. Servo, in turn, served interrogatories upon General Electric to determine its costs in connection with its pre-April 10, 1958 attempts to develop a workable detector; and General Electric filed objections to these interrogatories.
The various .motions and objections came on for hearing on July 19, 1966. The district court ruled on none of them, but instead appointed the second Special Master to aid the court “ * * * in the determination of the damages which might be due Servo, in the event that the Court should be of the opinion that some portion of Servo’s work was not publicly disclosed prior to the visit on April 10, 1958 * * * by representatives of General Electric Company * * As part of the order which was entered, Servo was directed to file a bill of particulars setting forth that portion of Servo’s work which was not publicly disclosed prior to April 10, 1958, and a pretrial conference was directed to be held on October 18, 1966.
Servo filed its bill of particulars on the date fixed, containing a lengthy recital of claimed combinations.' General Electric filed a responsive pleading, in which it asserted that every significant aspect of the detector had been disclosed prior to April 10, 1958.
At the pretrial conference held on October 18, 1966, considerable discussion between counsel and the court occurred, dealing with the relevancy of the discovery data sought to be elicited from I. T. & T. and the power of the court to require it, and also the propriety of General Electric’s being required to divulge the costs which it had incurred in an attempt to develop a hot box detector prior to April 10, 1958. After hearing from counsel, the district judge summarily announced that he thought that the seven years that the litigation had been going on was long enough, that he had conferred during an earlier recess with the Special Master, and that they had collaborated and written an opinion and judgment, containing the essential provisions before described, which he read to counsel.
As an answer to each of the three questions that we directed be determined on remand, we find the district judge’s opinion and judgment unsatisfactory, substantively and proeedurally.
In remanding the case for a re-determination of the first two questions which, the appeal presents, it is appropriate for us to state the substantive legal principles which will govern their outcome. Servo contends that the trade secret which General Electric appropriated from it lay in the “working combination” of various elements which it had developed, and urges us to rule that in order for there to have been public disclosure of the secret, there must have been a disclosure of all the components of the combination within the four corners of an integrated document. That Servo’s trade secret may have been a combination of components, each of which was in the public domain, cannot be doubted. Imperial Chem. Indus. Ltd. v. National Distillers & Chem. Corp., 342 F.2d 737 (2 Cir. 1965). But it does not follow that public disclosure of the working combination may be accomplished only through a single integrated document. That doctrine is the defense of anticipation in the field of patent law. Dewey & Almy Chem. Co. v. Mimex Co., 124 F.2d 986 (2 Cir. 1942). It has no necessary application to a trade secrets case where the question is whether, taking into account all of the plaintiff’s relevant disclosures, it is reasonable to conclude that a competitor could have ascertained the working combination from an examination of those disclosures. Sarkes Tarzian, Inc. v. Audio Devices, Inc., 166 F.Supp. 250 (S.D.Cal.1958); Cummings, Some Aspects of Trade Secrets and Their Protection: The Public Domain and the “Unified Description” Requirement, 54 Ken.L.J. 190, 197-201 (1966).
In holding that Servo’s trade secret might consist of several discrete elements, any one of which could have been discovered by study of. material available to the public, we recognize that in our earlier opinion denying a rehearing in this case we said that “the district court should allow Servo damages only for General Electric’s appropriation of that portion of its work which was not publicly disclosed prior to the visit to Salisbury on April 10,1958.” This statement was made in response to General Electric’s argument that the relationship between Servo and Southern could be deenled to be confidential only to the extent that the information communicated to Southern by Servo had not already been placed in the public domain, because, as we had said in American Potato Dryers v. Peters, 184 F.2d 165, 172 (4 Cir. 1950), "* * * it would be absurd to designate as a confidential disclosure that which is publicly known.” However, we also stated that we felt that this position was “consistent with [our earlier] opinion,” in which we had found a confidential relationship to exist between Servo and Southern. We interpret the language in the per curiam opinion to mean that Servo cannot recover for appropriation of information which had been so completely disclosed to the public as to dispel the existence of a trade secret and thus to negate the confidential relationship which had been established by Servo and Southern between themselves. We do not believe that in those instances where the extent of disclosure is arguable, and where the information had not been clearly placed in the public domain, General Electric should be allowed to avoid the consequences of the breach of confidence by piecing together in retrospect bits of information which had been disclosed in a variety of places and which as a combination were not clearly a matter of public knowledge.
Unless upon remand the district court should find that Servo’s public disclosures were so broad as to render ineffective its confidential relationship with Southern, the extent to which General Electric may invoke Servo’s prior publications as a defense to its misappropriation directly depends upon the extent to which it relied on them and not on its inspection of April 10, 1958. The gravamen in a trade secrets case is a breach of confidence, rather than an infringement of a property right; hence, reliance on innocent sources of information involving no breach of duty, is an essential element of the defense that the secrets were previously disclosed. Franke v. Wiltschek, 209 F.2d 493 (2 Cir. 1953); Standard Brands, Inc. v. Zumpe, 264 F.Supp. 254 (E.D.La.1967), Nims, Unfair Competition and Trade Marks, § 142 (1947 Ed.). Recently, the Supreme Court of Pennsylvania held that the first determination which must be made in a trade secret case is “whether, in fact, there was a trade secret to be misappropriated,” and that a public disclosure dispels the secret, irrespective of reliance. Van Prod. Co. v. General Welding & Fabricating Co., 419 Pa. 248, 213 A.2d 769 (1965). We agree with this statement to the extent that complete public disclosure of a secret would destroy the legal effectiveness of, or prevent the creation of, any confidential relationship based upon that secret, the breach of which is the essence of a trade secret's action. But if Van Products holds that the mere presence in the public domain of the information upon which a trade secret is based precludes recovery for breach of a confidential relationship, we decline to follow it. Thus, should it appear that Servo made disclosures prior to April 10, 1958, unless these disclosures made its secret so obvious as to render meaningless the confidential relationship which had been established by Servo and Southern, they become irrelevant unless General Electric can show that it relied on them and did not appropriate the secret in its April 10, 1958 inspection. Only if proof is offered to show that General Electric obtained its knowledge from them and not the April 10, 1958 inspection, need the question of their sufficiency, singly or collectively, to disclose the working combination be considered. In that determination, we hold, further, that the burden of proving innocent reliance on non-confidential sources rests on General Electric.
Of course, with respect to the amount of damages, the matter of a disclosure of something less than a disclosure so obvious as to render meaningless the claimed confidential relationship may be significant. On this record, we do not now know what secret belonging to Servo was misappropriated by General Electric. From the arguments which have been advanced, the district court may well conclude that the secret was a combination of several components and, further, the district court may well find that one or more of these components had been publicly disclosed by Servo, but that all were not disclosed such as to destroy the confidential relationship. In the latter event, we think that the damages which Servo may recover would be the cost of experimentation to discover the component or components not disclosed and to discover how to combine all components, but not the cost of experimentation to discover the component or components which were disclosed, notwithstanding that General Electric did not rely on the disclosures but, rather, derived its information from the April 10, 1958 inspection. As to elements disclosed by Servo, but unknown to General Electric, General Electric should be liable only for the cost of discovering Servo’s disclosure, but not the cost of experimentation to develop that which was disclosed.
In applying these substantive principles, the district court on remand should comply strictly with Rule 52, because we are unable to ascertain, with certainty, how the district court arrived at its conclusions. We directed, first, a determination of what portion of Servo’s work was not publicly disclosed prior to April 10, 1958. Servo contended that none was disclosed in the bill of particulars it was directed to file; General Electric contended all were disclosed, although it concedes on appeal that the district judge correctly determined that the aiming of the angle of the detector was not disclosed. While the first Special Master found that General Electric had copied three elements of the Servo device, we cannot read his report as making any finding of what Servo had' disclosed, if anything, prior to April 10, 1958. The second Special Master was not permitted to make any report.
Absent a report from either master, the conclusion of the district judge that “the Servo detector in its entirety had not been publicly disclosed,” whatever was meant manifestly lacks the specificity required by Rule 52, Fed.R. Civ.P. Without prejudice to the right of either party to conduct further discovery and to supplement the overall record with additional evidence, the district judge on remand will make detailed and intelligible findings if it is necessary to reach this question in the light of the principles we have stated.
In regard to the question of General Electric’s appropriation, the first Special Master found that General Electric, as a result of its April 10, 1958 inspection, had copied the orientation angles, the wheel trip and the shutter. His finding was adopted by the district judge in respect to the orientation angles. We infer that the district judge rejected his finding in regard to the wheel trip and the shutter, but if this inference is a correct one, we do not know why the latter finding was rejected. Again, we think that the district judge failed to comply with Rule 52 and, again without prejudice to the right of either party to conduct further discovery and to supplement the overall record with additional evidence in regard to this second question which should have been determined on remand, we direct the district judge to make detailed findings, initially or by reference, in regard thereto.
To turn to the question of damages, it appears that evidence was presented to the district judge on behalf of General Electric that its cost of development of that which it copied was $6,000.00, and evidence on behalf of Servo that its costs were many times that figure. This factual dispute rendered the case a peculiarly inappropriate one for the summary treatment which it received. The parties should have been afforded the opportunity to present relevant evidence in open court, or before a Special Master, as to damages; and a determination of damages, in compliance with Rule 52, made. In this connection, evidence of the development costs of I. T. & T. may be relevant, and appropriate discovery, limited by relevancy to the determination made of the second issue which should have been resolved on remand, permitted. Admittedly, the assessment of damages under the rule which we stated on remand cannot be done with complete exactness; but should it appear that I. T. & T.’s costs of developing that which may be determined to have been copied by General Electric can be identified and segregated, such data might be a persuasive indicator of the weight to be afforded other evidence of costs. What we say about permissible discovery dependent upon the determination of the second issue, however, is not intended by us to foreclose resistance to discovery by I. T. & T., if and when sought, on the grounds of unreasonableness or oppressiveness, or to condition compliance on the payment of costs, Rule 45(b), or to indicate how the district judge should decide such questions if they arise.
Because of the successive and dependent nature of the several questions which should have been determined on remand, we suggest to the district judge that, in an effort to conserve judicial time and time and costs to the parties, the several questions should be heard and determined, seriatim. Thus, discovery and evidence relevant to the second question may await, or may precede, the determination of the first question, depending upon further development of the issues by discovery and pretrial conferences; and discovery and evidence relevant to the third question, if reached, should await determination of the second question. This is not to intimate that we intend to hear interlocutory appeals from the determinations of the several questions to be decided, but simply to suggest that in this, as well as other protracted litigation, the separate determination of multiple issues can reduce the litigation to manageable size and bring about greater judicial efficiency.
We reverse the judgment below and remand the casé for further proceedings in accordance with the views expressed herein. We direct that each party shall pay its own costs on appeal.
Reversed and remanded.
. Certiorari was denied in Servo Corporation of America v. General Electric Co., 383 U.S. 934, 86 S.Ct. 1061, 15 L.Ed.2d 851 (1966), rehearing denied, 384 U.S. 914, 88 S.Ct. 1333, 16 L.Ed.2d 366 (1966).
. This was the second Special Master who had served in the case. The first Special Master had acted until the first appeal to this Court.
. The first Special Master in his consideration of the validity of the patents had found the essential elements of the inventions to be orientation angles, the wheel trip and the shutter. Apparently it was from this source that the district judge made his findings, although he made no mention of the latter two elements.
. In so ruling, the Pennsylvania court rejected the contrary prediction of Pennsylvania law in Smith v. Dravo Corp., 203 F.2d 369 (7 Cir. 1953).
. Whether this is a permissible reading of the opinion of the district judge that “the Court thus finds that the Servo detector in its entirety had not been publicly disclosed” is highly questionable. We are inclined to read it differently from General Electric.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PARKER, Circuit Judge
(after stating the facts as above). We think that the decree of the judge below denying the injunction was clearly right, and this for three, reasons, viz.: (1) Because the right of way in question had been acquired by defendant, and had been marked out and defined and devoted to a public use prior to the institution of the condemnation proceedings, and the statutes under which the government proceeded did not authorize the condemnation of sueh property; (2) because, in view of the agreement between the parties, the defendant was not a trespasser upon- the lands of the government, whatever view be taken as to the title acquired in the condemnation proceedings; and (3) because the government, not having tendered a permit to defendant in accordance with its agreement, was not in position to invoke the aid of a court of equity.
On the first proposition, the statutes upon which the government relies for the validity of the condemnation proceedings are the Weeks Law of March 1, 1911, 36 Stat. 962, 16 USCA § 516, and the Condemnation Act of August 1,1888, 25 Stat. 357,40 USCA § 257. The Weeks Law merely authorized the purchase of lands for forestry purposes.. It did not expressly authorize the acquisition of the rights of way of public service corporations, nor did it contain any provision for condemnation. The Act of August 1,1888, however, authorized the condemnation of all lands which an officer of the government had been or might thereafter be authorized to acquire; and, inasmuch as the Weeks Law authorized the acquisition of lands for forestry purposes, it is clear that condemnation for such purposes was proper under the Act of August 1,1888. U. S. v. Graham & Irvine (D. C.) 250 F. 499; Albert Hanson Lumber Co. v. U. S., 261 U. S. 581, 587, 43 S. Ct. 442, 67 L. Ed. 809.
It by no means follows, however, that condemnation of the rights of way of public service corporations was authorized in a proceeding to acquire land for forestry purposes. While it is well settled that land devoted to a public use may be taken for another public use under the power of eminent domain, it is equally well settled that this may not be done, unless the intention of the Legislature to that effect has been manifested in express terms or by necessary implication. 20 C. J. 602; Western Union Tel. Co. v. Pennsylvania R. Co., 195 U. S. 594, 597, 25 S. Ct. 150, 49 L. Ed. 332, 1 Ann. Cas. 533; Adirondack Railway v. New York State, 176 U. S. 335, 339, 20 S. Ct. 460, 44 L. Ed. 492; Portland R. Light & Power Co. v. City of Portland (C. C.) 181 F. 632, 634. It is true that this rule is ordinarily applied in grants of power to public service corporations, and not where the power is being exercised by the state itself for its immediate purposes. U. S. v. City of Tiffin (C. C.) 190 F. 279. But it is based, not upon any lack of power upon the part of the government, but upon the presumed intention of the Legislature, and should be held to apply in condemnation proceedings, even by the state itself, where the prior public use could not reasonably interfere with the purpose for which condemnation is authorized.
Now, the purposes of the government in acquiring land for a forest reserve are primarily to protect the timber growing thereon and to guard against drainage conditions which are productive of floods. These purposes are not appreciably interfered with by the fact that the forest lands are crossed by rights of way of- public utilities; ■ and it is unreasonable to assume that Congress, in granting the right to acquire lands for forestry purposes, intended to grant also the right to condemn such rights of way. Such condemnation would serve no useful purpose, and would necessarily involve inconvenience and loss to the public and needless expense to the government. Furthermore, such rights of way are used by,the corporations owning them in performing public services under grants of power from the several states; and it is not to be assumed that Congress intended to interfere with them in the performance of their public duties, in the absence of a clear manifestation of such intent.
We think, therefore, that the acts relied upon by the government are not to be construed as authorizing the condemnation for forestry purposes of the rights of way of public service corporations. As stated above, the power to acquire such rights of way was not expressly given by the Weeks Law, and, so far as lands for forestry purposes are concerned, the act of 1888 merely authorizes the condemnation of what might be acquired under that act. Both acts taken together do not expressly authorize the condemnation of such rights of way, and the authority to condemn does not result by neeessary implication. And this interpretation seems to be the interpretation placed upon these statutes by Congress itself in the Act of March 4, 1913, 37 Stat. 855,16 USCA § 518, which provides that the acquisition of lands under the Weeks Law “shall in no case be defeated” because of located or defined rights of way, etc., and authorizes the acquisition of such lands subject to the rights of way. The fact that Congress contemplated that the acquisition of lands might be defeated by the existence.of rights of way shows clearly that it was not intended that such rights of way might be condemned.
The right of way here in question had been acquired, marked out, and defined, and the power line had been constructed, a number of years before the condemnation suits were instituted by the government. Nevertheless, it was not mentioned in the pleadings in the condemnation suits, and no compensation was paid to defendant on account of it. The various tracts involved (in the suits for condemnation were condemned as forest or agricultural land on the basis of the acreage. The government contends, however, that, notwithstanding this, it obtained title free and 'clear of the easement of defendant because defendant was made a party to the suits, and the judgments provided that the lands be condemned for the United States “freed and disencumbered from any and all liens or claims of any nature or kind whatsoever.” Without passing upon the interesting questions raised by the failure to mention the easement of defendant in the pleadings or to pay compensation for its taking, we think that the judgments could not have the effect of divesting the title of defendant to its right of way, as the condemnation of property previously dedicated to a public use was not authorized by the statute under which the suits were instituted. “The extent of the title or rights acquired by a condemnor depends upon the authority to take. 3 * * ” And “the extent of the authority to take depends upon the statute conferring the power.” 20 C. J. 1221; Currie v. New York Transit Co., 66 N. J. Eq. 313, 58 A. 308, 105 Am. St. Rep. 647; Tacoma Safety Deposit Co. v. Chicago, 247 Ill. 192, 93 N. E. 153, 31 L. R. A. (N. S.) 868, 20 Ann. Cas. 564.
It is true that the agreement of the parties, entered into prior to the condemnation proceedings, contemplated that absolute and unincumbered title should be acquired by the government under the condemnation suits, and that thereupon the government should grant a use permit to defendant for a nominal consideration, giving defendant practically the same rights in its right of way as it then held. But it is doubtful whether under the law of South Carolina a public service corporation could part with title to its right of way needed for the public service, even by solemn deed of conveyance. Matthews v. Seaboard Air Line Ry., 67 S. C. 499, 46 S. E. 335, 65 L. R. A. 286; Blume v. Southern Ry, Co., 85 S. C. 440, 67 S. E. 546; Atlantic Coast Line R. Co. v. Searson, 137 S. C. 468, 135 S. E. 567; Williams, Mayor, v. Atlantic Coast Line R. Co. (C. C. A. 4th) 17 F.(2d) 17. And certain it is that the government, not having complied with the agreement, is not in a position to insist upon it.
But, even if we assume that the statutes relied upon authorized the condemnation of the right of way, and that the government acquired an unincumbered title by the condemnation suits, we do not think that it is entitled to the injunction prayed. In view of the contract between the parties, defendant is not a trespasser in any aspect of the ease, but is maintaining its power lines over the lands in question under the agreement by which the government acquired title to the lands. If, as contended, it was the duty of defendant under this agreement to apply for a use permit, the evidence is that it duly made application therefor in accordance with the directions given to it by the officials of the government with whom it was dealing at the time the agreement was made. No objection was made to the form or content of the application, but promise was given that the permit would be issued as soon as the title to all of the tracts of land should be acquired by the government. Defendant seems to have done all that it was required or could have been expected to do. That it has not received a formal permit is not its fault, but the fault of the government, first, in delaying the permit, and later in attempting to attach to it conditions not warranted by the agreement. Under such circumstances, the government will not be allowed to take advantage of its own wrong; but equity, considering that as done which should have been done, will treat defendant as having received a permit in accordance with the agreement and as occupying the right of way in accordance therewith. When the situation of the parties is so considered, defendant cannot be enjoined as a trespasser; for there is no proof that it has violated in any way the regulations of the Forestry Commission, or that it is interfering in the slightest particular with the proper management of the forest reserve.
The case of Utah Power & Light Co. v. U. S., 243 U. S. 389, 37 S. Ct. 387, 61 L. Ed. 791, relied upon by the government, has no application here. In that case the power company, without contract or permit, constructed reservoirs, power lines, etc., upon forest lands of the government, relying upon an understanding with certain government officers that all rights essential thereto would be granted under the act of 1905 (33 Stat. 628). It was held that the government was not bound or estopped by the agreement of its officers which the law did not permit, and that the company could claim nothing under the act of 1901 (31 Stat. 790) because it had not conformed to its requirements or received any permission or license under it. In that case the defendant entered into an agreement, not authorized by law, with regard to the public domain, which officers of the government could not deal with, except in accordance with the powers conferred upon them by law. In this case, however, defendant was aiding the government to acquire title to land which it did not own; and the only title which the government now has was acquired by virtue of an agreement which was in substance authorized by the Act of March 4, 1913 (16 USCA § 518). We say authorized “in substance,” because there can be no substantial difference between acquiring land subject to an easement and acquiring it subject to an agreement that an easement shall be granted. This is especially true in view of the rule of equity that, in the ease of such agreements, equity regards that as done which ought to be done, and views the title of the parties as though the agreement had been carried out. See Virginia Shipbuilding Corporation v. U. S. (C. C. A.) 22 F.(2d) 38, 50.
finally, we think that the injunction was properly denied, because the government, not having complied with its agreement to grant a use permit to defendant, is not in position to invoke the aid of a court of equity. As stated above, the defendant had done all that it was required to do. It had withdrawn its answers in the condemnation suits, and had filed application for a use permit in accordance with its agreement. The government delayed issuing the permit until after the passage-of the Federal Water Power Act of 1920 (16 USCA §§ 791-823), when it insisted upon defendant’s complying with the provisions of that act and the regulations of the Power Commission. After the decision in the court below, and before the entering of the final decree, it tendered a permit which is said to be in accordance with the provisions of the Act of February 15, 1901 (31 Stat. 790), and the regulations made pursuant thereto. But it woffid seem that the power of the Secretary of Agriculture to grant permits under the act of 1901 has been repealed by section 29 of the Federal Water Power Act of June 10, 1920, 41 Stat. 1077, 16 USCA § 823. See 32 Opinions of Atty. Gen. 525. And certain it is that the permit as tendered contains many stipulations and conditions entirely inconsistent with the agreement upon which defendant withdrew its answer in the condemnation suits and allowed title to be acquired by the government.
It is said that the parties must have contemplated such a permit as this, because the Secretary of Agriculture was not authorized to issue any other kind of permit. But by the 1913 amendment (16 USCA § 518) to the Weeks Law the government was authorized to acquire lands subject to existing rights of way, and,,as stated above, an agreement that the government should acquire unincumbered title and grant an easement in the right of way is not substantially different, as equity regards that as done which ought to be done. The former method would naturally be used where the owner of the land acquired was also the owner of the right of way; the latter, where the right of way was owned by a different person. In the former case, the conditions under which the right of way should be enjoyed would be stipulated in the deed as provided in the statute, in the latter these would be stipulated in the permit. The probability is that the plan of having the government acquire title and grant a permit for the enjoyment of the easement was decided upon, because it was realized that conditions binding the owner of the easement could not be inserted in a deed from the owner of the fee, where the owners of the fee and the easement were different persons.
But we think that a complete answer to this position of the government is that, even if defendant were entitled to no more than a permit under the act of 1901, the government has delayed the issuance of such permit until the law authorizing the issuance of same has been repealed. We do not think that the right to issue such permit is preserved by section 23 of the Water Power Act (16 USCA §§ 816, 817), nor that the issuance of that kind of permit is authorized under the section relating to minor projects. Section 10(i); 16 USCA § 803(i). The defendant is not required to submit to the conditions imposed by the Power Commission for the issuance of a permit; and, if the government will not, because it cannot, now issue a permit in accordance with its agreement, it will not be heard to ask an injunction restraining defendant from using the right of way, on the ground that the defendant has not received such permit. “He who seeks equity must do equity.”
One other contention of the government requires notice. Defendant’s deed to the right of way over what is known as the John Loehrie tract contained the provision: “This grant is made subject to the contract of bargain and sale heretofore made by me of the foregoing tracts along with certain other tracts to the Government o'f the United States of America. Also subject to approval by proper officers of the Government.” At the time of the execution of the deed, the government held a contract for the purchase of the land from Loehrie. The proper officers of the government, however, approved the acquirement of the right of way by defendant. And, furthermore, when the government came to acquire title to the land, it acquired it not Tinder the contract of purchase but under condemnation.
It is clear that the contract of purchase cannot be tacked on to the condemnation proceedings, so that what was subject to the former will be subject to the latter. The title acquired by condemnation is title acquired in invitum. It does not depend upon, or derive any benefit from, a prior contract. We tbink it clear, therefore, that the provisions in the deed of the right of way by Loehrie did not enable the government to acquire the right of. way by condemnation when it acquired title to the Loehrie tract of land. And, of course, in view of the effeet of the contract between the defendant and the government to which we have already adverted, the. defendant would not be a trespasser upon the lands in question in any event, nor would the government be entitled to the aid of equity to enjoin defendant from maintaining its power lines across same.
Por the reasons stated, we think that the injunction was properly denied, and the decree of the District Court refusing same is-accordingly affirmed.
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
RUDKIN, Circuit Judge.
Upon the original submission of this ease an opinion was prepared by Judge DIE.TRICH, but after his death the ease was restored to the calendar for reargument and has been resubmitted to the court by stipulation of the parties. Upon full consideration the opinion of Judge DIETRICH, which follows, is adopted as the opinion of the court.
“By the decree below the appellant is enjoined from enforcing an assessment-made by •its officers upon property constituting a portion of appellee’s terminal facilities in the city of San Diego, to cover the expense, in part, of opening a street in the vicinity thereof. The total cost of the proposed work was determined to be $54,565.83, of which $12,-607-12 was assessed against appellee’s property. The decree followed a finding that the projected improvement, if not detrimental, would at least be of no benefit to appellee.
“Appellee’s depot and appurtenances are at the eornér of Broadway and Kettner streets) with entrances from both streets. •Broadway is a wide thoroughfare, running east and west, and easterly from the depot penetrates the main business section of the city. Kettner street, not so wide, extends indefinitely north and south at right angles with Broadway. North of appellee’s premises, and approximately 600 feet from Broadway, is B street, which, in its easterly reaches,' also passes through the main business section. It will thus bé seen that appellee’s station may be entered on the south side from Broadway and on the east side from Kettner street, which connects with Broadway and other east and west streets to the south and with B and other streets to the north. Immediately across Kettner street, east of appellee’s grounds, lies a vacant block, bounded .by B street on the north, Broadway on the south, and on the east by India street, which is parallel with and.about 200 feet from Kettner street. Extending east from India street ■is C street, midway between and parallel with Broadway and B streets. The projected work contemplates the extension of this C street westerly from India street to Kettner, whereupon it will terminate directly in front of the easterly depot entrance. The expense is to be. imposed under what is known as a local or 'district assessment plan. The improvement district established as the area to be assessed •is a. rectangular tract 'with the longer boundary lines thereof 90 feet on either side of the .center line of C street, actual or projected, and extending in, length from a line nine blocks easterly from India street to a line 225 feet west from the westerly line of Kettner street, thus including, of appellee’s property, a tract 180 by 225 feet. By the city council the railway company’s protest, on the ground that the assessment was unjust and arbitrary, was overruled. Whereupon this suit was instituted.
“That the court below did not err touching the general principles of law applicable in such a case is disclosed by the following excerpt from its well-considered opinion, 34 F.(2d) 293:
“ 'The Street Improvement Act of the State of California, under which, it is asserted, the city proceeded (sees. 4, 5, p. 70, Stats, of Cal., 1889, and Amendatory Acts [Deering’s Gen. Laws, 1923, Act 8195]), provides for the hearing of objections to the proposed work and to the assessments made, and declares that the decision of the City Council allowing or disallowing protests “shall be final and conclusive.” It is admitted by defendants that the finality which attends the determination of the City Council when it acts upon the protest of a property owner assumes eases where that body acts within a fair and reasonable discretion upon the matter before it (which is presumed, prima facie), but that the protestan! is not concluded if he is able to show that no fair rule of uniformity was adopted in making the assessment (Schaffer v. Smith, 169 Cal. 764, 147 P. 976), or that the assessment was made without regard to benefits to accrue to the property taxed (Spring Street Company v. City of Los Angeles, 170 Cal. 24, 148 P. 217, L. R. A. 1918E, 197).
“ 'The question to be answered in such eases is: Did the municipal body use the judicial judgment which the law requires of it, and determine the amount of the assessments upon the basis of benefits to property assessed? Where it is plain that the Council, upon a showing of valid, supporting facts, has ruled that benefits accrue to the property assessed to pay the cost of the work, that determination may not be overthrown by witnesses produced in court who testify that the assessment is. for too large an amount. The law has established the agencies, which shall settle the question of the amount of damages and benefits: first, the commissioners appointed for that purpose; second, the municipal Council, with full power to revise, correct and annul the commissioners’ report. Counsel for defendants have cited a number of California decisions on the question, all showing the limited power which the courts have in these matters. There is no real difference between respective counsel as to the law.
“ ‘An assessment of the kind here to be considered will be deemed arbitrary and illegal if, upon examination of the record of proceedings had, together with other evidence offered to show fully plain conditions which the assessing officers are presumed to have had before them, the conclusion is inescapable that the property assessed could not be benefited by the contemplated work, or that, if benefited, the benefit necessarily would be trivial or inconsequential. * * *
“ ‘The State law authorizing the segregating of the property of a limited number of taxpayers within a district, and placing the cost of improvement work, the use of which will be equally shared in by the general public, as a charge upon the property within the district, rests, as the Supreme Court of California said in Spring Street Company v. City of Los Angeles, supra, upon the compensating benefit resulting to the included property as “its solo warrant.” ’
“Not only is appellee’s property now devoted exclusively to railroad purposes, and so improved as to make wholly probable the permanency of such use, but by the deeds conveying title to its immediate predecessor in interest it was expressly provided that the grantee must construct and maintain thereon a passenger station, with reversion of title in case of failure to comply with this condition. We aré, therefore, of the opinion that in making the assessment appellant was bound to assume the measurable permanency of such use and to make assessment accordingly. See Chicago, B. & Q. R. Co. v. Chicago, 166 U. S. 226, 17 S. Ct. 581, 41 L. Ed. 979; City of Oakland v. Schenck, 197 Cal. 456, 241 P. 545; Southern Pac. R. Co. v. S. F. Savings Union, 146 Cal. 290, 79 P. 961, 70 L. R. A. 221, 106 Am. St. Rep. 36, 2 Ann. Cas. 962; Naugatuck R. Co. v. City of Waterbury, 78 Conn. 193, 61 A. 474; New York Bay R. Co. v. Newark, 82 N. J. Law, 591, 83 A. 962; In re East 136th Street, 127 App. Div. 672, 111 N. Y. S. 916; City of Barre v. Barre & Chelsea R. Co., 97 Vt. 398, 123 A. 427, 37 A. L. R. 207; Federal Construction Co. v. Ensign, 59 Cal. App. 200, 210 P. 536; Road Improvement Dist. No. 1 v. Missouri Pac. R. Co. (C. C. A.) 2 F.(2d) 340 ; Kimama Highway Dist. v. O. S. L. R. Co. (C. C. A.) 298 F. 431; Kankakee v. Illinois Cent. R. Co., 257 Ill. 298, 100 N. E. 996.
“In its discussion of the facts the lower court said:
“ ‘The proposed opening of C street does not touch either side of the depot property. The depot now has access furnished on its southerly side from Broadway and along its easterly side from Kettner. Already B street, at the maximum of 300 feet from the easterly center line of the depot, furnishes a way for traffic to enter or depart to or from Kettner. The block lengths in the city are short, none exceeding 300 feet. It would seem to be beyond denial that if Kettner were a private way, and the railroad company were allowed the exclusive use of it as far as B street, for loading purposes, passenger and express, its interests would bo advanced. Any condition which would divert general traffic, having no business at the depot of complainant, from Kettner, would facilitate the handling of the railroad business, both as to the railroad itself and the public who make use of its service. With as ample means, of ingress and egress as could be desired already enjoyed by it, quite apparent it is that any change in conditions which will have the effect of increasing general traffic along the depot frontage on Kettner boulevard can bo of no eoneeivable benefit to the railroad, but rather a detriment. The greater the general traffic the greater the obstruction to complainant’s business. The opening of C street will not only bring into Kettner a new line of miscellaneous traffic, but will create a corner turning-point directly opposite that side of the depot used by cabs and vehicles brought there on business with the railroad. How this condition eould result in advantage to complainant or enhance the value of the property for railroad uses cannot reasonably be explained. This conclusion results from a consideration of fixed conditions, all necessarily apparent, as a fact and by presumption, to the street-opening commissioners and to the municipal Council.’
“Upon an examination of the evidence we discover no reason for disturbing these findings and conclusions, and, therefore, the decree will be affirmed.”
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
OPINION OF THE COURT
GARTH, Circuit Judge:
In this appeal we are asked to determine whether the district court erred in its dismissal of certain defendants for lack of jurisdiction, and in its construction of various statutory provisions of the Pennsylvania No-Fault Motor Vehicle Insurance Act of July 19, 1974, P.L. 489, No. 176, §§ 101 et seq., Pa.Stat.Ann. tit. 40, §§ 1009.101 et seq. (Purdon Supp.1984) (“No-Fault Act”). We affirm.
1.
The facts in this case are not in dispute and have been agreed upon by stipulation. On July 22, 1981, appellant, Warner Bell (“Bell”), a Pennsylvania resident, was injured in a two-vehicle accident. At the time of the accident, he was employed by the Department of Defense as a civilian file clerk and was acting within the scope of his employment. Bell was a passenger in a federally-owned truck which was hit in the rear by a vehicle owned by First Pennsylvania Auto Leasing and driven by John Callahan (“Callahan”). Callahan was employed by Wistar Institute (“Wistar”) and, at the time of the accident, was also acting within the scope of his employment.
Bell was severely injured as a result of the accident and was unable to return to work for many months. As of January 26, 1983, Bell’s medical expenses totaled $32,-509.24, and his lost earnings amounted to $13,648.80 and were accruing at the rate of $188.00 per week.
The government truck in which Bell was a passenger was not registered in Pennsylvania nor was it insured under Pennsylvania’s No-Fault Act. At the time of the accident, Bell had no statutorily identifiable source of coverage under Pennsylvania’s No-Fault Act, as he did not own a vehicle, did not reside with the owner of a vehicle, and was not named insured in any policy of basic loss insurance under the No-Fault Act. Since the accident, Bell has been receiving federal workmen’s compensation payments for his medical expenses and lost earnings under the Federal Employee’s Compensation Act (“FECA”), 5 U.S.C. §§ 8101, et seq. (1982).
In April 1982, Bell filed an application with the Pennsylvania Assigned Claims Plan (“the Plan”), the entity created by the No-Fault Act to provide coverage for vehicle accident victims who have no statutorily identifiable source of coverage. The Plan initially rejected Bell’s request, stating that he was not entitled to benefits under the No-Fault Act.
Bell responded by filing suit in the Court of Common Pleas to compel the Plan to designate a servicing carrier to Bell’s claim for no-fault benefits. In May 1982, the court granted Bell’s motion and ordered the Plan to assign Bell’s claim to a servicing carrier. As a result of the court’s order, the Plan assigned Bell’s claim to Travelers Insurance Company (“Travelers”). On July 6, 1982 Travelers denied Bell’s claim for benefits and directed Bell to seek benefits instead through the United States Government. Travelers further stated that since Bell is eligible for workmen’s compensation benefits, there would be no money due Bell from Travelers once Travelers set-off the amount Bell received from workmen’s compensation. On July 22, 1982, Travelers sent Bell another letter denying liability on the alternative ground that the vehicle in which Bell was a passenger at the time of the accident was not a “motor vehicle” within the meaning of the No-Fault Act and therefore Travelers was not required to make payment under the Plan.
Shortly after Travelers’ last letter, Bell filed suit in the Eastern District of Pennsylvania seeking declaratory and injunctive relief from the United States Department of Labor and Travelers, and monetary damages from Wistar Institute and Callahan. In an order filed December 30, 1982, the district court dismissed Wistar and Callahan for lack of subject matter jurisdiction. The district court judge also dismissed the Department of Labor, but held that the Department was entitled to satisfaction of a statutory lien on any recovery in tort made by Bell from Wistar and Callahan. The judge did not dismiss the action between Bell and Travelers because there was diversity of citizenship.
Bell and Travelers then submitted cross motions for summary judgment. On March 25, 1983, the district court held that Bell was entitled to recover No-Fault benefits from Travelers under the Plan, but that Travelers was authorized to deduct the entire amount of Bell’s FECA benefits from Bell’s No-Fault recovery. Bell appeals both the December 30, 1982 and March 25, 1983 orders of the district court. Travelers cross-appeals.
II.
As a preliminary matter, we affirm the district court’s order of December 30, 1982 dismissing Wistar, Callahan, and the Department of Labor. We are presented with two issues from Bell’s appeal of that order. The first is whether the Department of Labor is entitled to exercise a statutory lien over non-economic tort recovery. The second is whether there existed subject matter jurisdiction with regard to appellees Wistar and Callahan.
A.
The No-Fault Act’s operation generally limits any recovery sought in tort against the driver of the other automobile to non-economic losses such as pain and suffering. Pa.Stat.Ann. tit. 40, § 1009.301(a)(4) (Purdon Supp.1984). Bell originally argued that the United States, pursuant to section 8132 of FECA, could not exercise a statutory lien against tortfeasors Callahan and Wistar because FECA did not authorize the government to offset its payments with any form of non-economic recovery.
5 U.S.C. § 8132 essentially provides that when a beneficiary receives compensation from the United States under this statute and also receives payments from a third person for the same injuries or damages, the beneficiary, after deducting from the third party recovery the costs of suit and a reasonable attorney’s fee, is required to refund to the government the amount of compensation which the government had paid to him, to the extent of his third party recovery. The district judge rejected Bell’s argument, relying entirely on Judge Bechtle’s district court opinion in Lorenzetti v. United States, 550 F.Supp. 997 (E.D.Pa. 1982), rev’d, 710 F.2d 982 (3d Cir.1983), rev’d, — U.S. —, 104 S.Ct. 2284, 81 L.Ed.2d 134 (1984). In Lorenzetti, Judge Bechtle held that the Government was entitled under FECA to reimbursement from an employee’s non-economic tort recovery of the benefits which the government had paid under workmen’s compensation. Although this court reversed the district court’s Lorenzetti decision, see Lorenzetti v. United States, 710 F.2d 982 (3d Cir. 1983), the Supreme Court thereafter reversed our decision, and thereby upheld the district court’s conclusion. United States v. Lorenzetti, — U.S.—, 104 S.Ct. 2284, 81 L.Ed.2d 134 (1984).
In light of the Supreme Court’s pronouncement, the district court in the present case was correct in holding that the government is entitled to a general right of reimbursement that attaches to Bell’s recovery of non-economic losses.
B.
The district court was also correct in dismissing appellees Wistar and Callahan for lack of jurisdiction. Since both Bell and Callahan are residents of Pennsylvania and Wistar is a non-profit corporation organized under the laws of Pennsylvania, app. at 2-3, there exists no diversity of citizenship in the event that Callahan and Wistar remain as parties.
Bell seeks to retain his state court claims against Wistar and Callahan by asserting that the No-Fault Act violates the United States Constitution. Bell argues that the No-Fault Act, by abolishing tort liability for economic losses, unreasonably discriminates against employees of the federal government in violation of the equal protection clause. This federal claim is without merit. While federal employees may receive reduced no-fault payments as a result of the FECA lien on third party tort recoveries, such decreased benefits do not represent a constitutional deprivation. The fourteenth amendment guarantees equal laws, not equal results. Personnel Administrator of Massachusetts v. Feeney, 442 U.S. 256, 273, 99 S.Ct. 2282, 2293, 60 L.Ed.2d 870 (1979).
It is important in this regard to note that the No-Fault Act does not, on its face, discriminate against federal employees. Although a statute’s facial neutrality does not automatically immunize the statute from an attack on equal protection grounds, the burden that the plaintiff must satisfy is made more difficult. When, as in this case, the attack is based on a statute’s discriminatory impact, the burden is on the plaintiff, here Bell, to demonstrate that the legislators had a discriminatory intent. Washington v. Davis, 426 U.S. 229, 239, 96 S.Ct. 2040, 2047, 48 L.Ed.2d 597 (1976).
In the instant case, to state a federal claim, Bell had to allege that the No-Fault Act was designed to purposefully discriminate against federal employees. This he has failed to do. In neither his pleadings, submissions, or arguments has Bell alleged or established the requisite discriminatory intent. Given the fact that Bell has failed to state a claim under the equal protection clause, and noting in passing that Bell will not be deprived of a forum since he has already initiated a suit for personal injuries against Wistar and Callahan in Pennsylvania state court, see, Warner Bell v. The Travelers Insurance Company, et al., Dec. Term, 1982, No. 4959, we hold that the district court did not err in dismissing Bell’s claims against defendants Wistar and Callahan.
III.
The cross-appeals taken from the district court’s March 25, 1983 summary judgment order present this court with issues of first impression and require us to interpret various sections of Pennsylvania’s No-Fault Act. At the outset, we note that there is no legislative history to shed light on the purpose or meaning of any of the No-Fault Act’s provisions. As a result, our analysis must primarily rely upon the statutory language of the Act itself, as well as upon general policy statements contained in the relevant case law.
A.
In the instant case, the district court held that Bell was entitled to receive both no-fault and workmen’s compensation payments. See Bell v. United States Dep’t. of Labor, 560 F.Supp. 515, 519-20 (E.D.Pa. 1983). Travelers, however, presents the novel argument that Bell is not entitled to benefits under Pennsylvania’s No-Fault Act because Bell’s workmen’s compensation recovery under FECA is exclusive. Travelers contends that to allow Bell to recover from both the FECA and the Assigned Claims Plan would be contrary to the provisions and purposes of the No-Fault Act. Bell, on the other hand, claims that he is entitled to the difference between the FECA benefits that he has been receiving and the no-fault benefits. The district court, as we have noted, agreed with Bell.
As an initial matter, it should be emphasized that our attention has not been called to any provision of the No-Fault Act which would excuse a payment of no-fault benefits to a claimant who was receiving workmen’s compensation. Indeed, the Pennsylvania Superior Court has held that an employee who received Pennsylvania workmen’s compensation benefits was not precluded from also recovering benefits under the Assigned Claims Plan of the No-Fault Act. Borrell v. Continental Casualty Co., 310 Pa.Super. 554, 456 A.2d 1074 (1983).
In its attempt to limit Bell to only his FECA benefits, Travelers relies on policy arguments which do not persuade us, and case law which we find to be inapposite. Travelers’ basic contention is that an insurance company should not be required to pay benefits pursuant to the Assigned Claims Plan when, under section 501 of the No-Fault Act, Pa.Stat.Ann. tit. 40, § 1009.501 (Purdon Supp.1984), the owner of the uninsured vehicle (in this case the government) is under no obligation to reimburse the insurance company.
Section 501 of the No-Fault Act allows an insurance company that pays benefits to a victim injured while in an uninsured motor vehicle to recover from the vehicle’s owner. However, since the Department of Defense is the uninsured owner of the vehicle in which Bell was injured. Travelers cannot successfully maintain an action under section 501 due to the federal government’s shield of sovereign immunity. Travelers contends that its inability to recover any benefits which Travelers must pay, releases Travelers from its obligation to pay benefits under the Assigned Claims Plan. In effect, Travelers argues that section 501 may be invoked by an Assigned Claims carrier not only to recover its no-fault payments from the owner of an uninsured vehicle, but that section 501 also protects the carrier from making no-fault payments when the uninsured owner cannot be sued.
On the basis of the statutory arguments made, we conclude that despite Travelers’ inability to recover from the government under section 501, Travelers still remains responsible for its no-fault payments. Nowhere does section 501, or any other provision of the No-Fault Act, suggest that an insurance company is released from its obligation to pay benefits if it cannot succeed in obtaining reimbursement under section 501. Section 501 was designed to provide insurance companies with a potential source of reimbursement. It was not designed to allow insurance companies to escape payment obligations. This result is consistent with the No-Fault Act’s primary purpose which is to provide basic loss benefits to individuals injured in automobile accidents. Pa.Stat.Ann. tit. 40, § 1009.102(b) (Purdon Supp.1984). See generally Harleysville Mutual Insurance Company v. Schuck, 302 Pa.Super. 534, 449 A.2d 45 (1982).
Unable to find direct support for its exclusivity argument, Travelers draws an analogy between the present situation and the situations presented in cases where residents of other states have been injured in Pennsylvania. Travelers calls our attention to Toter v. Knight, 278 Pa.Super. 547, 420 A.2d 676 (1980), which involved an automobile collision between vehicles operated by To ter, a New Jersey resident, and Knight, a resident of Pennsylvania. In Toter, the Superior Court of Pennsylvania resolved a claimed statutory conflict in Pennsylvania’s No-Fault Act. The court permitted Toter to pursue a tort action in Pennsylvania despite the Pennsylvania No-Fault provision that abolished tort liability. Pa.Stat.Ann. tit. 40, § 1009.301(a)(4). (Purdon Supp.1984). In its discussion of the purported “conflict” issue presented, the court referred to still another provision of the No-Fault Act, section 110(c)(1). That statute provides, among other things, that a nonresident domiciled in a state that has its own no-fault plan is denied benefits available under Pennsylvania’s No-Fault Act and is remitted to the benefits available to the plan of his home state. Pa.Stat. Ann. tit. 40, § 1009.110(c)(1) (Purdon Supp. 1984). Travelers seeks to persuade us that just as a resident of another no-fault state is required to pursue no-fault benefits in his home state, so should Bell in this case be required to pursue only FECA benefits from the federal government.
We find that Travelers’ reliance on Toter is entirely inappropriate. First, Toter involves two states — each of which has its own no-fault statute — and the issue presented concerned the availability of a tort action brought in the face of a Pennsylvania No-Fault statute that purportedly barred such an action. This is not our situation.
Second, the analysis in Toter relied upon still another provision of the Pennsylvania Act which remitted a nonresident to the no-fault benefits that his home state provided.
In this case, we are not presented with another state’s no-fault plan, but rather with the federal government’s workmen’s compensation scheme. Under FECA, the benefits paid may differ in character from the benefits which compensate a victim who claims no-fault payments. Finally, in Toter, a New Jersey claimant was denied Pennsylvania no-fault benefits, although he was permitted to pursue other tort claims. In the instant case, the claimant, Bell, is a resident of Pennsylvania, and as such, is entitled to protection under Pennsylvania’s No-Fault Act. The court in Toter recognized the importance of Pennsylvania residency with regard to coverage under the No-Fault Act when it considered the policy underlying the No-Fault Act. It answered the question which it asked, as follows:
Is the policy of the [No-Fault] Act to provide for all persons injured in Pennsylvania, or to provide for all Pennsylvanians injured in motor vehicle accidents? As already noted, the basic intent of the Act is to provide basic loss benefits to Pennsylvanians injured in Pennsylvania
278 Pa.Super. at 555-56, 420 A.2d at 681 (quoting D. Shrager, The Pennsylvania No-Fault Motor Vehicle Insurance Act, § 1:16.3 at 131-32 (1979)) (emphasis added). Thus, we hold that Bell is entitled to no-fault benefits despite the fact that Travelers is denied recovery from the government under section 501 due to the government’s sovereign immunity.
B.
Travelers argues that even if the district court correctly held that Bell’s recovery under FECA is nonexclusive, the district court erred in determining that, under Section 204 of the No-Fault Act, Travelers was the appropriate carrier to pay Bell’s claim.
Section 204 of the No-Fault Act sets out the source of recovery for a victim entitled to benefits under the Act. Travelers maintains that under that section, the proper source of recovery is not, as the district court held, the Assigned Claims Plan (see section 204(a)(5)), which would require Travelers to respond to Bell’s claim. Rather Travelers contends the proper source of recovery is the insurer of the leased car that Callahan was driving (see section 204(a)(4)).
By its terms, Section 204(a)(4) applies to an individual who is (1) not an insured, (2) not the driver of a “motor vehicle,” and (3) not the occupant of a “motor vehicle.” Bell was not an insured and was not the driver of the government-owned truck. Bell, however, was an occupant (a passenger) in the government-owned truck, which Bell claims is a motor vehicle within the meaning of section 204(a)(4). Thus, section 204(a)(4) is inapplicable. The provisions of section 204(a)(4) could come into play in the circumstances of this case only if the government-owned truck was held not to be a “motor vehicle” within the meaning of the No-Fault Act.
Travelers argues that because the government vehicle was not a “motor vehicle,” section 204(a)(4) is the controlling provision of the Act, and as such, the insurer of Callahan’s car, rather than Travelers under section 204(a)(5), should respond to Bell’s claims. As we have noted, the district court rejected this argument and held that, because Bell did not fall within the first four sections of 204(a), Bell was necessarily covered under section 204(a)(5), which refers to “any other individual” and which provides that the Assigned Claims Plan is the proper source of recovery. We agree.
A “motor vehicle” is defined by section 103 of the No-Fault Act as “a vehicle of a kind required to be registered under the act of April 29, 1959 (P.L. 58, No. 32), known as The Vehicle Code.” Pa.Stat. Ann. tit. 40, § 1009.103 (Purdon Supp.1984) (emphasis added).
Travelers argues that this definition requires a determination of which vehicles must or must not be registered in Pennsylvania. Accordingly, Travelers maintains that if an automobile is not required to be registered in Pennsylvania, it is not a “motor vehicle” for purposes of the No-Fault Act. If we were to accept Travelers’ argument, then the federally owned truck in which Bell was a passenger would not be a “motor vehicle” under section 103, because, by operation of federal law, the truck was not required to be registered in Pennsylvania. As Travelers points out, federal regulation specifically excludes government owned vehicles from mandatory state registration.
We believe, however, that Travelers’ definition of “motor vehicle” is far too narrow. The plain language of the statute provides that a “motor vehicle” is a vehicle of a kind required to be registered. In arguing for its interpretation, Travelers apparently ignored the import of section 103’s qualifying language “of a kind.” It is our duty, under established principles of statutory construction, to give effect, if possible, to every clause and word of a statute. United States v. Menasche, 348 U.S. 528, 538-39, 75 S.Ct. 513, 519-20, 99 L.Ed. 615 (1955); Commonwealth v. Sitkin’s Junk Co., Inc., 412 Pa. 132, 138, 194 A.2d 199, 202 (1963). If the legislature had intended to limit the meaning of “motor vehicle” to only those vehicles required to be registered in Pennsylvania, it could have done so explicitly. Instead, by including the words “of a kind,” the legislature expanded the definition of motor vehicle to encompass not only vehicles required to be registered under Pennsylvania’s Vehicle Code, but also those vehicles generically similar to vehicles required to be registered. Since the truck in which Bell was a passenger is of the generic variety of vehicle that must be registered under the Pennsylvania Vehicle Code, it falls under the definition of “motor vehicle” contained in section 103 of the No-Fault Act.
Our construction of the No-Fault Act is also supported by the language of the Act’s title. The title of the No-Fault Act, which provides an overview of the Act’s many provisions, states that No-Fault insurance is mandatory “for all motor vehicles required to be registered in Pennsylvania____” Pa.Stat.Ann. tit. 40, § 1009.101 (Purdon Supp.1984). If, as Travelers argues, the legislature had intended the definition of “motor vehicle” under section 103 to be limited to only those vehicles required to be registered under the Act, the legislature presumably would have used the same unequivocal language in section 103 that it employed in the Act’s title. Instead, the legislature intentionally broadened the definition of “motor vehicle” in section 103 by inserting the words “of a kind.”
IV.
The district court held that Travelers is not obligated to compensate Bell for amounts recovered by the Government pursuant to its Lorenzetti lien. Bell appeals that holding, contending that Travelers, by off-setting Bell’s FECA benefits against Travelers’ no-fault payments, is thereby impermissibly reimbursed for Bell’s non-economic loss. We reject Bell’s argument and uphold the district court’s conclusion that Travelers is not required to make payments to Bell for the Lorenzetti amounts that the government has recovered.
Under the Pennsylvania No-Fault Act, a tort action against the driver of the other automobile is generally limited to recovery for non-economic losses. As we have earlier discussed, in United States v. Lorenzetti, supra, the Supreme Court held that under section 8132 of FECA, 5 U.S.C. § 8132 (1982), the government is entitled to a general right of reimbursement that attaches to the employee’s third party recovery of non-economic losses. This lien permits the federal government to deduct from its FECA payments any non-economic tort recovery to which the employee is entitled. The issue presented to the district court by Bell was whether Travelers is entitled under Pennsylvania’s No-Fault statute to deduct from any payment due Bell, the entire amount of the government’s FECA benefit obligations (including those benefits which represent Bell’s potential recovery against Callahan and Wistar) and thus, indirectly deduct from payments due to Bell, Bell’s potential tort recovery against third parties.
There are two No-Fault Act provisions which bear upon this issue. Travelers relies on section 108(a)(3), Pa.Stat.Ann. tit. 40, § 1009.108(a)(3) (Purdon Supp.1984), which provides that in calculating net loss under the Assigned Claims Plan, an insurance company may deduct any benefits received by the victim. Bell, on the other hand, places great importance on section 111(a)(1)(A), Pa.Stat.Ann. tit. 40, § 1009.-111(a)(1)(A) (Purdon Supp.1984), which outlines the reimbursement and subrogation rights of insurance companies under the Act. Section 111(a)(1)(A) forbids an insurance company from exercising, either directly or indirectly, a right of reimbursement to the proceeds of a victim’s cause of action for non-economic damages.
Bell argues that under section 111(a)(1)(A), Travelers must reimburse Bell for any money the government recovers as a result of its Lorenzetti lien on Bell’s non-economic tort recovery. Bell’s reasoning is as follows. Since the government has a lien against Bell for any non-economic tort recovery, the FECA benefits that Bell ultimately receives from the government will, in effect, be comprised of compensation for both economic and non-economic injury. Thus, when Travelers deducts Bell’s FECa benefits from its no-fault payments pursuant to section 108(a)(3), Travelers is indirectly offsetting its no-fault payments with Bell’s non-economic tort claim recovery in violation of section 111(a)(1)(A).
While Bell’s argument is though provoking, it is not in accord with the plain language of the No-Fault Act. By deducting Bell’s FECA benefits, Travelers is not exercising a form of indirect reimbursement for non-economic damages because Travelers’ no-fault payments to Bell are not dependent upon Bell’s non-economic recovery. Since Travelers is obligated to pay the same amount of benefits to Bell regardless of any non-economic recovery to which Bell might be entitled, Travelers cannot be'said to be reimbursed, directly or otherwise, by Bell’s non-economic recovery.
A simplified numerical example may be helpful in explaining the relationship between no-fault payments, FECA benefits and non-economic tort recovery. Assume that Bell is entitled to $100 in FECA benefits and $200 in no-fault benefits. Bell’s total recovery will amount to $200: $100 from FECA benefits and $100 from the no-fault insurer (the insurer will deduct the $100 in FECa benefits from its $200 obligation pursuant to section 108(a)(3) of the No-Fault Act).
Assume now, however, that Bell recovers an additional $100 in a third party tort action for non-economic damages. Bell, of course, is not advantaged by his non-economic tort recovery since the Government will exercise its $100 lien against Bell’s tort recovery. The government, under its Lorenzetti lien, will be reimbursed for its $100 workmen’s compensation outlay by the $100 that Bell recovered from his tortfeasor. Travelers will deduct the government’s $100 FECA payment from its benefits, thereby paying Bell $100. As a result, Bell’s total recovery will remain unchanged at $200.
More relevant to the issue of reimbursement, is that the no-fault insurer is unaffected by the third party tort recovery. The no-fault insurer is still obligated to pay $100, representing its $200 in no-fault payments less $100 which it is permitted to deduct as a result of Bell’s FECA benefits. The only party reimbursed, directly or indirectly, by Bell’s tort recovery is the federal government, whose net outlay under this example is now zero.
Under the approach recommended by Bell, the no-fault insurer in the above example would be obligated to pay Bell an additional $100, which would represent the amount of the government lien against Bell’s non-economic recovery. In effect, Bell’s analysis requires the no-fault insurer to reimburse Bell for Bell’s non-economic recovery lost as a result of the government having exercised its Lorenzetti lien.
While we observe that Bell’s approach would more fully compensate Bell and similarly situated plaintiffs with regard to non-economic loss, we also recognize that such an approach is not countenanced by the provisions of the No-Fault Act, nor can it be inferred from the underlying purpose of the Act. The No-Fault Act’s purpose is to provide “prompt and adequate basic loss benefits for motor vehicle accident victims — ” Pa.Stat.Ann. tit. 40, § 1009.-102(b) (Purdon Supp.1984) (emphasis added.) The federal government’s lien deprives Bell only of his non-economic recovery and does not diminish his economic recovery in any way. Thus, the fact that Travelers is under no obligation to reimburse Bell for his non-economic recovery, does not run counter to the purpose of the No-Fault Act as expressed in the statute itself.
Moreover, as illustrated above, Travelers’ set-off under section 108(a)(3) does not violate section 111(a)(1)(A) by representing a form of indirect reimbursement. The amount of FECA benefits that Bell is entitled to receive from the federal government is not in any way dependent on Bell’s third party non-economic tort recovery. As a result, the amount of Travelers’ set-off under section 108(a)(3) is also unaffected by Bell’s tort action.
Thus, under the No-Fault Act, Travelers is required to pay Bell the same amount, whether or not Bell is successful in recovering non-economic damages through a third party tort action. Because Travelers’ set-off and ultimate payments are not dependent on Bell’s tort recovery, Travelers cannot be described as being “reimbursed” for Bell’s non-economic compensation. The district court was therefore correct in its disposition of Bell’s claim.
V.
Bell has made one additional argument before us which merits little discussion. Bell claims that Travelers cannot deduct his FECA payments because they are not “benefits” under the No-Fault Act. Relying on Heusle v. National Mutual Insurance Co., 628 F.2d 833 (3d Cir.1980), Bell contends that the FECA payments he received were “exhaustible” and for that reason were not deductible benefits under section 206(a) of the Act. Exhaustible benefits may be characterized as benefits which terminate after a specified period of time has elapsed, or after a maximum amount of benefits have been paid. This argument fails for a number of reasons.
First, the Pennsylvania Supreme Court in Venpanziani v. Insana, 293 Pa.Super. 117, 437 A.2d 1234 (1981) specifically held that a no-fault insurer could deduct Pennsylvania workmen’s compensation benefits under section 206(a) of the No-Fault Act. Second, the relevant provision in the instant appeal is not section 206(a), but rather section 108(a)(3) which applies to the Assigned Claims Plan. While section 206(a) provides only for subtraction of certain governmental benefits, section 108(a)(3) is much broader in its scope and provides for the deduction of “all benefits or advantages that [an] individual receives or is entitled to receive as a result of [his] injury.” Pa. Stat.Ann. tit. 40, § 1009.108(a)(3) (Purdon Supp.1984) (emphasis added). See also Killeen v. Travelers Insurance Co., 721 F.2d 87, 89 (3d Cir.1983).
VI.
We conclude that the district court was correct in dismissing defendants Wistar and Callahan, and in determining that the Department of Labor was entitled to exercise a lien against Bell’s non-economic recovery. We also find that Travelers is responsible for Bell’s no-fault benefits, but may deduct from those no-fault payments Bell’s entire FECA benefits.
Accordingly, we will affirm the district court’s order of December 30, 1982 (dismissing Callahan, Wistar, and the Depart ment of Labor) and the district court’s order of March 25, 1983. Each party will bear its own costs.
APPENDIX A
District Court’s Order of March 25, 1983
The motion of the plaintiff Warner Bell for summary judgment is GRANTED in part and DENIED in part. The motion of the defendant The Travelers Insurance Company for summary judgment is GRANTED in part and DENIED in part.
Judgment is entered in favor of the plaintiff and against the defendant in the amount of $1,754.18 for net work loss sustained from September 6, 1981 to January 26, 1983.
Judgment is entered in favor of the plaintiff and against the defendant for $3,013.00 in medical bills not yet paid by the federal government subject to Travelers’ right of subrogation when plaintiff is paid such benefits. The amount of $3,013.00 shall represent the following unpaid medical bills:
William Burch, M.D. $ 55.00
Louis Yellin 190.00
175.00
Graduate Hospital 138.00
B.C.R.S.G. 216.00
Paul Cohen, D.D.S. 2239.00
Defendant shall pay interest of eighteen percent (18%) per annum accruing upon the above wage loss and medical bills from November 1, 1982 until the time of payment.
It is declared that defendant shall pay the plaintiff his net work loss consisting of his weekly loss of earnings less tax advantages minus compensation benefits paid under the Federal Employee Compensation Act. (FECA).
The defendant shall accept reasonable proof of the fact and amount of plaintiff’s items of loss and make payment of plaintiff’s work loss and allowable expense without deduction of any FECA benefits payable to plaintiff which remain unpaid after thirty days of submission of proof to defendant.
The defendant shall be subrogated to the plaintiff’s right to receive FECA benefits on all items payable under FECA but paid by the defendant due to the above thirty day requirement.
The defendant shall not be obligated to reimburse the plaintiff for any amount recovered by the United States as a result of its statutory lien.
The plaintiff’s request for attorney’s fees is DENIED.
IT IS SO ORDERED.
CHARLES R. WEINER
. Pursuant to Section 108(b) of the No-Fault Act, Pa.Stat.Ann. tit. 40, § 1009.108(b) (Purdon Supp.1984), all insurance companies in Pennsylvania are members of the Assigned Claims Plan, and they are assessed on a pro-rata basis by the Plan for all benefits paid by the Plan.
. Bell v. United States Dep’t. of Labor, 560 F.Supp. 515 (E.D.Pa.1983).
. In relevant part, 5 U.S.C. § 8132 (1982) provides:
If an injury or death for which compensation is payable under this subchapter is caused under circumstances creating a legal liability in a person other than the United States to pay damages, and a beneficiary entitled to compensation from the United States for that injury or death receives money or other property in satisfaction of that liability as the result of suit or settlement by him or in his behalf, the beneficiary, after deducting therefrom the costs of suit and a reasonable attorney’s fee, shall refund to the United States the amount of compensation paid by the United States and credit any surplus on future payments of compensation payable to him for the same injury. No court, insurer, attorney, or other person shall pay or distribute to the beneficiary of his designee the proceeds of such suit or settlement without first satisfying or assuring satisfaction of the interest of the United States.
. The district court’s order of March 25, 1983 appears as a part of the district court’s opinion, Bell, supra, 560 F.Supp. at 525. For ease of reference, the district court’s order is reproduced in full in Appendix A attached to this opinion.
. Section 501 provides:
The obligor obligated to pay basic loss benefits for accidental bodily injury to a person occupying a motor vehicle, the owner of which is uninsured pursuant to this act or to the spouse or relative resident in the household of the owner or registrant of such motor vehicle, shall be entitled to recover all the benefits paid and appropriate loss or adjustments costs incurred from the owner or registrant of such motor vehicle or from his estate. The failure of the person to make payment within thirty days shall be grounds for suspension or revocation of his motor vehicle registration and operator’s license.
Pa.Stat.Ann. tit. 40, § 1009.501 (Purdon Supp. 1984).
. Section 110(c)(1) provides:
The basis loss benefits available to any victim or to any survivor of a deceased victim shall be determined pursuant to the provisions of the state no-fault plan for motor vehicle insurance in effect in the state of domicile of the victim on the date when the motor vehicle accident resulting in injury occurs. If there is no such state no-fault plan in effect or if the victim is not domiciled in any state, then basic loss benefits available to any victim shall be determined pursuant to the provisions of the state no-fault plan for motor vehicle insurance, if any, in effect in the state in which the accident resulting in injury occurs.
Pa.Stat.Ann. tit. 40, § 1009.110(c)(1) (Purdon Supp.1984).
. Section 204 provides:
(a) Applicable security. — The security for the payment of basic loss benefits applicable to an injury to:
(1) an employee, or to the spouse or other relative of any employee residing in the same household as the employee, if the accident resulting in
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
MILBURN, Circuit Judge.
John K. Johnsen (“taxpayer”) and Frances Johnsen instituted this action in the United States Tax Court to challenge a determination by the Commissioner of Internal Revenue (“the Commissioner”) that they owe additional taxes of $3,700.00 for the year 1976. The issue before the Tax Court was the deductibility of taxpayer’s distributive share of pre-opening expenses incurred in 1976 by a limited partnership formed for the purpose of constructing and operating an apartment complex.
The Tax Court determined that the limited partnership was not engaged in the active conduct of a trade or business until 1977 when the apartments were rented out and refused to permit taxpayer to deduct his share of the limited partnership’s expenses as a trade or business expense under 26 U.S.C. § 162(a). Although denying business expense deductions, the Tax Court concluded that the pre-opening expenses were deductible, for the most part, under 26 U.S.C. § 212, which contains no trade or business requirement. The Tax Court then adjusted the taxpayer’s share of the limited partnership’s losses to reflect that portion of the year during which he held an interest in the limited partnership.
The Commissioner appealed arguing that the expenses were not deductible under 26 U.S.C. § 212, and the taxpayer cross-appealed arguing that the Tax Court’s adjustment of his share of pro rata losses was improper. For the reasons that follow, we reverse and hold that the limited partnership’s pre-opening expenses are not currently deductible under 26 U.S.C. § 212.
I.
The facts are carefully set out in the opinion of the Tax Court, 83 T.C. 103 (1984), and will only briefly be set forth here. On April 11,1976, Charles W. Greener, Allan R. Summer, and others formed Centre Square III, a general partnership. On the same date, Centre Square III, Ltd., a limited partnership, was formed. The general partners of the limited partnership were Norman L. Nelson, Jr., Greener and Sumner Architects, Inc., and Equity Advisers, Inc. The original limited partner of the limited partnership was Dee W. Dilts, who was Mr. Nelson’s law partner. The parties to the limited partnership agreement intended Mr. Dilts to be a “nominee” who would have no interest in Centre Square III and who would withdraw when new limited partners were admitted. By an amended limited partnership agreement, effective September 9, 1976, Dilts withdrew as the original limited partner and was replaced by twenty-two other limited partners, including taxpayer.
On April 11, 1976, the general partnership agreed to sell its entire interest in the apartment complex project, including land, plans, specifications, and any contracts relating to the project to the limited partnership for $3,171,200.00. On the same date, the limited partnership entered into a management agreement with the general partnership. Under the terms of the agreement, the general partnership was granted total responsibility for leasing, management, and administration of the project. In exchange for its services, the general partnership would receive management and guaranty fees in the amount of 5 percent of the project’s gross receipts and an additional $50,000.00 annually in the years 1976 through 1980.
On April 15, 1976, the general partnership agreed to provide the limited partnership construction financing in the amount of $3,171,200.00 in exchange for a $28,-200.00 nonrefundable commitment fee to be paid by the limited partnership upon acceptance of the commitment. The general partnership also agreed to provide the limited partnership permanent financing in the amount of $3,171,200.00 in exchange for an $84,600.00 nonrefundable commitment fee to be paid by the limited partnership upon acceptance of the commitment. In August, 1976, the general partnership extended its permanent loan commitment until August 31, 1977, in return for a fee in the amount of $11,280.00.
Construction of the apartment complex began in September, 1976 and was completed in October, 1977. During 1976, the general partnership sought prospective tenants for the complex, but did not accept any rental deposits or advances during that year. Rental deposits on uncompleted units were accepted from prospective tenants beginning in January, 1977.
The offering memorandum for the limited partnership, dated April 15, 1976, provided that the 99 per cent interest belonging to the limited partners would be divided into twenty units of 4.9 per cent each. Each unit cost $47,000.00, payable in five equal installments. The first installment was due upon the limited partner’s admission, and the remaining installments were due annually thereafter. On July 19, 1976, taxpayer executed the amended limited partnership agreement and drew a check for $9,400.00 in payment of his first installment.
On its 1976 United States partnership return, the limited partnership deducted $37,500.00 for “tax advisory fees,” $7,500.00 for “legal fees,” $50,000.00 for the “management and guaranty fees,” and $66,427.00 for the “amortization of commitment fees.” The limited partnership amortized the commitment fees over the duration of the commitments. The amount deducted included $15,667.00 of the construction loan fee and $50,760.00 of the permanent loan fee. The limited partnership listed the taxpayer’s share of the partnership’s resulting ordinary loss for 1976 as $9,568.00.
In the notice of deficiency, the Commissioner disallowed the limited partnership’s deductions for legal fees, tax advisory fees, commitment fees, and management and guaranty fees. The Commissioner determined that the taxpayer had failed to show that the limited partnership was engaged in a trade or business as of December 31, 1976. The Commissioner further determined that the taxpayer had failed to show that the claimed expenses were ordinary and necessary within the meaning of 26 U.S.C. § 162(a) and that the expenses were not capital in nature. Finally, the Commissioner determined that taxpayer had failed to show that deductibility of the expenses was not prohibited by 26 U.S.C. § 709 and that the expenses did not represent non-deductible organizational or syndication expenses of the partnership.
The Tax Court determined that the limited partnership was not actively engaged in a trade or business in 1976 because its intended activity of operating a rental apartment complex had not commenced at that time. Consequently, no deduction for trade or business expenses under section 162(a) was permitted. However, relying on its previous decision in Hoopengamer v. Commissioner, 80 T.C. 538, 540 (1983), the Tax Court held that the management and guaranty fee, the construction loan commitment fee, a portion of the permanent loan commitment fee, and the permanent loan commitment extension fee claimed by the limited partnership in 1976 were deductible under 26 U.S.C. § 212. The Tax Court disallowed the claimed deductions for legal fees and consulting and advisory fees, holding that they were incurred to organize the partnership and were not shown to be attributable to deductible tax advice. Finally, the Tax Court determined that the taxpayer’s distributive share of the limited partnership’s deductions must be adjusted to reflect that he was a partner for only a portion of the limited partnership’s taxable year.
The parties submitted conflicting computations of taxpayer’s liability, disagreeing over the adjustment necessary to reflect taxpayer’s entry into the limited partnership after its tax year had begun. The Tax Court adopted the Commissioner’s computation and entered its decision on November 21, 1984, determining that taxpayer owed additional taxes of $2,698.00. Taxpayer filed a motion to vacate the Tax Court’s decision, contending that the court should not have adopted the Commissioner’s computation adjusting his distributive share on the basis of the percentage of days in the limited partnership’s taxable year during which he was a partner. Instead, according to taxpayer, the Tax Court should have imposed on the Commissioner the burden of proving that any of the deductible fees accrued prior to his becoming a partner on July 19, 1976. After holding a hearing on taxpayer’s motion, the Tax Court issued a supplemental opinion upholding its earlier decision.
II.
The issue presented by the Commissioner’s appeal is whether expenses incurred during the start-up or pre-opening period of a new business, which are not deductible under 26 U.S.C. § 162(a) because of the “pre-opening expense doctrine,” are nevertheless deductible under 26 U.S.C. § 212. Section 162(a) provides that “there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” Courts have consistently held that section 162(a) does not permit current deductions for start-up or pre-open-ing expenses incurred by taxpayers prior to beginning business operations. See Abous-sie v. United States, 779 F.2d 424, 428 (8th Cir.1985); Central Texas Savings & Loan Association v. United States, 731 F.2d 1181, 1183 (5th Cir.1984); Bennett Paper Corp. v. Commissioner, 699 F.2d 450, 452 (8th Cir.1983); Madison Gas & Electric Co. v. Commissioner, 633 F.2d 512, 517 (7th Cir.1980); Richmond Television Corp. v. United States, 345 F.2d 901, 907 (4th Cir.), vacated on other grounds, 382 U.S. 68, 86 S.Ct. 233, 15 L.Ed.2d 143 (1965) (per curiam).
Courts denying deductions on the basis of the “pre-opening expense doctrine” have articulated two alternative rationales in support of the doctrine. In Richmond Television Corp., the seminal “pre-opening expense doctrine” decision, the court held that expenses for the training of staff incurred before the taxpayer was licensed to operate a broadcasting business were not currently deductible under 26 U.S.C. § 162(a). The court reasoned that a taxpayer is not “ ‘engaged in carrying on any trade or business’ within the intendment of section 162(a) until such time as the business has begun to function as a going concern and performed those activities for which it was organized.” 345 F.2d at 907. Similarly, in Aboussie, the court held that a mortgage insurance premium paid to the FHA in order to secure financing for an apartment complex was a nondeductible pre-opening expense. The court determined that the taxpayer was not carrying-on any trade or business at the time the expense was incurred and, therefore, was not entitled to a deduction under section 162(a). 779 F.2d at 428.
In Richmond v. Television Corp., the court articulated an alternative rationale for its decision, reasoning that expenses incurred during the start-up or pre-opening period of a new business are not ordinary business expenses but capital expenditures. “Our system of income taxation attempts to match income and expenses of the taxable year so as to tax only net income. A taxpayer may, therefore, not deduct as a current business expense the full cost of acquiring [a capital] asset____” 345 F.2d at 907. The court implicitly recognized that pre-opening expenses must be treated as capital in order to maintain parity with a taxpayer whose cost of purchasing an existing business is clearly capital. Id.
Later decisions have applied the “pre-opening expense doctrine” without sole reliance on the “carrying on any trade or business” language in 26 U.S.C. § 162(a). In Madison Gas & Electric the court held that expenses incurred by a public utility in expansion of its generating capacity through the joint construction and operation of a nuclear plant with two other utilities were nondeductible pre-opening expenses of the partnership venture. 633 F.2d at 517. The court did not rely solely on the “carrying on any trade or business” language of section 162(a), but treated the start-up costs as capital expenditures under general tax law standards. Id. Similarly, in Central Texas Savings & Loan Association the court held that expenditures incurred in starting up new branch offices were capital expenditures. 731 F.2d at 1185. Likewise, the court did not rely solely on the “carrying on any trade or business” language of 26 U.S.C. § 162(a), but reasoned that the expenses were capital because they were incurred in connection with the acquisition of a capital asset. Id.
Prior to Hoopengamer, the Tax Court held that expenses incurred during the pre-opening phase of a new business were not deductible under 26 U.S.C. § 212. Gray-beal v. Commissioner, 39 T.C.M. (CCH) 734 (1979). See also Swigart v. Commissioner, 39 T.C.M. (CCH) 734 (1980). In Graybeal the Tax Court held that expenses incurred in the development of an RV campground were not deductible under either 26 U.S.C. § 162(a) or 26 U.S.C. § 212. The Tax Court reasoned that expenses incurred in anticipation of engaging in a business are capital expenditures. 39 T.C.M. (CCH) at 738.
Under 26 U.S.C. § 212 “all the ordinary and necessary expenses paid or incurred during the taxable year ... for the production or collection of income ... [and] for the management, conservation, or maintenance of property held for the production of income” are deductible. “Prior to the enactment of ... Section 212 a person was not entitled to deduct expenses incurred in connection with income-producing nonbusiness property. The purpose of ... Section 212 was to create a parity of treatment between such nonbusiness expenses and similar business expenses which had long been deductible.” Brown v. United States, 526 F.2d 135, 138 (6th Cir.1975) (citations omitted). See also United States v. Gilmore, 372 U.S. 39, 45, 83 S.Ct. 623, 627, 9 L.Ed.2d 570 (1963); Bingham’s Trust v. Commissioner, 325 U.S. 365, 374, 65 S.Ct. 1232, 1237, 89 L.Ed. 1670 (1945); Snyder v. United States, 674 F.2d 1359, 1364 (10th Cir.1982); Lucas v. Commissioner, 388 F.2d 472, 473-74 (1st Cir.1967). Sections 162(a) and 212 are to be considered in pari materia, and the restrictions and qualifications applicable to the deductibility of trade or business expenses are also applicable to expenses covered by section 212. Woodward v. Commissioner, 397 U.S. 572, 575, 90 S.Ct. 1302, 1305, 25 L.Ed.2d 577 (1970); Gilmore, 372 U.S. at 45, 83 S.Ct. at 627; Zell v. Commissioner, 763 F.2d 1139, 1142 n. 2 (10th Cir.1985); Snyder, 674 F.2d at 1364; Fischer v. United States, 490 F.2d 218, 222 (7th Cir.1973).
The most important limitation applicable under 26 U.S.C. § 162(a) and 26 U.S.C. § 212 is that capital expenditures are not currently deductible. Sections 162(a) and 212 are subject to 26 U.S.C. § 263 which prohibits capital expenditures from being currently deductible. Woodward, 397 U.S. at 574-75, 90 S.Ct. at 1304-05; Snyder, 674 F.2d at 1364. Moreover, sections 162(a) and 212 limit deductions to “ordinary and necessary expenses.” “If an expense is capital, it cannot be deducted as ‘ordinary and necessary,’ either as a business expense under § 162 of the Code or as an expense of ‘management, conservation, or maintenance’ under § 212.” Woodward, 397 U.S. at 575, 90 S.Ct. at 1305. Instead, capital expenditures “are added to the basis of the capital asset with respect to which they are incurred, and are taken into account for tax purposes either through depreciation or by reducing the capital gain (or increasing the loss) when the asset is sold.” Woodward, 397 U.S. at 574-75, 90 S.Ct. at 1304-05.
Under 26 U.S.C. § 162(a) and 26 U.S.C. § 212, the costs incurred in connection with the acquisition or construction of a capital asset are capital expenditures. Commissioner v. Idaho Power Co., 418 U.S. 1, 12, 94 S.Ct. 2757, 2764, 41 L.Ed.2d 535 (1974); Woodward, 397 U.S. at 576, 90 S.Ct. at 1305; Central Texas Savings & Loan Association, 731 F.2d at 1184; Louisville and Nashville Railroad Co. v. Commissioner, 641 F.2d 435, 440 (6th Cir.1981); Brown, 526 F.2d at 138. Expenses incurred during the start-up or pre-opening period of a trade or business are capital in nature, just as are other expenditures to create or acquire an asset. See Central Texas Savings & Loan Association, 731 F.2d at 1183; Richmond Television Corp., 345 F.2d at 907-08. See also B. Bittker, Federal Taxation of Income, Estates and Gifts II 20.4.4 (1981). An immediate deduction for expenses incurred before an enterprise has begun actual business operations is inappropriate because the expenses are part of the cost of establishing the enterprise. See Central Texas Savings & Loan Association, 731 F.2d at 1183; Richmond Television Corp., 345 F.2d at 907-08.
The Tax Court’s decisions here and in Hoopengarner are based on an unduly narrow interpretation of the “pre-opening expense doctrine.” The Tax Court reasoned that the “pre-opening expense doctrine” has no relevance under 26 U.S.C. § 212 because it does not contain a “trade or business” requirement. 80 T.C. at 543. This reasoning ignores the rationale articulated in Richmond Television Corp. and other decisions that pre-opening expenses are not ordinary expenses but capital expenditures. See Bennett Paper Corp., 699 F.2d at 451; Madison Gas & Electric, 633 F.2d at 517; Richmond Television Corp., 345 F.2d at 907-08. Furthermore, the Tax Court’s decision emasculates the “pre-open-ing expense doctrine.” Individuals could contend, as the taxpayer did here, that pre-opening expenses are deductible under section 212 and thereby evade disallowance of the deduction under section 162(a).
The Tax Court’s allowance of an immediate deduction for pre-opening expenses under 26 U.S.C. § 212 is plainly at odds with the legislative intent underlying section 212. It permits an individual to deduct expenses incurred in starting a new enterprise, while a corporation formed to conduct the same activity would be unable to deduct these same expenses. Congress restricted 26 U.S.C. § 212 to individuals, assuming that, since a corporation’s activities almost invariably constitute a trade or business, a corporation could already deduct, under 26 U.S.C. § 162(a), those expenses that an individual would be able to deduct under .either section 162(a) or section 212. See B. Bittker & J. Eustice, Federal Income Taxation of Corporations and Shareholders ¶ 15.03 (4th ed. 1979). Congress did not intend to permit an individual to deduct expenses under section 212 that a corporation could not deduct under section 162(a). See id. at 5-9 n. 14. Cf. Brown, 526 P.2d at 138; Lucas, 388 F.2d at 474.
The Tax Court’s allowance of an immediate deduction for pre-opening expenses under 26 U.S.C. § 212 renders 26 U.S.C. § 195, enacted in 1980 and amended in 1984, as it applies to pre-opening expenses incurred by individuals prior to July 1, 1984, without meaning. Section 195 permits corporations and individuals to amortize start-up or pre-opening expenses over a period of sixty months or more. If an individual can currently deduct start-up or pre-opening expenses under section 212, permitting individuals to amortize those expenses is superfluous.
When 26 U.S.C. § 195 was enacted in 1980, Congress believed that pre-opening expenses were not deductible under either 26 U.S.C. § 162(a) or 26 U.S.C. § 212. In explaining the purpose of section 195, the Senate report summarized pre-existing law:
Under present law, ordinary and necessary expenses paid or incurred in carrying on a trade or business, or engaging in a profit-seeking activity, are deductible. Expenses incurred prior to the establishment of a business normally are not deductible currently since they are not incurred in carrying on a trade or business or while engaging in a profit-seeking activity.
S.Rep. No. 96-1036, 96th Cong., 2d Sess. 10, reprinted in 1980 U.S.Code Cong. & Ad.News 7293, 7300. Although the views of a later Congress are not controlling as to the meaning of pre-existing law, they carry some weight and may not be ignored when they are clearly relevant. See First State Bank v. United States, 599 F.2d 558, 563 n. 3 (3d Cir.1979), cert. denied, 444 U.S. 1013, 100 S.Ct. 662, 62 L.Ed.2d 642 (1980); Walt Disney Productions v. United States, 480 F.2d 66, 68 (9th Cir.1973), cert. denied, 415 U.S. 934, 94 S.Ct. 1451, 39 L.Ed.2d 493 (1974).
III.
The issue presented by the taxpayer’s cross-appeal is whether the Tax Court correctly determined both the need for and the amount of an adjustment to taxpayer’s distributive share of partnership losses to reflect that he was a partner in the limited partnership for only a portion of its taxable year. Because we hold that the loan commitment fees and management fees are not currently deductible, we need not address taxpayer’s cross-appeal.
IV.
Accordingly, the decision of the Tax Court holding that the limited partnership’s pre-opening expenses are deductible by the taxpayer under 26 U.S.C. § 212 is REVERSED, and this cause is REMANDED to the Tax Court for proceedings consistent with this opinion.
. Frances Johnsen is a party solely because she filed a joint income tax return with John K. Johnsen for 1976.
. Aboussie expressly declined to follow the decision in Hoopengamer reasoning that 26 U.S.C. § 212 only permits deduction of expenses incurred with respect to nonbusiness income. 779 F.2d at 428 n. 6.
. In the Tax Reform Act of 1984, Congress prospectively overruled the results obtained here and in Hoopengamer by amending 26 U.S.C. § 195 to expand the definition of start-up expenditures to include any expenditures made (1) for any activity engaged in for profit or for the production of income, (2) before the day on which the active trade or business begins, and (3) in anticipation of such activity becoming an active trade or business.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
STAKER, District Judge.
Appellants, American Bankers Insurance Company of Florida and Roger D. Roberts, trading as Allstate Bonding Company, assert that in a non-jury trial, the district court erred by finding and adjudging (1) that an agreement (hereinafter, the “assignment”) entered into between appellee, Marion Deisher, and appellants, which purported to assign from Deisher to appellants some of the monthly annuity payments thereafter to become payable to Deisher under an annuity policy issued by appellee, Allstate Life Insurance Company (Allstate Life), did not constitute an enforceable assignment of those annuity payments from Deisher to appellants, and (2) that Deisher was not obligated under the assignment to pay to appellants the annuity payments therefrom as they thereafter became due. Finding no merit to appellants’ claims of error, we affirm.
I.
Except for those noted to have been found by the court, the following facts were undisputed:
As a part of a structured settlement of a personal injury claim asserted by Deisher against one of its insureds, appellee Allstate Insurance Company (Allstate Insurance) caused Allstate Life to issue to Allstate Insurance an annuity policy in which Allstate Insurance was named as the “owner” of the annuity and Deisher was named the annuitant thereof.
Designed as it was, pursuant to the Internal Revenue Code and related statutes, to provide Deisher with taxfree, monthly payments, that annuity policy provided for the payment from Allstate Life to Deisher of $465 per month, beginning on December 21,1984, for 300 months, or for the remainder of his lifetime, whichever was longer, expressly provided that Allstate Insurance was the owner of the annuity, and further provided that if Deisher died before all of the 300 annuity payments were made, then such of them as remained unpaid at his death would be paid to his estate as beneficiary unless during his lifetime he designated a beneficiary thereof in lieu of his estate and so notified Allstate Life.
On April 17, 1987, Deisher’s friend, one Kosko, was arrested and charged in a criminal complaint with a single violation of Title 21 U.S.C. § 841(a)(1), possession with intent to distribute cocaine. Kosko was unable to post a $75,000 bond, and on April 23, 1987, continued to remain in custody awaiting indictment and trial on that single charge.
After Kosko’s arrest, Dillon, a mutual friend of Deisher and Kosko, requested Deisher to aid Kosko to post that bond, and Deisher agreed to do so. To that end, Dillon brought Deisher and Roberts together. Deisher indicated to Roberts his willingness to assign to appellants the annuity payments thereafter to become payable to him under the annuity policy as security to appellants if appellants would execute Kos-ko’s bond as his sureties.
In an attempt to ascertain whether De-isher’s rights under the annuity policy were assignable, Roberts and Deisher consulted with an agent of Allstate Insurance, who informed them that it was the position of Allstate Insurance that Deisher’s rights thereunder were not assignable by him. The court found, as fact, that that agent so informed them as he testified. Deisher and Roberts then went to the office of Roberts’ attorney, who likewise informed them that he questioned Deisher’s right to assign his rights thereunder. Nevertheless, because he noted that the annuity policy contained no language either prohibiting or permitting Deisher’s assigning his rights thereunder, that attorney drafted the assignment agreement for execution by Deisher and appellants.
On April 23,1987, Deisher and appellants executed the assignment wherein appellants agreed to execute, as sureties, Kos-ko’s bail bond, conditioned for his appearance for trial on the above single charge, which was specifically mentioned in the assignment, in consideration of Deisher’s agreeing therein to “irrevocably assign [to appellants] all of his right, title and interest to and in the ... annuity contract and proceeds due thereunder from Allstate Insurance Company up to and including the sum of $75,000, together with” interest and costs, expenses, and attorney fees incurred by appellants should forfeiture of that bond occur.
Compliant with the assignment, Roberts executed Kosko’s bond as agent of appellants, as sureties, and Kosko was released from custody thereon. Deisher did not sign the bond as surety or otherwise.
Thereafter an indictment was returned charging Kosko with the single violation of 21 U.S.C. § 841(a)(1). That was the only charge that had been lodged against Kosko at the time the assignment was executed and the bond posted and until the indictment was returned. And in addition, that indictment charged Kosko with a “continuing criminal enterprise” in violation of 21 U.S.C. § 848, which carried a minimum mandatory prison sentence of ten years.
Roberts was, but Deisher was not, present in court on June 11, 1987, when Kosko appeared for his arraignment upon the charges in the indictment. The court then, without objection by Roberts, permitted Kosko to remain free on that same bond.
The district court found, as fact, that Roberts knew of the additional charge upon which Kosko was indicted and failed to notify Deisher thereof and of the change it would effect in Deisher’s obligation under the assignment, and that it was not until after Kosko had failed to appear that Deisher gained that knowledge from another source.
On or about July 2, 1987, Kosko violated the conditions of his bond by failing to appear, and remained a fugitive. On July 10,1987, Kosko’s bond was forfeited by the court and judgment was rendered in favor of the United States of America and against Kosko and appellants for $75,000.
Appellants then demanded reimbursement from Deisher and Allstate Life pursuant to the assignment. Deisher instituted an action against appellants in which he sought rescission of the assignment upon the ground that it did not constitute a valid assignment. Allstate Life and Allstate Insurance intervened and interpleaded Deisher and appellants, praying among other things that the court determine whether the annuity and the annuity payments were assignable by any person other than Allstate Insurance, the named “owner” thereof in the annuity policy. The court aligned those intervenors as plaintiffs and Deisher and appellants as defendants.
Rule 52(a), Federal Rules of Civil Procedure, provides that findings of fact made by a trial judge pursuant thereto “shall not be set aside unless clearly erroneous.” See Darter v. Greenville Community Hotel Corporation, 301 F.2d 70 (4th Cir.1962); Anderson v. Bessemer City, 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985). There was ample and substantial evidence to support the district court’s findings of fact above noted, and they clearly were not erroneous ones.
II.
The district court was presented with three separate but related issues: First, did the writing purporting to be an assignment executed by Deisher and appellants constitute a valid legal assignment? Second, if it did not do so, then did it constitute an enforceable equitable assignment? And third, regardless of how either or both of those first and second issues are properly decided, did permitting Kosko’s bond to operate as an appearance bond in respect to the additional “continuing criminal enterprise” charge in the indictment, without Deisher’s knowledge and consent, constitute a modification of his obligation under the purported assignment that would, as a matter of law, release him therefrom?
As to that first issue: It is axiomatic that one may not sell, assign or hypothecate that which he does not own. Deisher had no ownership in the annuity itself. The annuity policy plainly stated, as the district court pointed out, that Allstate Insurance was the owner of the annuity. Thus, Deisher could not lawfully assign that annuity, wherefore the purported assignment did not constitute a valid legal assignment.
Moreover, the assignment did not constitute a valid legal assignment, because it did not operate as a transfer of a right of Deisher’s existing at the time the assignment was executed, but rather sought to transfer proceeds to which he was to become entitled in the future, and even then the transfer thereof was not to become effective until and unless Kosko’s bond was forfeited. In re Musser, 24 B.R. 913, 919 (W.D.Va.1982) (contract to transfer proceeds to be received in the future by the promisor not a legal assignment, because it does not involve a present transfer of a present right); Kelly Health Care v. Prudential Ins. Co., 226 Va. 376, 309 S.E.2d 305, 307 (1983) (for there to be a valid assignment, “the obligee must have intended, at the time of the transfer, to dispossess himself of an identified interest, or some part thereof, and to vest indefeasible title in the transferee.”); S.L. Nusbaum & Co. v. Atlantic Virginia Realty Corp., 206 Va. 673, 681, 146 S.E.2d 205, 210 (1966) (to effect an equitable assignment “the intent to transfer a present ownership of the subject matter of the assignment to the assignee must be manifested_”).
The district court properly held the assignment not to constitute a valid legal assignment.
As to the second issue, appellants contended that what Deisher assigned was not the annuity or the policy itself, but rather Deisher’s rights to receive from Allstate Life the annuity payments that were to become payable to him in the future thereunder, as contemplated by the terms of the assignment; that those rights constituted an interest of his which was lawfully assignable; and that the assignment operated to transfer those rights to appellants.
The court reasoned that what appellants were actually asking the court to do was to specifically enforce Deisher’s purported assignment against Allstate Life and Allstate Insurance, citing Restatement (Second) Contracts § 326(1), comment a. (1981) (a partial assignment “may create an equitable interest in the promisee by virtue of a right to specific performance of the promise.”).
And the district court held that since specific performance was an equitable remedy, application thereof was in the sound discretion of the court, Haythe v. May, 223 Va. 359, 288 S.E.2d 487 (1982), and that equity would not decree specific performance of a contract that is “founded in fraud, imposition, mistake, undue advantage, or gross misrepresentation, or where ... it would be unconscientious to enforce it,” Clay v. Landreth, 187 Va. 169, 45 S.E.2d 875, 879 (1948).
The district court found and held that it would be inequitable and unjust specifically to enforce the assignment against Allstate Life and Allstate Insurance, because the annuity policy plainly stated that Allstate Insurance was the owner thereof, Roberts had been told by Allstate Insurance’s agent that Deisher’s interests therein were not assignable, appellants had nevertheless procured Deisher's execution of the assignment purporting to assign that which he did not then own and other circumstances present in the case.
The district court did not abuse its discretion by so finding and holding.
As to the third issue, the court exercised its pendent jurisdiction to decide appellants’ claims against Deisher himself to recover the proceeds of the annuity.
Deciding that issue, the court held that, having attempted to assign the proceeds of the annuity as surety on the bond posted by appellants for Kosko, Deisher became a surety on Kosko’s bond; that Deisher’s obligation thereon was materially modified by the subsequent indictment that included the much more serious “continuing criminal enterprise” charge, which increased the likelihood of Kosko’s flight and failure to appear, and thus increased the risk attending Deisher’s obligation; that Deisher did not consent to that modification and the increased risk resulting therefrom; and that, as a matter of law, those circumstances released Deisher from any obligation he may have had to appellants under the terms of the purported assignment.
The United States of America was the “creditor” in respect to Kosko’s bond. As between Kosko, the principal, and appellants, his sureties, on that bond, Kosko was primarily, and appellants secondarily, liable thereon. But as between appellants and Deisher, appellants were primarily, and De-isher secondarily, liable thereon, notwithstanding that Deisher did not himself execute that bond. Forfeiture of the bond triggered the liability, to the creditors, of appellants, as sureties thereon, which in turn triggered the liability to appellants of Deisher, as surety for appellants under the terms of the assignment. Deisher thus bore, as to appellants, a relationship in the nature of a “subsurety.”
The Restatement of the Law of Security § 145 (1941) reads:
Subsuretyship is the relation between two or more sureties who are bound to answer for the same duty of the principal where one, the principal surety, in respect of the other, the subsurety, has the whole duty of performance.
Comment a. thereof in part explains:
Where there are two sureties, the usual relation is cosuretyship, but by agreement between them or because of the equities of the situation, one of them as between themselves, may be liable for the entire loss caused by the default of the principal and hence not a cosurety. Where this is true, there are two interlocking tripartite relationships. The creditor has two sureties for his principal, but between the sureties one of them is a principal and the other a surety, that is, the former rather than the latter should perform. The former is a surety as to the principal debtor but is a principal as to the other surety. In view of the dual position of the former, he is called the principal surety. The surety to whom the principal surety is in the relation of principal is the subsurety.
The district court pointed out that it was well-settled in Virginia that if the principal and creditor modify their contract without the consent of the surety, the surety is discharged if the modification materially increases the risk. Kirschbaum v. Blair, 98 Va. 35, 34 S.E. 895 (1900). That principle of law remains very much alive today. In People v. Smith, 645 P.2d 864 (Colo. App.1982), the surety secured a $400 bail bond for a misdemeanor charge pending against the defendant. As a result of the same episode, the defendant was later charged with a felony, which carried a mandatory prison sentence. The defendant then obtained another $600 bond from another surety, and the first surety was not advised of the new charge or of the application of the bond to the new charge. Both bonds were forfeited when the defendant failed to appear, and the first surety appealed. The court reversed, stating
When one undertakes a surety obligation, the surety undertakes a calculated risk, and events which materially increase that risk without consent of the surety terminate the obligation of the bond, (citations omitted).
Id. at 865.
In State v. Weissenburger, 189 N.J.Super. 172, 459 A.2d 693 (1983), the surety executed a bail bond conditioned upon the defendant’s not leaving the jurisdiction and appearing for trial. Subsequently, the defendant entered into an agreement with the prosecuting attorney, whereby the latter agreed to dismiss charges against the defendant and relocate him in exchange for his agreeing to assist in obtaining evidence against suspected distributors of controlled substances. The defendant fled the jurisdiction after assisting in one investigation, and the bond was forfeited. The surety was never advised of the agreement between the defendant and the prosecutor. The surety appealed. The court reversed and remanded, stating
It is well settled that a bail bond constitutes a surety agreement in which the defendant is the principal and the creditor is the State. Consequently, the legal principles applicable to the construction and consequences of surety agreements are equally applicable to bail bonds.... It is also well settled that if the principal and creditor modify their contract without the consent of a compensated surety, the surety will be discharged if the modification materially increases the risk.... (citations omitted).
Id. 459 A.2d at 696.
The Restatement of the Law of Security § 128(a) (1941) provides:
Where, without the surety’s consent, the principal and the creditor modify their contract otherwise than by extension of time of payment
(a) the surety, other than a compensated surety, is discharged unless the modification is of a sort that can only be beneficial to the surety ...
Here, Deisher was an uncompensated surety, and the modification was not of a sort that was beneficial to him.
In Reese v. United States, 76 U.S. (9 Wall.) 13, 22, 19 L.Ed. 541, 545 (1870), the Court stated:
There is ... an implied covenant on the part of the government, when the recognizance of bail is accepted, that it will not in any way interfere with ... this covenant between ... [the principal and his sureties in a bail bond], or impair its obligation, or take any proceedings with the principal which will increase the risks of the sureties or affect their remedy against him.
That principle stated in Reese remains the law. See, e.g., United States v. Galvez-Uriarte, 709 F.2d 1323 (9th Cir.1983)), where the court, citing Reese as authority, applied that principle to hold that a surety on a bail bond was released from his obligation thereon, because the government had acted materially to increase the risk of the surety without the surety’s consent.
That Deisher technically was not a surety on Kosko’s bond does not affect the district court’s decision of this third issue. By the purported assignment, itself a security agreement, Deisher, as surety, secured appellants’ obligation on Kosko’s bond. As above quoted from State v. Weissenburger, 459 A.2d at 696, “the legal principles applicable to the construction and consequences of security agreements are equally applicable to bail bonds.” Of course, the converse of that proposition is true. Accordingly, when the government and Kosko and appellants consented and agreed to Kosko’s release on the bond and to permit it to apply as Kosko’s appearance bond in respect to the additional “continuing criminal enterprise” charge in the indictment, thereby increasing Deisher’s risk, without Deisher’s having consented to their agreement, Deisher was thereby relieved of his obligation under the purported assignment as a matter of law.
We agree with the decision reached by the district court on that third issue.
We therefore hold that the district court committed no error in any of its findings and adjudications, and its decision is
AFFIRMED.
. Roberts testified that the Agent of Allstate Insurance told Deisher and him that the agent did not know whether Deisher’s rights under the annuity policy were assignable.
. Roberts also collected from Kosko a premium of $7,500 as consideration for the appellants’ signing Kosko’s bond as sureties. In the assignment, Deisher further agreed to cause appellants to be named as the beneficiary of the annuity policy in lieu of his estate and to give Allstate Life and Allstate Insurance written notice of that change, but he did not do so.
. Nothing in the record indicates that the district court was aware of the existence of the assignment at the time of Kosko’s arraignment and release on the bond.
. Roberts’ testimony indicated that Deisher had that knowledge shortly after Kosko was arraigned on the indictment and before he failed to appear. Deisher denied that he did so. An Assistant United States Attorney testified that when Roberts and Deisher were in her office after Kosko had failed to appear, she disclosed that knowledge to Deisher in Roberts’ presence, whereupon Deisher manifested surprise thereat and enquired why he had not been theretofore informed thereof.
.The court nevertheless continued Kosko’s trial for some months to afford appellants an opportunity to apprehend Kosko.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
BRATTON, Chief Judge.
Drawn under 18 U.S.C. § 1114, an indictment returned in the United States Court for Kansas charged that Leonard J. Williams forcibly assaulted with a knife an employee and correctional officer of the federal penitentiary at Leavenworth, Kansas, who was then and there engaged in the performance of his official duties. The defendant pleaded guilty and was sentenced to imprisonment for a period of seven years, to begin at the expiration of the sentence he was then serving in the penitentiary at Leavenworth. Almost four years after the imposition of the sentence of seven years, the defendant filed a motion in the nature of petition for writ of error coram nobis in which he sought to have such judgment and sentence vacated upon the ground that his waiver of fundamental rights and plea of guilty were not freely and voluntarily given and entered but were the result of duress and coercion exerted upon him by officials of the prison. The motion was denied and an appeal was seasonably perfected.
The court treated the motion filed by the appellant as one under 28 U.S.C.A. § 2255. The statute empowers a person in custody under sentence of a court established by Act of Congress to challenge by motion on one or more of the grounds enumerated in the statute the sentence under which he is in custody. The statute is available only to attack a sentence under which a prisoner is then in custody. It cannot be employed to attack a sentence under which the defendant has not yet begun to serve. Opinion and concurring opinion in Heflin v. United States, 358 U.S. 415, 79 S.Ct. 451, 3 L.Ed.2d 407; Ellison v. United States, 10 Cir., 263 F.2d 395.
At the time of the assault upon the employee and correctional officer of the federal penitentiary, and at the time of the denial of the motion for a writ of error coram nobis, petitioner was confined in that penal institution for service of another sentence. ■ While it does not affirmatively appear in the record, it is stated in the brief of the Government— and not challenged by the appellant — that the sentence then being served was for bank robbery. Appellant has not begun to serve the sentence of seven years for assault upon the employee and correctional officer of the penitentiary. And therefore section 2255 is not yet available to him as a procedural channel through which to challenge such sentence. Opinion and concurring opinion in Heflin v. United States, supra; Ellison v. United States, supra.
But appellant did not undertake to proceed under section 2255. He expressly sought a writ of error coram nobis. In United States v. Morgan, 346 U.S. 502, 74 S.Ct. 247, 98 L.Ed. 248, it was held that after the expiration of the full term of service of a sentence in a criminal case, the sentence was open to challenge by application for a writ of error coram nobis upon the ground that the accused was only nineteen years of age, was without knowledge of law, was without advice concerning his rights, and was without the assistance of counsel. Fair analogy leads to the conclusion that as a matter of law the judgment and sentence of seven years imposed upon the appellant could be challenged before its service had begun upon the grounds pleaded in the motion for a writ of error coram nobis.
The trial court did not make disposition of the ease upon any technical deficiency in pleading. Instead, the case was heard on its merits. A hearing was had at which appellant and others testified. Appellant testified in substance that after the assault charged in the indictment, he was held in segregation at the penitentiary; and that while held in segregation, he was threatened, whipped, beaten, and tortured. He further testified that he was told that such punishment would be continued unless he pleaded guilty, and that the only way he could protect himself from continued mistreatment of that kind was to plead guilty and end the matter in that manner. And he further testified that as the result of such mistreatment, he was nervous and unbalanced; that he did not consider himself guilty; and that he entered the plea of guilty in fear and because he had been promised that the mistreatment would be stopped if he pleaded guilty. But that evidence did not stand alone. The associate warden of the penitentiary, a correctional officer, and four custodial officers testified to facts and circumstances which in their totality tended to discredit the testimony of the appellant; and the court expressly found that appellant had not carried the burden of proof. In other words, the court in effect found the issues of fact against appellant; and the crucial findings have adequate support in the record and are not clearly erroneous. Therefore they must not be disturbed on appeal.
The judgment denying the motion for a writ of coram nobis is
Affirmed.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
A
|
songer_crossapp
|
What follows is an opinion from a United States Court of Appeals. Your task is to determine whether there were cross appeals from the decision below to the court of appeals that were consolidated in the present case.
PER CURIAM:
Defendants-appellants-cross-appellees petition for rehearing of our decision of September 4, 1986, 800 F.2d 305. That decision, entered upon remand from the Supreme Court, modified our original decision of July 5, 1985, 767 F.2d 1041, in two respects. First, we eliminated a reduction that we had previously made in the amount of the remittitur offer to reflect tax benefits; we thereby confirmed the amount of the remittitur as ordered by the District Court. Second, we directed the District Court to afford the plaintiff an opportunity to amend his complaint to add a civil RICO claim.
On petition for rehearing, the defendants seek reconsideration of the ruling permitting an opportunity to add a civil RICO claim. Though acknowledging the force of the Supreme Court’s ruling in Sedima, S.P.R.L. v. Imrex Company, 473 U.S. 479, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1986), defendants contend that the plaintiff has lost the opportunity to pursue a RICO claim because of the manner in which he advanced his RICO contention to this Court on the original appeal. On that appeal, the plaintiffs argument concerning the District Court’s rejection of his RICO claim was included as one of several contentions advanced in his cross-appeal. Part V of plaintiff’s brief, the portion arguing the issues on the cross-appeal, was captioned, “IF JUDGMENT OF DISTRICT COURT IS NOT AFFIRMED, PLAINTIFF’S CROSS APPEAL MUST BE CONSIDERED.” The first sentence of this section of the brief acknowledged that there could be no cross-appeal unless this Court determined that any part of the remittitur offer was to be altered. Section E of Part V of the brief, concerned specifically with restoration of the RICO claim, was captioned, “If a New Trial is Ordered, the Plaintiffs Motion to Amend the Complaint to Add a RICO Count should be Allowed. ”
Plaintiff thus advanced his RICO contention to this Court conditionally, as a matter to be considered only in the event that the remittitur amount was altered and a new trial ordered. The conditional nature of plaintiff’s RICO argument was expressly noted in our original opinion. 767 F.2d at 1046 n. 4.
Once our ruling on remand restored the full amount of the remittitur offer, as specified by the District Court, the condition for plaintiff’s cross-appeal was unsatisfied: there is no alteration of the remittitur amount and no order for a new trial. We see no reason to relieve plaintiff of the representations made to this Court on the original appeal, restricting the RICO contention as one to be advanced only upon the occurrence of specified events. Since those events have not and will not occur, the cross-appeal should not have been entertained in our September 4, 1986, decision.
Accordingly, the petition for rehearing is granted, and our decision of September 4, 1986, is amended to delete the instruction to the District Court to afford the plaintiff an opportunity to present a motion to amend the complaint to add a civil RICO claim.
Question: Were there cross appeals from the decision below to the court of appeals that were consolidated in the present case?
A. No
B. Yes
C. Not ascertained
Answer:
|
B
|
songer_crossapp
|
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